50072 Federal Register / Vol. 73, No. 165 / Monday, August 25, 2008 / Proposed Rules 

DEPARTMENT OF ENERGY 

10 CFR Part 431 

[Docket No. EE–2006–STD–0126] 

RIN 1904–AB59 

Energy Conservation Program for 

Commercial and Industrial Equipment: 

Energy Conservation Standards for 

Commercial Ice-Cream Freezers; SelfContained Commercial Refrigerators, 

Commercial Freezers, and Commercial 

Refrigerator-Freezers Without Doors; 

and Remote Condensing Commercial 

Refrigerators, Commercial Freezers, 

and Commercial Refrigerator-Freezers 

AGENCY: Office of Energy Efficiency and 

Renewable Energy, Department of 

Energy. 

ACTION: Notice of proposed rulemaking 

and notice of public meeting. 

SUMMARY: The Energy Policy and 

Conservation Act prescribes energy 

conservation standards for certain 

commercial and industrial equipment, 

and requires the Department of Energy 

(DOE) to administer an energy 

conservation program for this 

equipment. In this notice, DOE is 

proposing new energy conservation 

standards for commercial ice-cream 

freezers; self-contained commercial 

refrigerators, commercial freezers, and 

commercial refrigerator-freezers without 

doors; and remote condensing 

commercial refrigerators, commercial 

freezers, and commercial refrigeratorfreezers. DOE is also announcing a 

public meeting on its proposed 

standards. 

DATES: DOE will hold a public meeting 

on Tuesday, September 23, 2008, from 

9 a.m. to 5 p.m. in Washington, DC. 

DOE must receive requests to speak at 

the public meeting no later than 4 p.m., 

Tuesday, September 9, 2008 DOE must 

receive a signed original and an 

electronic copy of statements to be given 

at the public meeting no later than 4 

p.m., Tuesday, September 16, 2008. 

DOE will accept comments, data, and 

information regarding the notice of 

proposed rulemaking (NOPR) before and 

after the public meeting, but no later 

than October 24, 2008. See Section VII, 

‘‘Public Participation,’’ of this NOPR for 

details. 

ADDRESSES: The public meeting will be 

held at the U.S. Department of Energy, 

Forrestal Building, Room 8E–089, 1000 

Independence Avenue, SW., 

Washington, DC 20585–0121. Please 

note that foreign nationals visiting DOE 

Headquarters are subject to advance 

security screening procedures, requiring 

a 30-day advance notice. If you are a 

foreign national and wish to participate 

in the public meeting, please inform 

DOE as soon as possible by contacting 

Ms. Brenda Edwards at (202) 586–2945 

so that the necessary procedures can be 

completed. 

Any comments submitted must 

identify the NOPR for commercial 

refrigeration equipment, and provide 

docket number EE–2006–STD–0126 

and/or RIN number 1904–AB59. 

Comments may be submitted using any 

of the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: commercialrefrigeration.

rulemaking@ee.doe.gov. Include docket 

number EE–2006–STD–0126 and/or RIN 

1904–AB59 in the subject line of the 

message. 

• Postal Mail: Ms. Brenda Edwards, 

U.S. Department of Energy, Building 

Technologies Program, Mailstop EE–2J, 

1000 Independence Avenue, SW., 

Washington, DC 20585–0121. 

Telephone: (202) 586–2945. Please 

submit one signed original paper copy. 

• Hand Delivery/Courier: Ms. Brenda 

Edwards, U.S. Department of Energy, 

Building Technologies Program, 950 

L’Enfant Plaza, SW., 6th Floor, 

Washington, DC 20024. Please submit 

one signed original paper copy. 

For detailed instructions on 

submitting comments and additional 

information on the rulemaking process, 

see Section VII, ‘‘Public Participation,’’ 

of this document. 

Docket: For access to the docket to 

read background documents or 

comments received, visit the U.S. 

Department of Energy, Resource Room 

of the Building Technologies Program, 

950 L’Enfant Plaza, SW., 6th Floor, 

Washington, DC 20024, (202) 586–2945, 

between 9 a.m. and 4 p.m., Monday 

through Friday, except Federal holidays. 

Please call Ms. Brenda Edwards at the 

above telephone number for additional 

information regarding visiting the 

Resource Room. 

Please Note: DOE’s Freedom of Information 

Reading Room (Room 1E–190 at the Forrestal 

Building) no longer houses rulemaking 

materials. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Charles Llenza, U.S. Department of 

Energy, Building Technologies Program, 

EE–2J, 1000 Independence Avenue, 

SW., Washington, DC 20585–0121, (202) 

586–2192, Charles.Llenza@ee.doe.gov. 

Ms. Francine Pinto, Esq., U.S. 

Department of Energy, Office of General 

Counsel, GC–72, 1000 Independence 

Avenue, SW., Washington, DC 20585– 

0121, (202) 586–9507, 

Francine.Pinto@hq.doe.gov. 

SUPPLEMENTARY INFORMATION: 

I. Summary of the Proposed Rule 

II. Introduction 

A. Overview 

B. Authority 

C. Background 

1. Current Standards 

2. History of Standards Rulemaking for 

Commercial Refrigeration Equipment 

III. General Discussion 

A. Test Procedures 

B. Technological Feasibility 

1. General 

2. Maximum Technologically Feasible 

Levels 

C. Energy Savings 

1. Determination of Savings 

2. Significance of Savings 

D. Economic Justification 

1. Specific Criteria 

a. Economic Impact on Manufacturers and 

Commercial Customers 

b. Life-Cycle Costs 

c. Energy Savings 

d. Lessening of Utility or Performance of 

Equipment 

e. Impact of Any Lessening of Competition 

f. Need of the Nation to Conserve Energy 

g. Other Factors 

2. Rebuttable Presumption 

IV. Methodology and Discussion of 

Comments 

A. Market and Technology Assessment 

1. Definitions Related to Commercial 

Refrigeration Equipment 

a. Air Curtain Angle Definition 

b. Door Angle Definition 

2. Equipment Classes 

B. Engineering Analysis 

1. Approach 

2. Equipment Classes Analyzed 

3. Analytical Models 

a. Cost Model 

b. Energy Consumption Model 

c. Design Options 

4. Baseline Models 

5. Engineering Analysis Results 

C. Markups to Determine Equipment Price 

D. Energy Use Characterization 

E. Life-Cycle Cost and Payback Period 

Analyses 

1. Manufacturer Selling Price 

2. Increase in Selling Price 

3. Markups 

4. Installation Costs 

5. Energy Consumption 

6. Electricity Prices 

7. Electricity Price Trends 

8. Repair Costs 

9. Maintenance Costs 

10. Lifetime 

11. Discount Rate 

12. Payback Period 

F. Shipments Analysis 

G. National Impact Analysis 

1. Base Case and Standards Case 

Forecasted Efficiencies 

2. Annual Energy Consumption, Total 

Installed Cost, Maintenance Cost, and 

Repair Costs 

3. Escalation of Electricity Prices 

4. Electricity Site-to-Source Conversion 

H. Life-Cycle Cost Sub-Group Analysis 

I. Manufacturer Impact Analysis 

1. Overview 

a. Phase 1, Industry Profile 


pwalker on PROD1PC71 with PROPOSALS2
Federal Register / Vol. 73, No. 165 / Monday, August 25, 2008 / Proposed Rules 50073 

1These types of equipment are referred to 

collectively hereafter as ‘‘commercial refrigeration 

equipment.’’

2For this rulemaking, equipment class 

designations consist of a combination (in sequential 

order separated by periods) of: (1) an equipment 

family code (VOP = vertical open, SVO = 

semivertical open, HZO = horizontal open, VCT = 

vertical transparent doors, VCS = vertical solid 

doors, HCT = horizontal transparent doors, HCS = 

horizontal solid doors, or SOC = service over 

counter); (2) an operating mode code (RC = remote 

condensing or SC = self-contained); and ( 3) a rating 

temperature code (M = medium temperature (38 °F), 

L = low temperature (0 °F), or I = ice-cream 

temperature (¥15 °F)). For example, ‘‘VOP.RC.M’’

refers to the ‘‘vertical open, remote condensing, 

medium temperature’’ equipment class. See 

discussion below and chapter 3 of the TSD, market 

and technology assessment, for a more detailed 

explanation of the equipment class terminology. 

b. Phase 2, Industry Cash-Flow Analysis 

c. Phase 3, Sub-Group Impact Analysis 

2. Government Regulatory Impact Model 

Analysis 

3. Manufacturer Interviews 

a. Key Issues 

4. Government Regulatory Impact Model 

Key Inputs and Scenarios 

a. Base Case Shipments Forecast 

b. Standards Case Shipments Forecast 

c. Markup Scenarios 

d. Equipment and Capital Conversion Costs 

J. Utility Impact Analysis 

K. Employment Impact Analysis 

L. Environmental Assessment 

V. Analytical Results 

A. Trial Standard Levels 

1. Miscellaneous Equipment 

B. Economic Justification and Energy 

Savings 

1. Economic Impacts on Commercial 

Customers 

a. Life-Cycle Cost and Payback Period 

b. Rebuttable Presumption Payback 

c. Life-Cycle Cost Sub-Group Analysis 

2. Economic Impacts on Manufacturers 

a. Industry Cash-Flow Analysis Results 

b. Cumulative Regulatory Burden 

c. Impacts on Employment 

d. Impacts on Manufacturing Capacity 

e. Impacts on Sub-Groups of Manufacturers 

3. National Impact Analysis 

a. Amount and Significance of Energy 

Savings 

b. Net Present Value 

c. Impacts on Employment 

4. Impact on Utility or Performance of 

Equipment 

5. Impact of Any Lessening of Competition 

6. Need of the Nation to Conserve Energy 

7. Other Factors 

C. Proposed Standard 

VI. Procedural Issues and Regulatory Review 

A. Review Under Executive Order 12866 

B. Review Under the Regulatory Flexibility 

Act/Initial Regulatory Flexibility 

Analysis 

C. Review Under the Paperwork Reduction 

Act 

D. Review Under the National 

Environmental Policy Act 

E. Review Under Executive Order 13132 

F. Review Under Executive Order 12988 

G. Review Under the Unfunded Mandates 

Reform Act of 1995 

H. Review Under the Treasury and General 

Government Appropriations Act, 1999 

I. Review Under Executive Order 12630 

J. Review Under the Treasury and General 

Government Appropriations Act, 2001 

K. Review Under Executive Order 13211 

L. Review Under the Information Quality 

Bulletin for Peer Review 

VII. Public Participation 

A. Attendance at Public Meeting 

B. Procedure for Submitting Requests to 

Speak 

C. Conduct of Public Meeting 

D. Submission of Comments 

E. Issues on Which DOE Seeks Comment 

VIII. Approval of the Office of the Secretary 

I. Summary of the Proposed Rule 

The Energy Policy and Conservation 

Act, as amended (EPCA), specifies that 

any new or amended energy 

conservation standard the U.S. 

Department of Energy (DOE) prescribes 

for the equipment covered by this notice 

shall be designed to ‘‘achieve the 

maximum improvement in energy 

efficiency * * * which the Secretary 

determines is technologically feasible 

and economically justified.’’ (42 U.S.C. 

6295(o)(2)(A) and 6316(e)(1)) 

Furthermore, the new or amended 

standard must ‘‘result in significant 

conservation of energy.’’ (42 U.S.C. 

6295(o)(3)(B) and 6316(e)(1)) In 

accordance with these and other 

statutory criteria discussed in this 

notice, DOE proposes to adopt new 

energy conservation standards for 

commercial ice-cream freezers; selfcontained commercial refrigerators, 

commercial freezers, and commercial 

refrigerator-freezers without doors; and 

remote condensing commercial 

refrigerators, commercial freezers, and 

commercial refrigerator-freezers.1 The 

proposed standards, shown in Table I–

1, would apply to all commercial 

refrigeration equipment manufactured 

on or after January 1, 2012, and offered 

for sale in the United States. 42 U.S.C. 

6313(c)(4)(A). 

TABLE I–1—PROPOSED STANDARD LEVELS

Equipment class 2 Proposed standard level * ** Equipment class Proposed standard level 

VOP.RC.M ..................................... 0.82 × TDA + 4.07 ........................ VCT.RC.I ...................................... 0.71 × TDA + 3.05 

SVO.RC.M ..................................... 0.83 × TDA + 3.18 ........................ HCT.RC.M .................................... 0.16 × TDA + 0.13 

HZO.RC.M ..................................... 0.35 × TDA + 2.88 ........................ HCT.RC.L ..................................... 0.34 × TDA + 0.26 

VOP.RC.L ...................................... 2.28 × TDA + 6.85 ........................ HCT.RC.I ...................................... 0.4 × TDA + 0.31 

HZO.RC.L ...................................... 0.57 × TDA + 6.88 ........................ VCS.RC.M .................................... 0.11 × V + 0.26 

VCT.RC.M ..................................... 0.25 × TDA + 1.95 ........................ VCS.RC.L ..................................... 0.23 × V + 0.54 

VCT.RC.L ...................................... 0.6 × TDA + 2.61 .......................... VCS.RC.I ...................................... 0.27 × V + 0.63 

SOC.RC.M ..................................... 0.51 × TDA + 0.11 ........................ HCS.RC.M .................................... 0.11 × V + 0.26 

VOP.SC.M ..................................... 1.74 × TDA + 4.71 ........................ HCS.RC.L ..................................... 0.23 × V + 0.54 

SVO.SC.M ..................................... 1.73 × TDA + 4.59 ........................ HCS.RC.I ...................................... 0.27 × V + 0.63 

HZO.SC.M ..................................... 0.77 × TDA + 5.55 ........................ SOC.RC.L ..................................... 1.08 × TDA + 0.22 

HZO.SC.L ...................................... 1.92 × TDA + 7.08 ........................ SOC.RC.I ...................................... 1.26 × TDA + 0.26 

VCT.SC.I ....................................... 0.73 × TDA + 3.29 ........................ VOP.SC.L ..................................... 4.37 × TDA + 11.82 

VCS.SC.I ....................................... 0.38 × V + 0.88 ............................. VOP.SC.I ...................................... 5.55 × TDA + 15.02 

HCT.SC.I ....................................... 0.56 × TDA + 0.43 ........................ SVO.SC.L ..................................... 4.34 × TDA + 11.51 

SVO.RC.L ...................................... 2.28 × TDA + 6.85 ........................ SVO.SC.I ...................................... 5.52 × TDA + 14.63 

VOP.RC.I ....................................... 2.9 × TDA + 8.7 ............................ HZO.SC.I ...................................... 2.44 × TDA + 9 

SVO.RC.I ....................................... 2.9 × TDA + 8.7 ............................ SOC.SC.I ...................................... 1.76 × TDA + 0.36 

HZO.RC.I ....................................... 0.72 × TDA + 8.74 ........................ HCS.SC.I ...................................... 0.38 × V + 0.88 

* ‘‘TDA’’ is the total display area of the case, as measured in the Air-Conditioning and Refrigeration Institute (ARI) Standard 1200–2006, Appendix D. 

** ‘‘V’’ is the volume of the case, as measured in ARI Standard 1200–2006, Appendix C. 


pwalker on PROD1PC71 with PROPOSALS2
50074 Federal Register / Vol. 73, No. 165 / Monday, August 25, 2008 / Proposed Rules 

3Additionally, the standards would result in 17 

thousand tons (kt) of nitrogen oxides (NOX) 

emissions reductions or generate a similar amount 

of NOX emissions allowance credits in areas where 

such emissions are subject to regulatory or 

voluntary emissions caps. 

4 DOE intends to use EIA’s AEO 2008 to generate 

the results for the final rule. The AEO2008 Early 

Release contains reference case energy price 

forecasts which show higher commercial electricity 

prices at the national level compared with the AEO 

2007 on a real (inflation adjusted) basis. If these 

early release energy prices remain unchanged in the 

final release, then incorporation of the AEO 2008 

forecasts would likely result in reduced payback 

periods and greater life-cycle cost savings and 

greater national net present value for the proposed 

standards. 

5U.S. Department of Energy, Solid-State Lighting 

Research and Development, Multi-Year Program 

Plan FY’09–FY’14. This document was prepared 

under the direction of a Technical Committee from 

the Next Generation Lighting Initiative Alliance 

(NGLIA). Information about the NGLIA and its 

members is available at http://www.nglia.org. 

DOE’s analyses indicate that the 

proposed energy conservation 

standards, trial standard level (TSL) 4 

(see Section V.A for a detailed 

description of TSLs), would save a 

significant amount of energy—an 

estimated 0.83 quadrillion British 

thermal units (Btu), or quads, of 

cumulative energy over 30 years (2012–

2042). The economic impacts on 

commercial consumers (i.e., the average 

life-cycle cost (LCC) savings) are 

positive for all equipment classes. 

The cumulative national net present 

value (NPV) of the proposed standards 

at TSL 4 from 2012 to 2042 ranges from 

$1.1 billion (at a seven percent discount 

rate) to $3.24 billion (at a three percent 

discount rate), in 2007$. This is the 

estimated total value of future operating 

cost savings minus the estimated 

increased equipment costs, discounted 

to 2007$. The benefits and costs of the 

standard can also be expressed in terms 

of annualized 2007$ values over the 

forecast period 2012 through 2062. 

Using a 7 percent discount rate for the 

annualized cost analysis, the cost of the 

standard is estimated to be $109 million 

per year in increased equipment and 

installation costs while the annualized 

benefits are expected to be $214 million 

per year in reduced equipment 

operating costs. Using a 3 percent 

discount rate, the annualized cost of the 

standard is expected to be $92 million 

per year while the annualized benefits 

of today’s standard are expected to be 

$234 million per year. See Section V.B.3 

for additional details. If DOE adopts the 

proposed standards, it expects 

manufacturers will lose 8 to 35 percent 

of the industry net present value (INPV), 

which is approximately $40 to $180 

million. 

DOE estimates that the proposed 

standards will have environmental 

benefits leading to reductions in 

greenhouse gas emissions (i.e., 

cumulative (undiscounted) emission 

reductions) of 44 million tons (Mt) of 

carbon dioxide (CO2) from 2012 to 

2042.3 Most of the energy saved is 

electricity. In addition, DOE expects the 

energy savings from the proposed 

standards to eliminate the need for 

approximately 640 megawatts (MW) of 

generating capacity by 2042. These 

results reflect DOE’s use of energy price 

projections from the U.S. Energy 

Information Administration (EIA)’s 

Annual Energy Outlook 2007 (AEO 

2007).4

DOE proposes that TSL 4 represents 

the maximum improvement in energy 

efficiency that is technologically 

feasible and economically justified. DOE 

proposes that the benefits to the Nation 

of TSL 4 (energy savings, commercial 

consumer average LCC savings, national 

NPV increase, and emission reductions) 

outweigh the costs (loss of manufacturer 

INPV) and is therefore proposing TSL 4 

as the energy conservation standards for 

commercial refrigeration equipment in 

this NOPR. TSL 4 is technologically 

feasible because the technologies 

required to achieve these levels already 

exist. 

In this NOPR, DOE proposes that TSL 

5 is not economically justified because, 

under the current circumstances, DOE 

believes that the benefits to the Nation 

of TSL 5 (energy savings, commercial 

consumer average LCC savings, and 

emission reductions) do not outweigh 

the costs (national NPV decrease and 

loss of manufacturer INPV). DOE’s 

analyses indicate that TSL 5 would save 

a greater amount of energy than TSL 4—

an estimated 1.21 quadrillion quads of 

cumulative energy over 30 years (2012–

2042). At TSL 5, while the economic 

impacts on commercial consumers (i.e., 

LCC savings and NPV) are still positive 

for the majority of equipment classes, 

the impacts on commercial customers 

for five classes (VOP.RC.M, VOP.SC.M, 

SVO.RC.M, SVO.SC.M, and SOC.RC.M) 

are negative. The life-cycle cost savings 

are negative for three classes and NPV 

results for each of these five classes are 

negative. 

The cumulative NPV at TSL 5, from 

2012 to 2042, ranges from ¥$200 

million (at a seven percent discount 

rate) to $1.16 billion (at a three percent 

discount rate), in 2007$. Using a 7 

percent discount rate, the annualized 

cost of the standard is estimated to be 

$285 million per year in increased 

equipment and installation costs while 

the annualized benefits are expected to 

be $266 million per year in reduced 

equipment operating costs. Using a 3 

percent discount rate, the annualized 

cost of the standard is expected to be 

$241 million per year while the 

annualized benefits are expected to be 

$292 million per year. See Section V.B.3 

for additional details. At TSL 5, DOE 

expects manufacturers will lose 3 to 56 

percent of the industry net present value 

INPV, which is approximately $18 to 

$285 million. 

DOE based its estimates of the 

economic impacts referenced above on 

current costs for energy improving 

technologies used in commercial 

refrigeration equipment. A key 

technology for energy savings benefits 

in most commercial refrigeration 

equipment is the use of solid state 

lighting (i.e., light emitting diodes or 

LEDs). At current LED prices, the lifecycle cost savings at TSL 5 are 

substantially lower than TSL 3 and TSL 

4 for several equipment classes. For 

example, the average per unit LCC 

savings for the VOP.RC.M equipment 

class is $1,551 at TSL 3, but this number 

falls by $1,785 to ¥$234 when moving 

to TSL 5. When accounting for the 

projected volume of sales for these 

equipment classes in 2012, the net effect 

of moving from TSL 3 to TSL 5 is a 

decrease in LCC savings of $130 million 

per year. To achieve the same or greater 

LCC savings at TSL 5 as other efficiency 

levels (e.g., TSL 3 or 4), for all 

equipment classes, average LED costs 

would need to decrease by almost 45 

percent. 

While considerable information is 

available that suggests LED costs are 

likely to decline more than assumed in 

DOE’s analysis, DOE believes it must 

have a higher degree of confidence of 

further cost reductions than assumed in 

today’s proposed rule. In this NOPR, 

DOE projected future LED costs based 

on DOE’s Multi-Year Program Plan,5

which are consistent with historical 

LED price reductions between 2000 and 

2007. The Multi-Year Program Plan 

projects that LED chip costs will 

continue to decrease at a compound 

annual growth rate (CAGR) of 

approximately ¥27 percent between 

2007 and 2012, which represents a price 

reduction of 80 percent over that time 

period. Since LED chips are only a 

portion of the total LED system (other 

components include power supply and 

the LED fixture), the 80 percent 

reduction in chip costs contributes to an 

estimated decrease in total LED system 

cost of approximately 50 percent by 

2012, assuming the costs of the power 

supply and LED fixtures do not change 

significantly. Such a decrease in cost 


pwalker on PROD1PC71 with PROPOSALS2
Federal Register / Vol. 73, No. 165 / Monday, August 25, 2008 / Proposed Rules 50075 

6This part was originally titled Part C, however, 

it was renamed Part A–1 after Part B of Title III was 

repealed by EPACT 2005. 

would be sufficient for TSL 5 to achieve 

LCC savings equal to or greater than 

other TSLs. 

DOE examined whether the projected 

LED costs presented in the Multi-Year 

Program Plan and used in this NOPR are 

consistent with publicly available 

empirical historical cost data. DOE 

reviewed available price data for the 

LED market and found that between 

2000 and 2007, white-light LEDs had a 

CAGR ranging from approximately ¥18 

to ¥31 percent. DOE’s LED cost 

projection (i.e., ¥27 percent CAGR) 

falls within the range of CAGRs 

observed. DOE expanded its 

examination by comparing this 

projected trend to the red-light LED 

market, which is a related technology, 

with cost information spanning 

approximately three decades (i.e., 1973 

to 2005). DOE found that the CAGR of 

red-light LED costs was ¥22 percent 

over this longer time span. The trend in 

red-light LED costs derived from 

empirical data over this longer time 

period is of a similar magnitude to 

DOE’s projected costs for white-light 

LEDs. Due to the technological 

similarities between red-light LEDs and 

white-light LEDs, DOE believes that the 

historical cost reductions for red-light 

LEDs are indicative of future cost 

reductions for white-light LEDs. 

Furthermore, the white-light LED 

market is undergoing a massive 

expansion and growth phase, with 

significant investment, new products 

and innovative applications for LED 

technology, including illumination of 

commercial refrigeration equipment. 

See Section V.C of this NOPR and 

Appendix B of the technical support 

document (TSD) for more detail on the 

cost projection and DOE’s validation of 

those estimates. DOE seeks comment on 

the extent to which these price trends 

are indicative of what can be expected 

for commercial refrigeration equipment 

LED lighting from 2007 to 2012 and the 

extent to which the cost reduction 

observed for red-light LEDs is relevant 

to DOE’s cost projections for white-light 

LEDs. DOE also seeks comment on the 

extent to which stakeholders expect 

projected LED cost reductions would 

occur, the timing of the projected LED 

cost reductions, and the certainty of the 

projected LED cost reductions. Finally, 

considering the rapid development of 

LED technology and the steady 

reductions in cost, DOE seeks comment 

on the extent to which manufacturers 

would adopt LED technology into the 

design of commercial refrigeration 

equipment in the absence of standards. 

DOE also performed sensitivity 

analyses of the effect of projected cost 

reductions in LED lighting systems on 

LCC and NPV. Incorporation of DOE 

LED lighting system cost projections of 

a 50 percent decline by 2012 shift the 

calculated NPV, for 2012–2042, from 

¥$200 million to a positive $1.62 

billion at a seven percent discount rate, 

for TSL 5. See Section V.C of this NOPR 

or Chapter 8 of the TSD for additional 

details. 

TSL 5 is estimated to have 

environmental benefits leading to 

reductions in greenhouse gas emissions 

of 63 Mt of CO2 from 2012 to 2042. 

Additionally, TSL 5 would result in 23 

kt of NOX emissions reductions or 

generate a similar amount of NOX

emissions allowance credits in areas 

where such emissions are subject to 

emissions caps. Most of the energy 

saved is electricity. In addition, DOE 

expects the energy savings from the 

proposed standards to eliminate the 

need for approximately 930 MW of 

generating capacity by 2042. 

Although DOE has tentatively rejected 

TSL 5 because, under the current 

circumstances, it tentatively found that 

the benefits to the Nation do not 

outweigh the costs, and therefore does 

not consider TSL 5 economically 

justified, DOE expects that LED costs 

will decline substantially over the next 

4–5 years and could have a dramatic 

effect on the economic impacts 

described above. Therefore, DOE 

requests data or information that could 

provide a greater level of confidence 

that the projected LED cost reductions 

will occur and DOE will assess that data 

in determining whether to further 

consider TSL 5 in its final rule analysis. 

II. Introduction 

A. Overview 

DOE proposes to set energy 

conservation standards for commercial 

refrigeration equipment at the levels 

shown in Table I–1. The proposed 

standards would apply to equipment 

manufactured on or after January 1, 

2012, and offered for sale in the United 

States. DOE has tentatively found that 

the standards would save a significant 

amount of energy (see Section III.C.2) 

and result in a cleaner environment. In 

the 30-year period after the new 

standard becomes effective, the Nation 

would tentatively save 0.83 quads of 

primary energy. These energy savings 

also would tentatively result in 

significantly reduced emissions of air 

pollutants and greenhouse gases 

associated with electricity production, 

by avoiding the emission of 44 Mt of 

CO2 and 17 kt of NOX. In addition, DOE 

expects the standard to prevent the 

construction of the new power plants 

that would be necessary to produce 

approximately 640 MW by 2042. In 

total, DOE tentatively estimates the net 

present value to the Nation of this 

standard to be $1.1 billion from 2012 to 

2042 in 2007$. 

Commercial customers would see 

benefits from the proposed standards. 

Although DOE expects the price of the 

higher efficiency commercial 

refrigeration equipment to be 

approximately 11 percent higher than 

the average price of this equipment 

today, weighted by shipments across 

equipment classes, the energy efficiency 

gains would result in lower energy 

costs, saving customers about 26 percent 

per year on their energy bills. Based on 

DOE’s LCC analysis, DOE tentatively 

estimates that the mean payback period 

for the higher efficiency commercial 

refrigeration equipment would be 

between a low of 1.4 to a high of 6.1 

years. In addition, when the net results 

of these price increases and energy cost 

savings are summed over the lifetime of 

the higher efficiency equipment, 

customers could save approximately 

$690 to $3800, depending on equipment 

class, compared to their expenditures on 

today’s baseline commercial 

refrigeration equipment. 

B. Authority 

Title III of EPCA sets forth a variety 

of provisions designed to improve 

energy efficiency. Part A of Title III (42 

U.S.C. 6291–6309) provides for the 

Energy Conservation Program for 

Consumer Products Other Than 

Automobiles. Part A–1 of Title III (42 

U.S.C. 6311–6317) establishes a similar 

program for certain types of commercial 

and industrial equipment.6 The Energy 

Policy Act of 2005 (EPACT 2005), Pub. 

L. 109–58, included an amendment to 

Part A–1 requiring that DOE prescribe 

energy conservation standards for the 

commercial refrigeration equipment that 

is the subject of this rulemaking. 

(EPACT 2005, Section 136(c); 42 U.S.C. 

6313(c)(4)(A)) Hence, DOE publishes 

today’s notice of proposed rulemaking 

(NOPR) pursuant to Part A–1, which 

provides definitions, test procedures, 

labeling provisions, energy conservation 

standards, and the authority to require 

information and reports from 

manufacturers. The test procedures for 

commercial refrigeration equipment 

appear at Title 10 Code of Federal 

Regulations (CFR) Sections 431.63 and 

431.64. 

EPCA provides criteria for prescribing 

new or amended standards for covered 

equipment. As indicated above, any 


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7This notice concerns types of ‘‘covered 

equipment’’ as that term is defined in EPCA, (42 

U.S.C. 6311(1)(E)) in Part A–1, Certain Industrial 

Equipment. Therefore, when DOE quotes from, 

paraphrases or describes general provisions in Part 

A, for instance, 42 U.S.C. 6295(o), it substitutes the 

term ‘‘equipment’’ for ‘‘product’’ when the latter 

term appears in those provisions. (See 42 U.S.C. 

6316 (a)(3)) 

new or amended standard for 

commercial refrigeration equipment 

must be designed to achieve the 

maximum improvement in energy 

efficiency that is technologically 

feasible and economically justified.7 (42 

U.S.C. 6295(o)(2)(A) and 6316(e)(1)) But 

EPCA precludes DOE from adopting any 

standard that would not result in 

significant conservation of energy. (42 

U.S.C. 6295(o)(3) and 6316(e)(1)) 

Moreover, DOE may not prescribe a 

standard for certain equipment if no test 

procedure has been established for that 

equipment, or if DOE determines by rule 

that the standard is not technologically 

feasible or economically justified, and 

that such standard will not result in 

significant conservation of energy. (42 

U.S.C. 6295(o)(3) and 6316(e)(1)) EPCA 

also provides that, in deciding whether 

a standard is economically justified, 

DOE must determine whether the 

benefits of the standard exceed its 

burdens after receiving comments on 

the proposed standard. (42 U.S.C. 

6295(o)(2)(B)(i) and 6316(e)(1)) To the 

greatest extent practicable, DOE must 

consider the following seven factors: 

(I) The economic impact of the 

standard on manufacturers and 

consumers of the equipment subject to 

the standard; 

(II) The savings in operating costs 

throughout the estimated average life of 

the covered equipment in the type (or 

class) compared to any increase in the 

price, initial charges, or maintenance 

expenses for the equipment that are 

likely to result from the imposition of 

the standard; 

(III) The total projected amount of 

energy savings likely to result directly 

from the imposition of the standard; 

(IV) Any lessening of the utility or the 

performance of the covered equipment 

likely to result from the imposition of 

the standard; 

(V) 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; 

(VI) The need for national energy 

conservation; and 

(VII) Other factors the Secretary 

considers relevant. 

Id. 

Furthermore, the Secretary may not 

prescribe an amended or new standard 

if interested persons have established by 

a preponderance of the evidence that 

the standard is likely to result in the 

unavailability in the United States of 

any equipment type (or class) with 

performance characteristics (including 

reliability), features, sizes, capacities, 

and volumes that are substantially the 

same as those generally available in the 

United States. (42 U.S.C. 6295 (o)(4) and 

6316(e)(1)) In addition, there is a 

rebuttable presumption that a standard 

level is economically justified if the 

Secretary finds that ‘‘the additional cost 

to the consumer of purchasing 

equipment complying with an energy 

conservation standard level will be less 

than three times the value of the energy 

* * * savings during the first year that 

the consumer will receive as a result of 

the standard, as calculated under the 

applicable test procedure * * *.’’ (42 

U.S.C. 6295(o)(2)(B)(iii) and 6316(e)(1)) 

The rebuttable presumption test is an 

alternative path to establishing 

economic justification. 

Section 325(q)(1) of EPCA addresses 

the situation where DOE sets a standard 

for a type or class of covered equipment 

that has two or more groups of covered 

equipment. DOE must specify a 

different standard level than that which 

applies generally to such equipment 

‘‘for any group of covered equipment 

which have the same function or 

intended use, if * * * equipment 

within such group—(A) consume a 

different kind of energy from that 

consumed by other covered equipment 

within such type (or class); or (B) have 

a capacity or other performance-related 

feature which other equipment within 

such type (or class) do not have and 

such feature justifies a higher or lower 

standard’’ than applies or will apply to 

the other equipment. (42 U.S.C. 

6295(q)(1) and 6316(e)(1)) In 

determining whether a performancerelated feature justifies a different 

standard for a group of equipment, DOE 

must ‘‘consider such factors as the 

utility to the consumer of such a 

feature’’ and other factors DOE deems 

appropriate. Any rule prescribing such 

a standard must include an explanation 

of the basis on which a higher or lower 

level was established. (42 U.S.C. 

6295(q)(2) and 6316(e)(1)) 

Finally, Federal energy conservation 

requirements for commercial equipment 

generally supersede State laws or 

regulations concerning energy 

conservation testing, labeling, and 

standards for such equipment. (42 

U.S.C. 6316(a)–(b)) For the commercial 

refrigeration equipment covered by this 

rulemaking, Federal energy 

conservation requirements will 

supersede all such State laws or 

regulations beginning on the date of 

publication of the Federal standards, 

except that any state or local standard 

issued before that time will be 

superseded only when the Federal 

standards take effect. (42 U.S.C. 

6316(e)(3)) Furthermore, DOE can grant 

waivers of preemption to any State laws 

or regulations that are superseded in 

accordance with the procedures and 

other provisions of Section 327(d) of the 

Act. (42 U.S.C. 6297(d) and 6316(e)(3)) 

C. Background 

1. Current Standards 

There are no national energy 

conservation standards for the 

commercial refrigeration equipment 

covered by this rulemaking. EPACT 

2005 did amend EPCA to establish 

energy conservation standards that will 

apply to certain other types of 

commercial refrigerators, freezers, and 

refrigerator-freezers when manufactured 

on or after January 1, 2010. (42 U.S.C. 

6313(c)(2)–(3)) Those standards are not 

at issue in this rulemaking. 

2. History of Standards Rulemaking for 

Commercial Refrigeration Equipment 

On August 8, 2005, Section 136(c) of 

EPACT 2005 amended EPCA, in part to 

direct DOE to issue energy conservation 

standards for the equipment covered by 

this rulemaking, which standards would 

apply to equipment manufactured on or 

after January 1, 2012. (42 U.S.C. 

6313(c)(4)(A)) Section 136(a)(3) of 

EPACT 2005 also amended EPCA, by 

adding definitions for terms relevant to 

this equipment. (42 U.S.C. 6311(9)) In 

defining the term ‘‘commercial 

refrigerator, freezer, and refrigeratorfreezer,’’ EPCA states that this 

refrigeration equipment is connected to 

either a self-contained condensing unit 

or to a remote condensing unit. 42 

U.S.C. 6311(9)(A)(vii). Subsequently, 

EPCA defines the terms ‘‘remote 

condensing unit’’ and ‘‘self-contained 

condensing unit.’’ 42 U.S.C. 6311(9)(E)–

(F). These are the two condenser 

configurations of equipment covered by 

this rulemaking. 

On December 19, 2006, the Energy 

Independence and Security Act of 2007 

(EISA 2007) was signed into law by the 

President. This legislation affected some 

of the products for which DOE had 

rulemakings underway. However, it did 

not create any additional requirements 

for commercial refrigeration equipment. 

As an initial step to comply with 

EPCA’s mandate to issue standards for 

commercial refrigeration equipment, 

and to commence this rulemaking, on 

April 25, 2006, DOE published notice of 

a public meeting and of the availability 


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of its Framework Document for this 

rulemaking. 71 FR 23876. The 

Framework Document described the 

procedural and analytical approaches 

that DOE anticipated using to evaluate 

energy conservation standards for 

commercial refrigeration equipment, 

and identified various issues to be 

resolved in conducting the rulemaking. 

DOE held a public meeting on May 16, 

2006 to present the contents of the 

Framework Document, describe the 

analyses it planned to conduct during 

the rulemaking, obtain public comment 

on these subjects, and inform and 

facilitate interested persons’

involvement in the rulemaking. DOE 

also gave interested persons an 

opportunity, after the public meeting, to 

submit written statements in response to 

the Framework Document. DOE 

received five statements. 

On July 26, 2007, DOE published an 

advance notice of proposed rulemaking 

(ANOPR) concerning energy 

conservation standards for commercial 

refrigeration equipment. 72 FR 41161. In 

the ANOPR, DOE described and sought 

comment on its proposed equipment 

classes for this rulemaking, and on the 

analytical framework, models, and tools 

(e.g., LCC and national energy savings 

(NES) spreadsheets) that DOE used to 

analyze the impacts of energy 

conservation standards for commercial 

refrigeration equipment. In conjunction 

with the ANOPR, DOE also published 

on its Web site the complete ANOPR 

TSD. The TSD included the results of 

DOE’s preliminary (1) engineering 

analysis, (2) markups analysis to 

determine equipment price, (3) energy 

use characterization, (4) LCC and 

payback period (PBP) analyses, (5) NES 

and national impact analyses (NIA), and 

(6) manufacturer impact analysis (MIA). 

In the ANOPR, DOE requested comment 

on these results, and on a range of other 

issues. These issues included 

equipment classes, definitions for aircurtain angle and door angle, case 

lighting operating hours, operation and 

maintenance practices, equipment 

lifetime, LCC baseline levels, NIA base 

case, base case and standards case 

forecasts, differential impact of new 

standards on future shipments, selection 

of standard levels for post-ANOPR 

analysis, the equation that expresses the 

energy conservation standards, and the 

nature of standards for commercial 

refrigerator-freezers. 

DOE held a public meeting in 

Washington, DC on August 23, 2007, to 

present the methodology and results of 

the ANOPR analyses, and to solicit both 

oral and written comments from the 

interested persons who attended. Public 

comment focused on DOE’s 

assumptions, approach, and equipment 

class breakdown, and are addressed in 

detail in this NOPR. 

III. General Discussion 

A. Test Procedures 

On December 8, 2006, DOE published 

a final rule in which it adopted 

American National Standards Institute 

(ANSI)/Air-Conditioning and 

Refrigeration Institute (ARI) Standard 

1200–2006, Performance Rating of 

Commercial Refrigerated Display 

Merchandisers and Storage Cabinets, as 

the DOE test procedure for this 

equipment. 71 FR 71340, 71369–70; 10 

CFR 431.63–431.64. ANSI/ARI Standard 

1200–2006 contains rating temperature 

specifications of 38 °F (±2 °F) for 

commercial refrigerators and refrigerator 

compartments, 0 °F (±2 °F) for 

commercial freezers and freezer 

compartments, and ¥5 °F (±2 °F) for 

commercial ice-cream freezers. The 

standard also requires performance tests 

to be conducted according to the 

American Society of Heating, 

Refrigerating, and Air-Conditioning 

Engineers (ASHRAE) Standard 72–2005, 

Method of Testing Commercial 

Refrigerators and Freezers. In this final 

rule, DOE also adopted a ¥15 °F (±2 °F) 

rating temperature for commercial icecream freezers. 71 FR 71370. In 

addition, DOE adopted ANSI/ 

Association of Home Appliance 

Manufacturers (AHAM) Standard HRF–

1–2004, Energy, Performance and 

Capacity of Household Refrigerators, 

Refrigerator-Freezers and Freezers, for 

determining compartment volumes for 

this equipment. 71 FR 71369–70. 

B. Technological Feasibility 

1. General 

DOE considers design options 

technologically feasible if industry 

already uses these options or if research 

has progressed to the development of a 

working prototype. ‘‘Technologies 

incorporated in commercially available 

equipment or in working prototypes 

will be considered technologically 

feasible.’’ 10 CFR Part 430, Subpart C, 

Appendix A, Section 4(a)(4)(i). 

In each standards rulemaking, DOE 

conducts a screening analysis, which it 

bases on information it has gathered 

regarding all current technology options 

and prototype designs. In consultation 

with interested parties, DOE develops a 

list of design options for consideration 

in the rulemaking. All technologically 

feasible design options are candidates in 

this initial assessment. Early in the 

process, DOE eliminates from 

consideration any design option (a) that 

is not practicable to manufacture, 

install, or service; (b) that will have 

adverse impacts on equipment utility or 

availability; or (c) for which there are 

health or safety concerns that cannot be 

resolved. Chapter 4 of the TSD 

accompanying this notice contains a 

description of the screening analysis for 

this rulemaking. 

In the ANOPR, DOE eliminated five of 

the technologies considered in the 

market and technology assessment: (1) 

Air-curtain design, (2) thermoacoustic 

refrigeration, (3) magnetic refrigeration, 

(4) electro-hydrodynamic heat 

exchangers, and (5) copper rotor motors. 

Because all five of these technologies 

are in the research stage, DOE believes 

that they would not be practicable to 

manufacture, install and service on the 

scale necessary to serve the relevant 

market at the time of the effective date 

of the standard. In addition, because 

these technologies are in the research 

stage, DOE cannot assess whether they 

would have any adverse impacts on 

utility to significant subgroups of 

consumers, result in the unavailability 

of any types of equipment, or present 

any significant adverse impacts on 

health or safety. Therefore, DOE did not 

consider these technologies as design 

options for improving the energy 

efficiency of commercial refrigeration 

equipment. DOE believes that all the 

efficiency levels discussed in today’s 

notice are technologically feasible 

because there is equipment either in the 

market or in working prototypes at all 

of the efficiency levels analyzed. See 

Chapter 4 of the TSD for further 

discussion of the screening analysis. 

2. Maximum Technologically Feasible 

Levels 

In deciding whether to adopt a new 

standard for a type or class of 

commercial refrigeration equipment, 

DOE must ‘‘determine the maximum 

improvement in energy efficiency or 

maximum reduction in energy use that 

is technologically feasible’’ for such 

equipment. (42 U.S.C. 6295(p)(1) and 

6316(e)(1)) If such standard is not 

designed to achieve such efficiency or 

use, the Secretary shall state the reasons 

such is the case in the proposed rule. Id. 

For this rulemaking, DOE determined 

that the values in Table III–1 represent 

the energy use levels that would achieve 

the maximum reductions in energy use 

that are technologically feasible at this 

time for commercial refrigeration 

equipment. DOE identified these ‘‘maxtech’’ levels for the equipment classes 

analyzed as part of the engineering 

analysis (Chapter 5 of the TSD). For 

each equipment class, DOE applied the 

most efficient design options available 


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for energy-consuming components. 

These levels are set forth in TSL 5. 

TABLE III–1—‘‘MAX-TECH’’ ENERGY USE LEVELS

Equipment class 

‘‘Max-Tech’’ level 

kilowatt hours per day 

(kWh/day) 

Equipment class 

‘‘Max-Tech’’ level 

kilowatt hours per day 

(kWh/day) 

VOP.RC.M ..................................... 0.68 × TDA + 4.07 ........................ VCT.RC.I ...................................... 0.71 × TDA + 3.05 

SVO.RC.M ..................................... 0.69 × TDA + 3.18 ........................ HCT.RC.M .................................... 0.16 × TDA + 0.13 

HZO.RC.M ..................................... 0.35 × TDA + 2.88 ........................ HCT.RC.L ..................................... 0.34 × TDA + 0.26 

VOP.RC.L ...................................... 2.28 × TDA + 6.85 ........................ HCT.RC.I ...................................... 0.4 × TDA + 0.31 

HZO.RC.L ...................................... 0.57 × TDA + 6.88 ........................ VCS.RC.M .................................... 0.11 × V + 0.26 

VCT.RC.M ..................................... 0.25 × TDA + 1.95 ........................ VCS.RC.L ..................................... 0.23 × V + 0.54 

VCT.RC.L ...................................... 0.6 × TDA + 2.61 .......................... VCS.RC.I ...................................... 0.27 × V + 0.63 

SOC.RC.M ..................................... 0.39 × TDA + 0.11 ........................ HCS.RC.M .................................... 0.11 × V + 0.26 

VOP.SC.M ..................................... 1.57 × TDA + 4.71 ........................ HCS.RC.L ..................................... 0.23 × V + 0.54 

SVO.SC.M ..................................... 1.58 × TDA + 4.59 ........................ HCS.RC.I ...................................... 0.27 × V + 0.63 

HZO.SC.M ..................................... 0.77 × TDA + 5.55 ........................ SOC.RC.L ..................................... 0.83 × TDA + 0.22 

HZO.SC.L ...................................... 1.92 × TDA + 7.08 ........................ SOC.RC.I ...................................... 0.97 × TDA + 0.26 

VCT.SC.I ....................................... 0.73 × TDA + 3.29 ........................ VOP.SC.L ..................................... 3.95 × TDA + 11.82 

VCS.SC.I ....................................... 0.38 × V + 0.88 ............................. VOP.SC.I ...................................... 5.02 × TDA + 15.02 

HCT.SC.I ....................................... 0.56 × TDA + 0.43 ........................ SVO.SC.L ..................................... 3.98 × TDA + 11.51 

SVO.RC.L ...................................... 2.28 × TDA + 6.85 ........................ SVO.SC.I ...................................... 5.06 × TDA + 14.63 

VOP.RC.I ....................................... 2.9 × TDA + 8.7 ............................ HZO.SC.I ...................................... 2.44 × TDA + 9 

SVO.RC.I ....................................... 2.9 × TDA + 8.7 ............................ SOC.SC.I ...................................... 1.35 × TDA + 0.36 

HZO.RC.I ....................................... 0.72 × TDA + 8.74 ........................ HCS.SC.I ...................................... 0.38 × V + 0.88 

C. Energy Savings 

1. Determination of Savings 

DOE used the NES spreadsheet to 

estimate energy savings. The 

spreadsheet forecasts energy savings 

over the period of analysis for TSLs 

relative to the base case. DOE quantified 

the energy savings attributable to an 

energy conservation standard as the 

difference in energy consumption 

between the trial standards case and the 

base case. The base case represents the 

forecast of energy consumption in the 

absence of new mandatory efficiency 

standards. The NES spreadsheet model 

is described in Section IV.G of this 

notice and in Chapter 11 of the TSD 

accompanying this notice. 

The NES spreadsheet model 

calculates the energy savings in site 

energy or kilowatt hours (kWh). Site 

energy is the energy directly consumed 

at building sites by commercial 

refrigeration equipment. DOE expresses 

national energy savings in terms of the 

source energy savings, which are the 

energy savings used to generate and 

transmit the energy consumed at the 

site. Chapter 11 of the TSD contains a 

table of factors used to convert kWh to 

Btu. DOE derives these conversion 

factors, which change with time, from 

DOE’s EIA’s AEO2007. 

2. Significance of Savings 

For commercial refrigeration 

equipment, EPCA prohibits DOE from 

adopting a standard that would not 

result in significant additional energy 

savings. (42 U.S.C. 6295(o)(3)(B) and 

6316(e)(1)) While the term ‘‘significant’’

is not defined in the Act, the U.S. Court 

of Appeals, in Natural Resources 

Defense Council v. Herrington, 768 F.2d 

1355, 1373 (D.C. Cir. 1985), indicated 

that Congress intended significant 

energy savings in this context to be 

savings that were not ‘‘genuinely 

trivial.’’ The estimated energy savings 

for all of the trial standard levels 

considered in this rulemaking are 

nontrivial, and therefore DOE considers 

them significant within the meaning of 

Section 325 of the Act. 

D. Economic Justification 

1. Specific Criteria 

As noted earlier, EPCA provides 

seven factors to be evaluated in 

determining whether an energy 

conservation standard is economically 

justified. The following sections discuss 

how DOE has addressed each factor thus 

far in this rulemaking. (42 U.S.C. 

6295(o)(2)(B)(i) and 6316(e)(1)) 

a. Economic Impact on Manufacturers 

and Commercial Customers 

DOE uses an annual cash-flow 

approach in determining the 

quantitative impacts of a new or 

amended standard on manufacturers. 

This includes both a short-term 

assessment based on the cost and capital 

requirements between the 

announcement of a regulation and when 

the regulation comes into effect, and a 

long-term assessment. Impacts analyzed 

include INPV, cash flows by year, and 

changes in revenue and income. Next, 

DOE analyzes and reports the impacts 

on different types of manufacturers, 

with particular attention to impacts on 

small manufacturers. DOE then 

considers the impact of standards on 

domestic manufacturer employment, 

manufacturing capacity, plant closures, 

and loss of capital investment. Finally, 

DOE takes into account the cumulative 

impact of regulations on manufacturers. 

For commercial consumers, measures 

of economic impact are generally the 

changes in installed cost and annual 

operating costs, i.e., the LCC. Chapter 6 

of the TSD presents the LCC of the 

equipment at each TSL. The LCC is one 

of the seven factors to be considered in 

determining the economic justification 

for a new or amended standard. (42 

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

6316(e)(1)) It is discussed in the 

paragraphs that follow. 

b. Life-Cycle Costs 

The LCC is the sum of the purchase 

price, including the installation and 

operating expense (i.e., operating 

energy, maintenance, and repair 

expenditures) discounted over the 

lifetime of the equipment. To determine 

the purchase price including 

installation, DOE estimated the markups 

that distributors and contractors add to 

the manufacturer selling price (MSP); 

DOE also estimated installation costs 

from an analysis of commercial 

refrigeration equipment installation 

costs for each equipment class. DOE 

determined that preventative 

maintenance costs do not depend on 

efficiency but that repair costs increase 


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with efficiency and that the cost of 

replacement lighting fixtures (‘‘lighting 

maintenance’’) increased with higher 

efficiency. See Sections IV.E.8 and 

IV.E.9 for more detail. In estimating 

operating energy costs, DOE used 

average effective commercial electricity 

prices at the State level from the EIA 

publication, State Energy Consumption, 

Price, and Expenditure Estimates. DOE 

modified the 2006 average commercial 

electricity prices to reflect the average 

electricity prices for each of the four 

types of businesses examined in this 

analysis. The LCC analysis compares the 

LCCs of equipment designed to meet 

possible energy conservation standards 

with the LCCs of equipment likely to be 

installed in the absence of standards. 

The LCC analysis also identifies a range 

of energy price forecasts for the 

electricity prices used in the economic 

analyses and provides results showing 

the sensitivity of the LCC results to 

these price forecasts. 

Recognizing that each commercial 

building that uses commercial 

refrigeration equipment is unique, DOE 

analyzed variability and uncertainty by 

performing the LCC and PBP 

calculations for two prototype 

commercial buildings (i.e., stores) and 

four types of businesses (two types of 

businesses for each prototype store). 

The first store prototype is a large 

grocery store, which encompasses 

supermarkets and wholesaler/retailer 

multi-line stores such as big-box stores, 

warehouse stores, and supercenters. The 

second prototype is a small store, which 

encompasses convenience stores and 

small specialty stores such as meat 

markets; wine, beer, and liquor stores; 

and convenience stores associated with 

gasoline stations. Various types of 

commercial refrigeration equipment can 

serve a given type of store’s refrigeration 

needs. DOE gives the LCC savings as a 

distribution, with a mean value and a 

range. DOE developed average discount 

rates for each of four business types 

analyzed, ranging from 5.1 to 8.4 

percent for the calculations, and 

assumed that the customer purchases 

the equipment in 2012. Chapter 8 of the 

TSD contains the details of the LCC 

calculations. 

c. Energy Savings 

While significant energy conservation 

is a separate statutory requirement for 

imposing an energy conservation 

standard, EPCA requires DOE, in 

determining the economic justification 

of such a standard, to consider the total 

projected energy savings that are 

expected to result directly from the 

standard. (42 U.S.C. 6295(o)(2)(B)(i)(III) 

and 6316(e)(1)) DOE used the NES 

spreadsheet results in its consideration 

of total projected savings. Section IV.G.1 

of this notice discusses the savings 

figures. 

d. Lessening of Utility or Performance of 

Equipment 

In establishing equipment classes, 

evaluating design options, and assessing 

the impact of potential standard levels, 

DOE tried to avoid having new 

standards for commercial refrigeration 

equipment lessen the utility or 

performance of the equipment under 

consideration in this rulemaking. (42 

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

6316(e)(1)) None of the proposed trial 

standard levels considered in this 

rulemaking involve changes in 

equipment design or unusual 

installation requirements that would 

reduce the utility or performance of the 

equipment. See Chapter 4 and Chapter 

16 of the TSD for more detail. 

e. Impact of Any Lessening of 

Competition 

EPCA directs DOE to consider any 

lessening of competition likely to result 

from standards. It directs the Attorney 

General to determine in writing the 

impact, if any, of any lessening of 

competition likely to result from 

imposition of a proposed standard. (42 

U.S.C. 6295(o)(2)(B)(i)(V) and (ii); and 

6316(e)(1)) DOE has transmitted a 

written request to the Attorney General 

soliciting a written determination on 

this issue. 

f. Need of the Nation to Conserve Energy 

The non-monetary benefits of the 

proposed standard are likely to be 

reflected in improvements to the 

security and reliability of the Nation’s 

energy system. Reductions in the overall 

demand for energy will reduce the 

Nation’s reliance on foreign sources of 

energy and increase reliability of the 

Nation’s electricity system. DOE 

conducts a utility impact analysis to 

show the reduction in installed 

generation capacity. Reduced power 

demand (including peak power 

demand) generally improves the 

security and reliability of the energy 

system. 

The proposed standard also is likely 

to result in improvements to the 

environment. In quantifying these 

improvements, DOE has defined a range 

of primary energy conversion factors 

and associated emission reductions 

based on the generation that energy 

conservation standards displaced. DOE 

reports the environmental effects from 

each trial standard level for this 

equipment in the environmental 

assessment in the TSD. (42 U.S.C. 

6295(o)(2)(B)(i)(VI) and 6316(e)(1)) 

g. Other Factors 

EPCA allows the Secretary of Energy, 

in determining whether a standard is 

economically justified, to consider any 

other factors the Secretary deems to be 

relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII) 

and 6316(e)(1)) Under this provision, 

DOE considered LCC impacts on 

identifiable groups of customers, such 

as customers of different business types, 

who may be disproportionately affected 

by any national energy conservation 

standard level. In particular, DOE 

examined the LCC impact on 

independent small grocery/convenience 

store businesses where both higher 

discount rates and lack of access to 

national account equipment purchases 

might disproportionately affect those 

business types when compared to the 

overall commercial refrigeration 

equipment market. 

2. Rebuttable Presumption 

Another criterion for determining 

whether a standard level is 

economically justified is the following 

rebuttable presumption test: 

If the Secretary finds that the additional 

cost to the consumer of purchasing 

equipment complying with an energy 

conservation standard level will be less than 

three times the value of the energy * * * 

savings during the first year that the 

consumer will receive as a result of the 

standard, as calculated under the applicable 

test procedure, there shall be a rebuttable 

presumption that such standard level is 

economically justified. A determination by 

the Secretary that such criterion is not met 

shall not be taken into consideration in the 

Secretary’s determination of whether a 

standard is economically justified. (42 U.S.C. 

6295(o)(2)(B)(iii) and 6316(e)(1)) 

If the initial price of equipment 

increases due to a conservation 

standard, and the consumer would 

recover the increase in energy savings in 

less than three years through reduced 

energy costs resulting from the standard, 

then DOE presumes that such standard 

is economically justified. This 

presumption of economic justification 

can be rebutted upon a proper showing. 

The rebuttable presumption payback 

calculation is discussed in Sections 

III.D.2 and V.B.1.b of this NOPR. 

IV. Methodology and Discussion of 

Comments 

DOE used two spreadsheet tools to 

determine the impact of energy 

conservation standards on the Nation. 

The first spreadsheet calculates LCCs 

and payback periods of potential new 

energy conservation standards. The 

second provides shipments forecasts 


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50080 Federal Register / Vol. 73, No. 165 / Monday, August 25, 2008 / Proposed Rules 

8The EIA approves use of the name NEMS to 

describe only an AEO version of the model without 

any modification to code or data. Because the 

present analysis entails some minor code 

modifications and runs the model under various 

policy scenarios that deviate from AEO 

assumptions, the name NEMS–BT refers to the 

model used here. For more information on NEMS, 

refer to The National Energy Modeling System: An 

Overview 1998. DOE/EIA–0581 (98), February, 

1998. BT is DOE’s Building Technologies Program. 

NEMS–BT was formerly called NEMS–BRS. 

9 ‘‘Commercial refrigerators, commercial freezers, 

and commercial refrigerator-freezers’’ is a type of 

covered commercial equipment. For purposes of 

discussion only in this proceeding, DOE uses the 

term ‘‘categories’’ to designate groupings of 

‘‘commercial refrigeration equipment.’’ The 

categories of equipment are: Self-contained 

commercial refrigerators, commercial freezers, and 

commercial refrigerator-freezers without doors; 

remote condensing commercial refrigerators, 

commercial freezers, and commercial refrigeratorfreezers; and commercial ice-cream freezers. DOE 

will analyze specific equipment classes that fall 

within these general categories and set appropriate 

standards. 

and then calculates national energy 

savings and net present value impacts of 

potential new energy conservation 

standards. DOE also assessed 

manufacturer impacts, largely through 

use of the Government Regulatory 

Impact Model (GRIM). 

Additionally, DOE estimated the 

impacts of energy conservation 

standards for commercial refrigeration 

equipment on utilities and the 

environment. DOE used a version of 

EIA’s National Energy Modeling System 

(NEMS) for the utility and 

environmental analyses. The NEMS 

model simulates the energy economy of 

the United States and has been 

developed over several years by the EIA 

primarily for the purpose of preparing 

the Annual Energy Outlook (AEO). The 

NEMS produces a widely known 

baseline forecast for the Nation through 

2025 that is available on the DOE Web 

site. The version of NEMS used for 

efficiency standards analysis is called 

NEMS–BT,8 and is based on the 

AEO2007 version with minor 

modifications. The NEMS offers a 

sophisticated picture of the effect of 

standards, since its scope allows it to 

measure the interactions between the 

various energy supply and demand 

sectors and the economy as a whole. 

A. Market and Technology Assessment 

When beginning an energy 

conservation standards rulemaking, 

DOE develops information that provides 

an overall picture of the market for the 

equipment concerned, including the 

purpose of the equipment, the industry 

structure, and market characteristics. 

This activity includes both quantitative 

and qualitative assessments based 

primarily on publicly available 

information. The subjects addressed in 

the market and technology assessment 

for this rulemaking (Chapter 3 of the 

TSD) include equipment classes, 

manufacturers, quantities, and types of 

equipment sold and offered for sale, 

retail market trends, and regulatory and 

non-regulatory programs. 

1. Definitions Related to Commercial 

Refrigeration Equipment 

a. Air Curtain Angle Definition 

For equipment without doors, an air 

curtain divides the refrigerated 

compartment from the ambient space. 

DOE stated in the ANOPR that the 

orientation of the air curtain affects the 

energy consumption of both remote 

condensing and self-contained 

equipment, and that equipment without 

doors can be broadly categorized by the 

angle of the air curtain. DOE considered 

defining the air-curtain angle as ‘‘the 

angle between a vertical line and the 

line formed by the points at the center 

of the discharge air grille and the center 

of the return air grille, when viewed in 

cross-section.’’ DOE presented this 

definition in the ANOPR, 72 FR 41173, 

and for discussion at the ANOPR public 

meeting, and requested feedback. 

ARI and Edison Electric Institute (EEI) 

recommended that DOE slightly modify 

its definition of air-curtain angle to ‘‘the 

angle formed between a vertical line and 

the line formed by the points at the 

inside edge of the discharge air opening 

and the inside edge of the return air 

opening, when viewed in crosssection.’’ For equipment without doors 

and without a discharge air grille or 

discharge air honeycomb, the air curtain 

should be defined as ‘‘the angle between 

a vertical line extended down from the 

highest point on the manufacturer’s 

recommended load limit line and the 

same load limit line.’’ (ARI, No. 18 at p. 

2 and EEI, No. 15 at p. 2) DOE 

recognizes that these proposed 

definitions are consistent with industryapproved standards and is therefore 

including the suggested modifications to 

the definition for air-curtain angle in 

today’s proposed rule. 

b. Door Angle Definition 

For equipment with doors, DOE stated 

in the ANOPR that the orientation of the 

doors affects the energy consumption, 

and that equipment with doors can be 

broadly categorized by the angle of the 

door. DOE considered defining door 

angle as ‘‘the angle between a vertical 

line and the line formed by the plane of 

the door, when viewed in crosssection.’’ 72 FR 41174. DOE also 

presented this definition for discussion 

at the ANOPR public meeting and 

requested feedback. 

While stakeholders agreed with DOE’s 

proposed definition of door angle flat 

doors, it was not clear how DOE would 

define the door angle for curved doors 

such as those found on service over-thecounter cases. True stated that curved 

door angle should be defined by forming 

a plane between ‘‘the end plane and the 

end peak in-section.’’ (Public Meeting 

Transcript, No. 13.5 at p. 59) Southern 

California Edison (SCE) suggested 

defining door angle for curved doors in 

the way air-curtain angle is defined, by 

the angle formed between the vertical 

and a line drawn between the top and 

bottom edges. (Public Meeting 

Transcript, No. 13.5 at p. 59) DOE is 

proposing its original definition of door 

angle for cases with flat doors. For cases 

with curved doors, DOE is not clear 

what True’s intent was in defining door 

angle, and no clarification was made in 

True’s written comments. DOE believes 

the approach suggested by SCE is 

appropriate because it accounts for the 

complex geometry of curved doors 

while still remaining consistent with the 

existing definition for air-curtain angle. 

Therefore, DOE is proposing to define 

door angle as ‘‘the angle formed 

between a vertical line and the straight 

line drawn by connecting the top and 

bottom points where the display area 

glass joins the cabinet, when the 

equipment is viewed in cross-section.’’

2. Equipment Classes 

When establishing energy 

conservation standards, DOE generally 

divides covered equipment into 

equipment classes by the type of energy 

used, capacity, or other performancerelated features that affect efficiency. 

Different energy conservation standards 

may apply to different equipment 

classes. (42 U.S.C. 6295(q) and 

6316(e)(1)) 

Commercial refrigerators, commercial 

freezers, and commercial refrigeratorfreezers can be divided into various 

equipment classes categorized largely by 

physical characteristics that affect 

energy efficiency. Some of these 

characteristics delineate the categories 

of equipment covered by this 

rulemaking.9 Most affect the 

merchandise that the equipment can be 

used to display, and how the customer 

can access that merchandise. Key 

physical characteristics that affect 

energy efficiency are the operating 

temperature, the presence or absence of 

doors (i.e., closed cases or open cases), 

the type of doors used (i.e., transparent 


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or solid), the angle of the door or aircurtain (i.e., horizontal, semivertical, or 

vertical) and the type of condensing unit 

(i.e., remote or self-contained). As 

discussed in the ANOPR, 72 FR 41173–

77, and below, DOE has developed 

equipment classes in this rulemaking by 

(1) dividing commercial refrigerators, 

commercial freezers, and commercial 

refrigerator-freezers into equipment 

families, (2) subdividing these families 

based on condensing unit configurations 

and rating temperature designations, 

and (3) identifying the resulting classes 

that are within each of the three 

equipment categories covered by this 

rulemaking. 

DOE divided covered equipment into 

eight equipment families, which are 

shown in Table IV–1. Following the 

ANOPR, DOE did not receive any 

comments that it believes warranted 

changes to the eight equipment families 

proposed in the ANOPR and therefore, 

the eight families are unchanged. The 

two issues related to equipment family 

designations are discussed below. 

TABLE IV–1—EQUIPMENT FAMILY DESIGNATIONS

Equipment family Description 

Vertical Open (VOP) ........................................... Equipment without doors and an air-curtain ≥ 0° and < 10° from the vertical. 

Semivertical Open (SVO) .................................... Equipment without doors and an air-curtain angle ≥ 10° and < 80° from the vertical. 

Horizontal Open (HZO) ....................................... Equipment without doors and an air-curtain angle ≥ 80° from the vertical. 

Vertical Closed Transparent (VCT) ..................... Equipment with hinged or sliding transparent doors and a door angle < 45°. 

Horizontal Closed Transparent (HCT) ................ Equipment with hinged or sliding transparent doors and a door angle ≥ 45°. 

Vertical Closed Solid (VCS) ................................ Equipment with hinged or sliding solid (opaque) doors and a door angle < 45°. 

Horizontal Closed Solid (HCS) ............................ Equipment with hinged or sliding solid (opaque) doors and a door angle ≥ 45°. 

Service Over Counter (SOC) .............................. Equipment with sliding or hinged doors intended for use by sales personnel and fixed or 

hinged glass for displaying merchandise. 

Within each of the eight equipment 

families is equipment that has one of the 

two condensing unit configurations, 

which are shown in Table IV–2. Because 

these are the only two condensing unit 

configurations used in commercial 

refrigeration equipment, and since DOE 

did not receive any comments on these 

configurations following the ANOPR, 

DOE did not make any changes. 

TABLE IV–2—CONDENSING UNIT CONFIGURATION

Condensing unit configuration Description 

Remote Condensing (RC) .............. Condensing unit is remotely located from the refrigerated equipment and consists of one or more refrigerant compressors, refrigerant condensers, condenser fans and motors, and factory-supplied accessories. 

Self-Contained (SC) ........................ Condensing unit is an integral part of the refrigerated equipment and consists of one or more refrigerant 

compressors, refrigerant condensers, condenser fans and motors, and factory-supplied accessories. 

DOE is also organizing equipment 

classes based on the three operating 

temperature ranges shown in Table IV–

3. Based on the temperature at which 

the equipment is designed to operate, it 

will fall into one of these operating 

temperature ranges. This is identified as 

Issue 3 under ‘‘Issues on Which DOE 

Seeks Comment’’ in Section VII.E of this 

NOPR. 

Each temperature range coincides 

with a rating temperature used in the 

test procedure final rule for the different 

equipment types. 10 CFR 431.64. 

Following the ANOPR, DOE did not 

receive any comments regarding the 

rating temperature designations 

proposed in the ANOPR, and therefore 

DOE did not make any changes to the 

rating temperature designations. 

TABLE IV–3—RATING TEMPERATURE DESIGNATIONS

Operating 

temperature (°F) 

Rating 

temperature 

(°F) 

Description 

≥ 32 (M) ...................................................................................... 38 Medium temperature (refrigerators). 

< 32 and > ¥5 (L) ...................................................................... 0 Low temperature (freezers). 

≤ ¥5 (I) ....................................................................................... ¥15 Ice-cream temperature (ice-cream freezers). 

In the ANOPR, DOE responded to 

several comments and presented a 

discussion (Section II.A.2) of the aircurtain angle ranges used to delineate 

vertical, semivertical, and horizontal 

equipment families without doors (VOP, 

SVO, and HZO). 72 FR 41173–74. In 

comments received following the 

Framework document publication, some 

stakeholders felt that the air-curtain 

angle ranges used in the data provided 

by ARI might encourage manufacturers 

to redesign equipment to take advantage 

of less stringent standards. Specifically, 

the stakeholders were concerned that 

manufacturers of VOP.RC.M equipment 

(a high-volume equipment class) would 

make slight alterations in their designs 

that would shift the equipment to the 

SVO.RC.M equipment class. If this shift 

occurred for a large number of models, 

and if standards for SVO.RC.M 

equipment were significantly less 

stringent than standards for VOP.RC.M 

equipment, a significant amount of 

energy savings would be avoided. In 

other words, energy savings will be less 

than if that equipment was not modified 

and remained under the vertical 

classification. DOE responded to these 


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10Table IV–4 identifies 48 classes of commercial 

refrigerators, commercial freezers, and commercial 

refrigerator-freezers. Of the 48 classes, 10 classes are 

identified by asterisks. EPCA has already 

established energy conservation standards for these 

10 classes, (42 U.S.C. 6313(c)(2)–(3)) which are not 

covered under this rulemaking. 

comments in the ANOPR, concurring 

with stakeholders’ concerns, and 

requesting any relevant data or feedback 

regarding the ranges of air-curtain angle 

proposed in the ANOPR. No further 

comments were received on this issue 

following the ANOPR. DOE is proposing 

standards for the SVO.RC.M equipment 

class that are virtually equivalent to 

standards for the VOP.RC.M equipment 

class (see the proposed rule language of 

this NOPR). As a result, DOE believes 

that the proposed standards eliminate 

motivation for market shifts between 

these equipment classes. However, to 

assure that no changes to the air-curtain 

ranges for the VOP, SVO, and HZO 

equipment families are warranted, DOE 

seeks comment on the possibility of 

market shifts between equipment 

classes based on the proposed 

standards. 

As discussed in the ANOPR, 72 FR 

41174 and during the ANOPR public 

meeting, DOE stated that it was 

considering defining two equipment 

families each for equipment with solid 

and transparent doors, based on door 

angles of 0° to 45° (vertical) and 45° to 

90° (horizontal). EEI stated that DOE 

should consider revising its definition 

of door angle, because it is unclear 

whether a door angle of 45° to be 

vertical or horizontal. (Public Meeting 

Transcript, No. 13.5 at p. 58) DOE agrees 

with EEI that its previous designation 

did not specify what equipment family 

a unit with a 45° door angle would fall 

under. Therefore, DOE has tentatively 

decided that it will designate vertical 

equipment with transparent or solid 

doors as ‘‘equipment with hinged or 

sliding doors and a door angle less than 

45°,’’ and horizontal equipment with 

transparent or solid doors as 

‘‘equipment with hinged or sliding 

doors and a door angle greater than or 

equal to 45°.’’

DOE is considering 38 of the 48 

equipment classes shown in Table IV–

4.10 The equipment classes are 

organized by equipment family, 

compressor operating mode, and rating 

temperature. The right-hand column in 

Table IV–4 with the heading 

‘‘Equipment Class Designation’’

identifies each of the 48 equipment 

classes with a particular set of letters. 

The first three letters for each class 

represent its equipment family. The 

next two letters represent the 

condensing unit configuration. The last 

letter represents the rating temperature. 

Table IV–1 through Table IV–3 set forth 

the meaning of the equipment class 

lettering designations. 

TABLE IV–4—COMMERCIAL REFRIGERATION EQUIPMENT CLASSES

Equipment family Condensing unit configuration Operating temperature (°F) Equipment class designation 

Vertical Open ................................. Remote ......................................... ≥ 32 ...............................................

< 32 and > ¥5 .............................

≤ ¥5 .............................................

VOP.RC.M 

VOP.RC.L 

VOP.RC.I 

Self-Contained .............................. ≥ 32 ...............................................

< 32 and > ¥5 .............................

≤ ¥5 .............................................

VOP.SC.M 

VOP.SC.L 

VOP.SC.I 

Semivertical Open .......................... Remote ......................................... ≥ 32 ...............................................

< 32 and > ¥5 .............................

≤ ¥5 .............................................

SVO.RC.M 

SVO.RC.L 

SVO.RC.I 

Self-Contained .............................. ≥ 32 ...............................................

< 32 and > ¥5 .............................

≤ ¥5 .............................................

SVO.SC.M 

SVO.SC.L 

SVO.SC.I 

Horizontal Open ............................. Remote ......................................... ≥ 32 ...............................................

< 32 and > ¥5 .............................

≤ ¥5 .............................................

HZO.RC.M 

HZO.RC.L 

HZO.RC.I 

Self-Contained .............................. ≥ 32 ...............................................

< 32 and > ¥5 .............................

≤ ¥5 .............................................

HZO.SC.M 

HZO.SC.L 

HZO.SC.I 

Vertical Closed Transparent .......... Remote ......................................... ≥ 32 ...............................................

< 32 and > ¥5 .............................

≤ ¥5 .............................................

VCT.RC.M 

VCT.RC.L 

VCT.RC.I 

Self-Contained .............................. ≥ 32 ...............................................

< 32 and > ¥5 .............................

≤ ¥5 .............................................

VCT.SC.M* 

VCT.SC.L* 

VCT.SC.I 

Horizontal Closed Transparent ...... Remote ......................................... ≥ 32 ...............................................

< 32 and > ¥5 .............................

≤ ¥5 .............................................

HCT.RC.M 

HCT.RC.L 

HCT.RC.I 

Self-Contained .............................. ≥ 32 ...............................................

< 32 and > ¥5 .............................

≤ ¥5 .............................................

HCT.SC.M* 

HCT.SC.L* 

HCT.SC.I 

Vertical Closed Solid ..................... Remote ......................................... ≥ 32 ...............................................

< 32 and > ¥5 .............................

≤ ¥5 .............................................

VCS.RC.M 

VCS.RC.L 

VCS.RC.I 

Self-Contained .............................. ≥ 32 ...............................................

< 32 and > ¥5 .............................

≤ ¥5 .............................................

VCS.SC.M* 

VCS.SC.L* 

VCS.SC.I 

Horizontal Closed Solid ................. Remote ......................................... ≥ 32 ...............................................

< 32 and > ¥5 .............................

≤ ¥5 .............................................

HCS.RC.M 

HCS.RC.L 

HCS.RC.I 

Self-Contained .............................. ≥ 32 ...............................................

< 32 and > ¥5 .............................

≤ ¥5 .............................................

HCS.SC.M* 

HCS.SC.L* 

HCS.SC.I 


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TABLE IV–4—COMMERCIAL REFRIGERATION EQUIPMENT CLASSES—Continued 

Equipment family Condensing unit configuration Operating temperature (°F) Equipment class designation 

Service Over Counter .................... Remote ......................................... ≥ 32 ...............................................

< 32 and > ¥5 .............................

≤ ¥5 .............................................

SOC.RC.M 

SOC.RC.L 

SOC.RC.I 

Self-Contained .............................. ≥ 32 ...............................................

< 32 and > ¥5 .............................

≤ ¥5 .............................................

SOC.SC.M* 

SOC.SC.L* 

SOC.SC.I 

* These equipment classes are covered by standards established in EPCA and are not covered under this rulemaking. (42 U.S.C. 6313(c)(2)–

(3)) 

EPCA contains standards for selfcontained commercial refrigerators, 

commercial freezers and commercial 

refrigerator-freezers with doors (42 

U.S.C. 6313(c)(2)–(3)); this equipment is 

not included in this rulemaking. 

Equipment classes already covered by 

EPCA, and therefore not included in 

this rulemaking, are indicated with 

asterisks in Table IV–4. DOE has based 

the designations of these possible 

equipment classes on the classification 

methodology presented in Table IV–1 

through Table IV–3. 

Table IV–5 presents the equipment 

classes covered under this rulemaking, 

organized by the three equipment 

categories. 

TABLE IV–5—COMMERCIAL REFRIGERATION EQUIPMENT CLASSES BY CATEGORY

Equipment category Condensing unit 

configuration Equipment family Operating temperature (°F) 

Equipment class 

designation 

Remote Condensing Commercial Refrigerators, Commercial Freezers, 

and Commercial Refrigerator-Freezers.

Remote ................. Vertical Open ....................................... ≥ 32 ......................

< 32 and > ¥5 .....

VOP.RC.M 

VOP.RC.L 

Semivertical Open ............................... ≥ 32 ......................

< 32 and > ¥5 .....

SVO.RC.M 

SVO.RC.L 

Horizontal Open .................................. ≥ 32 ......................

< 32 and > ¥5 .....

HZO.RC.M 

HZO.RC.L 

Vertical Closed Transparent ................ ≥ 32 ......................

< 32 and > ¥5 .....

VCT.RC.M 

VCT.RC.L 

Horizontal Closed Transparent ........... ≥ 32 ......................

< 32 and > ¥5 .....

HCT.RC.M 

HCT.RC.L 

Vertical Closed Solid ........................... ≥ 32 ......................

< 32 and > ¥5 .....

VCS.RC.M 

VCS.RC.L 

Horizontal Closed Solid ....................... ≥ 32 ......................

< 32 and > ¥5 .....

HCS.RC.M 

HCS.RC.L 

Service Over Counter .......................... ≥ 32 ......................

< 32 and > ¥5 .....

SOC.RC.M 

SOC.RC.L 

Self-Contained Commercial Refrigerators, Commercial Freezers, and 

Commercial Refrigerator-Freezers 

without Doors.

Self-Contained ...... Vertical Open ....................................... ≥ 32 ......................

< 32 and > ¥5 .....

VOP.SC.M 

VOP.SC.L 

Semivertical Open ............................... ≥ 32 ......................

< 32 and > ¥5 .....

SVO.SC.M 

SVO.SC.L 

Horizontal Open .................................. ≥ 32 ......................

< 32 and > ¥5 .....

HZO.SC.M 

HZO.SC.L 

Commercial Ice-Cream Freezers ......... Remote ................. Vertical Open ....................................... ≤ ¥5 ..................... VOP.RC.I 

Semivertical Open ............................... SVO.RC.I 

Horizontal Open .................................. HZO.RC.I 

Vertical Closed Transparent ................ VCT.RC.I 

Horizontal Closed Transparent ........... HCT.RC.I 

Vertical Closed Solid ........................... VCS.RC.I 

Horizontal Closed Solid ....................... HCS.RC.I 

Service Over Counter .......................... SOC.RC.I 

Self-Contained ...... Vertical Open ....................................... VOP.SC.I 

Semivertical Open ............................... SVO.SC.I 

Horizontal Open .................................. HZO.SC.I 

Vertical Closed Transparent ................ VCT.SC.I 

Horizontal Closed Transparent ........... HCT.SC.I 

Vertical Closed Solid ........................... VCS.SC.I 

Horizontal Closed Solid ....................... HCS.SC.I 

Service Over Counter .......................... SOC.SC.I 

B. Engineering Analysis 

The engineering analysis develops 

cost-efficiency relationships to show the 

manufacturing costs of achieving 

increased efficiency. DOE has identified 

the following three methodologies to 

generate the manufacturing costs 

needed for the engineering analysis: (1) 

The design option approach, which 


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11These four curves applied to the following four 

equipment classes: VCT.RC.L, VOP.RC.M, 

SVO.RC.M, and HZO.RC.L. These represent the 

equipment classes with the highest shipment 

volumes. 

provides the incremental costs of adding 

design options to a baseline model that 

will improve its efficiency; (2) the 

efficiency-level approach, which 

provides the relative costs of achieving 

increases in energy efficiency levels 

without regard to the particular design 

options used to achieve such increases; 

and (3) the cost-assessment (or reverse 

engineering) approach, which provides 

‘‘bottom-up’’ manufacturing cost 

assessments for achieving various levels 

of increased efficiency based on detailed 

cost data for parts and material, labor, 

shipping/packaging, and investment for 

models that operate at particular 

efficiency levels. 

1. Approach 

In the ANOPR engineering analysis, 

the primary methodology was an 

efficiency-level approach, 

supplemented by a design option 

approach. DOE analyzed only the 15 

equipment classes with shipment 

volumes greater than 100 per year. The 

basis of the approach was four industrysupplied cost-efficiency curves for the 

four equipment classes shipped most 

frequently (i.e., VCT.RC.L, VOP.RC.M, 

SVO.RC.M, and HZO.RC.L). See Section 

0 for shipment data. DOE developed 

these classes using an efficiency-level 

approach. DOE supplemented these 

industry-supplied curves with 15 curves 

it developed using a design option 

approach. Four of DOE’s curves were 

intended only for comparison with the 

industry-supplied curves, as verification 

of the industry data. The other 11 curves 

formed the basis of analysis for the other 

11 analyzed equipment classes. The 

ANOPR provides more details on this 

approach. 72 FR 41180. 

During the ANOPR public meeting 

and subsequent comment period, 

stakeholders raised concerns over using 

industry-supplied data as the basis of 

the engineering analysis. ARI stated that 

the intent was to use the industry curves 

only to validate DOE’s design option 

analysis, not to use them directly in the 

analysis. (Public Meeting Transcript, 

No. 13.5 at p. 91) The American Council 

for an Energy Efficient Economy 

(ACEEE) stated that rulemakings have 

always used industry curves when they 

were available. (Public Meeting 

Transcript, No. 13.5 at p. 91) ARI stated 

that the industry data represents an 

average and covers the range of 

available equipment, but not all 

manufacturers’ equipment would span 

the whole range. ARI also stated that as 

few as three manufacturers submitted 

data for some of the cost-efficiency 

curves, while in the best cases there 

were up to seven. ARI explained that 

three manufacturers might not represent 

the entire industry. (Public Meeting 

Transcript, No. 13.5 at pp. 94–95) 

Hussmann stated that it doesn’t know, 

for example, how many shelf lights 

other manufacturers included in the 

data they submitted to ARI, and therein 

lies some of the danger of using an 

industry average. (Public Meeting 

Transcript, No. 13.5 at p. 95) Regarding 

the HZO.RC.L equipment class, EEI 

stated that DOE’s data does not appear 

to have the same range as ARI’s data. 

(Public Meeting Transcript, No. 13.5 at 

p. 93) Copeland also questioned 

whether the cost-efficiency curves from 

industry made sense [because they did 

not appear to be ordered in terms of 

increasing payback]. (Public Meeting 

Transcript, No. 13.5 at p. 149) ACEEE 

noted that the analytically derived price 

points for several equipment classes are 

significantly higher than the industrysupplied data at high efficiency, and 

suggested that DOE reexamine this data. 

(ACEEE, No. 16 at p. 2) ARI stated that 

DOE’s design option approach appears 

to be technically sound, and that the 

ARI cost-efficiency curves are only 

available for a limited number of 

equipment classes. For consistency, ARI 

recommended that DOE base its analysis 

solely on DOE’s analytically derived 

curves. (ARI, No. 18 at p. 6) 

As mentioned above, DOE used the 

four cost-efficiency curves 11 provided 

by ARI as the basis for its ANOPR 

engineering analysis. DOE was not 

aware of ARI’s intent that they be used 

only to validate DOE’s own analysis, or 

of ARI’s concerns that the data may 

have been insufficient for some classes. 

DOE agrees with stakeholders that using 

the analytically derived curves (a design 

option approach) for all equipment 

classes would be more consistent and 

provide more transparency. Although 

the efficiency-level and design option 

approaches have been used together in 

other rulemakings, DOE recognizes the 

challenges in using the industrysupplied data as the primary 

engineering analysis approach in this 

rulemaking. The ARI data cannot be 

disaggregated for public review, since 

doing so would disclose sensitive 

manufacturer information. This 

prevents a rigorous investigation of any 

discrepancies or irregularities in data 

submitted by the manufacturers. At the 

ANOPR public meeting, Hussmann 

mentioned lighting levels as one 

example of a design feature that could 

cause discrepancies among data from 

different manufacturers. In the design 

option approach, data on design features 

that affect performance (such as 

lighting) are available for interested 

persons to review and comment on, 

along with other assumptions and 

calculations. The aggregation of 

industry data seems to have resulted in 

cost-efficiency curves that lack the 

marked cost increases at higher levels of 

efficiency that are typical of the costefficiency relationship. The industrysupplied curves tended to be ‘‘flatter’’

than those developed by DOE, and in 

some cases appear to have efficiency 

levels that were not in order of 

increasing payback, as noted by 

Copeland. DOE believes the flatness of 

the industry curves may account for 

some of the discrepancies in pricing 

between the industry-supplied and 

analytically derived data, as noted by 

ACEEE. 

The extent of the industry-supplied 

data was also cause for concern. ARI’s 

statement that not all manufacturers’

equipment would span the whole range 

of efficiency levels is consistent with 

EEI’s concern that the data derived 

using DOE’s design option approach did 

not span the same range as the industry 

data. Because of overlapping ranges of 

efficiency of manufacturers’ data, the 

overall cost-efficiency data reported by 

ARI spans a range that in some cases is 

greater than the range covered by DOE’s 

design option data. DOE realizes this 

could raise a concern that its analysis is 

incomplete, for example by neglecting 

design options that could account for 

additional increases in efficiency, and 

thus an increase in the span of 

efficiencies covered. However, based on 

the comments received, DOE believes 

the extra range in the ARI data is instead 

largely due to inconsistencies in the 

manufacturer data submitted to ARI, 

such as lighting levels. A smaller 

portion of the extra range may also be 

attributable to subtle aspects of design 

and manufacturing (e.g., airflow and aircurtain design) that have an 

insignificant impact on performance 

and that cannot be modeled accurately 

in the design option approach. DOE 

appreciates the feedback from ARI that 

the design option approach appears 

sound, and believes that the design 

option data is more accurate in 

depicting the cost-efficiency 

relationship for commercial 

refrigeration equipment. 

For the NOPR engineering analysis, 

DOE analyzed the same 15 equipment 

classes as in the ANOPR analysis, but 

used only a design option approach. 

That approach is identical to the one 

used in the ANOPR, involving 

consultation with outside experts, 


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12The VOP.RC.L equipment class was reported as 

having zero shipments in the ARI shipment data, 

but was included in the analysis based on 

recommendations from manufacturers. During 

interviews conducted for the NOPR, manufacturers 

reported to DOE their individual shipment numbers 

for the VOP.RC.L class. Regardless of the actual 

shipment volume, DOE believes there are 

significantly more than 100 annual shipments of the 

VOP.RC.L equipment class. 

review of publicly available cost and 

performance information, and modeling 

of equipment cost and energy 

consumption, but DOE applied it to all 

15 equipment classes analyzed. The 

industry-supplied data developed using 

an efficiency-level approach is used 

only as a check on DOE’s data. DOE 

believes this approach is more reliable, 

and affords the public full transparency 

of assumptions and results and the 

ability to perform independent analyses 

for verification. See Chapter 5 of the 

TSD for more detail. 

2. Equipment Classes Analyzed 

For the NOPR, DOE did not make any 

changes to the equipment classes 

directly analyzed in the ANOPR 

engineering analysis. Because of the 

large number of equipment classes in 

this rulemaking, DOE did not directly 

analyze all equipment classes using the 

design option approach. DOE 

maintained the same equipment class 

prioritization used in the ANOPR. 

Equipment classes with more than 100 

units shipped per year (‘‘primary’’

classes), as well as the VOP.RC.L 12

equipment class, were directly 

analyzed. Table IV–6 lists these 

equipment classes, which represent 

approximately 98 percent of the 

shipments of commercial refrigeration 

equipment reported by ARI. 

TABLE IV–6—EQUIPMENT CLASSES DIRECTLY ANALYZED IN THE ENGINEERING ANALYSIS

Equipment class Description 

VOP.RC.M ............... Vertical Refrigerator without Doors with a Remote Condensing Unit, Medium Temperature. 

VOP.RC.L ................ Vertical Freezer without Doors with a Remote Condensing Unit, Low Temperature. 

SVO.RC.M ............... Semi-Vertical Refrigerator without Doors with a Remote Condensing Unit, Medium Temperature. 

HZO.RC.M ............... Horizontal Refrigerator without Doors with a Remote Condensing Unit, Medium Temperature. 

HZO.RC.L ................ Horizontal Freezer without Doors with a Remote Condensing Unit, Low Temperature. 

VCT.RC.M ............... Vertical Refrigerator with Transparent Doors with a Remote Condensing Unit, Medium Temperature. 

VCT.RC.L ................ Vertical Freezer with Transparent Doors with a Remote Condensing Unit, Low Temperature. 

SOC.RC.M ............... Service Over Counter Refrigerator with a Remote Condensing Unit, Medium Temperature. 

VOP.SC.M ............... Vertical Refrigerator without Doors with a Self-Contained Condensing Unit, Medium Temperature. 

SVO.SC.M ............... Semi-Vertical Refrigerator without Doors with a Self-Contained Condensing Unit, Medium Temperature. 

HZO.SC.M ............... Horizontal Refrigerator without Doors with a Self-Contained Condensing Unit, Medium Temperature. 

HZO.SC.L ................ Horizontal Freezer without Doors with a Self-Contained Condensing Unit, Low Temperature. 

VCT.SC.I .................. Vertical Ice-Cream Freezer with Transparent Doors with a Self-Contained Condensing Unit, Ice-Cream Temperature. 

VCS.SC.I ................. Vertical Ice-Cream Freezer with Solid Doors with a Self-Contained Condensing Unit, Ice-Cream Temperature. 

HCT.SC.I ................. Horizontal Ice-Cream Freezer with Transparent Doors with a Self-Contained Condensing Unit, Ice-Cream Temperature. 

3. Analytical Models 

In the design option approach, DOE 

used models to develop estimates of 

cost and energy consumption for each 

equipment class at each efficiency level. 

DOE used a cost model to estimate the 

manufacturer production cost (MPC) in 

dollars, and an energy consumption 

model to estimate the daily energy 

consumption in kWh for each of the 15 

primary equipment classes analyzed. 

a. Cost Model 

Development of the cost model 

involved the disassembly of a selfcontained refrigerator with transparent 

doors, an analysis of the materials and 

manufacturing processes, and the 

development of a parametric 

spreadsheet model flexible enough to 

cover all equipment classes. The 

manufacturing cost model estimated 

MPC and reported it in aggregated form 

to maintain confidentiality of sensitive 

cost data. DOE obtained input from 

stakeholders on the MPC estimates and 

assumptions to confirm accuracy. The 

cost model was used for 7 of the 15 

examined equipment classes and the 

results were extended to 6 of the 

remaining examined equipment classes. 

The cost of the remaining two 

equipment classes was estimated using 

available manufacturer list price (MLP) 

information discounted to MPC. Details 

of the cost model are provided in 

chapter 5 of the TSD. 

Following the ANOPR, no comments 

were received regarding DOE’s cost 

model, and therefore no significant 

changes were made to the methodology 

used in the NOPR analysis. One change 

was made to the manufacturer markup 

assumption, which is discussed below. 

One key element of DOE’s cost model 

concerned features and structural 

elements common in commercial 

refrigeration equipment, but that would 

not affect the energy use of the 

equipment. Development of this part of 

the cost model involved disassembling 

a self-contained refrigerator with 

transparent doors, analyzing the 

materials and manufacturing processes, 

and developing a parametric 

spreadsheet model flexible enough to 

cover all equipment classes. The other 

key part of the cost model estimated the 

costs of particular features or design 

options that would affect the energy use 

of the equipment. DOE obtained input 

from stakeholders on the MPC estimates 

and assumptions to confirm their 

accuracy. DOE used the cost model for 

7 of the 15 examined equipment classes 

and extended the results to 6 of the 

remaining examined equipment classes. 

DOE estimated the cost of the remaining 

two equipment classes using available 

manufacturer list price (MLP) 

information reduced to MPC. Chapter 5 

of the TSD provides details of the cost 

model. 

A manufacturer markup is applied to 

the MPC estimates to arrive at the MSP. 

This is the price of equipment sold at 

which the manufacturer can recover 

both production and non-production 

costs and can earn a profit. DOE 

calculated the manufacturer markup as 

the market share weighted average value 

for the industry. For the ANOPR, DOE 

developed this manufacturer markup by 

examining several major commercial 

refrigeration equipment manufacturers’

gross margin information from annual 

reports and the Securities and Exchange 

Commission (SEC) 10–K reports. The 

manufacturers DOE analyzed account 

for approximately 80 percent of the 

market, and each company is a 

subsidiary of a more diversified parent 

company that manufactures equipment 

other than commercial refrigeration 

equipment. Because the 10–K reports do 


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13The test procedures are found at 10 CFR 

431.64. 

14A view factor is the proportion of all radiation 

that leaves one surface and strikes another. 

15The mass of warm ambient store air that 

displaces the cold air inside of the case. 

not provide gross margin information at 

the subsidiary level, the estimated 

markups represent the average markups 

that the parent company applies over its 

entire range of equipment offerings and 

does not necessarily represent the 

manufacturer markup of the subsidiary. 

The ANOPR analysis indicated that 

the average manufacturer markup is 

1.39. However, DOE adjusted the 

markups to be more representative of 

the industry following discussions with 

manufacturers during the MIA 

interviews (Chapter 13). An aggregation 

of the MIA interview responses gives a 

market share weighted average 

manufacturer markup value of 1.32. For 

the NOPR, DOE used this revised 

manufacturer markup with the MPC 

values from the engineering analysis to 

arrive at the MSP values used in the 

GRIM. 

As explained in the ANOPR, DOE 

received industry-supplied curves from 

ARI in the form of daily energy 

consumption versus MLP, both 

normalized by total display area (TDA). 

Since DOE developed its analytically 

derived curves in the form of calculated 

daily energy consumption (CDEC) 

versus MSP, it was necessary for DOE to 

estimate an industry list price markup 

so that it could make comparisons 

between the two sets of curves. The 

industry list price markup is a markup 

to the selling price that provides the list 

price. To make comparisons between 

the analytically derived and industrysupplied cost-efficiency curves, DOE 

discounted the industry data with the 

list price markup and normalized the 

analytically derived curves by TDA. 

Manufacturers typically offer a 

discount from the MLP, which depends 

on factors such as the relationship with 

the customer and the volume and type 

of equipment being purchased. For the 

estimate of list price markup, DOE 

relied on information gathered on selfcontained commercial refrigeration 

equipment, since list price information 

is readily available and typically 

published by manufacturers of this 

equipment. A review of the data shows 

that the list price markup is typically 

2.0 (i.e., manufacturers will typically 

sell their equipment for 50 percent off 

the published list price). DOE further 

verified the estimate by obtaining list 

price quotes from several remote 

condensing equipment manufacturers. 

During manufacturer interviews, some 

commercial refrigeration equipment 

manufacturers agreed with the 2.0 

markup estimate, while others stated the 

estimate was somewhat high. Although 

the list price markup can vary 

significantly by manufacturer and by 

customer, DOE believes the estimated 

list price markup of 2.0 is representative 

of the industry. DOE applied this 

markup to all equipment classes. 

DOE did not receive any additional 

comments or information indicating that 

revision of the cost model used in the 

ANOPR analysis is warranted. Therefore 

DOE has adhered to that model in the 

NOPR analysis. 

b. Energy Consumption Model 

The energy consumption model 

estimates the daily energy consumption 

of commercial refrigeration equipment 

at various performance levels using a 

design options approach. The model is 

specific to the categories of equipment 

covered under this rulemaking, but is 

sufficiently generalized to model the 

energy consumption of all covered 

equipment classes. For a given 

equipment class, the model estimates 

the daily energy consumption for the 

baseline and the energy consumption of 

several levels of performance above the 

baseline. The model is used to calculate 

each performance level separately. 

In developing the energy 

consumption model, DOE made general 

assumptions about the analysis 

methodology and specific numerical 

assumptions regarding load components 

and design options. DOE based its 

energy consumption estimates on new 

equipment tested in a controlledenvironment chamber in accordance 

with ANSI/ARI Standard 1200–2006, 

the DOE test procedure for commercial 

refrigeration equipment, which 

references the ANSI/ASHRAE Standard 

72–2005 test method.13 Once Federal 

standards for this equipment become 

operative, manufacturers will be 

required to test units with this test 

method, which specifies a certain 

ambient temperature, humidity, light 

level, and other requirements. This test 

method, however, contains no 

specification as to the operating hours of 

the display case lighting, and DOE’s 

energy consumption model considers 

the operating hours to be 24 hours per 

day (i.e., that lights are on 

continuously). This assumption is 

consistent with the lighting operating 

time assumption used in the energy use 

characterization (see Section IV.D). 

Chapter 5 of the TSD discusses further 

the assumptions used in the energy 

consumption model. 

The energy consumption model 

calculates CDEC as having two major 

components: Compressor energy 

consumption and component energy 

consumption (expressed as kWh/day). 

Component energy consumption is the 

sum of the direct electrical energy 

consumption of fan motors, lighting, 

defrost and drain heaters, anti-sweat 

heaters, and pan heaters. Compressor 

energy consumption is calculated from 

the total refrigeration load (expressed in 

Btu/h) and one of two compressor 

models: One version for remote 

condensing equipment and one for selfcontained equipment. The total 

refrigeration load is a sum of the 

component load and the non-electric 

load. The component load is the sum of 

the heat emitted by evaporator fan 

motors, lighting, defrost and drain 

heaters, and anti-sweat heaters inside 

and adjacent to the refrigerated space 

(condenser fan motors and pan heaters 

are outside of the refrigerated space and 

do not contribute to the component heat 

load). The non-electric load is the sum 

of the heat contributed by radiation 

through glass and openings, heat 

conducted through walls and doors, and 

sensible and latent loads from warm, 

moist air infiltration through openings. 

Chapter 5 of the TSD discusses 

component energy consumption, 

compressor energy consumption, and 

load models. 

DOE made one change to the 

methodology of calculating the radiation 

load for cases without doors (VOP, SVO, 

and HZO equipment families). In the 

ANOPR analysis, the view factor 14 from 

the interior of the case to the walls of 

the test chamber was estimated as 0.025. 

This value was kept as a constant for all 

cases and sizes in the ANOPR analysis, 

but it is clear this value should change 

somewhat as the geometry and the 

overall size of the case changes. For the 

NOPR, DOE calculated the view factor 

separately for each equipment class 

depending on the geometry specific to 

the baseline design specifications of that 

class. The view factor from the case to 

the room is calculated as the ratio of 

TDA (i.e., the area of the plane 

separating the case from the room) to 

the test chamber wall surface area. 

Stakeholders raised questions 

regarding DOE’s method of calculating 

the infiltration load 15 for commercial 

refrigeration equipment. Carrier asserted 

that DOE’s method of using defrost 

water to model infiltration has 

limitations. Carrier pointed out that as 

the case is run at higher suction 

temperatures, the coil has a tendency to 

run as a wet coil and does not retain 

much of the moisture on its exterior. 

Typically on manufacturer specification 

sheets, defrost meltwater is only the 


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water that comes out during a defrost 

period, and Carrier noted that there may 

be additional water that would come off 

the coil between defrost periods. Carrier 

believes DOE may be underestimating 

the infiltration load using information 

from the specification sheets, and 

estimated that the infiltration load is 

typically around 75 percent of total 

cooling water. Carrier questioned 

whether or not DOE compared its 

estimates with the calculated infiltration 

loads. (Public Meeting Transcript, No. 

13.5 at p. 83) Hussmann stated that 

when it publishes data for defrost 

meltwater, it does so for the sole 

purpose of sizing sewer lines and not for 

estimating the infiltration load. (Public 

Meeting Transcript, No. 13.5 at p. 85) 

In the ANOPR analysis, DOE 

calculated infiltration load using 

empirical defrost meltwater data 

obtained from manufacturers’ detailed 

specification sheets. DOE assumed that 

defrost meltwater could be correlated 

with infiltration load, given certain 

known parameters such as ambient 

relative humidity. This methodology 

was calibrated with detailed 

refrigeration load data obtained from 

Southern California Edison for several 

large-volume equipment classes. DOE 

agrees with the assessment made by 

stakeholders and has altered its 

methodology accordingly. In the NOPR 

engineering design specifications, 

defrost meltwater (in pounds per hour, 

lbs/hr) is replaced with infiltrated air 

(also in lbs/hr) for all equipment classes. 

DOE estimated infiltrated air by using 

manufacturers’ detailed specification 

sheets, recognizing that infiltration load 

is the only load component that cannot 

be directly calculated. Using physical 

parameters about each case, the other 

load components (internal load, 

conduction load, radiation load) are 

calculated. DOE subtracted these load 

components from the listed total 

refrigeration load, and it is assumed that 

the remaining load is due to infiltration. 

Chapter 5 of the TSD provides more 

details of the change to this 

methodology. 

At the public meeting, stakeholders 

expressed concern over the refrigerants 

DOE used in the analysis. EEI asked if 

hydrofluorocarbon (HFC) refrigerants 

were already assumed to be in use in the 

baseline. (Public Meeting Transcript, 

No. 13.5 at p. 97) ARI stated that most 

of the data it provided to DOE was 

based on such refrigerants and no 

changes are expected in that regard. 

(Public Meeting Transcript, No. 13.5 at 

p. 97) In its analysis, DOE assumed that 

HFC refrigerants are already fully in use 

for commercial refrigeration equipment. 

For all remote condensing equipment, 

in accordance with the DOE test 

procedure in ANSI/ARI Standard 1200–

2006, DOE assumes the use of a 

compressor using an HFC refrigerant 

(i.e., R–404A). Likewise, all of the 

compressors DOE used in modeling selfcontained equipment use either R–404A 

or R–134A, another HFC refrigerant. 

c. Design Options 

In the market and technology 

assessment for the ANOPR, DOE 

defined an initial list of technologies 

that have the potential to reduce the 

energy consumption of commercial 

refrigeration equipment. In the 

screening analysis for the ANOPR, DOE 

screened out some of these technologies 

based on four screening criteria: 

Technological feasibility; practicability 

to manufacture, install and service; 

impacts on equipment utility or 

availability; and impacts on health or 

safety. 72 FR 41179–80. The remaining 

technologies became inputs to the 

ANOPR engineering analysis as design 

options. However, for reasons described 

in the ANOPR, DOE did not incorporate 

all of these technologies as design 

options in the energy consumption 

model. 72 FR 41182–83. Stakeholders 

commented that some of these 

technologies should be included in the 

NOPR engineering analysis, and 

recommended additional design options 

DOE should consider. Comments 

pertaining to each suggested technology 

and DOE’s response are provided below. 

As a general comment about design 

options, ACEEE stated that some design 

options that were screened out should 

be considered for further analysis and 

that prevalence in the marketplace is 

not necessarily a good reason to screen 

out a design option. (Public Meeting 

Transcript, No. 13.5 at p. 62) DOE 

screened out five technologies in the 

ANOPR screening analysis. These are 

air-curtain design, thermoacoustic 

refrigeration, magnetic refrigeration, 

electro-hydrodynamic heat exchangers, 

and copper rotor motors. All five of 

these design options were screened out 

because they are in the research stage 

and would not be practical to 

manufacture, install, and service. Since 

the publication of the ANOPR, DOE is 

not aware of any significant changes to 

the status of these technologies, and has 

not included them in the NOPR 

analysis. 

ACEEE recommended that variablespeed compressors be included in the 

analysis. (ACEEE, No. 16 at p. 2) EEI 

also suggested that DOE consider the 

use of variable-speed drives for 

compressors. (EEI, No. 15 at p. 2) 

Variable-speed compressors could 

potentially improve the efficiency of 

commercial refrigeration equipment 

classes that are self-contained units 

without doors and self-contained icecream freezers. Variable-speed 

compressors can reduce energy 

consumption under real-world 

conditions by matching cooling capacity 

to the refrigeration load, which can 

change due to variations in ambient 

conditions and product loading. This 

load matching allows for a more 

constant temperature inside the case, 

eliminating the large fluctuations in 

temperature that are typical of singlespeed compressors. The stability in 

temperature allows manufacturers to 

design equipment with higher 

evaporator temperatures, improving 

compressor efficiency. However, the 

energy-saving benefit of variable-speed 

compressors is not clear under ANSI/ 

ASHRAE Standard 72–2005, because it 

is a steady-state test for commercial 

refrigeration equipment. Further, DOE is 

not aware of any test data showing the 

energy savings benefit of variable speed 

compressors in the types of equipment 

covered in this rule. Certain test data 

does exist for walk-ins and residential 

refrigerators, but DOE does not believe 

that this data can be used to predict the 

performance of variable-speed 

compressors in commercial refrigeration 

equipment. Therefore, DOE did not 

include variable-speed compressors as a 

design option in its engineering 

analysis. 

ACEEE recommended that variablespeed evaporator fans be included in the 

analysis. (ACEEE, No. 16 at p. 2) San 

Diego Gas & Electric Company (SDGE) 

also recommended that DOE include in 

its analysis the energy savings, costeffectiveness, and feasibility of such 

fans for enclosed refrigeration 

equipment served by remote 

refrigeration compressors. (SDGE, No. 

22 at p. 2) SCE recommended that DOE 

consider the cost-effectiveness of 

variable-speed evaporator fans for this 

equipment. SCE asserted that variablespeed fan control was a very effective 

and cost-effective means of increasing 

refrigerated warehouse efficiency and 

should be applicable to commercial 

refrigeration equipment as well. SCE 

stated that this reduces the energy 

consumption of the fan and the amount 

of load that the refrigerant must reject. 

SCE also noted that its work in support 

of California building and appliance 

standards showed variable-speed 

controls on evaporator fans had 

approximately one-year simple 

paybacks in both refrigerated 

warehouses and small walk-in coolers. 

(Public Meeting Transcript, No. 13.5 at 

p. 69 and SCE, No. 19 at p. 3) EEI also 


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suggested that DOE consider the use of 

variable-speed drives for evaporator fans 

and compressors. (EEI, No. 15 at p. 2) 

Variable-speed evaporator fans can 

operate at speeds that match changing 

conditions in the case. DOE recognizes 

that the use of these fans provides some 

opportunity for energy savings, because 

the buildup and removal of frost creates 

differing pressure drops across the 

evaporator coil. Theoretically, less fan 

power is required when the coil is free 

of frost. Additionally, when an 

evaporator fan operates at variable 

speeds, the coil would operate at a more 

stable temperature during the period of 

frost build-up. However, the 

effectiveness of the air curtain in 

equipment without doors is very 

sensitive to changes in airflow, so fan 

motor controllers would likely disrupt 

air curtains. DOE believes the likely 

disturbance to the air curtain, which 

would lead to higher infiltration loads 

and higher overall energy consumption, 

would negate the use of evaporator fan 

motor controllers in equipment without 

doors, even if there were some 

reduction in fan energy use. In addition, 

the ANSI/ASHRAE Standard 72–2005 

test method is a steady-state test for 

commercial refrigeration equipment, so 

similar to variable-speed compressors, 

the energy-saving benefit of variablespeed fans is not clear. Therefore, DOE 

did not include variable-speed fans as a 

design option in its engineering 

analysis. 

ACEEE recommended that remote 

ballast location be included in the 

analysis. (ACEEE, No. 16 at p. 2) 

Fluorescent lamp ballasts generate heat, 

and their relocation outside the 

refrigerated space can reduce energy 

consumption by lessening the 

refrigeration load on the compressor. 

However, for the majority of commercial 

refrigeration equipment currently 

manufactured, ballasts are already 

located in electrical trays outside of the 

refrigerated space, in either the base or 

top of the equipment. The notable 

exceptions are the equipment classes in 

the VCT equipment family, where 

ballasts are most often located on the 

interior of each door mullion. Most 

commercial refrigeration equipment 

manufacturers purchase doors for VCT 

units that are preassembled with the 

entire lighting system in place rather 

than configured for separate ballasts. 

DOE believes that most commercial 

refrigeration equipment manufacturers 

choose these kinds of doors because it 

would be labor intensive and time 

consuming to relocate these ballasts at 

the factory, and because of the 

additional cost and labor of wiring 

separate ballasts. Manufacturers have 

indicated that the potential energy 

savings are also small, since modern 

electronic ballasts are very efficient and 

typically contribute only a few watts 

(W) each to the refrigeration load. 

Because (1) lamp ballasts are already 

located externally on most equipment; 

(2) most units that have internally 

located lamp ballasts use preassembled 

lighting systems; and (3) potential 

energy savings are small, DOE did not 

consider remote relocation of ballasts as 

a design option in its engineering 

analysis. 

ACEEE recommended that improved 

insulation be included in the analysis. 

(ACEEE, No. 15 at p. 2) Potential 

improvements to insulation material 

used in commercial refrigeration 

equipment cabinets include better 

polyurethane foams and vacuum panels. 

In consultation with insulation material 

manufacturers, DOE determined that 

there are no significant differences in 

‘‘grades’’ of insulation material, so 

equipment manufacturers are already 

using the best commercially available 

foam materials in their equipment. 

Vacuum panels are an alternative form 

of insulation; however, they may 

degrade in performance in time as small 

leaks develop. Based on knowledge of 

typical manufacturing practices, DOE 

also believes it would be impractical to 

use vacuum panels to construct 

commercial refrigeration equipment, 

because they cannot be penetrated by 

fasteners, and do not provide the 

rigidity of ‘‘foamed-in-place’’

polyurethane insulation panels. Thicker 

insulation is another possible option, 

but could be problematic because it 

would likely result in either a reduced 

volume for the refrigerated space or an 

increase in the overall size of the 

equipment cabinet. Reducing the 

volume of the refrigerated space could 

affect the utility of the equipment, and 

because the outer dimensions of 

commercial refrigeration equipment are 

often limited (e.g., by interior 

dimensions of shipping containers), it is 

often not practical to increase the 

overall size of the cabinet. For all these 

reasons, DOE did not consider 

insulation thickness increases or 

improvements as a design option in its 

ANOPR engineering analysis. 

However, DOE did add increases in 

insulation thickness as a design option 

in the NOPR engineering analysis, 

because it now believes this is a costeffective option in several equipment 

types, most notably self-contained icecream freezers with doors. DOE 

understands that in equipment classes 

where conduction makes up a 

significant portion of the total 

refrigeration load, a modest increase in 

insulation thickness can lead to small, 

but significant energy savings. In 

relatively large units, which make up 

the largest portion of the shipments of 

commercial refrigeration equipment, 

even if such added insulation results in 

reduction of the refrigerated volume, 

any such reduction would not be 

substantial. DOE does not foresee any 

impact on the availability of this type of 

equipment from the use of increased 

insulation that would trigger EPCA’s 

prohibition at 42 U.S.C. 6295(o)(4) and 

6316(e)(1). As to smaller units, DOE 

assumes that their outer dimensions are 

less constrained than the dimensions of 

larger units, and that therefore 

manufacturers could accommodate a 

small increase in insulation thickness, 

and maintain the amount of refrigerated 

volume, by making a small increase in 

the overall size of the cabinet. 

Therefore, in the NOPR, DOE modeled 

a 1⁄2-inch increase in insulation 

thickness for all equipment classes. 

When implemented as a design option, 

this increase in thickness was added to 

the baseline value of insulation 

thickness and DOE recalculated the 

conduction load. DOE based the cost of 

increasing the insulation thickness on a 

sunk cost per unit, considering foam 

fixture engineering and tooling costs, 

production line lifetime, and number of 

fixtures and units produced. Chapter 5 

of the TSD provides details of the 

assumptions DOE used to calculate the 

additional cost of insulation thickness 

increases. 

ACEEE recommended that DOE 

include defrost cycle control in the 

analysis. (ACEEE, No. 16 at p. 2) Defrost 

cycle control can reduce energy 

consumption by reducing the frequency 

and duration of defrost periods. The 

majority of equipment currently 

manufactured already uses partial 

defrost cycle control in the form of cycle 

termination control. However, defrost 

cycle initiation is still scheduled at 

regular intervals. Full defrost cycle 

control would involve detecting frost 

buildup and initiating defrost. As 

described in the market and technology 

assessment (Chapter 3 of the TSD), this 

could be accomplished through an 

optical sensor or by sensing the 

temperature differential across the 

evaporator coil. However, both methods 

are unreliable due to problems with 

fouling of the coil from dust and other 

surface contaminants. This becomes 

more of an issue as the display case 

ages. Because of these issues, DOE did 

not consider defrost cycle control as a 

design option in its engineering 

analysis. 

SCE asserted that doors should be 

considered a design option for open 


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16 Improvements to the condensing unit are not 

considered for remote condensing equipment, since 

the test procedure and standard apply only to the 

cabinet and not the condensing unit. 

17U.S. Department of Energy, Solid-State Lighting 

Research and Development, Multi-Year Program 

Plan FY’09–FY’14. This document was prepared 

under the direction of a Technical Committee from 

the Next Generation Lighting Initiative Alliance 

(NGLIA). Information about the NGLIA and its 

members is available at http://www.nglia.org. 

units, and that open units without doors 

should be held to energy consumption 

standards at levels warranted for units 

with doors. (Public Meeting Transcript, 

No. 13.5 at p. 44) SCE advocates, in 

essence, that manufacture of new, open 

commercial refrigeration equipment be 

discontinued and replaced by 

manufacture of equipment with doors. It 

stated that this would be a cost-effective 

way of saving substantial amounts of 

energy. (SCE, No. 19 at p. 2) Although 

SCE did not state it explicitly, DOE 

understands that its main argument for 

advocating that doors be considered for 

open cases is that doors should be 

regarded as a design option and not a 

feature, such that there are not separate 

equipment classes for equipment with 

and without doors. 

DOE acknowledges SCE’s position. 

Substantial, cost-effective energy 

savings might well result from standards 

that would, in effect, require the 

manufacture of commercial refrigeration 

equipment with doors instead of 

without. DOE has not considered such 

standards in this proceeding, however, 

nor has it studied their potential energy 

savings or economic justification 

(including the extent of their impact on 

product utility), because it believes 

EPCA precludes their adoption. First, 

DOE believes that, for commercial 

refrigeration equipment, the existence or 

lack of doors (i.e., whether the case is 

open or closed) does affect the utility of 

the equipment to its owner and user, 

and therefore is a ‘‘feature’’ as that term 

is used in 42 U.S.C. 6295(o)(4) and 

6316(e)(1). Because a standard based on 

combining open and closed equipment 

classes would result in the 

unavailability of open cases, as 

described above, such a standard would 

violate EPCA’s prohibition against any 

standard that would ‘‘result in the 

unavailability’’ of equipment with 

‘‘features * * * that are substantially 

the same’’ as those currently available in 

the United States. (42 U.S.C. 6295(o)(4) 

and 6316(e)(1)) Second, EPCA 

prescribes energy conservation 

standards for self-contained equipment 

with doors, and mandates that DOE 

issue standard levels for ‘‘self-contained 

commercial refrigerators, freezers, and 

refrigerator-freezers without doors.’’ (42 

U.S.C. 6313(c)(2)–(4)) The latter 

equipment is one of the subjects of this 

rulemaking. Hence, the plain language 

of EPCA covers standards for 

commercial refrigeration equipment 

with and without doors. DOE must 

follow this legislative mandate. For 

these reasons, DOE did not consider 

doors as a design option for open 

equipment in its engineering analysis. 

The design options DOE considered in 

the NOPR engineering analysis are: 

• Higher efficiency lighting and 

ballasts for the VOP, SVO, HZO, and 

SOC equipment families (horizontal 

fixtures); 

• Higher efficiency lighting and 

ballasts for the VCT equipment family 

(vertical fixtures); 

• Higher efficiency evaporator fan 

motors; 

• Increased evaporator surface area; 

• Increased insulation thickness; 

• Improved doors for the VCT 

equipment family, low temperature; 

• Improved doors for the VCT 

equipment family, medium temperature; 

• Improved doors for the HCT 

equipment family, ice-cream 

temperature; 

• Improved doors for the SOC 

equipment family, medium temperature; 

• Higher efficiency condenser fan 

motors (for self-contained equipment 

only); 

• Increased condenser surface area 

(for self-contained equipment only); and 

• Higher efficiency compressors (for 

self-contained equipment only).16

At the public meeting and during the 

comment period, stakeholders raised 

concerns about some of the design 

option data DOE used in its analysis and 

about DOE’s depiction of some of the 

design options. Several stakeholders 

were concerned with the lighting design 

option data. Zero Zone stated that DOE’s 

estimate of the incremental increase in 

cost for light emitting diode (LED) 

lighting was too low. (Public Meeting 

Transcript, No. 13.5 at p. 89) ARI 

seemed to agree with Zero Zone’s 

assessment, stating that DOE appears to 

have significantly underestimated the 

incremental cost for LED lighting by 

about 50 percent. 

DOE revised its cost assumption for 

LED lighting used in the VOP, SVO, 

HZO, and SOC equipment families 

(horizontal four-foot fixtures) and the 

VCT equipment family (vertical 5-foot 

fixtures). For the ANOPR, DOE based 

LED lighting costs on an LED retrofit 

case study, but DOE revised some of its 

assumptions for the NOPR based on 

conversations with manufacturers of 

LED chips and LED fixtures. 

Specifically, DOE revised its 

assumptions on the relative weight of 

the costs of LED chips, power supplies, 

and the balance of fixtures (which 

includes labor). These changes cause the 

original equipment manufacturer (OEM) 

cost (i.e., the cost to commercial 

refrigeration equipment manufacturers) 

of LED fixtures to increase for both 

horizontal and vertical fixtures. DOE 

believes the cost estimates for LED 

fixtures are now more accurate and are 

consistent with the costs commercial 

refrigeration equipment manufacturers 

would experience in today’s market at 

mass-production volumes. Further 

discussion of the assumptions used to 

calculate LED fixture costs are provided 

in Chapter 5 of the TSD. 

Although DOE found that current LED 

costs are higher than originally 

estimated in the ANOPR analysis, 

through a closer examination of cost 

data for currently available LEDs, DOE 

recognizes that LED technology has 

historically exceeded DOE’s efficiency 

and cost targets. In this NOPR, DOE 

conducted a sensitivity study that 

analyzed future LED costs based on 

DOE’s Multi-Year Program Plan,17

which are consistent with historical 

LED price reductions between 2000 and 

2007 (see Appendix B of the TSD). The 

Multi-Year Program Plan projects that 

LED chip costs will continue to decrease 

at a compound annual growth rate 

(CAGR) of approximately ¥27 percent 

between 2007 and 2012, which 

represents a price reduction of 80 

percent over that time period. Also in 

agreement, EIA’s NEMS uses a 

technology characterization for LED 

light sources, which show that LED chip 

costs are expected to decline by 

approximately 71 percent for the same 

time period. Since LED chips are only 

a portion of the total LED system (other 

components include power supply and 

the LED fixture), the 80 percent 

reduction in chip costs contributes to an 

estimated decrease in total LED system 

cost of approximately 50 percent by 

2012, assuming the costs of the power 

supply and LED fixtures do not change 

significantly. 

DOE examined whether the projected 

LED costs presented in the Multi-Year 

Program Plan and used in this NOPR are 

consistent with publicly available 

empirical historical cost data. DOE 

reviewed available price data for the 

LED market and found that between 

2000 and 2007, white-light LEDs had a 

CAGR ranging from approximately ¥18 

to ¥31 percent. DOE’s LED cost 

projection (i.e., ¥27 percent CAGR) 

falls within the range of CAGRs 

observed. 


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18ASHRAE Standard 540–2004 lists standard 

rating conditions for hermetic refrigeration 

compressors. For medium-temperature equipment, 

compressors are rated at 20 °F suction dewpoint, 

120 °F discharge dewpoint, 40 °F return gas, and 

0 °F subcooling. For low-temperature equipment, 

compressors are rated at ¥10 °F suction dewpoint, 

120 °F discharge dewpoint, 40 °F return gas, and 

0 °F subcooling. For ice-cream-temperature 

equipment, compressors are rated at ¥25 °F suction 

dewpoint, 105 °F discharge dewpoint, 40 °F return 

gas, and 0 °F subcooling. 

DOE expanded its examination by 

comparing this projected trend to the 

red-light LED market, which is a related 

technology, with price information 

spanning approximately three decades 

(i.e., 1973 to 2005). DOE found that the 

CAGR of red-light LED costs was ¥22 

percent over this longer time span. The 

trend in red-light LED costs derived 

from empirical data over this longer 

time period is of a similar magnitude to 

DOE’s projected costs for white-light 

LEDs. Due to the technological 

similarities between red-light LEDs and 

white-light LEDs, DOE believes that the 

historical cost reductions for red-light 

LEDs are indicative of future cost 

reductions for white-light LEDs. 

Furthermore, the white-light LED 

market is undergoing a massive 

expansion and growth phase, with 

significant investment, new products 

and innovative applications for LED 

technology, including illumination of 

commercial refrigeration equipment. 

See Section V.C of this NOPR and 

Appendix B of the TSD for more detail 

on the cost projection and DOE’s 

validation of those estimates. DOE seeks 

comment on the extent to which these 

price trends are indicative of what can 

be expected for commercial refrigeration 

equipment LED lighting from 2007 to 

2012 and the extent to which the cost 

reduction observed for red-light LEDs is 

relevant to DOE’s cost projections for 

white-light LEDs. Also, in order to 

consider that LED costs are to decline 

more than assumed in this analysis, 

DOE will need more information than 

currently available on the extent, 

timing, and certainty of such further 

price reductions. Finally, DOE seeks 

comment on the extent to which 

manufacturers would adopt LED 

technology into the design of 

commercial refrigeration equipment in 

the absence of standards considering the 

rapid development of LED technology 

and the steady reductions in cost. See 

Section VII.E.1 for details. 

The design option data for doors on 

VCT equipment were another area of 

concern for stakeholders. Zero Zone 

stated that the incremental increase in 

cost for high-efficiency doors 

(particularly cooler doors) seemed too 

high. (Public Meeting Transcript, No. 

13.5 at p. 89) ACEEE also indicated that 

DOE’s costs for high-efficiency doors are 

too high. (ACEEE, No. 16 at p. 2) ARI 

stated that it does not believe that the 

door used in DOE’s analysis (one that 

uses no energy) is available in the 

market today. According to ARI, highefficiency door models currently in the 

market have no heat in the door, but the 

frame installed in the case uses at least 

40 W per door. ARI also stated that this 

option is not available to manufacturers 

in all applications because it is not 

intended for stores that operate outside 

a condition of 75 °F dry bulb and 55 

percent relative humidity, which 

requires higher wattage anti-condensate 

heaters in the doors/frames. (ARI, No. 

18 at p. 6) Zero Zone made similar 

comments, stating that building 

humidity could be an issue in the use 

and functionality of higher efficiency 

doors without heaters. Zero Zone also 

recommended that DOE revise its 

analysis and use 40 W per door for the 

high-efficiency medium temperature 

frame, and that high-efficiency doors 

should be dropped from the analysis 

because they can result in condensate 

and water on the floor, such that they 

are not safe to use in a number of stores. 

(Public Meeting Transcript, No. 13.5 at 

p. 119 and Zero Zone, No. 17 at p. 2) 

DOE did not revise its costs for doors 

on VCT equipment. After reviewing the 

information collected for the ANOPR 

analysis, DOE concluded that its 

preliminary cost estimates were 

reasonable. Notwithstanding the 

stakeholder observations just set forth, 

none of them provided any specific 

additional data that would warrant 

revision of DOE’s cost assessments, and 

DOE is not aware of such data. 

However, DOE revised the values for the 

anti-sweat heater power for glass doors 

for VCT.RC.L and VCT.RC.I equipment 

in the NOPR engineering analysis. 

Based on discussion with manufacturers 

and data from manufacturer 

specification sheets, the anti-sweat 

heater power for both the baseline and 

high-efficiency doors was increased 

(from 160 W to 200 W for baseline doors 

and from 60 W to 110 W for highefficiency doors). DOE also revised the 

anti-sweat heater power for glass doors 

for VCT.RC.M equipment in the NOPR 

engineering analysis based on 

comments and data received from 

manufacturer specification sheets. DOE 

increased the anti-sweat heater power 

for both the baseline doors (from 60 W 

to 100 W) and high-efficiency doors 

(from 0 W to 50 W). See Chapter 5 of 

the TSD for more detail. 

Regarding the compressor design 

options, Emerson noted that possible 

efficiency improvements for 

compressors in self-contained units may 

be too optimistic. True believes that 

because the test procedure is not steadystate (due to door openings), variablespeed compressors may be an effective 

design option. (Public Meeting 

Transcript, No. 13.5 at p. 75) However, 

True also noted that few variable-speed 

compressors are available in the 

appropriate power range, but that their 

development is continuing. (Public 

Meeting Transcript, No. 13.5 at p. 76) 

Emerson also believes that highefficiency compressors may not be 

readily available and that it may be 

particularly hard to find compressors 

capable of this level of increased 

efficiency for low temperature 

equipment. (Public Meeting Transcript, 

No. 13.5 at p. 65) For the NOPR, DOE 

revised the assumptions it used to 

estimate the changes in cost and 

efficiency for high-efficiency, singlespeed compressors. Based on 

discussions with manufacturers and 

other experts, DOE concluded that the 

assumptions used in the ANOPR 

analysis (a 10 percent increase in cost 

results in a 20 percent reduction in 

energy use) overstated the actual 

efficiency gains that are possible for 

today’s compressors. Therefore, DOE 

now assumes that a five percent 

increase in cost would result in a 10 

percent reduction in compressor energy 

use. Per-dollar efficiency gains are 

equivalent with these new assumptions, 

but the overall magnitude of power 

reduction and the cost premium are 

reduced. This change affects only the 

self-contained equipment classes 

analyzed in the engineering analysis. 

Additionally, in the NOPR analysis, 

DOE revised the capacity values used to 

select self-contained compressors in the 

energy consumption model. DOE’s 

energy consumption model selects the 

most appropriate compressor by 

comparing each compressor’s capacity 

to the total refrigeration load in the case 

multiplied by the compressor oversize 

factor. Because compressor capacity is 

dependent on the conditions the 

compressor is tested at (compressor 

manufacturers provide capacity data 

over a range of conditions), it is 

important to select the compressor 

capacity based on the same conditions 

used to calculate total refrigeration load. 

For the ANOPR analysis, DOE listed 

capacity at standard ASHRAE rating 

conditions. However, the standard 

rating conditions used in the ASHRAE 

540–2004 standard differ from the 

operating conditions used in the model, 

and each set of conditions results in 

different capacity values.18 Because the 

standard conditions and modeled 


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conditions differed, the model typically 

overestimated the capacity of the 

selected compressors. To compensate, 

DOE adjusted the compressor oversize 

factor to an unrealistic level (typically 1) 

in order for the ANOPR model to select 

the correct compressor. For the NOPR, 

DOE used capacities based on the same 

conditions used to calculate total 

refrigeration load and revised the 

oversize factor (typically 1.4 in the 

NOPR model) for all self-contained 

equipment classes to maintain the 

selection of the correct compressor size. 

See Chapter 5 of the TSD for more 

detail. 

In the analysis for the ANOPR, the 

calculation of LED energy use assumed 

that the LED lighting fixtures at the ends 

of VCT cases were identical to those 

between doors. With fluorescent 

fixtures, manufacturers install the same 

lamp regardless of whether it is at the 

end of the case (attached to an end 

mullion) or between doors (attached to 

an interior mullion). This causes excess 

light at the ends of the case. The light 

output of a single lamp between two 

doors is directed in both directions (i.e., 

behind two doors), whereas lamps at the 

ends direct light only on the contents 

behind the end door. LED fixtures are 

inherently scalable, so manufacturers 

can install an LED fixture in the end 

mullion that uses fewer LEDs than 

fixtures in interior mullions. In the 

NOPR analysis, the calculation assumes 

single-row LED fixtures are used in the 

end mullions and that these fixtures use 

roughly 75 percent of the energy of 

double-row fixtures in interior mullions. 

See Chapter 5 of the TSD for more 

detail. 

4. Baseline Models 

As mentioned above, the engineering 

analysis estimates the incremental costs 

for equipment with efficiency levels 

above the baseline in each equipment 

class. DOE was not able to identify a 

voluntary or industry standard that 

provided a minimum baseline efficiency 

requirement for commercial 

refrigeration equipment. Therefore, it 

was necessary for DOE to determine 

baseline specifications for each 

equipment class to define the energy 

consumption and cost of the typical, 

baseline equipment. These 

specifications include dimensions, 

number of components, temperatures, 

nominal power ratings, and other case 

features that affect energy consumption, 

as well as a basic case cost (the cost of 

a piece of equipment not including the 

major efficiency-related components 

such as lights, fan motors, and 

evaporator coils). 

DOE established baseline 

specifications for each equipment class 

modeled in the engineering analysis by 

reviewing available manufacturer data, 

selecting several representative units 

from available manufacturer data, and 

then aggregating the physical 

characteristics of the selected units. 

This process created a unit 

representative of commercial 

refrigeration equipment currently being 

offered for sale in each equipment class, 

with average characteristics for physical 

parameters (e.g., volume, TDA), and 

minimum performance of energyconsuming components (e.g., fans, 

lighting). DOE used the cost model to 

develop the basic case cost for each 

equipment class. See Appendix B of the 

TSD for these specifications. 

Zero Zone expressed concern over 

DOE’s method for calculating the 

internal case volume. Zero Zone 

suggested that DOE update its analysis 

to use ARI Standard 1200 for calculating 

the internal volume of a case. This 

standard calculates internal volume 

using the internal height and depth of 

the case from the inside of the door to 

the rear wall or rear duct. This is 

typically how the industry calculates 

internal volume. (Zero Zone, No. 17 at 

p. 1) 

In its engineering analysis, DOE 

followed the methodology in ANSI/ARI 

Standard 1200–2006 when calculating 

the refrigerated volume parameter used 

in the baseline design specifications. 

DOE used the internal height and depth 

of the case from inside of the door to the 

rear wall. No subtractions were made for 

shelving or other protrusions within the 

case interior envelope. 

At the public meeting, Zero Zone 

expressed concern over the lighting 

technology for the baseline models in 

each equipment class. Zero Zone stated 

that T12 lighting is no longer used in 

closed cases, and that T8 lighting is now 

the baseline for those cases. (Public 

Meeting Transcript, No. 13.5 at p. 88) 

Further, Zero Zone reiterated in writing 

that the baseline lighting for cases with 

a vertical transparent door should be T8. 

(Zero Zone, No. 17 at p. 3) DOE has 

changed the baseline specifications and 

is now using T8 lighting in the analysis 

of baseline models. 

Stakeholders raised concerns over the 

accuracy of some of the data used for 

the baseline models. Zero Zone stated 

that the TDA for VCT.RC.L and 

VCT.RC.M cases may be incorrect, and 

that the sum of the TDA for each door 

did not equal the TDA of the entire case 

for these two equipment classes. (Zero 

Zone, No. 17 at p. 3) 

In the NOPR analysis, DOE made 

several revisions to the baseline 

specifications. Appendix B of the TSD 

shows changes to baseline design 

specifications relative to the ANOPR 

analysis. DOE revised the TDA for 

VCT.RC.L and VCT.RC.M equipment so 

that the sum of the display area of the 

doors matches the TDA of the case. The 

baseline models used in the NOPR 

analysis are more representative of 

actual equipment than those DOE used 

in the ANOPR analysis, but in some 

situations, the changes to baseline 

characteristics affected the baseline 

energy consumption significantly 

compared to the ANOPR. Four 

equipment classes (HZO.RC.M, 

HZO.SC.M, HZO.SC.L, and VCS.SC.I) 

had changes that resulted in a 

significant increase in the baseline 

energy consumption, and one 

equipment class (SOC.RC.M) had 

changes that resulted in a decrease in 

the baseline energy consumption. See 

Appendix B of the TSD for more detail. 

For the ANOPR analysis, DOE 

calculated a baseline energy usage of 

0.16 kWh/ft2 for the HZO.RC.M 

equipment class. During manufacturer 

interviews, some manufacturers stated 

that this seemed unreasonably low. DOE 

reviewed the data it presented in the 

ANOPR TSD, as to the energy 

consumption of equipment on the 

market and realized that its figure for 

baseline energy usage for HZO.RC.M 

cases was well below the amounts 

indicated by the market data. DOE 

identified problems with the ANOPR 

design specifications for the HZO.RC.M 

equipment class, namely a lack of 

electric defrost and a mismatch between 

the size of the case (TDA) and the 

amount of infiltration load. For the 

NOPR analysis, DOE revised its baseline 

design specifications for this equipment 

to include electric defrost based on 

discussions with manufacturers during 

the MIA interviews and a review of 

market data. Although electric defrost is 

not always required on HZO.RC.M 

cases, about two-thirds of such 

equipment on the market use electric 

defrost. Based on manufacturer 

interviews, DOE understands there are 

lower infiltration loads (on a per-TDA 

basis) in horizontal open cases because 

of the natural ‘‘well’’ of cold air that 

tends to sit inside the case. In contrast, 

for a vertical or semivertical open case, 

the cold air tends to spill out of the 

opening under the influence of gravity. 

With a lower infiltration load for a given 

TDA, there is less heat available to melt 

frost from the evaporator coil using offcycle defrost. Thus, most HZO.RC.M 

case designs necessitate the use of 

electric resistance heating for defrost. 

DOE also revised the specifications for 


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the HZO.RC.M equipment class to 

include a higher infiltration load (in 

accordance with the updated infiltration 

methodology), and updated dimensions. 

In the ANOPR analysis, DOE used 

defrost meltwater to estimate the 

infiltration load. In accordance with the 

updated infiltration methodology, DOE 

used refrigeration load data to calculate 

the baseline infiltration load, which was 

higher than the load estimated using 

meltwater data in the ANOPR analysis 

(Chapter 5 for details). DOE also revised 

the dimensions of the HZO.RC.M class 

to reflect a somewhat smaller case size 

that was more representative of cases 

currently on the market. This change 

involved reducing the TDA, volume, 

wall area, and case interior surface area, 

all of which DOE matched to the 

infiltration load and other case 

components. See Appendix B of the 

TSD for more detail. 

For the HZO.SC.M and HZO.SC.L 

equipment classes, DOE made changes 

similar to those described in the 

preceding paragraph. These two 

equipment classes are in the same 

equipment family as the HZO.RC.M 

equipment class, so they share 

similarities to that class (e.g., having the 

same cabinet). Because of a lack of 

detailed data for the HZO.SC.M and 

HZO.SC.L equipment classes, DOE 

based its baseline specifications on the 

HZO.RC.M equipment class, making 

reasonable adjustments for design 

features specific to self-contained 

equipment. In particular, self-contained 

equipment has a lower compressor 

energy efficiency ratio (EER), and an 

added drain pan heater to evaporate 

defrost meltwater. Similar to the 

HZO.RC.M class, the change in 

infiltration load calculation led to a 

higher infiltration load for the 

HZO.SC.M class. DOE also added 

electric defrost to the HZO.SC.M class 

and increased the anti-sweat heater 

load. For the HZO.SC.L class, electric 

defrost was already included, since it is 

necessary for low-temperature 

equipment. However, DOE revised the 

infiltration load in accordance with the 

change in methodology and increased 

the anti-sweat heater load. See 

Appendix B of the TSD for more detail. 

Discussions during the manufacturer 

interviews revealed that in the ANOPR 

analysis, the baseline energy usage for 

the VCS.SC.I equipment class was 

unrealistically low. Therefore, in the 

NOPR analysis, DOE made revisions 

that increased energy usage in the 

baseline equipment for this class. DOE 

was unable to verify the accuracy of the 

baseline specifications in the ANOPR 

analysis, because of a lack of publicly 

available performance data for this 

class. For the NOPR, DOE revised its 

baseline assumptions to reflect a twodoor case instead of the three-door 

model analyzed in the ANOPR. DOE 

believes this change more accurately 

reflects the current market for VCS.SC.I 

cases and is more in line with the 

electric defrost power level. DOE 

increased infiltration load somewhat 

relative to the ANOPR specifications 

and added anti-sweat power. See 

Appendix B of the TSD for more detail. 

5. Engineering Analysis Results 

The results of the engineering analysis 

are reported as cost-efficiency data (or 

‘‘curves’’) in the form of CDEC (in kWh) 

versus MSP (in dollars), both 

normalized by TDA (or volume for the 

VCS.SC.I equipment class). DOE created 

15 cost-efficiency curves in the 

engineering analysis. 

Table IV–7 presents data for these 

curves. See Chapter 5 of the TSD for 

additional detail on the engineering 

analysis and comparisons of DOE’s 

analytically derived curves to industrysupplied curves. See Appendix B of the 

TSD for complete cost-efficiency results. 

BILLING CODE 6450–01–P 


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BILLING CODE 6450–01–C 

C. Markups to Determine Equipment 

Price 

This section explains how DOE 

developed the distribution channel 

markups it used (Chapter 6 of the TSD). 

DOE used these markups, along with 

sales taxes, installation costs, and the 

MSPs developed in the engineering 

analysis, to arrive at the final installed 

equipment prices for baseline and 

higher efficiency commercial 

refrigeration equipment. As explained 

in the ANOPR, 72 FR 41184, and as 

shown in Table IV–8, DOE defined three 

distribution channels for commercial 

refrigeration equipment to describe how 

the equipment passes from the 

manufacturer to the customer. 


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TABLE IV–8—DISTRIBUTION CHANNEL MARKET SHARES FOR COMMERCIAL REFRIGERATION EQUIPMENT

[In percent] 

Channel 1 Channel 2 Channel 3 

Manufacturer Manufacturer, 

wholesaler 

Manufacturer, 

wholesaler, 

contractor 

Customer Customer Customer 

Remote Condensing Equipment .................................................................................................. 70 15 15 

Self-Contained Equipment ........................................................................................................... 30 35 35 

For the ANOPR analysis, DOE 

estimated shares of 86 percent, 7 

percent, and 7 percent for the 

manufacturer, manufacturer/wholesaler, 

and manufacturer/wholesaler/contractor 

channels, respectively, for all 

commercial refrigeration equipment, 

based on market estimates from 

consultants. At the ANOPR public 

meeting, ARI and Carrier commented 

that the breakdown should be changed 

to 70 percent, 15 percent, and 15 

percent among the three channels, 

respectively, for remote condensing 

equipment and 30 percent, 35 percent, 

and 35 percent, respectively, for selfcontained equipment. (Public Meeting 

Transcript, No. 13.5 at p. 122; ARI, No. 

18 at p. 7) No other alternative estimates 

were provided of shipments through 

these distribution channels. Therefore, 

in the NOPR, DOE decided to modify 

the breakdown and it recalculated the 

overall markups using the same 

procedure described in the ANOPR (72 

FR 41184), but based upon the industry 

comments from ARI and Carrier. The 

new overall baseline and incremental 

markups for sales to supermarkets 

within each distribution channel are 

shown in Table IV–9, Table IV–10, 

Table IV–11, and Table IV–12, 

respectively. Chapter 6 of the TSD 

provides additional details on markups. 

TABLE IV–9—BASELINE MARKUPS BY DISTRIBUTION CHANNEL INCLUDING SALES TAX FOR SELF-CONTAINED EQUIPMENT

IN SUPERMARKETS

Wholesaler 

Mechanical 

contractor 

(includes 

wholesaler) 

National account (manufacturer-direct) 

Overall 

Distributor(s) Markup ....................................................................................... 1.436 2.182 1.218 1.631 

Sales Tax ......................................................................................................... 1.068 1.068 1.068 1.068 

Overall Markup ................................................................................................ 1.533 2.330 1.300 1.742 

TABLE IV–10—BASELINE MARKUPS BY DISTRIBUTION CHANNEL INCLUDING SALES TAX FOR REMOTE CONDENSING

EQUIPMENT IN SUPERMARKETS

Wholesaler 

Mechanical 

contractor 

(includes 

wholesaler) 

National account (manufacturer-direct) 

Overall 

Distributor(s) Markup ....................................................................................... 1.436 2.182 1.218 1.395 

Sales Tax ......................................................................................................... 1.068 1.068 1.068 1.068 

Overall Markup ................................................................................................ 1.533 2.330 1.300 1.490 

TABLE IV–11—INCREMENTAL MARKUPS BY DISTRIBUTION CHANNEL INCLUDING SALES TAX FOR SELF-CONTAINED

EQUIPMENT IN SUPERMARKETS

Wholesaler 

Mechanical 

contractor 

(includes 

wholesaler) 

National account (manufacturer-direct) 

Overall 

Distributor(s) Markup ....................................................................................... 1.107 1.362 1.054 1.180 

Sales Tax ......................................................................................................... 1.068 1.068 1.068 1.068 

Overall Markup ................................................................................................ 1.182 1.454 1.125 1.260 


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TABLE IV–12—INCREMENTAL MARKUPS BY DISTRIBUTION CHANNEL INCLUDING SALES TAX FOR REMOTE CONDENSING

EQUIPMENT IN SUPERMARKETS

Wholesaler 

Mechanical 

contractor 

(includes 

wholesaler) 

National account (manufacturer-direct) 

Overall 

Distributor(s) Markup ....................................................................................... 1.107 1.362 1.054 1.108 

Sales Tax ......................................................................................................... 1.068 1.068 1.068 1.068 

Overall Markup ................................................................................................ 1.182 1.454 1.125 1.183 

D. Energy Use Characterization 

The energy use characterization 

estimates the annual energy 

consumption of commercial 

refrigeration equipment systems 

(including the remote condensing 

units). This estimate is used in the 

subsequent LCC and PBP analyses 

(Chapter 8 of the TSD) and NIA (Chapter 

11 of the TSD). DOE estimated the 

energy consumption of the 15 

equipment classes analyzed in the 

engineering analysis (Chapter 5 of the 

TSD) using the relevant test procedure. 

DOE then validated these energy 

consumption estimates with annual 

whole-building simulation modeling of 

selected equipment classes and 

efficiency levels. One of the key 

assumptions in both the engineering 

analysis and the whole-building 

simulation in the ANOPR analysis was 

that the display case lighting operated 

24 hours per day. DOE conducted a 

limited sensitivity analysis to explore 

how variation in display case lighting 

operating hours affected the energy 

savings. The sensitivity analysis showed 

that energy savings fell as lighting 

operating hours were reduced for all 

equipment classes that used display 

case lighting. The magnitude of this 

effect depended on the equipment class. 

At the ANOPR public meeting, SCE 

stated that it was studying display case 

lighting and will gladly share results of 

the study with DOE as soon as the study 

is done. (Public Meeting Transcript, No. 

13.5 at p. 117) Hussman stated that with 

today’s low-temperature cabinets, store 

owners won’t turn those lights off 

because they may not come back on 

when they are so cold. (Public Meeting 

Transcript, No. 13.5 at p. 118) Hill 

Phoenix stated that turning off 

fluorescent lights at night can lead to 

maintenance issues because of moisture 

infiltration, so it is typical to leave the 

lights on all night. LEDs don’t have that 

problem. They agreed that 24-hour 

lighting is not a bad assumption. (Public 

Meeting Transcript, No. 13.5 at p. 118) 

Another manufacturer, Zero Zone, also 

agreed that 24 hours is a valid 

assumption for case lighting operating 

hours. (Zero Zone, No. 17 at p. 4) ARI 

recommended that the DOE analysis be 

based on 24 hours-per-day operation as 

this represents the worst-case scenario 

and many stores are open for 24 hours. 

(ARI, No. 18 at p. 4) Based on these 

comments, DOE decided to leave the 

assumption of display case lighting 

operating hours of 24 hours per day 

unchanged for the NOPR analysis. 

Additional detail on the energy use 

characterization can be found in 

Chapter 7 of the TSD. 

DOE also requested comments on 

other operational factors that might be 

encountered in the field that would 

differ from that found in the relevant 

test procedure, the relative frequency of 

these factors, and how it could account 

for them in its energy analysis. DOE 

received a comment from the Chinese 

delegation to the World Trade 

Organization stating that it should 

consider all kinds of on-site factors in 

operation and maintenance practices of 

the commercial refrigerating equipment 

when evaluating the optional standard 

class of the equipment. (China, No. 20 

at pp. 3–4) No specifics on what these 

factors might be or how to take them 

into account were provided, however. 

Chapter 7 of the TSD provides 

additional detail on the energy use 

characterization. 

E. Life-Cycle Cost and Payback Period 

Analyses 

In response to the requirements of 

Section 325(o)(2)(B)(i) of EPCA, DOE 

conducted LCC and PBP analyses to 

evaluate the economic impacts of 

possible new commercial refrigeration 

equipment standards on individual 

customers. This section describes the 

LCC and PBP analyses and the 

spreadsheet model DOE used for 

analyzing the economic impacts of 

possible standards on individual 

commercial customers. Details of the 

spreadsheet model, and of all the inputs 

to the LCC and PBP analyses, are in TSD 

Chapter 8. DOE conducted the LCC and 

PBP analyses using a spreadsheet model 

developed in Microsoft Excel for 

Windows 2003. 

The LCC is the total cost for a unit of 

commercial refrigeration equipment, 

over the life of the equipment, including 

purchase and installation expense and 

operating costs (energy expenditures 

and maintenance). To compute the LCC, 

DOE summed the installed price of the 

equipment and its lifetime operating 

costs discounted to the time of 

purchase. The PBP is the change in 

purchase expense due to a given energy 

conservation standard divided by the 

change in first-year operating cost that 

results from the standard. DOE 

expresses PBP in years. Otherwise 

stated, the payback period is the number 

of years it would take for the customer 

to recover the increased costs of a 

higher-efficiency product through 

energy savings. DOE measures the 

changes in LCC and in PBP associated 

with a given energy use standard level 

relative to a base case forecast of 

equipment energy use. The base case 

forecast reflects the market in the 

absence of mandatory energy 

conservation standards. 

The data inputs to the PBP calculation 

are the purchase expense (otherwise 

known as the total installed customer 

cost or first cost) and the annual 

operating costs for each selected design. 

The inputs to the equipment purchase 

expense were the equipment price and 

the installation cost, with appropriate 

markups. The inputs to the operating 

costs were the annual energy 

consumption, the electricity price, and 

the repair and maintenance costs. The 

PBP calculation uses the same inputs as 

the LCC analysis but, since it is a simple 

payback, the operating cost is for the 

year the standard takes effect, assumed 

to be 2012. For each efficiency level 

analyzed, the LCC analysis required 

input data for the total installed cost of 

the equipment, the operating cost, and 

the discount rate. 

Table IV–13 summarizes the inputs 

and key assumptions used to calculate 

the customer economic impacts of 

various energy consumption levels. 

Equipment price, installation cost, and 

baseline and standard design selection 

affect the installed cost of the 

equipment. Annual energy use, 

electricity costs, electricity price trends, 

and repair and maintenance costs affect 


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50096 Federal Register / Vol. 73, No. 165 / Monday, August 25, 2008 / Proposed Rules 

the operating cost. The effective date of 

the standard, the discount rate, and the 

lifetime of equipment affect the 

calculation of the present value of 

annual operating cost savings from a 

proposed standard. Table IV–13 also 

shows how DOE modified these inputs 

and key assumptions for the NOPR, 

relative to the ANOPR. 

TABLE IV–13—SUMMARY OF INPUTS AND KEY ASSUMPTIONS USED IN THE LCC AND PBP ANALYSES

Input Description Changes for NOPR 

Baseline Manufacturer Selling Price.Price charged by manufacturer to either a wholesaler or 

large customer for baseline equipment.

Data reflects updated engineering analysis. 

Standard-Level Manufacturer 

Selling Price Increases.

Incremental change in manufacturer selling price for 

equipment at each of the higher efficiency standard 

levels.

Data reflects updated engineering analysis. 

Markups and Sales Tax ....... Associated with converting the manufacturer selling 

price to a customer price (Chapter 6 of TSD).

Markups updated based on revised distribution channel 

shipment estimates. 

Installation Price ................... Cost to the customer of installing the equipment. This 

includes labor, overhead, and any miscellaneous materials and parts. The total installed cost equals the 

customer equipment price plus the installation price.

Installation prices for remote condensing and self-contained equipment revised based on ANOPR comments. 

Equipment Energy Consumption.Site energy use associated with the use of commercial 

refrigeration equipment, which includes only the use 

of electricity by the equipment itself.

Data reflects updated engineering analysis for each efficiency level. 

Electricity Prices ................... Average commercial electricity price ($/kWh) in each 

State and for four classes of commercial customers, 

as determined from EIA data for 2003$ converted to 

2006$.

Electricity prices updated to 2007$ using Electricity EIA 

Monthly Electricity Database for base commercial 

electricity prices; and AEO2007 to convert 2006 

prices to 2007 prices. 

Electricity Price Trends ........ Used the AEO2006 reference case to forecast future 

electricity prices.

Used the AEO2007 reference case to forecast future 

electricity prices. 

Maintenance Costs .............. Labor and material costs associated with maintaining 

the commercial refrigeration equipment (e.g., cleaning heat exchanger coils, checking refrigerant charge 

levels, lamp replacement).

No change in methodology. Lamp replacement costs 

reflect updated engineering analysis costs and are in 

2007$. 

Repair Costs ........................ Labor and material costs associated with repairing or 

replacing components that have failed. Based on a 

fixed percentage of baseline equipment costs.

Repair costs in NOPR reflect estimates of individual 

component life and cost to replace. Repair costs increase with increasing component costs. 

Equipment Lifetime .............. Age at which the commercial refrigeration equipment is 

retired from service (estimated to be 10 years).

Average equipment life for small grocery and convenience stores adjusted to 15 years. 

Discount Rate ...................... Rate at which future costs are discounted to establish 

their present value to commercial refrigeration equipment users.

Updated to 2007 version of the Damodaran website 

with very little change to discount rates. 

Rebound Effect .................... A rebound effect was not taken into account in the LCC 

analysis.

No change. 

The following sections contain brief 

discussions of the methods underlying 

each input and key assumption in the 

LCC analysis. Where appropriate, DOE 

also summarizes comments on these 

inputs and assumptions and explains 

how it took these comments into 

consideration. 

1. Manufacturer Selling Price 

The baseline MSP is the price charged 

by manufacturers to either a wholesaler/ 

distributor or very large customer for 

equipment meeting existing energy use 

(or baseline) levels. The MSP includes 

a markup that converts the MPC to MSP. 

DOE obtained the baseline MSPs 

through industry-supplied efficiencylevel data supplemented with a design 

option analysis. Refer to Chapter 5 of 

the TSD for details. 

DOE developed MSPs for equipment 

classes consisting of eight possible 

equipment families, two possible 

condensing unit configurations (remote 

condensing and self-contained), and 

three possible operating temperature 

ranges. Not all covered equipment 

classes have significant actual 

shipments (Chapter 3 of the TSD). DOE 

carried out the LCC and PBP analyses 

on the 15 primary equipment classes 

identified earlier. DOE estimated the 

MSP for each primary equipment class 

between the baseline efficiency level 

and for four to seven additional moreefficient levels. Refer to Chapter 5 of the 

TSD for details. 

DOE was not able to identify data on 

relative shipments for equipment 

classes by efficiency level, and DOE did 

not find equivalent data in the literature 

or studies. DOE designated the 

equipment with the highest energy use 

as Level 1, and selected this as the 

baseline equipment. 

In the ANOPR analysis, DOE 

requested feedback on whether the 

Level 1 baseline is valid for the LCC 

analysis, and if not, what changes 

should be made to provide a more 

realistic baseline level. DOE also asked 

whether a distribution of efficiencies 

should be used to establish the baseline 

for the LCC analysis. 72 FR 41193, 

41208. DOE received comments on the 

engineering analysis and the use of the 

analytically derived curves versus the 

industry-supplied curves. DOE modified 

the engineering analysis, which resulted 

in a modified Level 1 baseline. See 

Section IV.B for details. 

ARI stated that it would try to provide 

energy efficiency distribution data to 

DOE, but was unable to provide that 

data in time for the NOPR. (Public 

Meeting Transcript, No. 13.5 at p. 143) 

EEI stated that Electric Power Research 

Institute (EPRI) end use studies might 

provide some data that could be used to 

establish distributions. (Public Meeting 

Transcript, No. 13.5 at p. 141) ACEEE 

suggested that DOE check with the 

Northwest Energy Efficiency Alliance 

for possible energy efficiency 

distribution data. (Public Meeting 

Transcript, No. 13.5 at p. 142) However, 

ARI agreed with DOE’s approach to use 

the Level 1 data established in the 

engineering analysis as the appropriate 

baseline for DOE’s LCC analysis. DOE 

was able to explore some of the data 

available with the Northwest Energy 

Efficiency Alliance; however, the 


pwalker on PROD1PC71 with PROPOSALS2
Federal Register / Vol. 73, No. 165 / Monday, August 25, 2008 / Proposed Rules 50097 

19RS Means Company, Inc. 2005. Mechanical 

Cost Data 28th Annual Edition. Kingston, 

Massachusetts. 

20EIA form 826. Annual 1991 through 2006, JanFeb 2007. http://www.eia.doe.gov/cneaf/electricity/ 

page/data.html. Accessed May 29, 2007. 

available data generally provides only 

frequency of use of specific design 

features and not energy use. Based on 

this, DOE chose to continue to use the 

Level 1 energy efficiency level as the 

baseline efficiency level for the LCC 

analysis. See Chapter 8 of the TSD. 

2. Increase in Selling Price 

The standard level MSP increase is 

the change in MSP associated with 

producing equipment at lower energy 

consumption levels associated with 

higher standards. DOE developed MSP 

increases associated with decreasing 

equipment energy consumption (or 

higher efficiency) levels through a 

combination of energy consumption 

level and design-option analyses. See 

Chapter 5 of the TSD for details. DOE 

developed MSP increases as a function 

of equipment energy consumption for 

each of the 15 equipment classes. 

Although the engineering analysis 

produced up to 11 energy consumption 

levels, depending on equipment class, 

the LCC and PBP analyses used only up 

to eight selected energy consumption 

levels. 

3. Markups 

As discussed earlier, overall markups 

are based on one of three distribution 

channels and the calculation of baseline 

and incremental markups. The 

distribution channels defined in the 

ANOPR were also used for the NOPR 

analysis, but DOE modified the relative 

fractions of shipments through each 

distribution channel based on 

stakeholder input. See Section IV.C, 

Markups to Determine Equipment Price, 

for details. 

4. Installation Costs 

In the ANOPR, DOE derived 

installation costs for commercial 

refrigeration equipment from data 

provided in RS Means Mechanical Cost 

Data.19 RS Means provides estimates on 

the person-hours required to install 

commercial refrigeration equipment and 

the labor rates associated with the type 

of crew required to install the 

equipment. DOE developed separate 

installation costs for self-contained and 

remote condensing equipment. DOE 

considered the installation costs to be 

fixed, independent of the cost or 

efficiency of the equipment. Although 

the LCC spreadsheet allows for 

alternative scenarios, DOE did not find 

a basis for changing its basic premise for 

the ANOPR analysis. 

DOE received comments on the RS 

Means installation costs. Zero Zone 

commented that the installation costs 

seem low, and that it tracks installation 

costs and would provide installation 

cost data to DOE. (Public Meeting 

Transcript, No. 13.5 at p. 133) 

Separately, Zero Zone provided 

installation costs of $2,000 and $750, 

respectively, for remote condensing and 

self-contained equipment. DOE has 

decided to use these cost data in the 

NOPR analysis. Zero Zone also stated 

that a high-efficiency case installation 

isn’t going to cost significantly more 

than a standard case unless there are 

more controls to tune and adjust. SCE 

stated that if the installation cost doesn’t 

change with the equipment efficiency, 

then it doesn’t affect the relative lifecycle cost. (Public Meeting Transcript, 

No. 13.5 at p. 117) 

The total installed cost is the sum of 

the equipment price and the installation 

cost. DOE derived the customer 

equipment price for any given standard 

level by multiplying the baseline MSP 

by the baseline markup and adding to it 

the product of the incremental MSP and 

the incremental markup. Because MSPs, 

markups, and the sales tax can take on 

a variety of values depending on 

location, the resulting total installed 

cost for a particular standard level will 

not be a single-point value, but a 

distribution of values. See Chapter 8 of 

the TSD. 

5. Energy Consumption 

The electricity consumed by the 

commercial refrigeration equipment was 

based on the engineering analysis 

estimates as described previously in 

Section IV.B. No change was made to 

the ANOPR methodology. 

6. Electricity Prices 

Electricity prices are necessary to 

convert the electric energy savings into 

energy cost savings. Because of the wide 

variation in electricity consumption 

patterns, wholesale costs, and retail 

rates across the country, it is important 

to consider regional differences in 

electricity prices. DOE used average 

commercial electricity prices at the 

State level from the EIA Monthly 

Electricity Database.20 The 2006 prices 

were then converted to 2007$ using 

AEO2007. 

Different kinds of businesses typically 

use electricity in different amounts at 

different times of the day, week, and 

year, and therefore face different 

effective prices. To make this 

adjustment, DOE used the 2003 

Commercial Building Energy 

Consumption Survey (CBECS) data to 

identify the average prices the four 

kinds of businesses in this analysis paid 

compared with the average prices all 

commercial customers paid. The ratios 

of prices paid by the four types of 

businesses to the national average 

commercial prices seen in the 2003 

CBECS were used as multiplying factors 

to increase or decrease the average 

commercial 2006 price data previously 

developed. Once the electricity prices 

for the four types of businesses were 

adjusted, the resulting prices were used 

in the analysis. 

To obtain a weighted-average national 

electricity price, the prices paid by each 

business in each State was weighted by 

the estimated sales of frozen and 

refrigerated food products, which also 

serves as the distribution of commercial 

refrigeration equipment units in each 

State, to each prototype building. The 

State/business type weights are the 

probabilities that a given commercial 

refrigeration equipment unit shipped 

will be operated with a given electricity 

price. For evaluation purposes, the 

prices and weights can be depicted as a 

cumulative probability distribution. The 

effective electricity prices range from 

approximately 5 cents per kWh to 

approximately 22 cents per kWh. 

During the ANOPR public meeting, 

EEI concurred with the DOE analysis 

that shows grocery stores and food 

markets having lower electric prices 

than typical commercial facilities. (EEI, 

No. 15 at p. 3) DOE continued to use the 

same approach to develop electric 

prices for the NOPR analysis; however, 

DOE updated electric costs to 2007$. 

The section below describes the 

development and use of State-average 

electricity prices by building type; 

Chapter 8 of the TSD provides more 

detail. 

7. Electricity Price Trends 

The electricity price trend provides 

the relative change in electricity prices 

for future years to 2030. Estimating 

future electricity prices is difficult, 

especially considering that many States 

are attempting to restructure the 

electricity supply industry. DOE applied 

the AEO2007 reference case as the 

default scenario and extrapolated the 

trend in values from 2020 to 2030 of the 

forecast to establish prices in 2030 to 

2042. This method of extrapolation is in 

line with methods the EIA uses to 

forecast fuel prices for the Federal 

Energy Management Program (FEMP). 

DOE provided a sensitivity analysis of 

the life-cycle cost savings and PBP 

results to future electricity price 

scenarios using both the AEO2007 highgrowth and low-growth forecasts in 


pwalker on PROD1PC71 with PROPOSALS2
50098 Federal Register / Vol. 73, No. 165 / Monday, August 25, 2008 / Proposed Rules 

21RS Means Company, Inc. 2006. Means 

Costworks 2006: Facility Maintenance & Repair 

Cost Data. Kingston, Massachusetts. 

22RS Means Company, Inc. 2005. 2005 RS Means 

Electrical Cost Data. Kingston, Massachusetts. 

Chapter 8 of the TSD. ACEEE suggested 

that the NOPR economic analysis be 

recalculated using AEO2008 price 

forecasts. (ACEEE, No. 16 at p. 2) 

However, the AEO2008 was not 

available when DOE was completing the 

NOPR analysis. DOE used the most 

recent AEO forecast available 

(AEO2007) when it performed the LCC 

analysis for the NOPR. 

8. Repair Costs 

The equipment repair cost is the cost 

to the customer of replacing or repairing 

components in commercial refrigeration 

equipment that have failed. For the 

ANOPR analysis, DOE calculated the 

annualized repair cost for baseline 

efficiency equipment using the 

following expression: 

RC = k × EQP/LIFE 

Where 

RC = repair cost in dollars 

k = fraction of equipment price (estimated 

to be 0.5) 

EQP = baseline equipment price in dollars, 

and 

LIFE = average lifetime of the equipment in 

years (estimated to be 10 years for large 

grocery and multi-line retail chains and 

15 years for small grocery and 

convenience stores) 

DOE placed replacement of lighting 

components (lamps and ballasts) under 

maintenance expenses since the typical 

lamp life is known and commonly 

considered a maintenance item by 

customers of commercial refrigeration 

equipment. 

Because data were not available for 

how repair costs vary with equipment 

efficiency, DOE held repair costs 

constant as the default scenario for the 

ANOPR LCC and PBP analyses. DOE 

received several comments on the use of 

constant repair costs for higher 

efficiency equipment. Carrier stated that 

while it had no data to support this, 

higher efficiency design options—like 

adding controls—could cost more to 

repair, and it encouraged DOE to find 

more accurate repair costs that would 

correlate with more sophisticated 

controls. (Public Meeting Transcript, 

No. 13.5 at p. 135) Carrier felt that 

making repair costs proportional was 

better than making them flat. ARI stated 

that the assumption that repair costs are 

constant and do not vary with 

equipment efficiency is incorrect. (ARI, 

No. 18 at p. 7) Industry experience 

indicates that higher efficiency 

equipment is more expensive to repair 

because it uses more sophisticated and 

more expensive components. If actual 

cost data are not available, ARI 

recommended that DOE assume the 

repair cost to increase as a function of 

equipment cost. True stated that many 

routine maintenance items are affected 

by higher efficiency fan motors and 

lighting systems. (Public Meeting 

Transcript, No. 13.5 at p. 136) Hill 

Phoenix stated that higher maintenance 

costs would be incurred with almost 

any new technology. (Public Meeting 

Transcript, No. 13.5 at p. 136) However, 

True Manufacturing also stated that no 

data exists as to whether components 

such as energy efficient motors would 

have the same lifetime or costs as 

existing components. (Public Meeting 

Transcript, No. 13.5 at p. 138) ACEEE 

stated that it would caution against a 

straight ratio of repair cost to initial 

purchase cost; for controls this might be 

appropriate, but it shouldn’t affect 

repair costs for heat exchangers. (Public 

Meeting Transcript, No. 13.5 at p. 137) 

ACEEE suggested that any measures 

requiring increased repair costs be 

treated on a measure-by-measure basis. 

(ACEEE, No. 16 at p. 3) 

To address comments on repair costs, 

DOE contacted users and manufacturers 

of commercial refrigeration equipment 

to determine typical repair frequency for 

components used in commercial 

refrigeration equipment. Based on this 

review, DOE estimated replacement 

frequencies for five key components that 

appear to represent the most common 

repairs, and for which higher efficiency 

and more costly components were used 

in the engineering analysis for higher 

efficiency commercial refrigeration 

equipment. DOE then annualized the 

expected costs for these components at 

each efficiency level and added these 

component costs to the baseline repair 

cost estimates. This resulted in repair 

costs that increase with higher 

efficiency equipment. Refer to Chapter 8 

of the TSD for details. 

9. Maintenance Costs 

DOE estimated the annualized 

maintenance costs for commercial 

refrigeration equipment from data in RS 

Means Facilities Maintenance & Repair 

Cost Data.21 RS Means provides 

estimates on the person-hours, labor 

rates, and materials required to maintain 

commercial refrigeration equipment on 

a semi-annual basis. DOE used a single 

figure of $160/year (2007$) for 

preventive maintenance for all classes of 

commercial refrigeration equipment 

based on data from RS Means. Because 

data were not available to indicate 

whether, and if so, how, maintenance 

costs vary with equipment efficiency, 

DOE held preventive maintenance costs 

constant even as equipment efficiency 

increased. Lamp replacement and other 

lighting maintenance activities are 

required maintenance for commercial 

refrigeration equipment, which DOE 

considered to be separate from 

preventive maintenance, and were not 

itemized in the preventive maintenance 

activities described by RS Means. 

Different commercial refrigeration 

equipment classes have different 

numbers of lamps (and ballasts), and 

many of the efficiency options DOE 

considered in the engineering analysis 

involved changes to the lighting 

configuration (lamp, ballast, or use of 

LED lighting systems). Because the 

lighting configurations can vary by 

energy consumption level, DOE 

estimated the relative maintenance costs 

for lighting for each case type for which 

a design-option analysis was performed. 

DOE estimated the frequency of failure 

and replacement of individual lighting 

components, estimated the cost of 

replacement in the field, and developed 

an annualized maintenance cost based 

on the sum of the total lighting 

maintenance costs (in 2007$) over the 

estimated life of the equipment divided 

by the estimated life of the equipment. 

DOE based costs for fluorescent lamp 

and ballast replacements on a review of 

the OEM costs used in the engineering 

analysis, RS Means estimates, cost data 

from Grainger, Inc., and previous 

studies. DOE estimated the costs of field 

replacement using labor cost hours from 

RS Means Electrical Cost Data 22 for 

typical lamp or ballast replacement for 

other lighting fixtures using a 150- 

percent multiplier on OEM costs for 

lamps and ballasts (provided in the 

engineering analysis spreadsheets) to 

reflect retail pricing. See Chapter 8 of 

the TSD for details. 

Fluorescent lamp and ballast 

technology is mature, so DOE made no 

change in inflation-adjusted costs for 

these components. However, because of 

rapid technological improvement, costs 

for LED lamps are declining. DOE 

estimated the cost for field replacement 

of LED lighting fixtures (believed to 

occur approximately 6 years after the 

effective date of the standard, or 2018) 

at 140 percent of the OEM cost of LED 

lighting fixtures (2007 MPC cost in 

2007$), plus installation. This estimate 

includes installation labor and all retail 

markups for replacement fixtures. This 

estimate of replacement LED costs was 

based on 2007 OEM prices for LED 

fixtures, but with additional contractor 

markups for replacement fixtures 

similar to that used for fluorescent light 

ballasts and lamps (150 percent of OEM 


pwalker on PROD1PC71 with PROPOSALS2
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23 DOE anticipates a reduction in installed cost of 

LED systems over time. The projected reduction in 

price for LED systems is provided and discussed in 

Sections V.C and IV.B.3.c of this NOPR and 

Appendix B of the TSD. 

costs). In addition, because of the rapid 

development of LED technology and the 

projected OEM cost reductions for LED 

systems, DOE performed an LCC 

sensitivity analysis that examined the 

impact of reducing the cost of the LED 

replacement fixtures in 2018 by 50 

percent of the cost used in the base 

analysis.23 DOE recognizes that both life 

and cost estimates for LED replacement 

are projections and seeks comment on 

how it can best estimate the price for 

replacement LED fixture costs in the 

LCC analysis. This is identified as Issue 

1 under ‘‘Issues on Which DOE Seeks 

Comment’’ in Section VII.E of this 

NOPR. Chapter 8 of the TSD provides 

details on the development of 

maintenance costs. 

10. Lifetime 

DOE defines lifetime as the age when 

a commercial refrigeration equipment 

unit is retired from service. In its 

ANOPR analysis, DOE based equipment 

lifetime on discussions with industry 

experts and other stakeholders, as well 

as a review of estimates in the subject 

literature. DOE concluded that a typical 

lifetime of 10 years is appropriate for 

commercial refrigeration equipment. In 

commenting on the ANOPR analysis, 

ARI stated that, on average, equipment 

lifetime is approximately 10 years. ARI 

noted, however, that properly installed 

and maintained equipment typically has 

a useful life longer than end-use 

customers retain it due to retail store 

customer business models and 

competitive demands to upgrade and 

remodel stores. (ARI, No. 18 at p. 5) 

Zero Zone stated that door cases may be 

changed in store remodels every 10 

years at larger chains, but small 

independent chains will use cases for 20 

years. (Zero Zone, No. 17 at p. 4) True 

stated that most self-contained 

equipment has a life expectancy of 7 to 

12 years, although it regularly services 

equipment that is 25 years old. (Public 

Meeting Transcript, No. 13.5 at p. 98) 

For the NOPR analysis, DOE used an 

average life of 10 years for large grocery 

and multi-line retailers, but modified 

the lifetime in the LCC analysis to use 

a longer average 15-year life for the 

small grocery and convenience store 

business types, consistent with 

stakeholder comments and equipment 

life estimates from industry experts 

regarding smaller stores and 

independent grocers and chains. See 

Chapter 3 of the TSD for more detail. 

Commercial refrigeration equipment 

units are typically replaced when stores 

are renovated, which is before the units 

would have physically worn out. 

Therefore, there is a used equipment 

market for commercial refrigeration 

equipment. Due to the difficulty of 

incorporating used equipment into 

grocery store display case line-ups, the 

salvage value to the original purchaser 

is very low. Therefore, the ANOPR LCC 

analysis did not take the used 

equipment market into account. This 

methodology was also maintained in the 

NOPR LCC analysis. 

11. Discount Rate 

The discount rate is the rate at which 

future expenditures are discounted to 

establish their present value. DOE 

derived the discount rates for the LCC 

analysis by estimating the cost of capital 

for companies that purchase commercial 

refrigeration equipment. The cost of 

capital is commonly used to estimate 

the present value of cash flows to be 

derived from a typical company project 

or investment. Most companies use both 

debt and equity capital to fund 

investments, so their cost of capital is 

the weighted average of the cost to the 

company of equity and debt financing. 

DOE estimated the cost of equity 

financing by using the Capital Asset 

Pricing Model (CAPM). The CAPM, 

among the most widely used models to 

estimate the cost of equity financing, 

considers the cost of equity to be 

proportional to the amount of 

systematic risk associated with a 

company. The cost of equity financing 

tends to be high when a company faces 

a large degree of systematic risk, and it 

tends to be low when the company faces 

a small degree of systematic risk. 

To estimate the weighted average cost 

of capital (WACC) (including the 

weighted average cost of debt and equity 

financing) of commercial refrigeration 

equipment purchasers, DOE used a 

sample of companies involved in 

grocery and multi-line retailing drawn 

from a database of 7,319 U.S. companies 

on the Damodaran Online website. The 

WACC approach taken to determine 

discount rates takes into account the 

current tax status of the individual firms 

on an overall corporate basis. DOE did 

not evaluate the marginal effects of 

increased costs (and thus depreciation 

due to higher cost equipment on the 

overall tax status). 

DOE used a sample of 17 companies 

to represent the purchasers of 

commercial refrigeration equipment. For 

each company in the sample, DOE 

derived the cost of debt, percent debt 

financing, and systematic company risk 

from information provided by 

Damodaran Online. DOE estimated the 

cost of debt financing from the longterm Government bond rate (4.39 

percent) and the standard deviation of 

the stock price. The cost of capital for 

small, independent grocers; 

convenience store franchisees; gasoline 

station owner-operators; and others with 

more limited access to capital is more 

difficult to determine. Individual creditworthiness varies considerably, and 

some franchisees have access to the 

financial resources of the franchising 

corporation. However, personal contacts 

with a sample of commercial bankers 

yielded an estimate for the small 

operator weighted cost of capital of 

about 200 to 300 basis points (2 percent 

to 3 percent) above the rates for large 

grocery chains. A central value equal to 

the weighted average of large grocery 

chains, plus 250 basis points (2.5 

percent), was used for small operators. 

Deducting expected inflation from the 

cost of capital provides the estimates of 

the real discount rate by ownership 

category. The average after-tax discount 

rate, weighted by the percentage shares 

of total purchases of commercial 

refrigeration equipment, is 5.87 percent 

for large grocery stores, 5.11 percent for 

multi-line retailers, and 8.37 percent for 

convenience stores and convenience 

stores associated with gasoline stations. 

DOE received no comments on the 

discount rates developed in the ANOPR 

but took advantage of the availability of 

2007 financial data to update the 

discount rate assumptions in the NOPR. 

See Chapter 8 of the TSD. 

12. Payback Period 

The PBP is the amount of time it takes 

the customer to recover the 

incrementally higher purchase cost of 

more energy efficient equipment as a 

result of lower operating costs. 

Numerically, the PBP is the ratio of the 

increase in purchase cost (i.e., from a 

less efficient design to a more efficient 

design) to the decrease in annual 

operating expenditures. This type of 

calculation is known as a ‘‘simple’’ PBP, 

because it does not take into account 

changes in operating cost over time or 

the time value of money, that is, the 

calculation is done at an effective 

discount rate of zero percent. 

The equation for PBP is: 

PBP = DIC/DOC 

Where 

PBP = payback period in years, 

DIC = difference in the total installed cost 

between the more efficient standard level 

equipment (energy consumption levels 2, 

3, etc.) and the baseline (energy 

consumption level 1) equipment, and 

DOC = difference in annual operating costs. 


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The data inputs to the PBP analysis 

are the total installed cost of the 

equipment to the customer for each 

energy consumption level and the 

annual (first-year) operating costs for 

each energy consumption level. The 

inputs to the total installed cost are the 

equipment price and the installation 

cost. The inputs to the operating costs 

are the annual energy cost, the annual 

repair cost, and the annual maintenance 

cost. The PBP uses the same inputs as 

the LCC analysis, except that electricity 

price trends and discount rates are not 

required. Since the PBP is a ‘‘simple’’

(undiscounted) payback, the required 

electricity cost is only for the year in 

which a new energy conservation 

standard is to take effect—in this case, 

2012. The electricity price used in the 

PBP calculation of electricity cost was 

the price projected for 2012, expressed 

in 2007$, but not discounted to 2007. 

Discount rates are not used in the PBP 

calculation. 

PBP is one of the economic indicators 

that DOE uses when assessing economic 

impact to a customer. PBP does not take 

into account the time value of money 

explicitly (e.g., through a discount 

factor), the life of the efficiency 

measure, or changing fuel costs over 

time. In addition, because PBP takes 

into account the cumulative energy and 

first-cost impact of a set of efficiency 

measures, it can be sensitive to the 

baseline level assumed. In addition, 

what is deemed an acceptable payback 

period can vary. By contrast, when 

examining LCC savings by efficiency 

levels, there is generally a maximum 

LCC savings point (minimum LCC 

efficiency level) indicative of maximum 

economic benefit to the customer. The 

selection of the baseline efficiency level 

does not affect the identification of the 

minimum LCC efficiency level, although 

a baseline efficiency is used when 

calculating net LCC savings or costs. 

DOE considers both LCC and PBP as 

related to the seven factors discussed in 

Section II.B to determine whether a 

standard is economically justified and 

whether the benefits of an energy 

conservation standard will exceed its 

burdens to the greatest extent 

practicable. However, because LCC uses 

an explicit discount rate, takes into 

account changing energy prices, and 

does not require selection of a baseline 

efficiency level, it is considered by DOE 

to be a better indicator of the likely 

economic impacts on consumers. 

F. Shipments Analysis 

One of the more important 

components of any estimate of the 

future impact of a standard is 

equipment shipments. DOE developed 

forecasts of shipments for the base case 

and standards cases and includes those 

forecasts in the NES spreadsheet. The 

shipments portion of the spreadsheet 

forecasts shipments of commercial 

refrigeration equipment from 2012 to 

2042. DOE developed shipments 

forecasts for the 15 primary equipment 

classes by accounting for the shipments 

to replace the existing stock of 

commercial refrigeration equipment, 

commercial refrigeration shipments into 

new commercial floor spaces, and old 

equipment removed through 

demolitions. Chapter 10 of the TSD 

provides additional details on the 

shipments forecasts. 

The results of the shipments analysis 

are driven primarily by historical 

shipments data for the 15 equipment 

classes of commercial refrigeration 

equipment, DOE estimates of average 

equipment life, relative shipment 

estimates to each of the four business 

types, the existing total floor space in 

food sales buildings, and the anticipated 

growth in food sales floor space 

estimated in EIA’s NEMS. The model 

estimates that, in each year, the existing 

stock of commercial refrigeration 

equipment either ages by one year or is 

worn out and replaced. In addition, new 

equipment can be shipped into new 

commercial floor space, and old 

equipment can be removed through 

demolitions. DOE chose to preserve the 

capability to analyze all efficiency levels 

analyzed in the LCC in the NIA. 

The shipments analysis is a 

description of commercial refrigeration 

equipment stock flows as a function of 

year and age. While there are 15 

equipment classes, the shipment 

analysis treats each category of 

equipment independently such that 

future shipments in any one class are 

unaffected by shipments in any other 

equipment classes and the relative 

fraction of shipments in each product 

class compared to all commercial 

refrigeration equipment shipments is 

assumed to be constant over time. DOE 

recognizes that a retailer of refrigerated 

or frozen food can choose to use 

different classes of commercial 

refrigeration equipment to sell the same 

food product as long as the equipment 

is in the required temperature range (i.e. 

refrigerator, freezer, or ice-cream 

temperature range). The decision to 

adopt one equipment class over another 

within the same temperature range will 

depend on first costs, operating costs, 

and the perceived ability to 

merchandise product. In addition, 

relative sales refrigerated versus frozen 

foods could change in the future. 

However, DOE had no information with 

which to develop and calibrate a 

shipments model incorporating these 

factors. 

DOE formulated the equations used in 

the analysis as updates of the 

distribution of stock in any given year, 

as a function of age, to the following 

year using the following steps: 

1. DOE first converted the equipment 

units to linear feet of display space 

cooled by those units by taking the 

national statistics on sales of equipment 

and calculating equipment capacity per 

linear foot of retail grocery building 

display space. 

2. DOE used this calculation of 

existing stock, and the average age of the 

equipment, as a basis for calculating 

replacement sales. 

3. DOE subtracted replacement sales 

from historical total sales statistics to 

calculate new sales of commercial 

refrigeration equipment. 

4. DOE forecasted new sales as a 

function of new construction of retail 

food sales space. 

5. DOE recorded sales of new and 

replacement equipment by the year 

sold, and depreciated each annual 

vintage over the estimated life of the 

equipment. 

6. DOE allocated sales in each year to 

the 15 equipment classes in proportion 

to their relative historical sales. 

In response to DOE’s presentation of 

the ANOPR shipment analysis, the 

public made two primary comments. 

True stated that while food sales 

buildings are probably representative of 

remote condensing equipment, as much 

as 25 percent of the self-contained 

market goes into unusual conditions, 

but that the majority does end up in 

some sort of food-sales type application. 

(Public Meeting Transcript, No. 13.5 at 

p. 165) However, in a follow-up 

conversation, True agreed that for selfcontained equipment without doors, 

which is the majority of the selfcontained equipment covered in this 

rulemaking, the amount of equipment 

not shipped to food sales buildings 

represents a very small fraction of the 

total market. DOE concluded that it was 

therefore unnecessary to include other 

business types or building categories for 

the analysis of self-contained equipment 

to be valid and representative. 

Other stakeholders commented on the 

assumption of zero shipments in the 

ANOPR for the VOP.RC.L equipment 

class based on the submitted ARI 

shipment data. (Public Meeting 

Transcript, No. 13.5 at p. 164) ARI, in 

turn, stated that zero values in its data 

submittal to DOE may represent an 

equipment class where only one or two 

manufacturers have shipments. These 

data were excluded to maintain 

confidentiality. (Public Meeting 


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Transcript, No. 13.5 at p. 52) To address 

these issues, DOE estimated the 

shipments for the VOP.RC.L equipment 

class at five percent of the similarly 

designed VOP.RC.M equipment class 

based on information provided in 

manufacturer interviews. 

Finally, DOE received comments on 

the impact of the used equipment 

market on shipments in the presence of 

new equipment standards. True stated 

that DOE should consider how long 

existing low-efficiency equipment will 

be in service. (Public Meeting 

Transcript, No. 13.5 at p. 98) As you 

drive the cost higher, the life expectancy 

of existing equipment increases. ACEEE 

countered, however, that the issue of 

used equipment has come up in other 

rulemakings. Customers may use 

existing equipment longer, but the 

average was only one or two years more, 

which has a small impact on the energy 

savings projected through 2042. It may 

be more of a factor in the manufacturer 

impact analysis, because that could 

affect sales in at least the first year. 

(Public Meeting Transcript, No. 13.5 at 

p. 102) 

True stated that the used equipment 

market is often ignored. As you drive 

costs of capital up, you drive the need 

for low-end users to buy used 

equipment and that the higher the cost 

per unit, the more the used equipment 

market thrives. True stated that this is 

very significant in the restaurant 

industry, where studies suggest that 90 

percent of all new non-chain restaurants 

fail within the first year. Most of these 

businesses are buying used equipment. 

(Public Meeting Transcript, No. 13.5 at 

p. 202–207) EEI suggested that, if 

possible, DOE should investigate the use 

of used versus new equipment in 

restaurants, and make sure that new 

standards do not increase the purchase 

of older, less efficient equipment. (EEI, 

No. 15 at p. 2) 

Follow-up conversations with True 

lead DOE to believe that it is 

unnecessary to take the restaurant 

business type into account since it is not 

a large market for the equipment 

covered under this rulemaking. DOE 

determined that it would not try to 

account for life extension in the NIA. 

While DOE recognizes that there may be 

some initial life extension for existing 

markets for some customers, no data are 

available to forecast the frequency and 

amount of life extension that might 

occur within the industry. DOE agrees 

with ACEEE that this would result in a 

relatively small impact on energy 

savings and, given that it would also 

reduce expenditures for new equipment, 

would have an even smaller impact on 

calculated NPV. For the NOPR analysis, 

DOE did not assume an initial decrease 

in sales and life extension for 

commercial refrigeration equipment 

covered in this rulemaking. 

Table IV–14 shows the results of the 

shipments analysis for the 15 

commercial refrigeration equipment 

classes for the base case (baseline 

efficiency level or Level 1). As 

equipment purchase price increases 

with higher efficiency levels, a drop in 

shipments can be expected relative to 

the base case. However, as annual 

energy consumption is reduced, there is 

potentially a countering effect of 

increased equipment sales due to more 

frequent installations and use of 

commercial refrigeration equipment by 

retailers (a potential rebound effect). 

Although there is a provision in the 

spreadsheet for a change in projected 

shipments in response to efficiency 

level increases (or energy consumption 

level decreases), DOE has no 

information with which to calibrate 

such a relationship. No such data was 

provided in comments on the ANOPR 

analysis. Therefore, for the NOPR 

analysis, DOE assumed that the overall 

shipments do not change in response to 

the changing TSLs. Additional details 

on the shipments analysis can be found 

in Chapter 10 of the TSD. 

TABLE IV–14—FORECASTED SHIPMENTS FOR COMMERCIAL REFRIGERATION EQUIPMENT, 2012–2042, (BASE CASE) 

Equipment class 

Thousands of linear feet shipped by year and equipment class 

2012 2015 2020 2025 2030 2035 2040 2042 Cumulative 

VOP.RC.M ............................... 451 436 451 464 497 531 582 604 15,270 

VOP.RC.L ................................ 23 22 23 23 25 27 29 30 763 

VOP.SC.M ................................ 30 29 30 31 33 36 39 41 1,027 

VCT.RC.M ................................ 32 31 32 33 35 38 42 43 1,091 

VCT.RC.L ................................. 448 433 448 461 494 527 578 600 15,167 

VCT.SC.I .................................. 11 11 11 11 12 13 14 15 374 

VCS.SC.I .................................. 3 3 3 3 3 3 4 4 93 

SVO.RC.M ............................... 344 332 344 354 379 405 444 460 11,647 

SVO.SC.M ................................ 45 44 45 47 50 53 59 61 1,537 

SOC.RC.M ............................... 87 84 87 89 96 102 112 116 2,936 

HZO.RC.M ............................... 53 51 53 54 58 62 68 71 1,790 

HZO.RC.L ................................ 166 161 166 171 183 196 214 222 5,627 

HZO.SC.M ................................ 4 4 4 4 4 5 5 5 132 

HZO.SC.L ................................. 8 8 8 8 9 10 10 11 274 

HCT.SC.I .................................. 36 35 36 37 39 42 46 48 1,214 

G. National Impact Analysis 

The NIA assesses future NES and the 

national economic impacts of different 

efficiency levels. The analysis measures 

economic impacts using the NPV metric 

(i.e., future amounts discounted to the 

present) of total commercial customer 

costs and savings expected to result 

from new standards at specific 

efficiency levels. 

To make the analysis more accessible 

and transparent to the public, DOE used 

an Excel spreadsheet model to calculate 

the energy savings and the national 

economic costs and savings from new 

standards. Excel is the most widely used 

spreadsheet calculation tool in the 

United States and there is general 

familiarity with its basic features. Thus, 

DOE’s use of Excel as the basis for the 

spreadsheet models provides interested 

persons with access to the models 

within a familiar context. In addition, 

the TSD and other documentation that 

DOE provides during the rulemaking 

help explain the models and how to use 

them, and interested persons can review 

DOE’s analyses by changing various 

input quantities within the spreadsheet. 

Unlike the LCC analysis, the NES 

spreadsheet does not use distributions 

for inputs or outputs. DOE examined 

sensitivities by applying different 

scenarios. DOE used the NES 

spreadsheet to perform calculations of 

national energy savings and NPV using 


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the annual energy consumption and 

total installed cost data from the LCC 

analysis and estimates of national 

shipments for each of the 15 primary 

commercial refrigeration equipment 

classes. DOE forecasted the energy 

savings, energy cost savings, equipment 

costs, and NPV of benefits for all 

primary commercial refrigeration 

equipment classes from 2012 through 

2062. The forecasts provided annual 

and cumulative values for all four 

output parameters. 

DOE calculated the NES by 

subtracting energy use under a 

standards scenario from energy use in a 

base case (no new standards) scenario. 

Energy use is reduced when a unit of 

commercial refrigeration equipment in 

the base case efficiency distribution is 

replaced by a more efficient piece of 

equipment. Energy savings for each 

equipment class are the same national 

average values as calculated in the LCC 

and payback period spreadsheet. 

However, these results are normalized 

on a per-unit-length basis by equipment 

class and applied to the total annual 

estimated shipments in terms of line-up 

length of all equipment with the class. 

Table IV–15 shows key inputs to the 

NIA. Chapter 11 of the TSD provides 

additional information about the NES 

spreadsheet. 

TABLE IV–15—SUMMARY OF NATIONAL ENERGY SAVINGS AND NET PRESENT VALUE INPUTS

Input data Description Changes for NOPR 

Shipments ............................ Annual shipments from shipments model (Chapter 10, 

Shipments Analysis).

Shipments model modified to use a distribution of 

equipment lifetimes based on a 10-year average life 

in large grocery and multi-line retail, and a 15-year 

average life in small grocery and convenience stores. 

Estimates for shipments for the VOP.RC.L equipment 

class were added and are provided. 

Effective Date of Standard ... 2012 ................................................................................ No change. 

Base Case Efficiencies ........ Distribution of base case shipments by efficiency level No change in methodology to derive base case shipments by efficiency level. 

Standards Case Efficiencies Distribution of shipments by efficiency level for each 

standards case. Standards case annual market 

shares by efficiency level remain constant over time 

for the base case and each standards case.

No change in methodology to derive shipments by efficiency level in each standards case. 

Annual Energy Consumption 

per Linear Foot.

Annual weighted-average values are a function of energy consumption level, which are established in the 

engineering analysis (Chapter 5 of the TSD). Converted to a per linear foot basis.

No change in methodology. Energy consumption estimates reflect updates to NOPR engineering analysis. 

Total Installed Cost per Linear Foot.Annual weighted-average values are a function of energy consumption level (Chapter 8 of the TSD). Converted to a per linear foot basis.No change in methodology. Installed costs reflect updates to NOPR LCC. 

Repair Cost per Linear Foot Annual weighted-average values are constant with energy consumption level (Chapter 8 of the TSD). Converted to a per linear foot basis.No change in methodology. Repair costs reflected updates to NOPR LCC. 

Maintenance Cost per Linear 

Foot.

Annual weighted-average value equals $156 (Chapter 8 

of the TSD), plus lighting maintenance cost. Converted to a per linear foot basis.

No change in methodology, but annual weighted-average value updated to $160 in 2007$. 

Escalation of Electricity 

Prices.

EIA AEO2006 forecasts (to 2030) and extrapolation for 

beyond 2030 (Chapter 8 of the TSD).

EIA AEO2007 forecasts (to 2030) and extrapolation for 

beyond 2030 (Chapter 8 of the TSD). 

Electricity Site-to-Source 

Conversion.

Conversion varies yearly and is generated by DOE/ 

EIA’s NEMS* program (a time series conversion factor; includes electric generation, transmission, and 

distribution losses).

Conversion factor varies yearly and is generated by 

EIA’s NEMS model. Includes the impact of electric 

generation, transmission, and distribution losses. 

Discount Rate ...................... 3 and 7 percent real ........................................................ No change. 

Present Year ........................ Future costs are discounted to year 2007 ...................... Future costs are discounted to year 2008. 

Rebound Effect .................... A rebound effect (due to changes in shipments resulting from standards) was not considered in the NIA.No change. 

1. Base Case and Standards Case 

Forecasted Efficiencies 

A key component of DOE’s estimates 

of NES and NPV are the energy 

efficiencies for shipped equipment that 

it forecasts over time for the base case 

(without new standards) and for each 

standards case. The forecasted 

efficiencies represent the distribution of 

energy efficiency of the equipment 

under consideration that is shipped over 

the forecast period (i.e., from the 

assumed effective date of a new 

standard to 30 years after the standard 

becomes effective). 

The annual per-unit energy 

consumption is the site energy 

consumed by a commercial refrigeration 

equipment unit per year. The annual 

energy consumption is directly tied to 

the efficiency of the unit. Thus, 

knowing the efficiency of a commercial 

refrigeration equipment unit determines 

the corresponding annual energy 

consumption. DOE determined annual 

forecasted market shares by efficiency 

level that, in turn, enabled 

determination of shipment-weighted 

annual energy consumption values. 

Because no data were available on 

market shares broken down by 

efficiency level, DOE determined market 

shares by efficiency level for 

commercial refrigeration based on its 

own analysis. DOE first converted 2005 

shipment information by equipment 

class into market shares by equipment 

class, and then adapted a cost-based 

method similar to that used in the 

NEMS to estimate market shares for 

each equipment class by efficiency 

level. This cost-based method relied on 

cost data developed in the engineering 

and life-cycle cost analyses, as well as 

economic purchase criteria data taken 

directly from NEMS. From those market 

shares and projections of shipments by 

equipment class, DOE developed the 

future efficiency scenarios for a base 


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case (i.e., without new standards) and 

for various standards cases (i.e., with 

new standards). DOE did not have data 

to calibrate this approach to actual 

market shipments by efficiency level. 

DOE requested comment on this 

approach to generating market shares by 

efficiency level in the ANOPR. 

Commenting on the distribution of 

market efficiency, ARI stated that 

experience with other equipment tells 

us that the majority of the shipments are 

usually at the lower end of the curve of 

the highest efficiency. ARI was 

surprised that DOE had only 25 percent 

or 30 percent of the shipments at that 

efficiency level. They also cautioned 

DOE that the industry-supplied curves 

are cost curves and do not mean that 

such equipment is on the market today. 

As Section IV.E, Life-Cycle Cost, 

discusses, ARI offered to try to provide 

data on the distribution of efficiencies 

in current equipment but was not able 

to do so. (Public Meeting Transcript, No. 

13.5 at p. 143) Other stakeholders, such 

as EEI and ACEEE, suggested possible 

avenues that DOE could examine but 

did not have data DOE could use to 

establish a distribution of efficiencies. 

(Public Meeting Transcript, No. 13.5 at 

p. 141–142; p. 173) Because of the lack 

of data on market shipments by 

efficiency level, DOE chose to continue 

to use the ANOPR approach to estimate 

shipments by efficiency level. 

DOE developed base case efficiency 

forecasts based on the estimated market 

shares by equipment class and 

efficiency level. Because there are no 

historical data to indicate how 

equipment efficiencies or relative 

equipment class preferences have 

changed over time, DOE predicted that 

forecasted market shares would remain 

frozen at the 2012 efficiency level until 

the end of the forecast period (30 years 

after the effective date, 2042). DOE 

requested comments on this 

assumption. 

Copeland commented that since DOE 

plans to update the forecast in five 

years, no one can really figure out what 

that distribution of efficiency in the 

future looks like. (Public Meeting 

Transcript, No. 13.5 at p. 175) EEI 

suggested DOE make further contacts 

with national accounts that use 

commercial refrigeration equipment. No 

suggestions for improving this 

assumption were received. For the 

NOPR, DOE continued to use the 

assumption of flat market shares by 

efficiency level for the forecast period. 

For its determination of standards 

case forecasted efficiencies, DOE used a 

‘‘roll-up’’ scenario to establish the 

market shares by efficiency level for 

2012, the year that standards become 

effective. Information available to DOE 

suggests that equipment shipments with 

efficiencies in the base case that did not 

meet the standard level under 

consideration would roll up to meet the 

new standard level, and that all 

equipment efficiencies in the base case 

that were above the standard level 

under consideration would not be 

affected. Emerson commented that a 

standard brings some compression in 

the distribution of efficiencies. (Public 

Meeting Transcript, No. 13.5 at p. 175) 

However, ARI stated the roll-up 

scenario best represents what is likely to 

happen when energy conservation 

standards take effect. (ARI, No. 18 at p. 

5) DOE continued to use the roll-up 

scenario for the NOPR analysis. 

Finally, DOE recognizes that baseline 

efficiency trends can change if 

equipment costs are different than those 

projected. For example, if LED prices 

drop more than assumed in the 

engineering analysis, consumer demand 

for equipment with LEDs could change. 

DOE seeks comment on whether 

shipments of equipment with LEDs 

would change if LED costs drop and if 

so, the extent and timing of such 

shipment changes. See Section VII.E.1. 

2. Annual Energy Consumption, Total 

Installed Cost, Maintenance Cost, and 

Repair Costs 

The difference in shipments by 

equipment efficiency level between the 

base and standards cases was the basis 

for determining the reduction in perunit annual energy consumption that 

could result from new standards. The 

commercial refrigeration equipment 

stock in a given year is the total linear 

footage of commercial refrigeration 

equipment shipped from earlier years 

that survive in the given year. The NES 

spreadsheet model keeps track of the 

total linear footage of commercial 

refrigeration equipment units shipped 

each year and estimates the total 

commercial refrigeration equipment 

stock for each year. The annual energy 

consumption by efficiency level for each 

equipment category comes from the LCC 

analysis and is converted to a per-linearfoot basis by dividing by the length of 

the specific equipment analyzed in the 

engineering analysis. Similarly, the total 

installed cost, maintenance cost, and 

repair costs for each efficiency level for 

each equipment class analyzed in the 

LCC are converted to a per linear foot 

basis. Using the total estimated 

shipments and total estimated stock by 

equipment category and efficiency level, 

DOE calculates the annual energy 

consumption for the commercial 

refrigeration equipment stock in each 

year, the maintenance and repair costs 

associated with the equipment stock, 

and the total installed costs associated 

with new shipments in each year based 

on the standards scenario and 

associated distribution of shipments by 

efficiency level. 

3. Escalation of Electricity Prices 

DOE uses the most recent AEO 

reference case to forecast energy prices 

for standard rulemakings. For the 

ANOPR, DOE used the AEO2006 

reference case forecasts to estimate 

future electricity prices. ACEEE 

commented that it would like DOE to 

use the AEO2008 forecasts for the NOPR 

analysis. (ACEEE, No. 16 at p. 2) 

However, this forecast was not available 

when DOE completed the NOPR 

analysis. DOE used the AEO2007 

reference case forecasts for future 

electricity prices, extended out to the 

end of the analysis period. DOE 

extrapolated the trend in values from 

2020 to 2030 of the forecast to establish 

prices for the remainder of the analysis 

period. DOE intends to update its 

analysis for the final rule to reflect the 

AEO 2008 electricity price forecasts 

when final versions of these price 

forecasts are available. An AEO Revised 

Early Release for the AEO 2008 

reference case only has indicated that 

the reference case electricity prices are 

higher in real (inflation adjusted) terms 

and if this holds true in the final release 

it would generally result in more 

favorable economics for higher 

efficiency standard levels (i.e. shorter 

payback periods, greater life-cycle cost 

savings, and greater national net present 

value). 

4. Electricity Site-to-Source Conversion 

The site-to-source conversion factor is 

a multiplier used for converting site 

energy consumption, expressed in kWh, 

into primary or source energy 

consumption, expressed in quadrillion 

Btu (quads). The site-to-source 

conversion factor accounts for losses in 

electricity generation, transmission, and 

distribution. For the ANOPR, DOE used 

site-to-source conversion factors based 

on U.S. average values for the 

commercial sector, calculated from 

AEO2006, Table A5. The average 

conversion factors vary over time, due 

to projected changes in electricity 

generation sources (i.e., the power plant 

types projected to provide electricity to 

the country). For the NOPR, DOE 

developed marginal site-source 

conversion factors that relate the 

national electrical energy savings at the 

point of use to the fuel savings at the 

power plant. These factors use the 

NEMS model and the examination of 

the corresponding energy savings from 


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standards scenarios considered in DOE’s 

utility analysis (Chapter 14 of the TSD). 

The conversion factors vary over time, 

due to projected changes in electricity 

generation sources (i.e., the power plant 

types projected to provide electricity to 

the country) and power plant dispatch 

scenarios. Average U.S. conversion 

factors were used in the ANOPR 

because the utility analysis which is 

used to determine marginal conversion 

factors appropriate to efficiency 

standards for commercial refrigeration 

equipment occurs in the NOPR stage of 

DOE’s analysis. 

To estimate NPV, DOE calculated the 

net impact each year as the difference 

between total operating cost savings 

(including electricity, repair, and 

maintenance cost savings) and increases 

in total installed costs (including MSP, 

sales taxes, distribution channel 

markups, and installation cost). DOE 

calculated the NPV of each TSL over the 

life of the equipment using three steps. 

First, DOE determined the difference 

between the equipment costs under the 

TSL and the base case to calculate the 

net equipment cost increase resulting 

from the TSL. Second, DOE determined 

the difference between the base case 

operating costs and the TSL operating 

costs to calculate the net operating cost 

savings from the TSL. Third, DOE 

determined the difference between the 

net operating cost savings and the net 

equipment cost increase to calculate the 

net savings (or expense) for each year. 

DOE then discounted the annual net 

savings (or expenses) for commercial 

refrigeration equipment purchased on or 

after 2012 to 2008, and summed the 

discounted values to determine the NPV 

of a TSL. An NPV greater than zero 

shows net savings (i.e., the TSL would 

reduce overall customer expenditures 

relative to the base case in present value 

terms). An NPV less than zero indicates 

that the TSL would result in a net 

increase in customer expenditures in 

present value terms. 

H. Life-Cycle Cost Sub-Group Analysis 

In analyzing the potential impact of 

new or amended standards on 

commercial customers, DOE evaluates 

the impact on identifiable groups (i.e., 

sub-groups) of customers, such as 

different types of businesses that may be 

disproportionately affected by a 

National standard level. For this 

rulemaking, DOE identified 

independent small grocery and 

convenience stores as a commercial 

refrigeration equipment customer subgroup that could be disproportionately 

affected, and examined the impact of 

proposed standards on this group. 

DOE determined the impact on this 

commercial refrigeration equipment 

customer sub-group using the LCC 

spreadsheet model. DOE conducted the 

LCC and PBP analyses for commercial 

refrigeration equipment customers. The 

standard LCC and PBP analyses 

(described in Section IV.E) includes 

various types of businesses that use 

commercial refrigeration equipment. 

The LCC spreadsheet model allows for 

the identification of one or more subgroups of businesses, which can then be 

analyzed by sampling only each such 

sub-group. The results of DOE’s LCC 

sub-group analysis are summarized in 

Section V.B.1.c and described in detail 

in Chapter 12 of the TSD. 

I. Manufacturer Impact Analysis 

1. Overview 

DOE performed an MIA to estimate 

the financial impact of energy 

conservation standards on 

manufacturers of commercial 

refrigeration equipment, and to assess 

the impact of such standards on 

employment and manufacturing 

capacity. The MIA has both quantitative 

and qualitative aspects. The quantitative 

part of the MIA relies on the GRIM, an 

industry-cash-flow model customized 

for this rulemaking. The GRIM inputs 

are information regarding the industry 

cost structure, shipments, and revenues. 

This includes information from many of 

the analyses described above, such as 

manufacturing costs and prices from the 

engineering analysis and shipments 

forecasts. The key GRIM output is the 

industry net present value (INPV). The 

model estimates the financial impact of 

energy conservation standards by 

comparing changes in INPV between the 

base case and the various trial standard 

levels. Different sets of assumptions 

(scenarios) will produce different 

results. The qualitative part of the MIA 

addresses factors such as equipment 

characteristics, characteristics of 

particular firms, and market and 

equipment trends, and includes 

assessment of the impacts of standards 

on sub-groups of manufacturers. 

Chapter 13 of the TSD outlines the 

complete MIA. 

DOE conducted the MIA for 

commercial refrigeration equipment in 

three phases. Phase 1, Industry Profile, 

consisted of preparing an industry 

characterization, including data on 

market share, sales volumes and trends, 

pricing, employment, and financial 

structure. Phase 2, Industry Cash Flow 

Analysis, focused on the industry as a 

whole. In this phase, DOE used the 

GRIM to prepare an industry cash-flow 

analysis. Using publicly available 

information developed in Phase 1, DOE 

adapted the GRIM’s generic structure to 

perform an analysis of commercial 

refrigeration equipment energy 

conservation standards. In Phase 3, SubGroup Impact Analysis, DOE conducted 

interviews with manufacturers 

representing the majority of domestic 

commercial refrigeration equipment 

sales. This group included large and 

small manufacturers, providing a 

representative cross-section of the 

industry. During these interviews, DOE 

discussed engineering, manufacturing, 

procurement, and financial topics 

specific to each company and obtained 

each manufacturer’s view of the 

industry. The interviews provided 

valuable information DOE used to 

evaluate the impacts of an energy 

conservation standard on manufacturer 

cash flows, manufacturing capacities, 

and employment levels. For more detail 

on the manufacturer impact analysis, 

refer to Chapter 13 of the TSD. 

a. Phase 1, Industry Profile 

In Phase 1 of the MIA, DOE prepared 

a profile of the commercial refrigeration 

equipment industry based on the market 

and technology assessment prepared for 

this rulemaking. Before initiating the 

detailed impact studies, DOE collected 

information on the present and past 

structure and market characteristics of 

the commercial refrigeration equipment 

industry. The information DOE 

collected at that time included market 

share, equipment shipments, markups, 

and cost structure for various 

manufacturers. The industry profile 

includes further detail on equipment 

characteristics, estimated manufacturer 

market shares, the financial situation of 

manufacturers, trends in the number of 

firms, the market, and equipment 

characteristics of the commercial 

refrigeration equipment industry. 

The industry profile included a topdown cost analysis of commercial 

refrigeration equipment manufacturers 

that DOE used to derive cost and 

preliminary financial inputs for the 

GRIM (e.g., revenues; material, labor, 

overhead, and depreciation expenses; 

selling, general, and administrative 

expenses (SG&A); and research and 

development (R&D) expenses). DOE also 

used public sources of information to 

further calibrate its initial 

characterization of the industry, 

including U.S. Securities and Exchange 

Commission (SEC) 10–K reports, 

Standard & Poor’s (S&P) stock reports, 

and corporate annual reports. 

b. Phase 2, Industry Cash-Flow Analysis 

Phase 2 of the MIA focused on the 

financial impacts of energy conservation 


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standards on the industry. Higher 

energy conservation standards can affect 

a manufacturer’s cash flow in three 

distinct ways, resulting in: (1) A need 

for increased investment; (2) higher 

production costs per unit; and (3) 

altered revenue by virtue of higher perunit prices and changes in sales values. 

To quantify these impacts in Phase 2 of 

the MIA, DOE used the GRIM to perform 

a cash-flow analysis of commercial 

refrigeration equipment manufacturers. 

In performing these analyses, DOE used 

the financial values derived during 

Phase 1 and the shipment scenarios 

used in the NES analyses. 

c. Phase 3, Sub-Group Impact Analysis 

Using average cost assumptions to 

develop an industry-cash-flow estimate 

is not adequate for assessing differential 

impacts among sub-groups of 

manufacturers. For example, small 

manufacturers, niche equipment 

manufacturers, or manufacturers 

exhibiting a cost structure that largely 

differs from the industry average could 

be more negatively affected. DOE used 

the results of the industry 

characterization analysis (in Phase 1) to 

group manufacturers that exhibit similar 

characteristics. 

During the interview process, DOE 

discussed the potential sub-groups and 

sub-group members it identified for the 

analysis. DOE encouraged the 

manufacturers to recommend subgroups or characteristics that are 

appropriate for the sub-group analysis. 

DOE identified small commercial 

refrigeration equipment manufacturers 

as a potential manufacturing sub-group. 

DOE found that small business 

manufacturers generally have the same 

concerns as large manufacturers 

regarding energy conservation 

standards. In addition, DOE found no 

significant differences in the R&D 

emphasis or marketing strategies 

between small business manufacturers 

and large manufacturers. Therefore, for 

the equipment classes comprised 

primarily of small business 

manufacturers, DOE believes the GRIM 

analysis, which models each equipment 

class separately, is representative of the 

small business manufacturers affected 

by standards. 

2. Government Regulatory Impact Model 

Analysis 

As mentioned above, DOE uses the 

GRIM to quantify changes in cash flow 

that result in a higher or lower industry 

value. The GRIM analysis uses a 

standard annual cash-flow analysis that 

incorporates manufacturer prices, 

manufacturing costs, shipments, and 

industry financial information. The 

GRIM models changes in costs, 

distribution of shipments, investments, 

and associated margins that would 

result from new regulatory conditions 

(in this case, standard levels). The GRIM 

spreadsheet uses a number of inputs to 

arrive at a series of annual cash flows, 

beginning with the base year of the 

analysis, 2007, and continuing to 2042. 

DOE calculated INPVs by summing the 

stream of annual discounted cash flows 

during this period. 

DOE used the GRIM to calculate cash 

flows using standard accounting 

principles and compare changes in 

INPV between a base case and different 

TSLs (the standards cases). Essentially, 

the difference in INPV between the base 

case and a standards case represents the 

financial impact of the energy 

conservation standards on 

manufacturers. DOE collected this 

information from a number of sources, 

including publicly available data and 

interviews with manufacturers (Chapter 

13 of the TSD). 

3. Manufacturer Interviews 

As part of the MIA, DOE discussed 

potential impacts of energy conservation 

standards with manufacturers 

responsible for a majority of commercial 

refrigeration equipment sales. The 

manufacturers interviewed manufacture 

close to 90 percent of the commercial 

refrigeration equipment on the market. 

These interviews were in addition to 

those DOE conducted as part of the 

engineering analysis. The interviews 

provided valuable information that DOE 

used to evaluate the impacts of energy 

conservation standards on 

manufacturers’ cash flows, 

manufacturing capacities, and 

employment levels. 

a. Key Issues 

Manufacturers identified the 

following key issues for DOE to consider 

in developing energy conservation 

standards: 

• Meeting Standards. Manufacturers 

expressed concern that they would have 

difficulty meeting certain efficiency 

levels for certain equipment classes. 

First, some manufacturers stated that 

they could not meet or would have 

extreme difficulty meeting any of the 

possible efficiency levels presented 

during interviews for self-contained 

equipment (e.g., horizontal open units). 

One manufacturer stated that due to the 

small number of parts in the selfcontained equipment, efficiency 

improvements are constrained to these 

parts and are therefore limited. The 

same manufacturer stated that it already 

implements the most efficient options 

on the market that are available within 

its price range. For some manufacturers, 

self-contained equipment represents 

only a small portion of their business. 

These manufacturers make more remote 

condensing equipment and simply 

convert the design into self-contained 

units. Second, some manufacturers 

stated that they could not meet 

efficiency levels 3 and 4 for mediumtemperature equipment (e.g., SOC.RC.M, 

VCT.RC.M, VOP.RC.M), and that they 

would need advances in technology to 

achieve these levels by 2012. One 

manufacturer stated that it does not 

manufacture any equipment in the 

VOP.RC.M equipment class that meets 

DOE’s baseline level. 

• Customer Needs. Manufacturers are 

concerned that increased equipment 

efficiency will come at the expense of 

equipment functionality, utility, and 

customizability. The commercial 

refrigeration equipment industry is 

focused on customers’ need to sell 

products, and customers place a higher 

priority on marketing and displaying 

their goods than they do on energy 

efficiency. Customers demand high 

levels of customization to differentiate 

themselves from other retail stores. 

They do not want to lose any 

functionality or utility in their 

equipment, such as display area, that 

affects their ability to sell products. 

Often, the desire of customers for easy 

product access requires equipment that 

is less energy efficient. They also do not 

want to lose any flexibility in design 

choices, such as lighting options. For 

example, some customers specify 

certain lighting configurations (e.g., 

color rendering, color temperature, light 

distribution) to maximize the sale of 

products such as fresh meat, produce, or 

dairy. Manufacturers believe that setting 

standards at the maximum level will 

affect their customers’ ability to 

merchandise products by limiting the 

flexibility to choose from among 

different designs, which they expect 

would commoditize the industry and 

lead to reduced profit margins. Having 

some allowance in the efficiency 

thresholds would allow tradeoffs in 

design selection that would ease the 

reconciliation of energy savings with the 

ability to sell products. 

• Customer Awareness. 

Manufacturers expressed concern that 

their retail customers are not 

sufficiently aware of pending energy 

conservation standards and the impacts 

these standards may have on their 

purchasing decisions. The supermarket 

industry is a low-margin industry, 

which places much emphasis on lowfirst-cost equipment. Manufacturers 

believe that many customers may not be 

able to handle an increase in equipment 


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price effectively since they operate with 

a fixed budget, or a fixed amount of 

capital available for purchasing 

commercial refrigeration equipment. 

Manufacturers stated that customers 

with a fixed capital budget would tend 

to extend refurbishment periods and cut 

back on equipment growth to deal with 

the increase in price of higher efficiency 

equipment, which manufacturers say 

will reduce annual sales of commercial 

refrigeration equipment. Manufacturers 

expect that smaller stores and even 

small regional chains will feel 

significant financial pressure when 

faced with the increase in prices. Single 

family-owned stores and local stores in 

large cities may have no capital budget 

with which to replace existing cases 

with cases that are 30 percent to 50 

percent higher in price. Manufacturers 

stated that a reduction in sales would 

lead to employee layoffs since labor is 

proportional to units sold, not 

equipment price. Manufacturers also 

stated that customers have usually been 

unwilling to adopt energy efficiency 

improvements unless there is a 12- 

month payback period or less. 

• Equipment Classes. Manufacturers 

expressed concern regarding how 

equipment they manufacture would be 

categorized in DOE’s equipment classes. 

Manufacturers stated that certain pieces 

of low-volume equipment they 

manufacture do not easily fit into DOE’s 

equipment classes, and other pieces of 

equipment are excluded from coverage. 

For example, custom pieces of 

equipment, especially hybrid or 

combination units, do not easily fall 

within the DOE equipment classes since 

they could be classified in more than 

one category. A self-contained case with 

a service over counter upper portion 

and an open lower portion could be 

classified as a self-contained service 

over counter unit as well as a selfcontained open unit. Another example 

is wedges—transition pieces placed at 

the corners of a case lineup. These do 

not have a reasonable TDA and 

therefore do not have meaningful energy 

consumption levels when normalized to 

TDA. Some manufacturers stated that 

low-volume equipment that cannot meet 

energy conservation standards may be 

discontinued because the cost to 

increase the efficiency will not be worth 

the benefit gained. Manufacturers also 

expressed concern regarding secondary 

coolant systems, which may provide a 

loophole. Manufacturers estimate that 

secondary coolant systems represent 

about 10 percent of the market currently 

and consume about five percent more 

energy than their direct expansion 

equivalent. Some manufacturers stated 

that customers might purchase these 

lower efficiency secondary coolant 

systems instead of the direct expansion 

equipment that are subject to standards. 

This concerns manufacturers since it 

would defeat the purpose of regulatory 

action. 

• Component Manufacturers. 

Manufacturers expressed concern that 

they have little control over the options 

available and the price they pay for 

components used to manufacture 

commercial refrigeration equipment. 

Commercial refrigeration equipment 

manufacturers purchase many of the 

components needed to build the 

equipment and therefore rely heavily on 

component manufacturers to deliver 

parts, such as doors, motors, fans, and 

lights. However, commercial 

refrigeration equipment manufacturers 

state that higher efficiency components 

may not be readily available to meet 

standards. For example, the highefficiency compressors needed for selfcontained equipment to meet energy 

conservation standards may not be 

readily available. Manufacturers said 

that the compressors they purchase for 

commercial refrigeration are left over 

from the white goods (home appliances) 

industry since that industry has a much 

higher sales volume compared to 

commercial refrigeration equipment. 

Also, manufacturers stated that 

component suppliers set their own 

pricing, and manufacturers have no 

control over this. Manufacturers are 

concerned about what prices they 

would have to pay for higher efficiency 

components in the future. 

4. Government Regulatory Impact Model 

Key Inputs and Scenarios 

a. Base Case Shipments Forecast 

The GRIM estimates manufacturer 

revenues based on total unit shipment 

forecasts and the distribution of these 

values by efficiency level. Changes in 

the efficiency mix at each standard level 

are a key driver of manufacturer 

finances. For this analysis, the GRIM 

used the NES shipments forecasts from 

2007 to 2042. Total shipments 

forecasted by the NES for the base case 

in 2012 are shown in Table IV–16 and 

further discussed in this section of 

today’s Notice. 

TABLE IV–16—TOTAL NES-FORECASTED SHIPMENTS IN 2012 (NUMBER OF UNITS) 

Equipment class Total industry 

shipments 

VOP.RC.M ...................... 37,607 

VOP.RC.L ....................... 1,880 

VOP.SC.M ...................... 7,585 

VCT.RC.M ...................... 2,533 

VCT.RC.L ....................... 35,184 

VCT.SC.I ......................... 2,571 

VCS.SC.I ........................ 637 

SVO.RC.M ...................... 28,685 

SVO.SC.M ...................... 11,357 

SOC.RC.M ...................... 7,231 

HZO.RC.M ...................... 4,408 

HZO.RC.L ....................... 13,859 

HZO.SC.M ...................... 976 

HZO.SC.L ....................... 2,024 

HCT.SC.I ........................ 10,487 

In the shipments analysis, DOE also 

estimated the distribution of efficiencies 

in the base case for commercial 

refrigeration equipment (Chapter 10 of 

the TSD). Table IV–17 shows one 

example of the distribution of 

efficiencies in the base case for the 

VOP.RC.M equipment class. The 

distribution of efficiencies in the base 

case for other equipment classes are 

shown in Chapter 10 of the TSD. 

TABLE IV–17—GRIM DISTRIBUTION OF SHIPMENTS IN THE BASE CASE FOR VOP.RC.M 

TSL 

(CDEC/TDA—kWh/day/ft2) 

Baseline 

1.09 

TSL 1 

0.98 

TSL 2 

0.95 

TSL 3 

0.89 

TSL 4 * 

0.89 

TSL 5 

0.76 

Distribution of Shipments (%) .................. 17.6 36.3 16.6 14.0 14.0 15.6 

* For VOP.RC.M, TSL 4 is set at the same efficiency level as TSL 3. Therefore, the shipment distribution is the same for both of these TSLs. 

b. Standards Case Shipments Forecast 

For each standards case, DOE 

assumed that shipments at efficiencies 

below the projected standard levels 

were most likely to roll up to those 

efficiency levels in response to an 

energy conservation standard. This 

scenario assumes that demand for highefficiency equipment is a function of its 


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price without regard to the standard 

level. See Chapter 12 of the TSD for 

additional details. 

c. Markup Scenarios 

To understand how baseline and more 

efficient equipment are differentiated, 

DOE reviewed manufacturer catalogs 

and information gathered by 

manufacturers. To estimate the 

manufacturer price of the equipment 

sold, DOE applied markups to the 

production costs. For the analysis, DOE 

considered different markup scenarios, 

based on manufacturer input, for 

commercial refrigeration equipment. 

Scenarios were used to bound the range 

of expected equipment prices following 

new energy conservation standards. For 

each equipment class, DOE used the 

markup scenarios that best 

characterized the prevailing markup 

conditions and described the range of 

market responses manufacturers expect 

as a result of new energy conservation 

standards. DOE learned from interviews 

with manufacturers that the majority of 

manufacturers only offer one equipment 

line. A single equipment line means that 

there is no markup used to differentiate 

baseline equipment from premium 

equipment. 

After discussions with manufacturers, 

DOE believes its adoption of standards 

for commercial refrigeration equipment 

would likely result in one of two 

distinct markup scenarios: Preservationof-gross-margin-percentage or 

preservation-of-operating-profit. Under 

the preservation-of-gross-marginpercentage scenario, DOE applied a 

single uniform gross margin percentage 

markup across all efficiency levels. As 

production cost increases with 

efficiency, this scenario implies that the 

absolute dollar markup will increase. 

DOE assumed the non-production cost 

markup—which includes SG&A 

expenses, R&D expenses, interest, and 

profit—to be 1.32. Manufacturers 

believe it is optimistic to assume that as 

their production costs increase in 

response to an efficiency standard, they 

would be able to maintain the same 

gross margin percentage markup. 

Therefore, DOE assumes that this 

scenario represents a high bound to 

industry profitability under an energy 

conservation standard. 

Gross margin is defined as revenues 

less cost of goods sold. The implicit 

assumption behind this markup 

scenario is that the industry can 

maintain its gross margin from the 

baseline (in absolute dollars) after the 

standard. The industry would do so by 

passing through its increased 

production costs to customers without 

passing through its increased R&D and 

selling, general, and administrative 

expenses so the gross profit per unit is 

the same in absolute dollars. DOE 

implemented this scenario in the GRIM 

by setting the production cost markups 

for each TSL to yield approximately the 

same gross margin in the standards 

cases in the year standard are effective 

(2012) as is yielded in the base case. 

d. Equipment and Capital Conversion 

Costs 

New efficiency standards typically 

cause manufacturers to incur one-time 

conversion costs to bring their 

production facilities and equipment 

designs into compliance with the new 

regulation. For the purpose of the MIA, 

DOE classified these one-time 

conversion costs into three major 

groups. Capital conversion expenditures 

are one-time investments in property, 

plant, and equipment to adapt or change 

existing production facilities so that 

new equipment designs can be 

fabricated and assembled under the new 

regulation. Equipment conversion 

expenditures are one-time investments 

in research, development, testing, and 

marketing focused on creating 

equipment designs that comply with the 

new efficiency standard. Stranded assets 

are equipment or tooling that become 

obsolete as a result of new regulation. 

During the MIA interviews, DOE 

asked manufacturers for their estimates 

of the conversion costs they would 

incur due to new energy conservation 

standards. DOE then used the costs 

provided by each manufacturer and 

their respective market shares to 

develop estimates for the conversion 

costs of the entire industry at varying 

TSLs. Chapter 13 of the TSD 

summarizes these estimates. 

J. Utility Impact Analysis 

The utility impact analysis estimates 

the effects of reduced energy 

consumption due to improved 

equipment efficiency on the utility 

industry. This utility analysis consists 

of a comparison between forecast results 

for a case comparable to the AEO2007 

reference case and forecasts for policy 

cases incorporating each of the 

commercial refrigeration equipment 

TSLs. 

DOE analyzed the effects of proposed 

standards on electric utility industry 

generation capacity and fuel 

consumption using a variant of the 

EIA’s NEMS. NEMS, which is available 

on the DOE website, is a large, multisector, partial-equilibrium model of the 

U.S. energy sector. EIA uses NEMS to 

produce its AEO, a widely recognized 

baseline energy forecast for the United 

States. DOE used a variant known as 

NEMS–BT. The NEMS–BT is run 

similarly to the AEO2007 NEMS, except 

that commercial refrigeration equipment 

energy usage is reduced by the amount 

of energy (by fuel type) saved due to the 

TSLs. DOE obtained the inputs of 

national energy savings from the NES 

spreadsheet model. For the final rule, 

DOE intends to report utility analysis 

results using a version of NEMS–BT 

based on the AEO2008 NEMS. 

DOE conducted the utility analysis as 

policy deviations from the AEO2007, 

applying the same basic set of 

assumptions. In the utility analysis, 

DOE reported the changes in installed 

capacity and generation by fuel type 

that result for each TSL, as well as 

changes in end-use electricity sales. 

Chapter 14 of the TSD provides details 

of the utility analysis methods and 

results. 

K. Employment Impact Analysis 

Employment impact is one of the 

factors that DOE considers in selecting 

a standard. Employment impacts 

include direct and indirect impacts. 

Direct employment impacts are any 

changes in the number of employees for 

commercial refrigeration equipment 

manufacturers, their suppliers, and 

related service firms. Indirect impacts 

are those changes of employment in the 

larger economy that occur due to the 

shift in expenditures and capital 

investment caused by the purchase and 

operation of more efficient commercial 

refrigeration equipment. The MIA in 

this rulemaking addresses only the 

direct employment impacts on 

manufacturers of commercial 

refrigeration equipment. Chapter 15 of 

the TSD describes other, primarily 

indirect, employment impacts. 

Indirect employment impacts from 

commercial refrigeration equipment 

standards consist of the net jobs created 

or eliminated in the national economy, 

other than in the manufacturing sector 

being regulated, as a consequence of (1) 

reduced spending by end users on 

electricity (offset to some degree by the 

increased spending on maintenance and 

repair); (2) reduced spending on new 

energy supply by the utility industry; (3) 

increased spending on the purchase 

price of new commercial refrigeration 

equipment; and (4) the effects of those 

three factors throughout the economy. 

DOE expects the net monetary savings 

from standards to be redirected to other 

forms of economic activity. DOE also 

expects these shifts in spending and 

economic activity to affect the demand 

for labor. 

In developing this proposed rule, DOE 

estimated indirect national employment 

impacts using an input/output model of 


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the U.S. economy, called ImSET (Impact 

of Sector Energy Technologies), 

developed by DOE’s Building 

Technologies Program. ImSET is a 

personal-computer-based, economicanalysis model that characterizes the 

interconnections among 188 sectors of 

the economy as national input/output 

structural matrices, using data from the 

U.S. Department of Commerce’s 1997 

Benchmark U.S. input-output table. The 

ImSET model estimates changes in 

employment, industry output, and wage 

income in the overall U.S. economy 

resulting from changes in expenditures 

in various sectors of the economy. DOE 

estimated changes in expenditures using 

the NES spreadsheet. ImSET then 

estimated the net national indirect 

employment impacts of potential 

commercial refrigeration equipment 

efficiency standards on employment by 

sector. In comments on the ANOPR, 

Zero Zone asked if DOE was going to 

contact second tier suppliers (e.g., door 

suppliers, fluorescent lighting suppliers, 

shaded pole motor suppliers) regarding 

employment impacts. (Public Meeting 

Transcript, No. 13.5 at pp. 230–231) ARI 

noted that this had been done in the 

central air conditioning rulemaking. 

(Public Meeting Transcript, No. 13.5 at 

p. 231) 

DOE stated that the ImSET tool would 

not be able to address this in detail, but 

that it has been done within the MIA for 

other equipment. In the public meeting, 

DOE commented that there would be 

impacts from standards, but the 

effective date is different from the 

issuance date partly to allow time for 

adjustments in manufacturing. 

The ImSET input/output model 

suggests that the proposed commercial 

refrigeration equipment efficiency 

standards could increase the net 

demand for labor in the economy and 

the gains would most likely be very 

small relative to total national 

employment. DOE therefore concludes 

that the proposed commercial 

refrigeration equipment standards are 

only likely to produce employment 

benefits that are sufficient to fully offset 

any adverse impacts on employment in 

the commercial refrigeration equipment 

industry. For more details on the 

employment impact analysis, see 

Chapter 15 of the TSD. 

L. Environmental Assessment 

DOE has prepared a draft 

Environmental Assessment (EA) 

pursuant to the National Environmental 

Policy Act and the requirements of 42 

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

6316(e)(1)(A), to determine the 

environmental impacts of the proposed 

standards. Specifically, DOE estimated 

the reduction in power plant emissions 

of CO2, NOX, and mercury (Hg) using 

the NEMS–BT computer model. 

However, the Environmental 

Assessment (Chapter 16 of the TSD) 

does not include the estimated 

reduction in power plant emissions of 

SO2 because, DOE has determined that 

due to the presence of national caps on 

SO2 emissions as addressed below, any 

such reduction resulting from an energy 

conservation standard would not affect 

the overall level of SO2 emissions in the 

United States. 

The NEMS–BT is run similarly to the 

AEO2007 NEMS, except that 

commercial refrigeration equipment 

energy use is reduced by the amount of 

energy saved (by fuel type) due to the 

TSLs. DOE obtained the inputs of 

national energy savings from the NES 

spreadsheet model. For the 

environmental analysis, the output is 

the forecasted physical emissions. The 

net benefit of the standard is the 

difference between emissions estimated 

by NEMS–BT and the AEO2007 

Reference Case. The NEMS–BT tracks 

CO2 emissions using a detailed module 

that provides results with broad 

coverage of all sectors and inclusion of 

interactive effects. For the final rule, 

DOE intends to revise the emissions 

analysis using the AEO2008 NEMS 

model using the process outlined above. 

The Clean Air Act Amendments of 

1990 set an emissions cap on SO2 for all 

power generation. The attainment of 

this target, however, is flexible among 

generators and is enforced through the 

use of emissions allowances and 

tradable permits. As a result, accurate 

simulation of SO2 trading tends to imply 

that the effect of energy conservation 

standards on physical emissions will be 

near zero because emissions will always 

be at, or near, the ceiling. Thus, it is 

unlikely that there will be an SO2

environmental benefit from electricity 

savings as long as there is enforcement 

of the emissions ceilings. 

Although there may not be an actual 

reduction in SO2 emissions from 

electricity savings, there still may be an 

economic benefit from reduced demand 

for SO2 emission allowances. Electricity 

savings decrease the generation of SO2

emissions from power production, 

which can decrease the need to 

purchase or generate SO2 emissions 

allowance credits, and decrease the 

costs of complying with regulatory caps 

on emissions. 

Like SO2, future emissions of NOX

and Hg would have been subject to 

emissions caps under the Clean Air 

Interstate Act and Clean Air Mercury 

Rule. As discussed later, these rules 

have been vacated by a Federal court. 

DOE calculated a forecast of reductions 

for these emissions under an uncapped 

scenario. DOE assumes that the 

uncapped emissions reduction estimate 

would have corresponded generally to 

the generation of emissions allowance 

credits under an emissions cap scenario. 

V. Analytical Results 

A. Trial Standard Levels 

DOE selected between four and eight 

energy consumption levels for each 

commercial refrigeration equipment 

class in the LCC analysis. Based on the 

results of the LCC analysis, DOE 

selected five trial standard levels above 

the baseline level for each equipment 

class for the NOPR stage of the 

rulemaking. The range of TSLs selected 

includes the most energy efficient 

combination of design options with a 

positive NPV at the seven percent 

discount rate, and the combination of 

design options with the minimum LCC. 

Additionally, TSLs were selected that 

filled large gaps between the baseline 

and the level with the minimum LCC. 

Because of the size variation within 

each equipment class and the use of 

daily energy consumption as the 

efficiency metric, DOE presented a 

methodology to express efficiency 

standards in terms of a normalizing 

metric. This allows for a single energy 

conservation standard to be used for a 

broad range of equipment sizes within 

a given equipment class. DOE proposed 

the use of TDA as the normalizing 

metric for equipment with display 

capability. For equipment classes 

without display capability (e.g., 

equipment with solid doors), DOE 

proposed the use of internal volume as 

the normalizing metric. See Chapter 9 of 

the TSD for more detail. 

True commented that all selfcontained units (including any open 

units) should be tested using volume as 

a normalizing factor to provide a 

straight comparison between open and 

closed-door self-contained units. (Public 

Meeting Transcript, No. 13.5 at pp. 202–

207) DOE understands the usefulness of 

comparing self-contained equipment 

with and without doors on the basis of 

volume. However, the self-contained 

equipment covered in this rulemaking is 

frequently installed in supermarkets and 

convenience stores, where its primary 

purpose is to display and merchandise 

food. The most common application of 

remote condensing equipment is also in 

supermarkets and convenience stores. 

Therefore, DOE believes that, with 

respect to the purpose of equipment, the 

self-contained equipment covered in 

this rulemaking is more similar to 

remote condensing equipment than 


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other self-contained equipment (i.e., 

equipment with doors). DOE discussed 

this issue with manufacturers, and 

determined that TDA is the most 

appropriate normalization metric for the 

self-contained equipment covered in 

this rulemaking, since that is the metric 

used for remote condensing equipment. 

DOE expressed the ANOPR efficiency 

levels in terms of a normalized energy 

consumption using these normalization 

factors. DOE proposed equations for 

final standards that would have 

maximum energy consumption for 

equipment whose display area is 

directly proportional to TDA. DOE also 

suggested that for equipment 

normalized to volume, it might be 

necessary to develop equations that use 

offset factors to account for a potential 

non-linear variation of energy 

consumption with volume. At the 

ANOPR public meeting and during the 

comment period, stakeholders 

expressed concerns about the size of 

equipment DOE analyzed as the 

representative model for each 

equipment class. Zero Zone stated that 

its analysis indicates that using a twodoor case as the baseline (for the 

VCT.RC.L class) is more reasonable 

because of the end effects in those cases. 

Zero Zone reported a 10 percent 

increase in energy consumption per 

door for a two-door case with the same 

design features as a five-door case. A 

two-door case consumes more energy 

per door than a five-door case because 

of the lighting and end effects. Zero 

Zone noted that if the standard is based 

on a five-door case, it will penalize any 

smaller cabinet, and could eliminate 

smaller cases from production due to 

their size. (Public Meeting Transcript, 

No. 13.5 at p. 87) At the public meeting, 

Zero Zone stated that it would give 

some thought to what should be used 

for a representative model—a two-door 

case, or some combination of two-door 

and five-door cases. Zero Zone also 

noted that not all manufacturers make 

all case sizes. (Public Meeting 

Transcript, No. 13.5 at p. 88) Later, in 

a written comment, Zero Zone 

recommended that DOE base its analysis 

on the smaller case models instead of 

the larger case models to avoid 

accidentally outlawing smaller cases. 

(Zero Zone, No. 17 at p. 3) ARI 

commented that it generally agrees with 

the approach proposed by DOE for 

characterizing energy conservation 

standards for commercial refrigeration 

equipment, and offered to work with 

DOE in developing appropriate offset 

factors. (ARI, No. 18 at p. 6) 

For the NOPR, DOE developed offset 

factors as a way to adjust the energy 

efficiency requirements for smallersized equipment in each equipment 

class analyzed. These offset factors 

account for certain components of the 

refrigeration load (such as the 

conduction end effects) that remain 

constant even when equipment sizes 

vary. These constant loads affect smaller 

cases disproportionately. The offset 

factors are intended to approximate 

these constant loads and provide a fixed 

end point, corresponding to a zero TDA 

or zero volume case, in an equation that 

describes the relationship between 

energy consumption and the 

corresponding TDA or volume metric. 

See Chapter 5 of the TSD for further 

details on the development of these 

offset factors for each equipment class. 

This is identified as Issue 4 under 

‘‘Issues on Which DOE Seeks Comment’’

in Section VII.E of this NOPR. 

DOE preserved the general 

methodology and themes it used for the 

selection of efficiency levels in the 

ANOPR in establishing specific 

efficiency levels for equipment classes. 

These levels are based on the results of 

the updated LCC analysis and make up 

the TSLs used in the NOPR. Table V–

1 shows the TSL levels DOE selected for 

energy use for the equipment classes 

analyzed. TSL 5 is the max-tech level 

for each equipment class. TSL 4 is the 

maximum efficiency level with a 

positive NPV at the seven percent 

discount rate, except for VOP.RC.M, 

where the minimal difference in energy 

efficiency between the minimum lifecycle cost level as determined by the 

LCC analysis and the maximum 

efficiency level with positive NPV 

prompted DOE to select the minimum 

life-cycle cost level in preference to the 

maximum level with positive NPV. TSL 

4 is a combination of the efficiency 

levels selected for TSL 3 and TSL 5. For 

a given equipment class, the efficiency 

levels selected for TSL 4 are either 

equivalent to that of TSL 3 or that of 

TSL 5. TSL 3 is the efficiency level that 

provides the minimum life-cycle cost as 

determined by the LCC analysis. TSL 2 

and TSL 1 represent lower efficiency 

levels that fill in the gap between the 

current baseline and the levels 

determined to have the minimum LCC. 

Table V–2 shows the same TSL levels 

in terms of proposed equations that 

establish a maximum daily energy 

consumption (MEC) limit through a 

linear equation of the form: 

MEC = A × TDA + B (for equipment 

using TDA as a normalizing metric) 

or 

MEC = A × V + B (for equipment using 

volume as a normalizing metric) 

Coefficients A and B are uniquely 

derived for each equipment class based 

on the calculated offset factor B (see 

Chapter 5 of the TSD for offset factors) 

and the equation slope A, which would 

be used to describe the efficiency 

requirements for equipment of different 

sizes within the same equipment class. 

Chapter 9 of the TSD explains the 

methodology DOE used for selecting 

trial standard levels and developing the 

coefficients shown in Table V–2. 

BILLING CODE 6450–01–P 


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BILLING CODE 6450–01–C 

In addition to the 15 primary 

equipment classes analyzed, DOE 

intends to establish standards for the 

remaining 23 secondary equipment 

classes of commercial refrigeration 

equipment covered in this rulemaking 

that were not directly analyzed in the 

engineering analysis due to low annual 

shipments (less than 100 units per year). 

DOE’s approach involves extension 

multipliers developed using both the 15 

primary equipment classes analyzed 

and a set of focused matched-pair 

analyses. In addition, DOE believes that 

standards for certain primary equipment 

classes can be directly applied to other 

similar secondary equipment classes. 


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Chapter 5 of the TSD discusses the 

development of the extension 

multipliers and the set of focused 

matched-pair analyses. 

Using this approach, DOE developed 

an additional set of TSLs for these 

secondary equipment classes that 

corresponds to each of the equations 

shown in Table V–2 at each TSL. Table 

V–3 shows this additional set of 

corresponding TSL levels. The levels 

shown in Table V–3 do not necessarily 

reflect the minimum life-cycle cost or 

max-tech efficiency levels for these 

equipment classes, and do not reflect 

TSLs that DOE has analyzed in its 

impact analyses. The primary purpose 

of presenting these levels in this section 

is to provide interested persons with the 

range of efficiency standards that DOE 

is considering for these secondary 

equipment classes. This is identified as 

Issue 5 under ‘‘Issues on Which DOE 

Seeks Comment’’ in Section VII.E of this 

NOPR. 

1. Miscellaneous Equipment 

In the ANOPR, DOE proposed as part 

of its commercial refrigeration 

equipment test procedure that all 

equipment be tested at one of three 

rating temperatures: 38 °F for 

refrigerators, 0 °F for freezers, and ¥15 

°F for ice-cream freezers. Zero Zone, 

Hill Phoenix, Carrier/Tyler 

Refrigeration, and True expressed 

concern because they produce 

equipment that is not designed to 

operate at these designated rating 

temperatures. (Public Meeting 

Transcript, No. 13.5 at pp. 28–33) ARI 

stated that DOE should not require all 

equipment to be tested at these three 

rating temperatures alone. Doing so may 

require manufacturers to produce 

equipment that is less efficient solely for 

the purpose of meeting a specific rating 

condition, thus defeating the intent of 

the regulation. (ARI, No. 18 at p. 4) Hill 

Phoenix and True stated that the 

equipment they manufacture that is 

unable to meet these rating temperatures 

is only one percent to two percent of 

their shipments. Hill Phoenix added 

that, if possible, it would prefer to avoid 

the excessive paperwork of applying for 

waivers for equipment that cannot meet 

the three rating temperatures in the test 

procedure. (Public Meeting Transcript, 

No. 13.5 at p. 33) 

Zero Zone recommended developing 

regulations that apply to the special 

circumstances of the rating temperature 

(Zero Zone, No. 17 at p. 2) and that DOE 

should consider developing additional 

rating temperatures. (Public Meeting 

Transcript, No. 13.5 at p. 28) ACEEE 

suggested that DOE develop a method to 

interpolate the standard based on the 


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standards at the three official rating 

temperatures. (ACEEE, No. 16 at p. 2) 

ARI recommended that any equipment 

specifically designed to hold 

temperatures higher than the rating 

temperature should be tested at its 

application temperature, but must still 

meet the energy standard for its 

respective equipment class. (ARI, No. 18 

at p. 4) 

The DOE test procedure for 

commercial refrigeration equipment 

specifies three rating temperatures, 38 

°F, 0 °F, and ¥15 °F, that are required 

to be used in the testing of this 

equipment, each applied to designated 

equipment classes. 71 FR 71357. Since 

all of this equipment must be tested at 

one of these three rating temperatures, 

any manufacturer that is unable to test 

such equipment at its designated rating 

temperature, must request a test 

procedure waiver from DOE pursuant to 

the provisions described in 10 CFR 

431.401. If the equipment is unable to 

meet the maximum daily energy 

consumption (MDEC) limit for its 

designated equipment class, a 

manufacturer can petition DOE’s Office 

of Hearing and Appeals (OHA) for 

exception relief from the energy 

conservation standard pursuant to 

OHA’s authority under section 504 of 

the DOE Organization Act (42 U.S.C. 

7194), as implemented at subpart B of 

10 CFR part 1003. OHA grants such 

relief on a case-by-case basis if it 

determines that a manufacturer has 

demonstrated that meeting the standard 

would cause hardship, inequity, or 

unfair distributions of burdens. DOE 

believes that the majority of equipment 

covered by this rulemaking can be 

tested using the three specified rating 

temperatures (38 °F, 0 °F and ¥15 °F) 

provided in the test procedure. 

Certain types of equipment meet the 

definition of ‘‘commercial refrigeration 

equipment’’ (Section 136(a)(3) of EPACT 

2005), but do not fall directly into any 

of the 38 equipment classes defined in 

the market and technology assessment. 

One of these types is hybrid cases, 

where two or more compartments are in 

different equipment families and are 

contained in one cabinet. Another is 

refrigerator-freezers, which have two 

compartments in the same equipment 

family but with different operating 

temperatures. Hybrid refrigeratorfreezers, where two or more 

compartments are in different 

equipment families and have different 

operating temperatures, may also exist. 

Another is wedge cases, which form 

miter transitions (a corner section 

between two refrigerated display 

merchandisers) between standard 

display case lineups. DOE is proposing 

language that will allow manufacturers 

to determine appropriate standard levels 

for these types of equipment. 

An example of a pure hybrid case 

(one with two or more compartments in 

different equipment families and at the 

same temperature) is a unit with one 

open and one closed mediumtemperature compartment, such as those 

seen in coffee shops that merchandise 

baked goods and beverages. These 

hybrid cases may be either selfcontained or remote condensing, and 

may be cooled by one or more 

condensing units. They may also have 

one evaporator cooling both 

compartments or one evaporator feeding 

each compartment separately. 

An example of a refrigerator-freezer is 

a unit with doors where one 

compartment operates at medium 

temperature and one compartment 

operates at low temperature. Remote 

condensing commercial refrigeratorfreezers (with and without doors) and 

self-contained commercial refrigeratorfreezers without doors may operate in 

one of two ways. First, they may operate 

as separate chilled and frozen 

compartments with evaporators fed by 

two sets of refrigerant lines or two 

compressors. Second, they may operate 

as separate chilled and frozen 

compartments fed by one set of lowtemperature refrigerant lines (with 

evaporator pressure regulator (EPR) 

valves or similar devices used to raise 

the evaporator pressure) or one 

compressor. 

An example of a hybrid refrigeratorfreezer is a unit with one open 

compartment at medium temperature 

and one closed compartment at low 

temperature. As with pure hybrid cases, 

these cases may be either self-contained 

or remote condensing, and may be 

cooled by one or more condensing units. 

In the case of remote condensing 

equipment, they may operate as separate 

chilled and frozen compartments with 

evaporators fed by two sets of refrigerant 

lines or two compressors. Or they may 

operate as separate chilled and frozen 

compartments fed by one set of lowtemperature refrigerant lines (with EPR 

valves or similar devices used to raise 

the evaporator pressure of one 

compartment) or one compressor. 

During the ANOPR public meeting, 

stakeholders commented on how to 

handle these types of cases. True 

suggested that for self-contained 

refrigerator-freezer equipment, DOE 

should use a weighted average of the 

minimum standard requirements for the 

freezer and refrigerator. This is the 

present standard used in California and 

Canada, and [EPACT] 2005 for selfcontained equipment with doors: 1.63 

times freezer volume plus the 

refrigerated volume gives you a number 

[adjusted volume]. (Public Meeting 

Transcript, No. 13.5 at p. 215) Copeland 

followed up on the True comment on 

refrigerator-freezers, suggesting that a 

refrigerator-freezer standard for remote 

cases should be simple, and that they 

should be treated as if they have two 

separate compressors. (Public Meeting 

Transcript, No. 13.5 at p. 215) Zero 

Zone stated that a manufacturer could 

build equipment with one or two 

separate suction lines. If it is built with 

one, measure the suction pressure for 

that one and base the EER on that 

suction pressure, without concern for 

what is happening upstream of the case. 

(Public Meeting Transcript, No. 13.5 at 

p. 215) 

DOE has reviewed the comments and 

is proposing the following language for 

requiring manufacturers to meet 

standards for hybrid cases, refrigeratorfreezers, and hybrid refrigerator/ 

freezers: 

• For commercial refrigeration 

equipment with two or more 

compartments (hybrid refrigerators, 

hybrid freezers, hybrid refrigeratorfreezers, and non-hybrid refrigerator/ 

freezers), the MDEC for each model 

shall be the sum of the MDEC values for 

all of its compartments. For each 

compartment, measure the TDA or 

volume of that compartment, and 

determine the appropriate equipment 

class based on that compartment’s 

equipment family, condensing unit 

configuration, and designed operating 

temperature. The MDEC limit for each 

compartment shall be the calculated 

value obtained by entering that 

compartment’s TDA or volume into the 

standard equation in subsection (d)(1) 

for that compartment’s equipment class. 

Measure the calculated daily energy 

consumption (CDEC) or total daily 

energy consumption (TDEC) for the 

entire case as follows: 

Æ For remote condensing commercial 

hybrid refrigerators, hybrid freezers, 

hybrid refrigerator-freezers, and nonhybrid refrigerator-freezers, where two 

or more independent condensing units 

each separately cool only one 

compartment, measure the total 

refrigeration load of each compartment 

separately according to the ANSI/ 

ASHRAE Standard 72–2005 test 

procedure. Calculate compressor energy 

consumption (CEC) for each 

compartment using Table 1 in ANSI/ 

ARI Standard 1200–2006 using the 

saturated evaporator temperature for 

that compartment. The calculated daily 

energy consumption (CDEC) for the 

entire case shall be the sum of the CEC 

for each compartment, fan energy 


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consumption (FEC), lighting energy 

consumption (LEC), anti-condensate 

energy consumption (AEC), defrost 

energy consumption (DEC), and 

condensate evaporator pan energy 

consumption (PEC) (as measured in 

ANSI/ARI Standard 1200–2006). 

Æ For remote condensing commercial 

hybrid refrigerators, hybrid freezers, 

hybrid refrigerator-freezers, and nonhybrid refrigerator-freezers, where two 

or more compartments are cooled 

collectively by one condensing unit, 

measure the total refrigeration load of 

the entire case according to the ANSI/ 

ASHRAE Standard 72–2005 test 

procedure. Calculate a weighted 

saturated evaporator temperature for the 

entire case by (i) multiplying the 

saturated evaporator temperature of 

each compartment by the volume of that 

compartment (as measured in ANSI/ARI 

Standard 1200–2006), (ii) summing the 

resulting values for all compartments, 

and (iii) dividing the resulting total by 

the total volume of all compartments. 

Calculate the CEC for the entire case 

using Table 1 in ANSI/ARI Standard 

1200–2006, using the total refrigeration 

load and the weighted average saturated 

evaporator temperature. The CDEC for 

the entire case shall be the sum of the 

CEC, FEC, LEC, AEC, DEC, and PEC. 

Æ For self-contained commercial 

hybrid refrigerators, hybrid freezers, 

hybrid refrigerator-freezers, and nonhybrid refrigerator-freezers, measure the 

total daily energy consumption (TDEC) 

for the entire case according to the 

ANSI/ASHRAE Standard 72–2005 test 

procedure. 

• For remote-condensing and selfcontained wedge cases, measure the 

CDEC or TDEC according to the ANSI/ 

ASHRAE Standard 72–2005 test 

procedure. The MDEC for each model 

shall be the amount derived by 

incorporating into the standards 

equation in subsection (d)(1) for the 

appropriate equipment class a value for 

the TDA that is the product of (1) the 

vertical height of the air-curtain (or glass 

in a transparent door) and (2) the largest 

overall width of the case, when viewed 

from the front. This is identified as Issue 

6 under ‘‘Issues on Which DOE Seeks 

Comment’’ in Section VII.E of this 

NOPR. 

B. Economic Justification and Energy 

Savings 

1. Economic Impacts on Commercial 

Customers 

a. Life-Cycle Cost and Payback Period 

To evaluate the economic impact of 

the TSLs on customers, DOE conducted 

an LCC analysis for each level. More 

efficient commercial refrigeration 

equipment would affect customers in 

two ways: Annual operating expense 

would decrease and purchase price 

would increase. DOE analyzed the net 

effect by calculating the LCC. Inputs 

used for calculating the LCC include 

total installed costs (i.e., equipment 

price plus installation costs), annual 

energy savings, average electricity costs 

by customer, energy price trends, repair 

costs, maintenance costs, equipment 

lifetime, and discount rates. 

DOE’s LCC and PBP analyses 

provided five outputs for each TSL that 

are reported in Table V–4 through Table 

V–18. The first three outputs are the 

proportion of commercial refrigeration 

equipment purchases where the 

purchase of a standard-compliant piece 

of equipment would create a net LCC 

increase, no impact, or a net LCC 

savings for the customer. DOE used the 

estimated distribution of shipments by 

efficiency level for each equipment class 

to determine the affected customers. 

The fourth output is the average net LCC 

savings from standard-compliant 

equipment. The fifth output is the 

average PBP for the customer 

investment in standard-compliant 

equipment. The payback period is the 

number of years it would take for the 

customer to recover through energy 

savings the increased costs of higher 

efficiency equipment compared with the 

purchase of baseline efficiency 

equipment. 

TABLE V–4—SUMMARY LCC AND PBP RESULTS FOR VOP.RC.M EQUIPMENT CLASS

Trial standard level 

1 2 3 4 5 

Equipment with Net LCC Increase (%) ......................................... 0 0 0 0 63 

Equipment with No Change in LCC (%) ........................................ 65 47 30 30 2 

Equipment with Net LCC Savings (%) .......................................... 35 53 70 70 34 

Mean LCC Savings ($) .................................................................. 1,201 1,143 1,551 1,551 ¥234 

Mean Payback Period (years) ....................................................... 0 .9 1 .5 2 .2 2 .2 9 .7 

TABLE V–5—SUMMARY LCC AND PBP RESULTS FOR VOP.RC.L EQUIPMENT CLASS

Trial standard level 

1 2 3 4 5 

Equipment with Net LCC Increase (%) ......................................... 0 0 0 0 0 

Equipment with No Change in LCC (%) ........................................ 68 52 22 8 8 

Equipment with Net LCC Savings (%) .......................................... 32 48 78 92 92 

Mean LCC Savings ($) .................................................................. 3,132 4,005 4,089 3,364 3,364 

Mean Payback Period (years) ....................................................... 0 .8 1 .2 1 .3 3 .0 3 .0 

TABLE V–6—SUMMARY LCC AND PBP RESULTS FOR VOP.SC.M EQUIPMENT CLASS

Trial standard level 

1 2 3 4 5 

Equipment with Net LCC Increase (%) ......................................... 0 0 0 0 19 

Equipment with No Change in LCC (%) ........................................ 65 32 17 17 3 

Equipment with Net LCC Savings (%) .......................................... 35 68 83 83 78 

Mean LCC Savings ($) .................................................................. 758 1,065 1,342 1,342 703 


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TABLE V–6—SUMMARY LCC AND PBP RESULTS FOR VOP.SC.M EQUIPMENT CLASS—Continued 

Trial standard level 

1 2 3 4 5 

Mean Payback Period (years) ....................................................... 0 .8 1 .8 2 .7 2 .7 5 .9 

TABLE V–7—SUMMARY LCC AND PBP RESULTS FOR VCT.RC.M EQUIPMENT CLASS

Trial standard level 

1 2 3 4 5 

Equipment with Net LCC Increase (%) ......................................... 0 0 0 19 19 

Equipment with No Change in LCC (%) ........................................ 79 57 25 7 7 

Equipment with Net LCC Savings (%) .......................................... 21 43 75 74 74 

Mean LCC Savings ($) .................................................................. 286 581 1,107 867 867 

Mean Payback Period (years) ....................................................... 0 .9 1 .4 4 .6 6 .1 6 .1 

TABLE V–8—SUMMARY LCC AND PBP RESULTS FOR VCT.RC.L EQUIPMENT CLASS

Trial standard level 

1 2 3 4 5 

Equipment with Net LCC Increase (%) ......................................... 0 0 0 0 0 

Equipment with No Change in LCC (%) ........................................ 60 40 28 8 8 

Equipment with Net LCC Savings (%) .......................................... 40 60 72 92 92 

Mean LCC Savings ($) .................................................................. 676 3,594 3,662 3,546 3,546 

Mean Payback Period (years) ....................................................... 1 .2 2 .6 2 .6 3 .7 3 .7 

TABLE V–9—SUMMARY LCC AND PBP RESULTS FOR VCT.SC.I EQUIPMENT CLASS

Trial standard level 

1 2 3 4 5 

Equipment with Net LCC Increase (%) ......................................... 0 0 0 0 0 

Equipment with No Change in LCC (%) ........................................ 52 37 15 7 7 

Equipment with Net LCC Savings (%) .......................................... 48 63 85 93 93 

Mean LCC Savings ($) .................................................................. 2,305 3,806 3,841 3,818 3,818 

Mean Payback Period (years) ....................................................... 1 .1 1 .7 2 .4 2 .5 2 .5 

TABLE V–10—SUMMARY LCC AND PBP RESULTS FOR VCS.SC.I EQUIPMENT CLASS

Trial standard level 

1 2 3 4 5 

Equipment with Net LCC Increase (%) ......................................... 0 0 0 0 0 

Equipment with No Change in LCC (%) ........................................ 76 49 11 11 11 

Equipment with Net LCC Savings (%) .......................................... 24 51 89 89 89 

Mean LCC Savings ($) .................................................................. 640 1,191 1,565 1,565 1,565 

Mean Payback Period (years) ....................................................... 0 .4 0 .6 1 .4 1 .4 1 .4 

TABLE V–11—SUMMARY LCC AND PBP RESULTS FOR SVO.RC.M EQUIPMENT CLASS

Trial standard level 

1 2 3 4 5 

Equipment with Net LCC Increase (%) ......................................... 0 0 0 0 62 

Equipment with No Change in LCC (%) ........................................ 62 42 24 24 4 

Equipment with Net LCC Savings (%) .......................................... 38 58 76 76 34 

Mean LCC Savings ($) .................................................................. 810 782 1,106 1,106 ¥170 

Mean Payback Period (years) ....................................................... 0 .8 1 .5 2 .1 2 .1 9 .7 


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TABLE V–12—SUMMARY LCC AND PBP RESULTS FOR SVO.SC.M EQUIPMENT CLASS

Trial standard level 

1 2 3 4 5 

Equipment with Net LCC Increase (%) ......................................... 0 0 0 0 17 

Equipment with No Change in LCC (%) ........................................ 67 34 19 19 4 

Equipment with Net LCC Savings (%) .......................................... 33 66 81 81 79 

Mean LCC Savings ($) .................................................................. 527 756 988 988 516 

Mean Payback Period (years) ....................................................... 0 .7 1 .6 2 .6 2 .6 5 .9 

TABLE V–13—SUMMARY LCC AND PBP RESULTS FOR SOC.RC.M EQUIPMENT CLASS

Trial standard level 

1 2 3 4 5 

Equipment with Net LCC Increase (%) ......................................... 0 0 0 0 71 

Equipment with No Change in LCC (%) ........................................ 83 66 32 32 5 

Equipment with Net LCC Savings (%) .......................................... 17 34 68 68 24 

Mean LCC Savings ($) .................................................................. 363 759 819 819 ¥673 

Mean Payback Period (years) ....................................................... 0 .6 0 .9 1 .9 1 .9 12 .6 

TABLE V–14—SUMMARY LCC AND PBP RESULTS FOR HZO.RC.M EQUIPMENT CLASS

Trial standard level 

1 2 3 4 5 

Equipment with Net LCC Increase (%) ......................................... 0 0 0 0 0 

Equipment with No Change in LCC (%) ........................................ 80 60 39 19 19 

Equipment with Net LCC Savings (%) .......................................... 20 40 61 81 81 

Mean LCC Savings ($) .................................................................. 376 792 942 917 917 

Mean Payback Period (years) ....................................................... 0 .6 0 .9 1 .4 1 .8 1 .8 

TABLE V–15—SUMMARY LCC AND PBP RESULTS FOR HZO.RC.L EQUIPMENT CLASS

Trial standard level 

1 2 3 4 5 

Equipment with Net LCC Increase (%) ......................................... 0 0 0 0 0 

Equipment with No Change in LCC (%) ........................................ 59 39 19 19 19 

Equipment with Net LCC Savings (%) .......................................... 41 61 81 81 81 

Mean LCC Savings ($) .................................................................. 593 927 971 971 971 

Mean Payback Period (years) ....................................................... 1 .1 1 .5 1 .8 1 .8 1 .8 

TABLE V–16—SUMMARY LCC AND PBP RESULTS FOR HZO.SC.M EQUIPMENT CLASS

Trial standard level 

1 2 3 4 5 

Equipment with Net LCC Increase (%) ......................................... 0 0 0 0 0 

Equipment with No Change in LCC (%) ........................................ 73 45 21 10 10 

Equipment with Net LCC Savings (%) .......................................... 27 55 79 90 90 

Mean LCC Savings ($) .................................................................. 312 551 759 721 721 

Mean Payback Period (years) ....................................................... 0 .4 1 .1 2 .0 2 .5 2 .5 

TABLE V–17—SUMMARY LCC AND PBP RESULTS FOR HZO.SC.L EQUIPMENT CLASS

Trial standard level 

1 2 3 4 5 

Equipment with Net LCC Increase (%) ......................................... 0 0 0 0 0 

Equipment with No Change in LCC (%) ........................................ 73 45 21 10 10 

Equipment with Net LCC Savings (%) .......................................... 27 55 79 90 90 

Mean LCC Savings ($) .................................................................. 610 1,094 1,585 1,559 1,559 

Mean Payback Period (years) ....................................................... 0 .4 0 .9 1 .6 1 .9 1 .9 


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TABLE V–18—SUMMARY LCC AND PBP RESULTS FOR HCT.SC.I EQUIPMENT CLASS

Trial standard level 

1 2 3 4 5 

Equipment with Net LCC Increase (%) ......................................... 0 0 0 0 0 

Equipment with No Change in LCC (%) ........................................ 64 46 30 14 14 

Equipment with Net LCC Savings (%) .......................................... 36 54 70 86 86 

Mean LCC Savings ($) .................................................................. 192 692 710 693 693 

Mean Payback Period (years) ....................................................... 0 .7 1 .5 1 .6 2 .1 2 .1 

For three equipment classes 

(VOP.RC.M, SVO.RC.M, and SOC.RC.M) 

TSL 5 resulted in a negative LCC 

savings compared with the purchase of 

baseline equipment. For all other 

equipment classes, TSL 5 showed 

positive LCC savings. DOE noted that 

for equipment classes with lighting, the 

inclusion of LED lighting at TSL 5 had 

a significant impact on the calculated 

LCC savings. For equipment classes 

without lighting (i.e., VCS.SC.I, 

HZO.RC.L, HZO.SC.M, HZO.SC.L, 

HCT.SC.I), the LCC savings at TSL 5 was 

either identical to that of TSL 3, or less 

(between $17 and $38 over the life of 

the equipment). However, for 

equipment classes with lighting the 

difference in the LCC calculated 

between TSL 3 and TSL 5 varied from 

$23 for VCT.SC.I to $1785 for 

VOP.RC.M. When compared to TSL 3, 

the estimated reduction in LCC savings 

for TSL 5 was most pronounced for the 

three medium temperature equipment 

classes identified above as having 

negative LCC compared to the baseline 

(VOP.RC.M, SOC.RC.M, and 

SVO.RC.M), varying between $1276 and 

$1785 dollars. For three additional 

equipment classes (VOP.RC.L, 

SVO.SC.M, and VOP.SC.M), when 

compared to TSL 3, the difference in 

LCC was greater than $500. DOE noted 

that these are all medium temperature 

cases with the exception of VOP.RC.L, 

which is a small sales volume unit, 

similar in design to a medium 

temperature VOP.RC.M case. 

The inclusion of LED lighting systems 

result in an incremental increase in 

installed price. It also increases 

annualized lighting maintenance cost, 

since LED lights were assumed to be 

replaced after 50,000 hours or 5.7 years 

of steady operation. DOE performed two 

sensitivity analyses of the effect of 

projected cost reductions in LED 

lighting systems on LCC. These analyses 

involved five equipment classes: 

VOP.RC.M, VOP.SC.M, SVO.RC.M, 

SVO.SC.M, and SOC.RC.M. In the first 

sensitivity analysis, DOE determined 

the reduction in LED fixture cost, 

applied to the installed price in 2012, 

that would be necessary to reduce the 

average LCC for TSL 5 to a level 

equivalent to the LCC savings at TSL 3, 

the maximum LCC level. DOE 

determined that for these five 

equipment classes, a LED cost reduction 

ranging from 37 percent to 44 percent, 

depending on equipment class, would 

provide an LCC at TSL 5 equivalent to 

that at TSL 3. 

In the second sensitivity analysis, 

DOE presumed that the cost for 

replacement LED fixtures in 2018 would 

be reduced by 50 percent of the cost 

assumed in the base LCC analysis, and 

then calculated the reduction in LED 

fixture cost necessary by 2012 to reduce 

the average LCC for TSL 5 to a level that 

provided equivalent LCC savings as TSL 

3. DOE determined that for these five 

equipment classes an LED cost 

reduction ranging from 29 percent to 40 

percent, depending on equipment class, 

would provide a LCC at TSL 5 

equivalent to that at TSL 3. 

Based on these analyses, DOE 

concluded that a reduction in LED 

fixture costs of approximately 45 

percent would be sufficient to result in 

the maximum LCC savings for all five 

equipment classes at TSL 5. DOE 

estimated that this reduction in LED 

fixture costs would also increase LCC 

savings for all other equipment classes 

with installed lighting at TSL 5. DOE 

estimates that for all equipment classes 

to achieve their maximum LCC savings 

at TSL 5, LED fixture costs must 

decrease by at least 45 percent. DOE 

concluded that a reduction in LED costs 

of less than 45 percent could result in 

only certain commercial refrigeration 

equipment classes achieving their 

maximum LCC savings at TSL 5. 

b. Rebuttable Presumption Payback 

As discussed above, EPCA provides a 

rebuttable presumption that an energy 

conservation standard is economically 

justified if the increased purchase cost 

for the equipment that meets the 

standard is less than three times the 

value of the first year energy savings 

resulting from the standard. DOE 

calculated a rebuttable presumption 

payback period for each TSL to 

determine if DOE could presume that a 

standard at that level is economically 

justified. Rather than using distributions 

for input values, DOE used discrete 

values and, as required by EPCA, based 

the calculation on the DOE commercial 

refrigeration equipment test procedure 

assumptions. As a result, DOE 

calculated a single rebuttable 

presumption payback value for each 

standard level, and not a distribution of 

payback periods. 

To evaluate the rebuttable 

presumption, DOE estimated the 

additional customer price of a more 

efficient, standard-compliant unit using 

the average customer markup, and 

compared this cost to the value of the 

energy saved during the first year of 

operation of the equipment as 

determined by ANSI/ARI Standard 

1200–2006. DOE interprets that the 

increased cost of purchasing a standardcompliant unit includes the cost of 

installing the equipment for use by the 

purchaser. DOE calculated the 

rebuttable presumption PBP, or the ratio 

of the value of the increased installed 

price above the baseline efficiency level 

to the first year’s energy cost savings. 

When this PBP is less than three years, 

the rebuttable presumption is satisfied; 

when this PBP is equal to or more than 

three years, the rebuttable presumption 

is not satisfied. 

Rebuttable presumption PBPs were 

calculated based on single-point 

national average values for installed 

costs and energy prices appropriate to 

commercial refrigeration equipment. 

Equipment prices are based on a 

shipment-weighted average distribution 

markup for remote condensing 

equipment or self-contained equipment, 

as applied to the MSP for each 

equipment class. The installed cost is 

based on the national average 

equipment price and the national 

average installation cost for remote 

condensing or self-contained equipment 

as appropriate. Average first-year energy 

costs were calculated as the product of 

the annual energy consumption used in 

the LCC and the shipment-weighted 

national-average electricity price, which 

was calculated using the shipment 

weights for the four business types 


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Federal Register / Vol. 73, No. 165 / Monday, August 25, 2008 / Proposed Rules 50117 

using commercial refrigeration 

equipment. 

The equation for the rebuttable PBP 

is: 

PBP = DIC/DEC 

Where 

PBP = payback period in years, 

DIC = difference in the total installed cost 

between the more efficient standard level 

equipment (energy consumption levels 2, 

3, etc.) and the baseline (energy 

consumption level 1) equipment, and 

DEC = difference in annual energy costs. 

PBPs are expressed in years. PBPs 

greater than the life of the equipment 

means that the increased total installed 

cost of the more efficient equipment is 

not recovered in reduced operating costs 

for the more efficient equipment. The 

rebuttable presumption PBPs differ from 

the other PBPs calculated in the LCC 

analysis (see Section IV.E.12 of this 

NOPR) because they do not include 

maintenance or repair costs and they are 

based on single point values instead of 

distributions for installation costs or 

energy costs. The baseline efficiency 

level for the rebuttable presumption 

calculation is the baseline established in 

the engineering analysis. 

Table V–19 shows the nationally 

averaged rebuttable presumption 

paybacks calculated for all equipment 

classes and efficiency levels. The 

highest efficiency level with a rebuttable 

presumption payback of less than three 

years is also shown in Table V–19 for 

each equipment class. For eight 

equipment classes, the rebuttable 

presumption criteria were satisfied at all 

TSLs. At TSL 4, the rebuttable 

presumption criteria are satisfied for 13 

equipment classes. At TSL 3, the 

rebuttable presumption criteria are 

satisfied for 14 equipment classes. At 

TSL 2, the rebuttable presumption 

criteria were satisfied for all equipment 

classes. However, while DOE has 

examined the rebuttable presumption 

PBPs, DOE has not determined 

economic justification for any of the 

standard levels analyzed based on the 

ANOPR rebuttable presumption 

analysis. The economic justification for 

each TSL for each equipment class will 

take into account the more detailed 

analysis of the economic impacts of 

increased efficiency pursuant to Section 

325(o)(2)(B)(i) of EPCA. (42 U.S.C. 

6295(o)(2)(B)(i) and 6316(e)(1)). 

TABLE V–19—REBUTTABLE PRESUMPTION PAYBACK PERIODS BY EFFICIENCY LEVEL AND EQUIPMENT CLASS

Equipment type 

Rebuttable presumption payback period (years) Highest TSL with 

PBP < 3 Years Level 1 Level 2 Level 3 Level 4 Level 5 

VOP.RC.M ................. 0.8 1.1 1.7 1.7 5.9 4 

VOP.RC.L .................. 0.7 1.1 1.2 2.5 2.5 5 

VOP.SC.M ................. 0.8 1.5 2.3 2.3 4.5 4 

VCT.RC.M ................. 0.8 1.2 4.1 5.4 5.4 2 

VCT.RC.L .................. 1.0 2.4 2.4 3.3 3.3 3 

VCT.SC.I .................... 1.0 1.6 2.2 2.3 2.3 5 

VCS.SC.I ................... 0.4 0.6 1.3 1.3 1.3 5 

SVO.RC.M ................. 0.8 1.1 1.7 1.7 5.9 4 

SVO.SC.M ................. 0.6 1.3 2.2 2.2 4.5 4 

SOC.RC.M ................. 0.5 0.8 1.4 1.4 7.1 4 

HZO.RC.M ................. 0.5 0.8 1.2 1.6 1.6 5 

HZO.RC.L .................. 1.0 1.3 1.6 1.6 1.6 5 

HZO.SC.M ................. 0.4 1.0 1.9 2.3 2.3 5 

HZO.SC.L .................. 0.3 0.8 1.5 1.7 1.7 5 

HCT.SC.I ................... 0.7 1.4 1.5 2.0 2.0 5 

c. Life-Cycle Cost Sub-Group Analysis 

Using the LCC spreadsheet model, 

DOE estimated the impact of the TSLs 

on the following customer sub-group: 

small businesses. For the retail food 

sales business, the Small Business 

Association (SBA) defines as small 

businesses supermarkets and other 

grocery stores and convenience stores 

with less than $25 million in total 

annual sales. For specialty stores (e.g., 

meat markets, bakeries, fish and seafood 

markets), this limit is set at less than 

$6.5 million in annual sales. According 

to the Food Marketing Institute, the 

average supermarket had sales of 

approximately $15 million in 2006, so a 

small business could be represented by 

one to two average-size supermarkets or 

a chain of smaller grocery or 

convenience stores. The Food Marketing 

Institute defines independent stores as a 

retailer with one to ten stores, so most 

small supermarkets or grocery 

businesses as defined by SBA would be 

classified as independent grocery stores 

by the industry. A somewhat larger 

chain of convenience stores could still 

be classified as a small business. 

DOE estimated the LCC and PBP for 

small food sales businesses defined by 

SBA by presuming that most small 

business customers could be 

represented by the analysis performed 

for small grocery and convenience store 

owners. DOE assumed, however, that 

the smaller, independent grocery and 

convenience store chains may not have 

access to national accounts, but would 

instead purchase equipment primarily 

through distributors and grocery 

wholesalers. DOE modified the 

distribution channels for remote 

condensing and self-contained 

equipment to these small businesses as 

follows: 

• For remote condensing equipment, 

15 percent of the sales were assumed to 

pass through a manufacturer-todistributor-to-contractor-to-customer 

channel, and 85 percent were assumed 

to be purchased through a 

manufacturer-to-distributor-to-customer 

channel. 

• For self-contained equipment, 35 

percent of sales were assumed to pass 

through a manufacturer-to-distributorto-contractor-to-customer channel, and 

65 percent were assumed to be 

purchased through a manufacturer-todistributor-to-customer channel. 

In both cases, the distribution chain 

markups were calculated accordingly. 

Table V–20 shows the mean LCC 

savings from proposed energy 

conservation standards for the small 

business sub-group, and Table V–21 

shows the mean payback period (in 

years) for this sub-group. More detailed 

discussion on the LCC sub-group 

analysis and results can be found in 

Chapter 12 of the TSD. 


pwalker on PROD1PC71 with PROPOSALS2
50118 Federal Register / Vol. 73, No. 165 / Monday, August 25, 2008 / Proposed Rules 

24The MIA estimates the impacts on commercial 

refrigeration equipment manufacturers of 

equipment in the entire range of equipment classes 

(i.e., the MIA results in Table V–22 and Table V–

23 take into consideration the impacts on 

manufacturers of equipment from all equipment 

classes). 

TABLE V–20—MEAN LIFE-CYCLE COST SAVINGS FOR COMMERCIAL REFRIGERATION EQUIPMENT PURCHASED BY LCC 

SUB-GROUP (SMALL BUSINESS) (2007$) * 

Equipment class TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

VOP.RC.M ........................................................................... 1,536 1,524 2,096 2,096 564 

VOP.RC.L ............................................................................ 3,995 5,158 5,301 4,688 4,688 

VOP.SC.M ............................................................................ 968 1,413 1,840 1,840 1,308 

VCT.RC.M ............................................................................ 366 757 1,689 1,625 1,625 

VCT.RC.L ............................................................................. 876 4,842 4,941 5,042 5,042 

VCT.SC.I .............................................................................. 2,957 4,981 5,155 5,151 5,151 

VCS.SC.I .............................................................................. 805 1,511 2,031 2,031 2,031 

SVO.RC.M ........................................................................... 1,036 1,044 1,492 1,492 400 

SVO.SC.M ............................................................................ 669 994 1,346 1,346 953 

SOC.RC.M ........................................................................... 461 973 1,107 1,107 (175) 

HZO.RC.M ........................................................................... 476 1,013 1,221 1,202 1,202 

HZO.RC.L ............................................................................ 766 1,206 1,274 1,274 1,274 

HZO.SC.M ............................................................................ 393 708 1,005 974 974 

HZO.SC.L ............................................................................. 766 1,394 2,069 2,052 2,052 

HCT.SC.I .............................................................................. 244 898 925 919 919 

* Numbers in parentheses indicate negative savings. 

TABLE V–21—MEAN PAYBACK PERIOD FOR COMMERCIAL REFRIGERATION EQUIPMENT PURCHASED BY LCC SUB-GROUP

(SMALL BUSINESS) (YEARS) 

Equipment class TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

VOP.RC.M ........................................................................... 0.8 1.3 2.0 2.0 8.5 

VOP.RC.L ............................................................................ 0.7 1.1 1.2 2.7 2.7 

VOP.SC.M ............................................................................ 0.8 1.6 2.4 2.4 5.2 

VCT.RC.M ............................................................................ 0.8 1.3 4.2 5.6 5.6 

VCT.RC.L ............................................................................. 1.1 2.4 2.4 3.4 3.4 

VCT.SC.I .............................................................................. 1.0 1.6 2.1 2.2 2.2 

VCS.SC.I .............................................................................. 0.4 0.6 1.3 1.3 1.3 

SVO.RC.M ........................................................................... 0.8 1.3 1.9 1.9 8.5 

SVO.SC.M ............................................................................ 0.6 1.4 2.3 2.3 5.2 

SOC.RC.M ........................................................................... 0.5 0.8 1.7 1.7 10.8 

HZO.RC.M ........................................................................... 0.5 0.8 1.2 1.6 1.6 

HZO.RC.L ............................................................................ 1.0 1.4 1.7 1.7 1.7 

HZO.SC.M ............................................................................ 0.4 1.0 1.8 2.3 2.3 

HZO.SC.L ............................................................................. 0.3 0.8 1.5 1.7 1.7 

HCT.SC.I .............................................................................. 0.6 1.3 1.4 1.9 1.9 

For commercial refrigeration 

equipment, the LCC and PBP impacts 

for small businesses are similar to those 

of all customers as a whole. While the 

discount rate for small grocery stores is 

higher than that for commercial 

refrigeration equipment customers as a 

whole and equipment prices are higher 

due to the higher markups, these small 

business customers appear to retain 

commercial refrigeration equipment 

over longer periods, and generally, 

smaller stores tend to pay higher 

electrical prices. The average LCC 

savings for the small business sub-group 

is slightly higher than that calculated for 

the average commercial refrigeration 

equipment customer, and the average 

PBP is slightly shorter than the national 

average. DOE tentatively concluded that 

the small food sales businesses as 

defined by SBA will not experience 

economic impacts significantly different 

or more negative than those impacts on 

food sales businesses as a whole. 

2. Economic Impacts on Manufacturers 

DOE performed an MIA to estimate 

the impact of amended energy 

conservation standards on commercial 

refrigeration equipment manufacturers 

(Chapter 13 of the TSD). 

a. Industry Cash-Flow Analysis Results 

Table V–22 and Table V–23 show the 

MIA results for each TSL using both 

markup scenarios described above for 

commercial refrigeration equipment.24

TABLE V–22—MANUFACTURER IMPACT ANALYSIS FOR THE COMMERCIAL REFRIGERATION EQUIPMENT INDUSTRY UNDER

THE PRESERVATION OF GROSS MARGIN PERCENTAGE MARKUP SCENARIO

Preservation of gross margin percentage markup scenario with a rollup shipment scenario 

Units Base case 

Efficiency level 

1 2 3 4 5 

INPV ................. 2007$ Millions 510 510 517 493 471 493 


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TABLE V–22—MANUFACTURER IMPACT ANALYSIS FOR THE COMMERCIAL REFRIGERATION EQUIPMENT INDUSTRY UNDER

THE PRESERVATION OF GROSS MARGIN PERCENTAGE MARKUP SCENARIO—Continued 

Preservation of gross margin percentage markup scenario with a rollup shipment scenario 

Units Base case 

Efficiency level 

1 2 3 4 5 

Change in INPV 2007$ Millions ........................ (0) 6 (17) (40) (18) 

(%) ................... ........................ 0 .00% 1 .22% ¥3 .30% ¥7 .76% ¥3 .49% 

Energy Conservation 

Standards 

Equipment 

Conversion 

Expenses.

2007$ Millions ........................ 0 .5 2 .8 20 .6 40 .4 51 .6 

Energy Conservation 

Standards 

Capital Investments.

2007$ Millions ........................ 0 .8 5 .0 36 .3 71 .2 90 .8 

Total Investment 

Required.

2007$ Millions ........................ 1 .3 7 .8 57 .0 111 .6 142 .4 

TABLE V–23—MANUFACTURER IMPACT ANALYSIS FOR THE COMMERCIAL REFRIGERATION EQUIPMENT INDUSTRY UNDER

THE PRESERVATION OF OPERATING PROFIT MARKUP SCENARIO

Preservation of operating profit markup scenario with a rollup shipment scenario 

Units Base case 

Efficiency level 

1 2 3 4 5 

INPV ................. 2007$ Millions 510 447 423 382 330 226 

Change in INPV 2007$ Millions ........................ (63) (88) (129) (180) (285) 

(%) ................... ........................ ¥12 .34% ¥17 .16% ¥25 .20% ¥35 .32% ¥55 .77% 

Energy Conservation 

Standards 

Equipment 

Conversion 

Expenses.

2007$ Millions ........................ 0 .5 2 .8 20 .6 40 .4 51 .6 

Energy Conservation 

Standards 

Capital Investments.

2007$ Millions ........................ 0 .8 5 .0 36 .3 71 .2 90 .8 

Total Investment 

Required.

2007$ Millions ........................ 1 .3 7 .8 57 .0 111 .6 142 .4 

At TSL 1, the impact on INPV and 

cash flow varies greatly depending on 

the manufacturers and their ability to 

pass on MPC increases to the customer. 

DOE estimated the impacts in INPV at 

TSL 1 to range from approximately no 

impact to ¥$63 million, which is a 

change in INPV of zero percent to 

¥12.34 percent. At this level, the 

industry cash flow is $50.9 million, 

which is nearly the same as the base 

case value of $51.4 million in the year 

leading up to the standards. Since DOE 

estimates that more than 80 percent of 

the equipment being sold is already at 

or above this level, manufacturers that 

currently meet TSL 1 will not have to 

make additional modifications to their 

equipment lines to conform to the 

energy conservation standards. DOE 

expects the lower end of the impacts to 

be reached, because manufacturers will 

be able to fully recover the increase in 

manufacturer production cost from 

customers. Therefore, DOE expects that 

industry revenues and costs will not be 

significantly negatively affected at TSL 

1. 

At TSL 2, the impact on INPV and 

cash flow continues to vary depending 

on the manufacturers and their ability to 

pass on MPC increases to the customer. 

DOE estimated the impacts in INPV at 

TSL 2 to range from approximately $6 

million to ¥$88 million, which is a 

change in INPV of 1.22 percent to 

¥17.16 percent. At this level, the 

industry cash flow decreases by 

approximately 6 percent, to $48.2 

million, compared to the base case value 

of $51.4 million in the year leading up 

to the standards. DOE estimates that 

roughly 45 percent of the equipment 

being sold is already at or above this 

level. The required higher level of 

efficiency will cause some manufactures 

to modify their equipment lines to 

conform to the energy conservation 

standards. DOE does not expect 

industry revenues and costs to be 

affected significantly as long as 

manufacturers fully recover the increase 

in manufacturer production cost from 

customers. The positive INPV value is 


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50120 Federal Register / Vol. 73, No. 165 / Monday, August 25, 2008 / Proposed Rules 

explained by the assumption that MSP 

increases due to higher costs of the 

equipment, so that manufacturers fully 

recover and even surpass the 

investments needed to achieve this 

level. 

At TSL 3, DOE estimated the impacts 

in INPV to range from approximately 

¥$17 million to ¥$129 million, which 

is a change in INPV of ¥3.3 percent to 

¥25.2 percent. At this level, the 

industry cash flow decreases by 

approximately 45.5 percent, to $28 

million, compared to the base case value 

of $51.4 million in the year leading up 

to the standards. Based on information 

submitted by industry, the majority of 

manufacturers would require a complete 

redesign of their equipment, and 

therefore DOE expects that commercial 

refrigeration equipment manufacturers 

will have some difficulty fully passing 

on larger MPC increases to customers. 

Manufacturers expect that the actual 

impacts will be closer to the higher end 

of the range of impacts (i.e., a drop of 

25.2 percent in INPV). 

At TSL 4, DOE estimated the impacts 

on INPV to range from ¥$40 million to 

¥$180 million, which is a change in 

INPV of approximately ¥7.76 percent to 

¥35.32 percent. At this level, the 

industry cash flow decreases by 

approximately 88.4 percent to $5.5 

million, compared to the base case value 

of $51.4 million in the year leading up 

to the standards. TSL 4 was created as 

a combination of TSL 3 (minimum LCC) 

and TSL 5 (max-tech). Manufacturers 

were not directly asked about this 

combination TSL during interviews. 

However, DOE estimated the range of 

impacts at TSL 4 based on the expected 

impacts manufacturers reported for TSL 

3 and TSL 5. Since manufacturers 

expect that the actual impacts will be 

closer to the higher range of impacts at 

TSL 3 and TSL 5, DOE expects that the 

actual impacts for TSL 4 will also be at 

the higher range (i.e., a drop of 35.32 

percent in INPV). 

At TSL 5 (max-tech), DOE estimated 

the impacts in INPV to range from ¥$18 

million to ¥$285 million, which is a 

change in INPV of approximately ¥3.49 

percent to ¥55.77 percent. At this level, 

the industry cash flow decreases by 

approximately 114 percent to ¥$7.2 

million, compared to the base case value 

of $51.4 million in the year leading up 

to the standards. At higher TSLs, 

manufacturers have more difficulty fully 

passing on larger MPC increases to 

customers, and therefore manufacturers 

expect that the actual impacts will be 

closer to the higher end of the range of 

impacts (i.e., a drop of 55.77 percent in 

INPV). Currently, there is only one 

model being manufactured at these 

efficiency levels for most equipment 

classes, and some equipment classes 

have no equipment at these levels. At 

TSL 5, DOE recognizes that there is a 

risk of very large negative impacts if 

manufacturers’ expectations are 

accurate about reduced profit margins. 

During the interviews, manufacturers 

expressed great concern at the 

possibility of requiring an entire 

equipment line to be manufactured at 

the max-tech levels. 

b. Cumulative Regulatory Burden 

While any one regulation may not 

impose a significant burden on 

manufacturers, the combined effects of 

several impending regulations may have 

serious consequences for some 

manufacturers, groups of manufacturers, 

or an entire industry. Assessing the 

impact of a single regulation may 

overlook this cumulative regulatory 

burden. 

In addition to the energy conservation 

regulations on commercial refrigeration 

equipment, several other Federal 

regulations and pending regulations 

apply to commercial refrigeration 

equipment and other equipment 

produced by the same manufacturers or 

parent companies. DOE recognizes that 

each regulation can significantly affect 

manufacturers’ financial operations. 

Multiple regulations affecting the same 

manufacturer can quickly strain 

manufacturers’ profits and possibly 

cause an exit from the market. An 

example of these additional regulations 

is the U.S. Environmental Protection 

Agency (EPA)-mandated phaseout of 

hydrochlorofluorocarbons (HCFCs) and 

the potential residential central air 

conditioners and heat pumps Federal 

energy conservation standard. Table V–

24 provides the timetables for these 

mandatory or potential regulations. DOE 

believes that the cumulative burden of 

the HCFC phaseout is minimal because 

much of the commercial refrigeration 

equipment industry has already 

initiated the transition to HFC 

refrigerants. As shown in Section IV.B.3 

above, ARI stated that the data it 

provided to DOE was based on HFC 

refrigerants, and DOE therefore used 

HFC refrigerants in its analysis. DOE is 

aware of the industry’s transition to 

HFC refrigerants, but requests comment 

on any cumulative regulatory burdens 

from the combined effects of impending 

regulations that may affect 

manufacturers. 

TABLE V–24—FEDERAL REGULATION TIMETABLES

Regulation Key affected appliance Effective date 

Potential DOE energy conservation standards ........................ Central air conditioners and heat pumps (residential) ............. 06/2011. 

Potential DOE energy conservation standards ........................ Room air conditioners .............................................................. 06/2011 

EPA phaseout of HCFC refrigerant on new equipment ........... Room and residential central air conditioners, and commercial air conditioners.01/2010 

EPA phaseout of HCFC blowing agents on new equipment ... Commercial refrigeration equipment ........................................ 01/2010. 

Production of foam insulation uses a 

blowing agent. The EPA strategy for 

meeting U.S. obligations under the 

Montreal Protocol requires the United 

States to phase out the production and 

use of HCFC blowing agents. HCFC–22 

and HCFC–142b will be phased out on 

January 1, 2010. This affects equipment 

manufacturing in the United States after 

this date and causes manufacturers to 

switch to other blowing agents with no 

ozone depletion potential. 

DOE recognizes that some parent 

companies of commercial refrigeration 

equipment manufacturers could also be 

affected by the potential energy 

conservation standards for central air 

conditioners and heat pumps and for 

room air conditioners. Additional 

investments necessary to meet these 

potential standards could have 

significant impacts on manufacturers of 

commercial refrigeration equipment. 

DOE seeks comment on the magnitude 

of impacts for cumulative regulatory 

burden on manufacturers for potential 

energy conservation standards for 

central air conditioners and heat pumps 

and for room air conditioners. 

c. Impacts on Employment 

DOE used the GRIM to assess the 

impacts of energy conservation 

standards on commercial refrigeration 

equipment employment. DOE used 

statistical data from the U.S. Census 

Bureau’s 2006 Annual Survey of 

Manufacturers, the results of the 


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engineering analysis, and interviews 

with manufacturers to estimate the 

inputs necessary to calculate industrywide labor expenditures and 

employment levels. 

Currently the vast majority of 

commercial refrigeration equipment is 

manufactured in the U.S. Based on the 

GRIM results and interviews with 

manufacturers, DOE expects that there 

would be positive direct employment 

impacts among domestic commercial 

refrigeration equipment manufacturers 

for TSL 1 through TSL 5. This 

conclusion ignores the possible 

relocation of domestic jobs to lowerlabor-cost countries which may occur 

independently of new standards or may 

be influenced by the level of 

investments required by new standards. 

Because the labor impacts in the GRIM 

do not take relocation into account, the 

labor impacts would be different if 

manufacturers chose to relocate to lower 

cost countries. Manufactures stated that, 

although there are no current plans to 

relocate production facilities, at higher 

TSLs there would be increased pressure 

to cut costs, which could result in 

relocation. Chapter 13 of the TSD 

further discusses the employment 

impacts and exhibits the actual changes 

in employment levels by TSL. 

The conclusions in this section are 

independent of any conclusions 

regarding employment impacts from the 

broader U.S. economy estimated in the 

Employment Impact Analysis. These 

impacts are documented in Chapter 15 

of this TSD. 

d. Impacts on Manufacturing Capacity 

According to the majority of 

commercial refrigeration equipment 

manufacturers, new energy conservation 

standards will not significantly affect 

manufacturers’ production capacity. 

Any necessary redesign of commercial 

refrigeration equipment will not change 

the fundamental assembly of the 

equipment. However, manufacturers 

anticipate some minor changes to 

tooling. Thus, DOE believes 

manufacturers will be able to maintain 

manufacturing capacity levels and 

continue to meet market demand under 

new energy conservation standards. 

e. Impacts on Sub-Groups of 

Manufacturers 

As discussed above, using average 

cost assumptions to develop an industry 

cash-flow estimate is not adequate for 

assessing differential impacts among 

sub-groups of manufacturers. Small 

manufacturers, niche equipment 

manufacturers, or manufacturers 

exhibiting a cost structure that differs 

largely from the industry average could 

be affected differently. DOE used the 

results of the industry characterization 

to group manufacturers exhibiting 

similar characteristics. 

DOE evaluated the impact of new 

energy conservation standards on small 

businesses, as defined by the SBA for 

the commercial refrigeration equipment 

industry, as manufacturing enterprises 

with 750 or fewer employees. DOE 

shared the interview guides with small 

commercial refrigeration equipment 

manufacturers and tailored specific 

questions for them. During DOE’s 

interviews, small manufacturers 

suggested that the impacts of standards 

on them would not differ from impacts 

on larger companies within the industry 

(Chapter 13 of the TSD). 

3. National Impact Analysis 

a. Amount and Significance of Energy 

Savings 

To estimate the energy savings 

through 2042 due to new energy 

conservation standards, DOE compared 

the energy consumption of commercial 

refrigeration equipment under the base 

case to energy consumption of 

commercial refrigeration equipment 

under a new standard. The energy 

consumption calculated in the NIA is 

source energy, taking into account 

energy losses in the generation and 

transmission of electricity as discussed 

in Section IV.J. 

DOE tentatively determined the 

amount of energy savings at each of the 

5 TSLs being considered for the 15 

primary equipment class analyzed and 

aggregated the results. Table V–25 

shows the forecasted aggregate national 

energy savings for all 15 equipment 

classes at each TSL. The table also 

shows the magnitude of the estimated 

energy savings if the savings are 

discounted at seven percent and three 

percent. Each TSL considered in this 

rulemaking would result in significant 

energy savings, and the amount of 

savings increases with higher energy 

conservation standards (Chapter 11 of 

the TSD). 

TABLE V–25—SUMMARY OF CUMULATIVE NATIONAL ENERGY SAVINGS FOR COMMERCIAL REFRIGERATION EQUIPMENT

(ENERGY SAVINGS FOR UNITS SOLD FROM 2012 TO 2042) 

Primary national energy savings (quads) 

(sum of all equipment classes) 

Trial standard level Undiscounted 3% 

Discounted 

7% 

Discounted 

1 ................................................................................................................................................... 0.141 0.073 0.034 

2 ................................................................................................................................................... 0.545 0.284 0.132 

3 ................................................................................................................................................... 0.715 0.372 0.173 

4 ................................................................................................................................................... 0.832 0.433 0.201 

5 ................................................................................................................................................... 1.208 0.630 0.292 

DOE reports both undiscounted and 

discounted values of energy savings. 

Each TSL analyzed results in additional 

energy savings, ranging from an 

estimated 0.141 quads to 1.208 quads 

for TSLs 1 through 5 (undiscounted). 

b. Net Present Value 

The net present value analysis is a 

measure of the cumulative benefit or 

cost of standards to the Nation. In 

accordance with the Office of 

Management and Budget (OMB)’s 

guidelines on regulatory analysis (OMB 

Circular A–4, Section E, September 17, 

2003), DOE calculated an estimated 

NPV using both a seven percent and a 

three percent real discount rate. The 

seven percent rate is an estimate of the 

average before-tax rate of return to 

private capital in the U.S. economy, and 

reflects the returns to real estate and 

small business capital as well as 

corporate capital. DOE used this 

discount rate to approximate the 

opportunity cost of capital in the private 

sector, since recent OMB analysis has 

found the average rate of return to 

capital to be near this rate. In addition, 

DOE used the three percent rate to 

capture the potential effects of standards 

on private consumption (e.g., through 

higher prices for equipment and 

purchase of reduced amounts of energy). 


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25 DOE anticipates a reduction in installed cost of 

LED systems over time. The projected reduction in 

price for LED systems is provided and discussed in Sections V.C and IV.B.3.c of this NOPR and 

Appendix B of the TSD. 

This rate represents the rate at which 

society discounts future consumption 

flows to their present value. This rate 

can be approximated by the real rate of 

return on long-term Government debt 

(e.g., the yield on Treasury notes minus 

the annual rate of change in the 

Consumer Price Index), which has 

averaged about three percent on a pretax basis for the last 30 years. 

Table V–27 shows the estimated 

cumulative NPV for commercial 

refrigeration equipment resulting from 

the sum of the NPV calculated for each 

of the 15 primary equipment classes 

analyzed. Table V–27 assumes the 

AEO2007 reference case forecast for 

electricity prices. At a seven percent 

discount rate, TSL 1–4 show positive 

cumulative NPVs. The highest NPV is 

provided by TSL 3 at $1.20 billion. TSL 

4 provided $1.10 billion, close to that of 

TSL 3. TSL 5 showed a negative NPV at 

¥$200 million, the result of negative 

NPV observed in five equipment classes 

(VOP.RC.M, VOP.SC.M, SVO.RC.M, 

SVO.SC.M, and SOC.RC.M). DOE 

determined through a sensitivity 

analysis that a 50 percent reduction in 

LED fixture costs, applied to equipment 

sold during the analysis period starting 

in 2012, would yield a NPV of $1.62 

billion for TSL 5.25

At a three percent discount rate, all 

TSLs showed a positive NPV, with the 

highest NPV provided at TSL 3 (i.e., 

$3.25 billion). TSL 4 provided a near 

equivalent NPV at $3.24 billion. TSL 5 

provided a NPV of $1.16 billion dollars. 

Three equipment classes (VOP.RC.M, 

SVO.RC.M, and SOC.RC.M) were 

estimated to have negative NPVs at a 

three percent discount rate at TSL 5. 

DOE determined through a sensitivity 

analysis that a 50 percent reduction in 

LED fixture costs, applied to all 

equipment sold during the analysis 

period starting in 2012, would result in 

the greatest NPV at TSL 5 with $4.76 

billion. 

DOE also determined that a six 

percent reduction in LED system costs 

by 2012 would be sufficient to provide 

a positive NPV at TSL 5 in aggregate 

across all equipment classes at a seven 

percent discount rate. DOE recognizes 

that the aggregate six percent reduction 

in LED system costs could be attained 

by 2012 because of the rapid 

development of LED technology. In 

addition, DOE expects that a 50 percent 

reduction in LED system costs is 

possible in 2012, given the projections 

discussed previously, and considers a 

50 percent reduction likely to occur by 

2018 as examined in the LCC LED 

replacement cost sensitivity analysis. 

Table V–26 shows the estimated NPV 

results at TSL 5, for projected LED 

system cost reductions of six percent 

and 50 percent. 

TABLE V–26—SUMMARY OF NET PRESENT VALUE RESULTS WITH LED SYSTEM COST SENSITIVITY* 

TSL 5 

TSL 5 Including 6% LED 

system cost 

reduction 

TSL 5 Including 50% LED 

system cost 

reduction 

NPV (2007$ billion): 

7% Discount Rate ......................................................................................................................... (0.20) 0.03 1.62 

3% Discount Rate ......................................................................................................................... 1.16 1.62 4.76 

* Parentheses indicate negative (¥) values. 

In addition to the reference case, DOE 

examined the NPV under the AEO2007 

high-growth and low-growth electricity 

price forecasts. The results of this 

examination can be found in Chapter 11 

of the TSD. 

TABLE V–27—SUMMARY OF CUMULATIVE NET PRESENT VALUE FOR COMMERCIAL REFRIGERATION EQUIPMENT—

AEO2007 REFERENCE CASE

NPV* (billion 2007$) 

Trial standard level 7% discount 

rate 

3% discount 

rate 

1 ............................................................................................................................................................................. 0.33 0.82 

2 ............................................................................................................................................................................. 0.98 2.59 

3 ............................................................................................................................................................................. 1.20 3.25 

4 ............................................................................................................................................................................. 1.10 3.24 

5 ............................................................................................................................................................................. (0.20 ) 1.16 

* Numbers in parentheses indicate negative NPV, i.e., a net cost. 

c. Impacts on Employment 

DOE develops general estimates of the 

indirect employment impacts of 

proposed standards on the economy. As 

discussed above, DOE expects energy 

conservation standards for commercial 

refrigeration equipment to reduce 

energy bills for commercial customers, 

and the resulting net savings to be 

redirected to other forms of economic 

activity. DOE also realizes that these 

shifts in spending and economic activity 

could affect the demand for labor. To 

estimate these effects, DOE used an 

input/output model of the U.S. economy 

using Bureau of Labor Statistics (BLS) 

data (as described in Section IV.K; see 

Chapter 15 of the TSD for details). 

This input/output model suggests the 

proposed commercial refrigeration 

equipment energy conservation 

standards are likely to slightly increase 

the net demand for labor in the 

economy. Neither the BLS data nor the 

input/output model used by DOE 

includes the quality or wage level of the 

jobs. As shown in Table V–28, DOE 

estimates that net indirect employment 

impacts from a proposed commercial 

refrigeration equipment standard are 

likely to be very small. The net increase 

in jobs is so small that it would be 


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imperceptible in national labor statistics and might be offset by other, 

unanticipated effects on employment. 

TABLE V–28—NET NATIONAL CHANGE IN INDIRECT EMPLOYMENT, JOBS IN 2042 

Trial standard level 

Net national change in jobs 

2012 2022 2032 2042 

1 ....................................................................................................................................... 0 324 448 505 

2 ....................................................................................................................................... ¥6 1,270 1,744 1,970 

3 ....................................................................................................................................... ¥15 1,680 2,312 2,606 

4 ....................................................................................................................................... ¥94 2,204 3,047 3,434 

5 ....................................................................................................................................... ¥315 3,317 4,607 5,187 

Maximum Job Impact ...................................................................................................... ¥315 3,317 4,607 5,187 

4. Impact on Utility or Performance of 

Equipment 

In performing the engineering 

analysis, DOE considered design 

options that would not lessen the utility 

or performance of the individual classes 

of equipment. (42 U.S.C. 

6295(o)(2)(B)(i)(IV) and 6316(e)(1)) As 

presented in the screening analysis 

(Chapter 4 of the TSD), DOE did not 

consider design options that reduce the 

utility of the equipment. Because no 

design options were considered that 

reduce utility, DOE tentatively 

concluded that none of the efficiency 

levels proposed for commercial 

refrigeration equipment reduce the 

utility or performance of the equipment. 

5. Impact of Any Lessening of 

Competition 

EPCA directs DOE to consider any 

lessening of competition that is likely to 

result from standards. It directs the 

Attorney General to determine in 

writing the impact, if any, of any 

lessening of competition likely to result 

from a proposed standard. (42 U.S.C. 

6295(o)(2)(B)(i)(V) and 6316(e)(1)) To 

assist the Attorney General in making 

such a determination, DOE has provided 

the Department of Justice (DOJ) with 

copies of this Notice and the TSD for 

review. During MIA interviews, 

domestic manufacturers indicated that 

foreign manufacturers have entered the 

commercial refrigeration equipment 

market over the past several years. 

Manufacturers also stated that while 

there has been significant consolidation 

with supermarket chains, little or no 

consolidation has occurred among 

commercial refrigeration manufacturers 

in recent years. DOE believes that these 

trends will continue to happen in this 

market regardless of the proposed 

standard level chosen. 

6. Need of the Nation to Conserve 

Energy 

An improvement in the energy 

efficiency of commercial refrigeration 

equipment is likely to improve the 

security of the Nation’s energy system 

by reducing overall demand for energy, 

and thus reduce the Nation’s reliance on 

foreign sources of energy. Reduced 

demand may also improve the reliability 

of the electricity system, particularly 

during peak-load periods. As a measure 

of this reduced demand, DOE expects 

the proposed standards (TSL 4) to 

prevent the need for the construction of 

new power plants totaling 

approximately 643 MW of electricity 

generation capacity in 2042. 

Enhanced energy efficiency also 

produces environmental benefits. The 

expected energy savings from higher 

commercial refrigeration equipment 

standards will reduce the emissions of 

air pollutants and greenhouse gases 

associated with energy production and 

fossil fuel usage. Table V–29 shows 

estimated cumulative CO2, NOX, and Hg 

emissions reductions for all the 

commercial refrigeration equipment 

classes over the forecast period. The 

expected energy savings from 

commercial refrigeration equipment 

standards will reduce the emissions of 

greenhouse gases associated with energy 

production, and it may reduce the cost 

of maintaining nationwide emissions 

standards and constraints. 

TABLE V–29—SUMMARY OF EMISSIONS REDUCTIONS FOR COMMERCIAL REFRIGERATION EQUIPMENT

(cumulative reductions for equipment, 2012 to 2042) 

Trial Standard Levels 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

Emissions Reductions.

CO2 (Mt) ................................................................................................... 7.37 28.47 37.37 43.50 63.17 

NOX (kt) ................................................................................................... 2.74 10.58 13.88 16.16 23.47 

Hg (t) ........................................................................................................ 0.09 0.36 0.47 0.54 0.80 

Mt = million metric tons. 

kt = thousand tons. 

t = tons. 

The estimated cumulative CO2, NOX, 

and Hg emission reductions for the 

proposed standard are 43.5 Mt, 16.16 kt, 

and 0.54 t, respectively, for all 15 

equipment classes over the period from 

2012 to 2042. However, TSL 5 provides 

the greatest reduction of emissions of all 

the TSLs considered. In the 

environmental assessment (Chapter 16 

of the TSD), DOE reports estimated 

annual changes in CO2, NOX, and Hg 

emissions attributable to each TSL. As 

discussed in Section IV.L, DOE does not 

report SO2 emissions reduction from 

power plants because reductions from 

an energy conservation standard would 

not affect the overall level of SO2

emissions in the United States due to 

the emissions caps for SO2. 

The NEMS–BT modeling assumed 

that NOX would be subject to the Clean 

Air Interstate Rule (CAIR) issued by the 

U.S. Environmental Protection Agency 


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26See http://www.epa.gov/cleanairinterstaterule/. 

27Case No. 05–1244, 2008 WL 2698180 at *1 

(D.C. Cir. July 11, 2008). 

28 In the NOX SIP Call rule, EPA found that 

sources in the District of Columbia and 22 

‘‘upwind’’ states (States) were emitting NOX (an 

ozone precursor) at levels that significantly 

contributed to ‘‘downwind’’ states not attaining the 

ozone NAAQS or at levels that interfered with 

states in attainment maintaining the ozone NAAQS. 

In an effort to ensure that ‘‘downwind’’ states attain 

or continue to attain the ozone NAAQS, EPA 

established a region-wide cap for NOX emissions 

from certain large combustion sources and set a 

NOX emissions budget for each State. Unlike the 

cap that CAIR would have established, the NOX SIP 

Call Rule’s cap only constrains seasonal (summer 

time) emissions. In order to comply with the NOX

SIP Call Rule, States could elect to participate in the 

NOX Budget Trading Program. Under the NOX

Budget Trading Program, each emission source is 

required to have one allowance for each ton of NOX

emitted during the ozone season. States have 

flexibility in how they allocate allowances through 

their State Implementation Plans but States must 

remain within the EPA-established budget. 

Emission sources are allowed to buy, sell and bank 

NOX allowances as appropriate. It should be noted 

that, on April 16, 2008, EPA determined that 

Georgia is no longer subject to the NOX SIP Call 

rule. 

29 In anticipation of CAIR replacing the NOX SIP 

Call Rule, many States adopted sunset provisions 

for their plans implementing the NOX SIP Call Rule. 

The impact of the NOX SIP Call Rule on NOX

emissions will depend, in part, on whether these 

implementation plans are reinstated. 

30 70 FR 28606 (May 18, 2005). 

31No. 05–1097, 2008 WL 341338, at *1 (D.C. Cir. 

Feb. 8, 2008). 

32According to the IPCC, the mean social cost of 

carbon (SCC) reported in studies published in peerreviewed journals was US$43 per ton of carbon. 

This translates into about $12 per ton of carbon 

dioxide. The social costs estimated represented the 

discounted present value of increasing (or 

decreasing) current emissions of carbon dioxide (or 

an equivalent greenhouse gas) by one ton. The 

literature review (Tol 2005) from which this mean 

was derived did not report the year in which these 

dollars are denominated. However, since the 

underlying studies spanned several years on either 

side of 2000, the estimate is often treated as year 

2000 dollars. Updating that estimate to 2007 dollars 

yields a SCC of $14 per ton of carbon dioxide. Tol 

concluded that when only peer-reviewed studies 

published in recognized journals are considered, 

‘‘* * * climate change impacts may be very 

uncertain but is unlikely that the marginal damage 

costs of carbon dioxide emissions exceed $50 per 

tonne carbon [about $14 per metric ton of CO2 or 

about $12.66 per short ton][emphasis added].’’ He 

also concluded that the costs may be substantially 

lower than $50 per tonne of C. Tol’s survey showed 

that 10 percent of the SCC estimates were actually 

negative, so that a lower bound of zero is not 

unreasonable. 

on March 10, 2005.26 70 FR 25162 (May 

12, 2005). On July 11, 2008, the U.S. 

Court of Appeals for the District of 

Columbia Circuit (D.C. Circuit) issued 

its decision in North Carolina v. 

Environmental Protection Agency,27 in 

which the court vacated the CAIR. If left 

in place, the CAIR would have 

permanently capped emissions of NOX

in 28 eastern States and the District of 

Columbia. As with the SO2 emissions 

cap, a cap on NOX emissions would 

have meant that equipment energy 

conservation standards are not likely to 

have a physical effect on NOX emissions 

in States covered by the CAIR caps. 

While the caps would have meant that 

physical emissions reductions in those 

States would not have resulted from the 

energy conservation standards we are 

proposing today, the standards might 

have produced an environmentalrelated economic impact in the form of 

lower prices for emissions allowance 

credits, if large enough. DOE notes that 

the estimated total reduction in NOX

emissions, including projected 

emissions or corresponding allowance 

credits in States covered by the CAIR 

cap was between 0.004 and 0.034 

percent of the nationwide NOX

emissions as a whole, percentages that 

DOE estimated were too small to affect 

allowance prices for NOX under the 

CAIR. 

Even though the D.C. Circuit vacated 

the CAIR, DOE notes that the D.C. 

Circuit left intact EPA’s 1998 NOX SIP 

Call rule, which capped seasonal 

(summer) NOX emissions from electric 

generating units and other sources in 23 

jurisdictions and gave those 

jurisdictions the option to participate in 

a cap and trade program for those 

emissions. See 63 Fed. Reg. 57356, 

57359 (Oct. 27, 1998).28 Accordingly, 

DOE is considering whether changes are 

needed to its plan for addressing the 

issue of NOX reduction. DOE invites 

public comment on how the agency 

should address this issue, including 

how it might value NOX emissions for 

States now that the CAIR has been 

vacated.29

With regard to mercury emissions, 

DOE is able to report an estimate of the 

physical quantity changes in mercury 

emissions associated with an energy 

conservation standard. Based on the 

NEMS–BT modeling, Hg emissions 

show a slight decrease in the period 

from 2012 to 2042. These changes in Hg 

emissions, as shown in Table V–29, are 

extremely small with a range of between 

0.02 and 0.14 percent of national base 

case emissions depending on TSL. 

The NEMS–BT model assumed that 

mercury emissions would be subject to 

EPA’s Clean Air Mercury Rule 30

(CAMR), which would have 

permanently capped emissions of 

mercury for new and existing coal-fired 

plants in all States by 2010. Similar to 

SO2 and NOX, DOE assumed that under 

such a system, energy conservation 

standards would result in no physical 

effect on these emissions, but might 

result in an environmental-related 

economic benefit in the form of a lower 

price for emissions allowance credits, if 

large enough. DOE estimated that the 

change in Hg emissions from standards 

would not be large enough to influence 

allowance prices under CAMR. 

On February 8, 2008, the D.C. Circuit 

issued its decision in New Jersey v. 

Environmental Protection Agency,31 in 

which the Court, among other actions, 

vacated the CAMR referenced above. 

Accordingly, DOE is considering 

whether changes are needed to its plan 

for addressing the issue of mercury 

emissions in light of the D.C. Circuit’s 

decision. DOE invites public comment 

on addressing mercury emissions in this 

rulemaking. 

DOE is considering taking into 

account a monetary benefit of CO2

emission reductions associated with this 

rulemaking. During the preparation of 

its most recent review of the state of 

climate science, the Intergovernmental 

Panel on Climate Change (IPCC) 

identified various estimates of the 

present value of reducing carbondioxide emissions by one ton over the 

life that these emissions would remain 

in the atmosphere. The estimates 

reviewed by the IPCC spanned a range 

of values. In the absence of a consensus 

on any single estimate of the monetary 

value of CO2 emissions, DOE used an 

estimate identified by the study cited in 

Summary for Policymakers prepared by 

Working Group II of the IPCC’s Fourth 

Assessment Report to estimate the 

potential monetary value of the CO2

reductions likely to result from the 

standards under consideration in this 

rulemaking. 

The estimated year-by-year reductions 

in CO2 emissions were converted into 

monetary values ranging from the $0 

and $14 per ton. These monetary 

estimates were based on an assumption 

of no benefit to an average benefit value 

reported by the IPCC and the values 

include a range of discount factors used 

in their development.32 Based on DOE’s 

consideration of the IPCC report, DOE 

escalated the average benefit value per 

ton in real 2007$ at 2.4 percent per year. 

The resulting estimates of the potential 

range of benefits associated with the 

reduction of CO2 emissions are reflected 

in Table V–30. 


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33U.S. NOX emissions have been trending 

downward steadily since 1995, falling from 31.5 

million tons in 1995 to 15.2 million in 2006 (EIA 

2007). Although non-CAIR states’ emissions have 

also fallen, the emissions in the CAIR states have 

fallen more rapidly; thus, the CAIR states’

percentage of the total has also fallen from 87.4% 

in 1997 to 80.9% in 2006. For purposes of this 

analysis, DOE assumed that the CAIR states, 

percentage of emissions continues to decline until 

it reaches 75 percent in 2012. Seventy-five percent 

of emissions reductions are allocated to the CAIR 

states thereafter. Consequently non-CAIR state 

emissions would be about 25% of the total. 

[Reference: EIA (Energy Information 

Administration). 2007. Estimated Emissions for U.S. 

Electric Power Industry by State, 1990–2006. State 

Historical Tables for 2006. Released: October 26, 

2007. Next Update: October 2008 http:// 

www.eia.doe.gov/cneaf/electricity/epa/ 

emission_state.xls]. 

34 2006 Report to Congress on the Costs and 

Benefits of Federal Regulations and Unfunded 

Mandates on State, Local, and Tribal Entities. Office 

of Management and Budget Office of Information 

and Regulatory Affairs, Washington, DC. 

35Trasande, L., et al., ‘‘Applying Cost Analyses to 

Drive Policy that Protects Children’’ 1076 ANN. 

N.Y. ACAD. SCI. 911 (2006). 

36Ted Gayer and Robert Hahn, Designing 

Environmental Policy: Lessons from the Regulation 

of Mercury Emissions, Regulatory Analysis 05–01. 

AEI-Brookings Joint Center For Regulatory Studies, 

Washington, DC, 31 pp., 2004. A version of this 

paper was published in the Journal of Regulatory 

Economics in 2006. The estimate was derived by 

back-calculating the annual benefits per ton from 

the net present value of benefits reported in the 

study. 

TABLE V–30—PRELIMINARY ESTIMATES OF SAVINGS FROM CO2 EMISSIONS REDUCTIONS UNDER CONSIDERED

COMMERCIAL REFRIGERATION EQUIPMENT TRIAL STANDARD LEVELS

TSL 

Estimated total 

CO2 (Mt) emission 

reductions 

Value of estimated CO2

emission reductions based on 

IPCC range (million $) at 7% 

discount rate 

Value of estimated CO2

emission reductions based on 

IPCC range (million $) at 3% 

Discount Rate 

1 ....................................................................................................................................... 7.37 0 to 43 .............. 0 to 93 

2 ....................................................................................................................................... 28.47 0 to 166 ............ 0 to 361 

3 ....................................................................................................................................... 37.37 0 to 218 ............ 0 to 473 

4 ....................................................................................................................................... 43.50 0 to 253 ............ 0 to 551 

5 ....................................................................................................................................... 63.17 0 to 368 ............ 0 to 800 

DOE relied on the average of the IPCC 

reported estimate as an upper bound on 

the benefits resulting from reducing 

each metric ton of U.S. CO2 emissions. 

It is important to note that estimate of 

the $14 per ton of CO2 represents an 

average value of worldwide impacts 

from potential climate impacts caused 

by CO2 emissions, and is not confined 

to impacts likely to occur within the 

U.S. In contrast, most of the other 

estimates of costs and benefits of 

increasing the efficiency of commercial 

refrigeration equipment discussed in 

this proposal include only the economic 

values of impacts that would be 

experienced in the U.S. Consequently, 

as DOE considers a monetary value for 

CO2 emission reductions, the value 

might be restricted to a representation of 

those cost/benefits likely to be 

experienced in the United States. 

Currently, there are no estimated values 

for the U.S. benefits likely to result from 

CO2 emission reductions. However, 

DOE expects that, if such values were 

developed, DOE would use those U.S. 

benefit values, and not world benefit 

values, in its analysis. DOE further 

expects that, if such values were 

developed, they would be lower than 

comparable global values. DOE invites 

public comment on the above 

discussion of CO2. 

DOE also investigated the potential 

monetary impact resulting from the 

impact of today’s efficiency standards 

on SO2, NOX, and mercury (Hg) 

emissions. As previously stated, DOE’s 

analysis assumed the presence of 

nationwide emission caps on SO2 and 

caps on NOX emissions in the 28 states 

covered by the CAIR caps. In the 

presence of emission caps, DOE 

concluded that no physical reductions 

in total sector emissions would occur, 

however DOE’s estimates for reduction 

of these emissions could correspond to 

incremental changes in the prices of 

emissions allowances in cap-and-trade 

emissions markets rather than to 

physical emissions reductions. For SO2, 

the changes in annual emissions from 

today’s rule would be less than 0.03 

percent of the annual SO2 allowances, a 

change that DOE estimated is too small 

to influence allowance prices. Similarly, 

for NOX, in the 28 CAIR states, the 

emissions savings from today’s rule 

would be less than 0.018 percent of NOX

allowances, also a change that DOE also 

estimated is too small to influence 

allowance prices. 

In DOE’s analysis, for 22 non-CAIR 

states, emissions of NOX from electricity 

generation were not controlled by a 

regulatory cap. By 2012, DOE projected 

that the NOX emissions in the non-CAIR 

states would be about 25 percent of the 

national total.33 Mercury emissions are 

also not controlled by a regulatory cap. 

For these two emissions, DOE estimated 

the national monetized benefits of 

emissions reductions from today’s rule 

based on environmental damage 

estimates from the literature. Non-CAIR 

emissions would not be controlled by an 

emissions cap so those emissions would 

actually be reduced by the PTAC-PTHP 

energy savings. Available estimates 

suggest a very wide range of monetary 

values for NOX emissions, ranging from 

$370 per ton to $3,800 per ton of NOX

from stationary sources, measured in 

2001 dollars 34 or a range of $432 per ton 

to $4,441 per ton in 2007 dollars. The 

basic science linking mercury emissions 

from power plants to impacts on 

humans is considered highly uncertain. 

However, DOE located two estimates of 

the environmental damages of mercury 

based on two estimates of the adverse 

impact of childhood exposure to methyl 

mercury on IQ for American children, 

and subsequent loss of lifetime 

economic productivity resulting from 

these IQ losses. The high end estimate 

is based on an estimate of the current 

aggregate cost of the loss of IQ that 

results from exposure of American 

children of U.S. power plant origin of 

$1.3 billion per year in year 2000$, 

which works out to $32.6 million per 

ton emitted per year (2007$).35 The lowend estimate was $664,000 per ton 

emitted in 2004$ or $729,000 per ton in 

2007$), which DOE derived from a 

published evaluation of mercury control 

using different methods and 

assumptions from the first study, but 

also based on the present value of the 

lifetime earnings of children exposed.36

The resulting estimates of the potential 

range of the present value benefits 

associated with the reduction of NOX in 

the 22 non-CAIR states and national 

reductions in Hg emissions are reflected 

in Table V.31 and Table V.32 


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50126 Federal Register / Vol. 73, No. 165 / Monday, August 25, 2008 / Proposed Rules 

TABLE V.31—PRELIMINARY ESTIMATES OF MONETARY SAVINGS FROM REDUCTIONS OF HG (NATION) AND NOX (NONCAIR STATES) BY TRIAL STANDARD LEVEL AT A 7% DISCOUNT RATE

Standard size TSL 

Estimated cumulative NOX

(kt) emission 

reductions * 

Value of estimated NOX

emission 

reductions 

(million 2007$) 

Estimated 

cumulative 

Hg (tons) 

emission 

reductions* 

Value of estimated Hg 

emission 

reductions 

(million 2007$) 

1 ....................................................................................................................... 2.74 $0.1–$0.6 0.09 $0.0–$0.1 

2 ....................................................................................................................... 10.58 0.2–2.3 0.36 0.0–0.5 

3 ....................................................................................................................... 13.88 0.3–3.0 0.47 0.0–0.6 

4 ....................................................................................................................... 16.16 0.3–3.5 0.54 0.0–0.7 

5 ....................................................................................................................... 23.47 0.5–5.1 0.80 0.0–1.0 

* Values in Table V.31 may not appear to sum to the cumulative values in Table V–29 due to rounding. 

TABLE V.32—PRELIMINARY ESTIMATES OF MONETARY SAVINGS FROM REDUCTIONS OF HG (NATION) AND NOX (NONCAIR STATES) BY TRIAL STANDARD LEVEL AT A 3% DISCOUNT RATE

Standard size TSL 

Estimated cumulative NOX

(kt) emission 

reductions * 

Value of estimated NOX

emission 

reductions 

(million 2007$) 

Estimated cumulative Hg 

(tons) 

emission 

reductions 

Value of estimated Hg 

emission 

reductions 

(million 2007$) 

1 ....................................................................................................................... 2.74 $0.1–$1.5 0.09 $0.0–$1.0 

2 ....................................................................................................................... 10.58 0.5–5.6 0.36 0.1–3.9 

3 ....................................................................................................................... 13.88 0.7–7.4 0.47 0.1–5.1 

4 ....................................................................................................................... 16.16 0.8–8.6 0.54 0.1–5.9 

5 ....................................................................................................................... 23.47 1.2–12.5 0.80 0.2–8.6 

* Values in Table V.32 may not appear to sum to the cumulative values in Table V–29 due to rounding. 

As discussed above, with the D.C. 

Circuit vacating the CAIR, DOE is 

considering how it should address the 

issue of NOX reduction and 

corresponding monetary valuation. DOE 

invites public comment on how the 

agency should address this issue, 

including how to value NOX emissions 

for States in the absence of the CAIR. 

7. Other Factors 

EPCA allows the Secretary of Energy, 

in determining whether a standard is 

economically justified, to consider any 

other factors that the Secretary deems to 

be relevant. (42 U.S.C. 

6295(o)(2)(B)(i)(VII) and 6316(e)(1)) 

Under this provision, DOE considered 

LCC impacts on identifiable groups of 

customers, such as customers of 

different business types, who may be 

disproportionately affected by any 

national energy conservation standard 

level. DOE also considered the 

reduction in generated capacity that 

could result from the imposition of any 

national energy conservation standard 

level. 

C. Proposed Standard 

EPCA specifies that any new or 

amended energy conservation standard 

for any type (or class) of covered 

equipment shall be designed to achieve 

the maximum improvement in energy 

efficiency that the Secretary determines 

is technologically feasible and 

economically justified. (42 U.S.C. 

6295(o)(2)(A) and 6316(e)(1)) In 

determining whether a standard is 

economically justified, the Secretary 

must determine whether the benefits of 

the standard exceed its burdens. (42 

U.S.C. 6295(o)(2)(B)(i) and 6316(e)(1)) 

The new or amended standard must 

‘‘result in significant conservation of 

energy.’’ (42 U.S.C. 6295(o)(3)(B) and 

6316(e)(1)) 

DOE considered the impacts of 

standards at each of five trial standard 

levels, beginning with the most efficient 

level (TSL 5) and worked down to a 

level where DOE determined the 

benefits of potential standards 

outweighed the burdens of potential 

standards. To aid the reader as DOE 

discusses the benefits and/or burdens of 

each TSL, Table V–33 presents a 

summary of quantitative analysis results 

for each TSL based on the assumptions 

and methodology discussed above. This 

table presents the results or, in some 

cases, a range of results, for each TSL. 

The range of values reported in this 

table for industry impacts represents the 

results for the different markup 

scenarios that DOE used to estimate 

manufacturer impacts. 

TABLE V–33—SUMMARY OF RESULTS BASED UPON THE AEO2007 REFERENCE CASE ENERGY PRICE FORECAST* 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

Primary Energy Saved (quads) ........................................... 0.141 0.545 0.715 0.832 1.208 

7% Discount Rate ................................................................ 0.034 0.132 0.173 0.201 0.292 

3% Discount Rate ................................................................ 0.073 0.284 0.372 0.433 0.603 

Generation Capacity Reduction (GW) ** .............................. 0.109 0.421 0.552 0.643 0.934 

NPV (2007$ billion): 

7% Discount Rate ......................................................... 0.33 0.98 1.20 1.10 (0.20) 

3% Discount Rate ......................................................... 0.82 2.59 3.25 3.24 1.16 

Industry Impacts: 

Industry NPV (2007$ million) ........................................ 0–(63) 6–(88) (17)–(129) (40)–(180) (18)–(285) 

Industry NPV (% Change) ............................................ 0–(12) 1–(17) (3)–(25) (8)–(35) (3)–(56) 

Cumulative Emissions Impacts: †


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TABLE V–33—SUMMARY OF RESULTS BASED UPON THE AEO2007 REFERENCE CASE ENERGY PRICE FORECAST*—

Continued 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

CO2 (Mt) ........................................................................ 7.37 28.47 37.37 43.50 63.17 

NOX (kt) ........................................................................ 2.74 10.58 13.88 16.16 23.47 

Hg (t) ............................................................................. 0.09 0.36 0.47 0.54 0.80 

Life-Cycle Cost: 

Net Savings (%) ............................................................ 17–48 34–68 61–89 68–93 24–93 

Net Increase (%) ........................................................... 0 0 0 0–19 0–71 

No Change (%) ............................................................. 52–83 32–66 11–39 7–32 2–19 

Mean LCC Savings (2007$) ......................................... 192–3132 551–4005 710–4089 693–3818 (673)–3818 

Mean PBP (yrs) ............................................................ 0.4–1.2 0.6–2.6 1.3–4.6 1.4–6.1 1.4–12.6 

* Parentheses indicate negative (¥) values. For LCCs, a negative value means an increase in LCC by the amount indicated. 

** Change in installed generation capacity by the year 2042 based on AEO2007 Reference Case. 

† CO2 emissions impacts include physical reductions at power plants. NOX emissions impacts include physical reductions at power plants as 

well as production of emissions allowance credits where NOX emissions are subject to emissions caps. 

First, DOE considered TSL 5, the most 

efficient level for all equipment classes. 

TSL 5 would likely save an estimated 

1.208 quads of energy through 2042, an 

amount DOE considers significant. 

Discounted at seven percent, the 

projected energy savings through 2042 

would be 0.292 quads. For the Nation as 

a whole, DOE projects that TSL 5 would 

result in a net decrease of $200 million 

in NPV, using a discount rate of seven 

percent. Five equipment classes 

(VOP.RC.M, VOP.SC.M, SVO.RC.M, 

SVO.SC.M, and SOC.RC.M) show 

negative NPV at TSL 5. The emissions 

reductions at TSL 5 are 63.17 Mt of CO2

and up to 23.47 kt of NOX. DOE also 

estimates that under TSL 5, total 

generating capacity in 2042 will 

decrease compared to the base case by 

0.934 gigawatts (GW). 

At TSL 5, DOE projects that the 

average commercial refrigeration 

equipment customer will experience a 

reduction in LCC compared to the 

baseline for 12 of the 15 equipment 

classes analyzed, while three equipment 

classes (VOP.RC.M, SVO.RC.M, 

SOC.RC.M) experienced an increase in 

LCC. These three equipment classes are 

among the five identified above that 

DOE showed had negative NPV. The 

two additional classes, SVO.SC.M and 

VOP.SC.M, had positive LCC savings at 

TSL 5, but at substantially reduced 

values compared to those shown at TSL 

4 or TSL 3. LCC savings for all 15 

equipment classes vary from negative 

(¥$673) to positive $3,818. At TSL 5, 

DOE estimates the fraction of customers 

experiencing LCC increases will vary 

between 0 and 71 percent depending on 

equipment class. The mean payback 

period for the average commercial 

refrigeration equipment customer at TSL 

5 compared to the baseline level is 

projected to be between 1.4 and 12.6 

years, depending on equipment class. 

At higher TSLs, manufacturers have a 

more difficult time fully passing on 

larger increases in MPC to customers, 

and therefore manufacturers expect the 

higher end of the range of impacts to be 

reached at TSL 5 (i.e., a drop of 55.77 

percent in INPV). At TSL 5, there is the 

risk of very large negative impacts on 

the industry if manufacturers’ profit 

margins are reduced. Manufacturers 

expressed great concern at the 

possibility of having to manufacture an 

entire equipment line at the max-tech 

levels, because customers put a much 

higher priority on marketing and 

displaying their goods than they do on 

energy efficiency. For this reason, 

manufacturers fear that they will be 

unable to recover the additional cost 

incurred from producing the most 

efficient equipment possible. See 

Section IV.I for additional manufacturer 

concerns. 

After carefully considering the 

analysis and weighing the benefits and 

burdens of TSL 5, DOE tentatively 

concludes that the estimated benefits of 

energy savings and related benefits 

would not outweigh the potential $200 

million net economic cost to the Nation 

(at the seven percent discount rate), as 

well as the economic burden on 

consumers and the potential negative 

impact on manufacturers through 

reduction in INPV. 

As discussed above, DOE proposes to 

reject TSL 5 because DOE finds that the 

benefits to the Nation of TSL 5 (energy 

savings, commercial consumer average 

LCC savings, and emission reductions) 

do not outweigh the costs (national NPV 

decrease and loss of manufacturer 

INPV), and, therefore, DOE proposes 

that TSL 5 is not economically justified. 

This proposal reflects DOE’s tentative 

conclusion that there remains too much 

uncertainty regarding the timing and 

extent of anticipated reductions in LED 

costs to justify standards at the TSL 5 

level. While considerable information is 

available that suggests LED costs are 

likely to decline more than assumed in 

DOE’s analysis (see discussion in 

sections IV.B.3.c, V.B.1.a, and V.B.3.b), 

DOE believes that it must have a higher 

degree of confidence that the timing and 

extent of such further cost reductions 

will warrant higher standards before it 

imposes such requirements. DOE is 

soliciting public comments on these and 

other issues, and will reconsider this 

tentative conclusion during the 

development of its final rule. (See 

Section VII.E.1.) 

As mentioned above, if LED system 

costs achieve the 50 percent reduction 

projection by 2012, the estimated NPV 

at TSL 5 would be a positive $1.62 

billion at a seven percent discount rate 

and $4.76 billion at the three percent 

discount rate, and is likely to result in 

a net benefit. DOE requests comment on 

whether the benefits of TSL 5 would 

outweigh the burdens of TSL 5, 

considering the potential impacts of 

future LED cost projections. This is 

identified as Issue 7 under ‘‘Issues on 

Which DOE Seeks Comment’’ in Section 

VII.E of this NOPR. DOE also seeks 

comment on the extent to which 

stakeholders expect projected LED cost 

reductions would occur, the timing of 

the projected LED cost reductions, and 

the certainty of the projected LED cost 

reductions. Also, considering the rapid 

development of LED technology and the 

steady reductions in cost, DOE seeks 

comment on the extent to which 

manufacturers would adopt LED 

technology into the design of 

commercial refrigeration equipment in 

the absence of standards. 

DOE then considered TSL 4, which 

provides for all equipment classes the 

maximum efficiency levels that the 

analysis showed to have positive NPV to 

the Nation. TSL 4 would likely save an 

estimated 0.832 quads of energy through 

2042, an amount DOE considers 

significant. Discounted at seven percent, 

the projected energy savings through 

2042 would be 0.201 quads. For the 


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Nation as a whole, DOE projects that 

TSL 4 would result in a net increase of 

$1.10 billion in NPV, using a discount 

rate of seven percent. The estimated 

emissions reductions at TSL 4 are 43.50 

Mt of CO2 and up to 16.16 kt of NOX. 

Total generating capacity in 2042 is 

estimated to decrease compared to the 

base case by 0.643 GW under TSL 4. 

At TSL 4, DOE projects that the 

average commercial refrigeration 

equipment customer will experience a 

reduction in LCC compared to the 

baseline for all 15 equipment classes 

analyzed, ranging from $693 to $3,818 

depending on equipment class. The 

mean payback period for the average 

commercial refrigeration equipment 

customer at TSL 4 is projected to be 

between 1.4 and 6.1 years compared to 

the purchase of baseline equipment. 

As is the case with TSL 5, DOE 

believes the majority of manufacturers 

would need to completely redesign most 

equipment offered for sale, and 

therefore DOE expects that commercial 

refrigeration manufacturers will have 

some difficulty fully passing on larger 

MPC increases to customers. Similar to 

TSL 5, manufacturers expect the higher 

end of the range of impacts to be 

reached at TSL 4 (i.e., a drop of 35.3 

percent in INPV). However, compared to 

the baseline, all 15 equipment classes 

showed significant positive life-cycle 

cost savings on a national average basis 

and few customers experienced an 

increase in LCC with a standard at TSL 

4 compared with purchasing baseline 

equipment. The payback periods 

calculated for all equipment classes 

were lower than the life of the 

equipment. 

After carefully considering the 

analysis and weighing the benefits and 

burdens of TSL 4, DOE proposes that 

TSL 4 represents the maximum 

improvement in energy efficiency that is 

technologically feasible and 

economically justified and that the 

estimated benefits to the Nation 

outweigh the costs. DOE proposes that 

TSL 4 is technologically feasible 

because the technologies required to 

achieve these levels are already in 

existence. Therefore, DOE is proposing 

TSL 4 as the energy conservation 

standards for commercial refrigeration 

equipment in this NOPR. 

However, for the reasons discussed 

above, DOE also requests comments on 

whether it should adopt TSL 5 for all or 

some of the equipment classes. 

VI. Procedural Issues and Regulatory 

Review 

A. Review Under Executive Order 12866 

DOE has determined that today’s 

regulatory action is an ‘‘economically 

significant’’ action under Section 3(f)(1) 

of Executive Order 12866, ‘‘Regulatory 

Planning and Review.’’ 58 FR 51735 

(October 4, 1993). The Executive Order 

requires that each agency identify in 

writing the specific market failure or 

other specific problem that it intends to 

address that warrants new agency 

action, as well as assess the significance 

of that problem to determine whether 

any new regulation is warranted. 

Executive Order 12866, § 1(b)(1). 

In the ANOPR for this rulemaking, 

DOE requested feedback and data on a 

number of issues related to Executive 

Order 12866 and the existence of a 

market failure in the commercial 

refrigeration equipment industry. This 

request included (1) Data on, and 

suggestions for testing the existence and 

extent of, potential market failures to 

complete an assessment in the proposed 

rule of the significance of any failures; 

(2) data on the efficiency levels of 

existing commercial refrigeration 

equipment in use by store type; (3) 

comment on the Federal ENERGYSTAR 

program and its penetration into the 

commercial refrigeration equipment 

market as a resource on the availability 

and benefits of energy efficient 

refrigeration units; (4) data on owneroccupied buildings versus leased/nonowner occupied buildings for given 

store types and their associated use of 

high-efficiency equipment; and (5) 

comment on the weight that should be 

given to these factors in DOE’s 

determination of the maximum 

efficiency level at which the total 

benefits are likely to exceed the total 

burdens resulting from a DOE standard. 

Following publication of the ANOPR 

and subsequent public comment period, 

DOE did not receive any feedback 

related to these requests. 

Much of the industry segment that 

uses commercial refrigeration 

equipment tends to be large grocery 

stores, multi-line retailers, small grocery 

stores, or convenience stores. DOE 

believes that these owners may lack 

corporate direction on energy policy. 

The transaction costs for these owners 

to research, purchase, and install 

optimum efficiency equipment options 

are too high to make such action 

commonplace. DOE believes that there 

is a lack of information about energy 

efficiency opportunities in the 

commercial refrigeration equipment 

market available to these owners. Unlike 

residential heating and air conditioning 

equipment, commercial refrigeration 

equipment is not included in energy 

labeling programs such as the Federal 

Trade Commission’s energy labeling 

program. Furthermore, the energy use of 

this equipment depends on usage. 

Information is not readily available for 

the owners to make a decision on 

whether improving the energy efficiency 

of commercial refrigeration equipment 

is cost-effective. DOE seeks data on the 

efficiency levels of existing commercial 

refrigeration equipment in use by 

owners, electricity price, and equipment 

class. Being part of the food 

merchandising industry, energy 

efficiency and energy cost savings are 

not the primary drivers of the business, 

as is selling food products to shoppers. 

This may incur transaction costs, thus 

preventing access to capital to finance 

energy efficiency investment. 

Today’s action also required a 

regulatory impact analysis (RIA) and, 

under the Executive Order, was subject 

to review by the Office of Information 

and Regulatory Affairs (OIRA) in the 

OMB. DOE presented to OIRA for 

review the draft proposed rule and other 

documents prepared for this 

rulemaking, including the RIA, and has 

included these documents in the 

rulemaking record. They are available 

for public review in the Resource Room 

of the Building Technologies Program, 

950 L’Enfant Plaza, SW., 6th Floor, 

Washington, DC 20024, (202) 586–9127, 

between 9 a.m. and 4 p.m., Monday 

through Friday, except Federal holidays. 

The RIA is contained in the TSD 

prepared for the rulemaking. The RIA 

consists of (1) a statement of the 

problem addressed by this regulation 

and the mandate for Government action; 

(2) a description and analysis of the 

feasible policy alternatives to this 

regulation; (3) a quantitative comparison 

of the impacts of the alternatives; and 

(4) the national economic impacts of the 

proposed standard. 

The RIA calculates the effects of 

feasible policy alternatives to 

commercial refrigeration equipment 

standards and provides a quantitative 

comparison of the impacts of the 

alternatives. DOE evaluated the 

alternatives in terms of their ability to 

achieve significant energy savings at 

reasonable cost, and compared it to the 

effectiveness of the proposed rule. DOE 

analyzed these alternatives using a 

series of regulatory scenarios as input to 

the NES/shipments model for 

commercial refrigeration equipment, 

which DOE modified to provide inputs 

for these voluntary measures. 

DOE identified the following major 

policy alternatives for achieving 


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increased commercial refrigeration 

equipment energy efficiency: 

• No new regulatory action. 

• Commercial customer rebates. 

• Commercial customer tax credits. 

DOE evaluated each alternative’s 

ability to achieve significant energy 

savings at reasonable cost (Table VI–1), 

and compared it to the effectiveness of 

the proposed rule. 

TABLE VI–1—NON-REGULATORY ALTERNATIVES TO STANDARDS

Policy alternatives Energy savings*

(quads) 

Net present value**

(billion 2007$) 

7% 

discount rate 

3% 

discount rate 

No New Regulatory Action .................................................................................................... 0 0 0 

Commercial Customer Rebates ............................................................................................ 0 .099 0 .139 0 .315 

Commercial Customer Tax Credits† ...................................................................................... 0 .084 0 .178 0 .381 

Today’s Standards at TSL 4 .................................................................................................. 0 .832 1 .10 3 .24 

*Energy savings are in source quads. 

** Net present value is the value in the present of a time series of costs and savings. DOE determined the net present value from 2012 to 2062 

in billions of 2007$. †These are example values for TSL 3. 

The net present value amounts shown 

in Table VI–1 refer to the NPV for 

commercial customers. The following 

paragraphs discuss each policy 

alternative listed in Table VI–1. (See 

Chapter 17 of the TSD, Regulatory 

Impact Analysis, for further details.) 

No new regulatory action. The case in 

which no regulatory action is taken for 

commercial refrigeration equipment 

constitutes the base case (or No Action) 

scenario. By definition, no new 

regulatory action yields zero energy 

savings and a net present value of zero 

dollars. 

Commercial Customer Rebates. DOE 

modeled the impact of the customer 

rebate policy by determining the 

increased customer participation rate 

due to the rebates (i.e., the percent 

increase in customers purchasing highefficiency equipment). DOE modeled a 

national rebate program after existing 

utility rebate programs that provide 

incentives for incorporating highefficiency technologies into commercial 

refrigeration equipment. The reduction 

in retail cost of the higher efficiency 

cases was calculated and the 

methodology developed for the NIA 

used to assess relative shipments by 

efficiency level was used to assess 

relative shipments by efficiency level 

under the rebate scenario. DOE applied 

the resulting increase in market share of 

efficient units to the NES spreadsheet 

model to estimate the resulting NES and 

NPV for the rebate scenario with respect 

to the base case. 

Commercial Customer Tax Credits. 

DOE assumed a commercial or 

industrial customer Federal tax credit 

patterned after the tax credits created in 

EPACT 2005. EPACT 2005 provided tax 

credits to customers who purchase and 

install specific products such as energy 

efficient windows, insulation, doors, 

roofs, and heating and cooling 

equipment. DOE presumed the presence 

of a certification or other program that 

could be used to identify high-efficiency 

commercial refrigeration equipment by 

energy consumption, and assumed TSL 

3 as a likely candidate level for a tax 

credit incentive, given that it was the 

minimum LCC level. DOE then 

reviewed the incremental customer 

price increase to reach TSL 3 from the 

baseline for all 15 equipment classes. 

For 12 of the equipment classes, the 

incremental cost was between 6.1 and 

21.3 percent. For three equipment 

classes (SOC.RC.M, HZO.RC.M, 

HZO.RC.L), the incremental cost was 

less than five percent. In its tax credit 

analysis, DOE assumed a flat tax credit 

equal to five percent of the customer 

price for equipment sold at TSL 3 or 

higher for each primary equipment 

class, with the exception of SOC.RC.M, 

HZO.RC.M, and HZO.RC.L. DOE 

assumed a 100 percent application rate 

for the tax credit from commercial 

refrigeration equipment customers and 

reduced the retail equipment price by 

five percent for TSL 3, TSL 4, and TSL 

5 for the 12 equipment classes. The 

reductions in retail cost of commercial 

refrigeration equipment at these levels 

was calculated and the methodology 

developed for the NIA used to assess 

relative shipments by efficiency level 

under the tax credit scenario. DOE 

applied the resulting increase in market 

share of efficient units to the NES 

spreadsheet model to estimate the 

resulting NES and NPV for the tax credit 

scenario with respect to the base case. 

To see results for tax credits for 

equipment meeting or exceeding TSL 5, 

see the Regulatory Impact Analysis of 

the TSD. 

Performance Standards. Each of the 

non-regulatory alternatives must be 

gauged against the performance 

standards DOE is proposing in this 

proposed rule. DOE also considered, but 

did not analyze, the potential of bulk 

Government purchases and early 

replacement incentive programs as 

alternatives to the proposed standards. 

In the case of bulk Government 

purchases, commercial refrigeration 

equipment is a very small part of the 

total market and the volume of highefficiency equipment purchases that the 

Federal Government might make would 

have very limited impact on improving 

the overall market efficiency of 

commercial refrigeration equipment. In 

the case of replacement incentives, 

several policy options exist to promote 

early replacement, including a direct 

national program of customer 

incentives, incentives paid to utilities to 

promote an early replacement program, 

market promotions through equipment 

manufacturers, and replacement of 

Federally owned equipment. Previous 

analysis by DOE of methods to promote 

early replacement for other covered 

equipment have suggested that the 

energy savings realized through a onetime early replacement of existing stock 

equipment has not resulted in energy 

savings commensurate to the cost to run 

and administer the program. As a 

consequence, DOE did not analyze this 

option in detail. 

As Table VI–1 indicates, none of the 

alternatives DOE examined would save 

as much energy as today’s proposed 

rule. Also, several of the alternatives 

would require new enabling legislation, 

since authority to carry out those 

alternatives does not exist. The tax 

credit scenario would also require the 

development of a database of 

commercial refrigeration equipment that 

would meet or exceed the TSL 3 

efficiency level in order to determine 

compliance with the tax credit. 


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50130 Federal Register / Vol. 73, No. 165 / Monday, August 25, 2008 / Proposed Rules 

B. Review Under the Regulatory 

Flexibility Act/Initial Regulatory 

Flexibility Analysis 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) requires preparation 

of an initial regulatory flexibility 

analysis (IRFA) for any rule that by law 

must be proposed for public comment, 

unless the agency certifies that the rule, 

if promulgated, will not have a 

significant economic impact on a 

substantial number of small entities. As 

required by Executive Order 13272, 

‘‘Proper Consideration of Small Entities 

in Agency Rulemaking’’ 67 FR 53461 

(August 16, 2002), DOE published 

procedures and policies on February 19, 

2003, to ensure that the potential 

impacts of its rules on small entities are 

properly considered during the 

rulemaking process. 68 FR 7990. DOE 

has made its procedures and policies 

available on the Office of General 

Counsel’s Web site, http:// 

www.gc.doe.gov. 

Small businesses, as defined by the 

Small Business Administration (SBA) 

for the commercial refrigeration 

equipment manufacturing industry, are 

manufacturing enterprises with 750 

employees or fewer. DOE used the small 

business size standards published on 

January 31, 1996, as amended by the 

SBA to determine whether any small 

entities would be required to comply 

with the rule. 61 FR 3286 and codified 

at 13 CFR Part 121. The size standards 

are listed by North American Industry 

Classification System (NAICS) code and 

industry description. Commercial 

refrigeration equipment manufacturing 

is classified under NAICS 333415. 

Prior to issuing this notice of 

proposed rulemaking, DOE interviewed 

two small businesses affected by the 

rulemaking. DOE also obtained 

information about small business 

impacts while interviewing 

manufacturers that exceed the small 

business size threshold of 750 

employees. 

DOE reviewed ARI’s listing of its 

commercial refrigeration equipment 

manufacturer members and surveyed 

the industry to develop a list of all 

domestic manufacturers. DOE also 

asked stakeholders and ARI 

representatives within the industry if 

they were aware of any other small 

business manufacturers. DOE then 

examined publicly available data and 

contacted manufacturers, when needed, 

to determine if they meet the SBA’s 

definition of a small manufacturing 

facility and if their manufacturing 

facilities are located within the United 

States. Based on this analysis, DOE 

identified nine small manufacturers of 

commercial refrigeration equipment. 

DOE conducted on-site interviews with 

two small manufacturers who agreed to 

be interviewed to determine if there are 

differential impacts on these companies 

that may result from new energy 

conservation standards. 

DOE found that, in general, small 

manufacturers have the same concerns 

as large manufacturers regarding new 

energy conservation standards. DOE 

summarized the key issues for 

commercial refrigeration equipment 

manufacturers in Section IV.I.3.a of 

today’s notice. Both manufacturers 

echoed the same concerns regarding 

new energy conservation standards as 

the larger manufacturers, including 

investments needed to meet standards, 

meeting customer needs, equipment 

sales, and coverage of niche equipment. 

Specifically, DOE found no significant 

differences in the R&D emphasis or 

marketing strategies between small 

business manufacturers and large 

manufacturers. Therefore, for the 

equipment classes manufactured 

primarily by the small businesses, DOE 

believes the GRIM analysis, which 

models each equipment class separately, 

is representative of the small businesses 

affected by standards. The qualitative 

and quantitative GRIM results are 

summarized in Section V.B.2 of today’s 

notice. 

DOE reviewed the standard levels 

considered in today’s notice of proposed 

rulemaking under the provisions of the 

Regulatory Flexibility Act and the 

procedures and policies published on 

February 19, 2003. Based on this review, 

DOE has prepared an IRFA for this 

rulemaking. The IRFA describes 

potential impacts on small businesses 

associated with commercial 

refrigeration equipment design and 

manufacturing. 

The potential impacts on commercial 

refrigeration equipment manufacturers 

are discussed in the following sections. 

DOE has transmitted a copy of this IRFA 

to the Chief Counsel for Advocacy of the 

Small Business Administration for 

review. 

1. Reasons for the Proposed Rule 

Part A–1 of Title III of EPCA 

addresses the energy efficiency of 

certain types of commercial and 

industrial equipment. (42 U.S.C. 6311–

6317) EPACT 2005, Pub. L. 109–58, 

included an amendment to Part A–1 

requiring that DOE prescribe energy 

conservation standards for the 

commercial refrigeration equipment that 

is the subject of this rulemaking. 

(EPACT 2005, Section 136(c); 42 U.S.C. 

6313(c)(4)(A)) Hence, DOE is proposing 

in today’s notice, energy conservation 

standards for commercial ice-cream 

freezers; self-contained commercial 

refrigerators, commercial freezers, and 

commercial refrigerator-freezers without 

doors; and remote condensing 

commercial refrigerators, commercial 

freezers, and commercial refrigeratorfreezers. 

2. Objectives of, and Legal Basis for, the 

Proposed Rule 

EPCA provides that any new or 

amended standard for commercial 

refrigeration equipment must be 

designed to achieve the maximum 

improvement in energy efficiency that is 

technologically feasible and 

economically justified. (42 U.S.C. 

6295(o)(2)(A) and 6316(e)(1)) But EPCA 

precludes DOE from adopting any 

standard that would not result in 

significant conservation of energy. (42 

U.S.C. 6295(o)(3) and 6316(e)(1)) 

Moreover, DOE may not prescribe a 

standard for certain equipment if no test 

procedure has been established for that 

equipment, or if DOE determines by rule 

that the standard is not technologically 

feasible or economically justified, and 

that such standard will not result in 

significant conservation of energy. (42 

U.S.C. 6295(o)(3) and 6316(e)(1)) EPCA 

also provides that, in deciding whether 

a standard is economically justified, 

DOE must determine whether the 

benefits of the standard exceed its 

burdens after receiving comments on 

the proposed standard. (42 U.S.C. 

6295(o)(2)(B)(i) and 6316(e)(1)) To 

determine whether economic 

justification exists, DOE reviews 

comments received and conducts 

analysis to determine whether the 

economic benefits of the proposed 

standard exceed the burdens to the 

greatest extent practicable, taking into 

consideration seven factors set forth in 

42 U.S.C. 6295(o)(2)(B) and 6316(e)(1) 

(see Section II.B of this preamble). 

EPCA also states that the Secretary 

may not prescribe an amended or new 

standard if interested persons have 

established by a preponderance of the 

evidence that the standard is likely to 

result in the unavailability in the United 

States of any equipment type (or class) 

with performance characteristics 

(including reliability), features, sizes, 

capacities, and volumes that are 

substantially the same as those generally 

available in the United States. (42 U.S.C. 

6295(o)(4) and 6316(e)(1)) Further 

information concerning the background 

of this rulemaking is provided in 

Chapter 1 of the TSD. 


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Federal Register / Vol. 73, No. 165 / Monday, August 25, 2008 / Proposed Rules 50131 

3. Description and Estimated Number of 

Small Entities Regulated 

DOE reviewed ARI’s listing of 

commercial refrigeration equipment 

manufacturer members and surveyed 

the industry to develop a list of every 

manufacturer. DOE also asked 

stakeholders and ARI representatives 

within the industry if they were aware 

of any other small business 

manufacturers. DOE then looked at 

publicly available data and contacted 

manufacturers, where needed, to 

determine if they meet the SBA’s 

definition of a small business 

manufacturing facility and have their 

manufacturing facilities located within 

the U.S. Based on this analysis, DOE 

estimates that there are nine small 

commercial refrigeration equipment 

manufacturers. See Chapter 13 of the 

TSD for further discussion about the 

methodology used in DOE’s 

manufacturer impact analysis and its 

analysis of small-business impacts. 

4. Description and Estimate of 

Compliance Requirements 

Potential impacts on manufacturers, 

including small businesses, come from 

impacts associated with commercial 

refrigeration equipment design and 

manufacturing. The margins and/or 

market share of manufacturers, 

including small businesses, in the 

commercial refrigeration equipment 

industry could be negatively impacted 

in the long term by the standard levels 

under consideration in this notice of 

proposed rulemaking, specifically TSL 

4. The level of research and 

development needed to meet energy 

conservation standards increases with 

more stringent energy conservation 

standards. DOE expects that small 

manufacturers will have more difficulty 

funding the required research and 

development necessary to meet energy 

conservation standards than larger 

manufacturers. Therefore, at proposed 

TSL 4, as opposed to lower TSLs, small 

manufacturers would have less 

flexibility in choosing a design path. 

However, as discussed under subsection 

6 (Significant alternatives to the rule) 

below, DOE expects that the differential 

impact on small commercial 

refrigeration equipment manufacturers 

(versus large businesses) would be 

smaller in moving from proposed TSL 1 

to proposed TSL 2 than it would be in 

moving from proposed TSL 4 to 

proposed TSL 5. The rationale for DOE’s 

expectation is best discussed in a 

comparative context and is therefore 

elaborated upon in subsection 6 

(Significant alternatives to the rule). As 

discussed in the introduction to this 

IRFA, DOE expects that the differential 

impact associated with commercial 

refrigeration equipment design and 

manufacturing on small businesses 

would be negligible. 

5. Duplication, Overlap, and Conflict 

With Other Rules and Regulations 

DOE is not aware of any rules or 

regulations that duplicate, overlap, or 

conflict with the rule being considered 

today. 

6. Significant Alternatives to the Rule 

The primary alternatives to the 

proposed rule considered by DOE are 

the other TSLs besides the one being 

considered today, proposed TSL 4. In 

addition to the other TSLs considered, 

the TSD associated with this proposed 

rule includes a report referred to in 

Section VI.A in the preamble as the 

regulatory impact analysis (RIAdiscussed earlier in this report and in 

detail in the TSD). This report discusses 

the following policy alternatives: (1) No 

new regulatory action, (2) commercial 

customer rebates, and (3) commercial 

customer tax credits. The energy savings 

of these regulatory alternatives are one 

to two orders of magnitude smaller than 

those expected from the standard levels 

under consideration. The range of 

economic impacts of these regulatory 

alternatives is an order of magnitude 

smaller than the range of impacts 

expected from the standard levels under 

consideration. 

The commercial refrigeration 

equipment industry is highly 

customized. Customers demand high 

levels of customization from 

commercial refrigeration equipment 

manufacturers to differentiate 

themselves from other retail stores. 

They do not want to lose any 

functionality or utility in their 

equipment, such as display area, 

because this affects their ability to 

merchandise products. Often, the 

customer’s desire for easy consumer 

access requires equipment that is less 

energy efficient. They also do not want 

to lose any flexibility in design choices, 

such as lighting options. All 

manufacturers, including small 

businesses, would have to develop 

designs to enable compliance to higher 

TSLs. Product redesign costs tend to be 

fixed and do not scale with sales 

volume. Thus, small manufacturers 

would be at a relative disadvantage at 

higher TSLs because research and 

development efforts would be on the 

same scale as those for larger 

companies, but these expenses would be 

recouped over smaller sales volumes. 

At proposed TSL 5, the max-tech 

level, manufacturers stated their 

concerns over the ability to be able to 

produce equipment by the future 

effective date of the standard. At 

proposed TSL 5, DOE estimates that the 

majority of manufacturers would be 

negatively impacted. Based on 

manufacturer interviews, some 

manufacturers stated that they could not 

meet proposed TSL 5 for mediumtemperature equipment, and that they 

would need technological innovation to 

achieve these levels by 2012. 

Manufacturers believe that setting 

standards at the maximum level will 

affect their customers’ ability to 

merchandise products by limiting the 

flexibility in choosing design options. 

For example, at TSL 5 specifically, the 

use of LED lighting technology may be 

necessary to meet the proposed levels 

for many equipment classes. 

Manufacturers expect that having 

limited choices in design options would 

commoditize the industry and reduce 

profit margins. This concern was echoed 

by all manufacturers, not just small 

business manufacturers. 

For the proposed standard, TSL 4, and 

for alternative TSLs, TSL 1 through 3, 

DOE expects that impacts to small 

manufacturers would be less than the 

impacts described above for TSL 5. At 

lower TSLs, the differential impacts to 

small manufacturers are diminished 

because research and development 

efforts are less at lower TSLs. Chapter 

12 of the TSD contains additional 

information about the impact of this 

rulemaking on manufacturers. As 

mentioned above, the other policy 

alternatives (no new regulatory action, 

commercial customer rebates, and 

commercial customer tax credits) are 

described in Section VI.A of the 

preamble and in the Regulatory Impact 

Analysis, Chapter 17 of the TSD. Since 

the impacts of these policy alternatives 

are lower than the impacts described 

above for TSL 5, DOE expects that the 

impacts to small manufacturers would 

also be less than the impacts described 

above for the proposed standard levels. 

DOE requests comment on the impacts 

to small business manufacturers for 

these and any other possible alternatives 

to the proposed rule. DOE will consider 

any comments received regarding 

impacts to small business manufacturers 

for all the alternatives identified, 

including those in the RIA, for the Final 

Rule. 

C. Review Under the Paperwork 

Reduction Act 

This rulemaking will impose no new 

information or record keeping 

requirements. Accordingly, OMB 

clearance is not required under the 


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50132 Federal Register / Vol. 73, No. 165 / Monday, August 25, 2008 / Proposed Rules 

Paperwork Reduction Act. (44 U.S.C. 

3501 et seq.) 

D. Review Under the National 

Environmental Policy Act 

DOE is preparing an environmental 

assessment of the impacts of the 

proposed rule. DOE is preparing an 

environmental assessment of the 

impacts of the proposed rule. The 

assessment will include an examination 

of the potential effects of emission 

reductions likely to result from the rule 

in the context of global climate change 

as well as other types of environmental 

impacts. DOE anticipates completing a 

Finding of No Significant Impact 

(FONSI) before publishing the final rule 

on commercial refrigeration equipment, 

pursuant to the National Environmental 

Policy Act of 1969 (42 U.S.C. 4321 et 

seq.), the regulations of the Council on 

Environmental Quality (40 CFR Parts 

1500–1508), and DOE’s regulations for 

compliance with the National 

Environmental Policy Act (10 CFR Part 

1021). 

E. Review Under Executive Order 13132 

Executive Order 13132, Federalism, 

64 FR 43255 (August 4, 1999) imposes 

certain requirements on agencies 

formulating and implementing policies 

or regulations that preempt State law or 

that have federalism implications. The 

Executive Order requires agencies to 

examine the constitutional and statutory 

authority supporting any action that 

would limit the policymaking discretion 

of the States and carefully assess the 

necessity for such actions. The 

Executive Order also requires agencies 

to have an accountable process to 

ensure meaningful and timely input by 

State and local officials in the 

development of regulatory policies that 

have federalism implications. On March 

14, 2000, DOE published a statement of 

policy describing the intergovernmental 

consultation process it will follow in the 

development of such regulations. 65 FR 

13735. DOE has examined today’s 

proposed rule and has determined that 

it would not have a substantial direct 

effect on the States, on the relationship 

between the National Government and 

the States, or on the distribution of 

power and responsibilities among the 

various levels of government. EPCA 

governs and prescribes Federal 

preemption of State regulations as to 

energy conservation for the equipment 

that is the subject of today’s proposed 

rule. States can petition DOE for 

exemption from such preemption to the 

extent, and based on criteria, set forth in 

EPCA. (42 U.S.C. 6297(d) and 

6316(b)(2(D)) No further action is 

required by Executive Order 13132. 

F. Review Under Executive Order 12988 

With respect to the review of existing 

regulations and the promulgation of 

new regulations, section 3(a) of 

Executive Order 12988, Civil Justice 

Reform (61 FR 4729, February 7, 1996) 

imposes on Federal agencies the general 

duty to adhere to the following 

requirements: (1) Eliminate drafting 

errors and ambiguity; (2) write 

regulations to minimize litigation; and 

(3) provide a clear legal standard for 

affected conduct rather than a general 

standard and promote simplification 

and burden reduction. Section 3(b) of 

Executive Order 12988 specifically 

requires that Executive agencies make 

every reasonable effort to ensure that the 

regulation (1) clearly specifies the 

preemptive effect, if any; (2) clearly 

specifies any effect on existing Federal 

law or regulation; (3) provides a clear 

legal standard for affected conduct 

while promoting simplification and 

burden reduction; (4) specifies the 

retroactive effect, if any; (5) adequately 

defines key terms; and (6) addresses 

other important issues affecting clarity 

and general draftsmanship under any 

guidelines issued by the Attorney 

General. Section 3(c) of Executive Order 

12988 requires Executive agencies to 

review regulations in light of applicable 

standards in Section 3(a) and Section 

3(b) to determine whether they are met 

or it is unreasonable to meet one or 

more of them. DOE has completed the 

required review and determined that, to 

the extent permitted by law, this 

proposed rule meets the relevant 

standards of Executive Order 12988. 

G. Review Under the Unfunded 

Mandates Reform Act of 1995 

DOE reviewed this regulatory action 

under Title II of the Unfunded Mandates 

Reform Act of 1995 (Pub. L. 104–4) 

(UMRA), which requires each Federal 

agency to assess the effects of Federal 

regulatory actions on State, local and 

Tribal governments and the private 

sector. Today’s final rule may impose 

expenditures of $100 million or more on 

the private sector. It does not contain a 

Federal intergovernmental mandate. 

Section 202 of UMRA authorizes an 

agency to respond to the content 

requirements of UMRA in any other 

statement or analysis that accompanies 

the proposed rule. 2 U.S.C. 1532(c). The 

content requirements of section 202(b) 

of UMRA relevant to a private sector 

mandate substantially overlap the 

economic analysis requirements that 

apply under section 325(o) of EPCA and 

Executive Order 12866. The 

SUPPLEMENTARY INFORMATION section of 

the notice of final rulemaking and the 

‘‘Regulatory Impact Analysis’’ section of 

the TSD for this final rule respond to 

those requirements. 

Under section 205 of UMRA, the 

Department is obligated to identify and 

consider a reasonable number of 

regulatory alternatives before 

promulgating a rule for which a written 

statement under section 202 is required. 

DOE is required to select from those 

alternatives the most cost-effective and 

least burdensome alternative that 

achieves the objectives of the rule 

unless DOE publishes an explanation 

for doing otherwise or the selection of 

such an alternative is inconsistent with 

law. As required by sections 325(o), 

345(a) and 342(c)(4)(A) of EPCA (42 

U.S.C. 6295(o), 6316(a) and 

6313(c)(4)(A)), today’s proposed rule 

would establish energy conservation 

standards for commercial refrigeration 

equipment that are designed to achieve 

the maximum improvement in energy 

efficiency that DOE has determined to 

be both technologically feasible and 

economically justified. A full discussion 

of the alternatives considered by DOE is 

presented in the ‘‘Regulatory Impact 

Analysis’’ section of the TSD for today’s 

final rule. 

H. Review Under the Treasury and 

General Government Appropriations 

Act, 1999 

Section 654 of the Treasury and 

General Government Appropriations 

Act, 1999 (Pub. L. 105–277) requires 

Federal agencies to issue a Family 

Policymaking Assessment for any rule 

that may affect family well-being. This 

rule would not have any impact on the 

autonomy or integrity of the family as 

an institution. Accordingly, DOE has 

concluded that it is not necessary to 

prepare a Family Policymaking 

Assessment. 

I. Review Under Executive Order 12630 

DOE has determined, under Executive 

Order 12630, Governmental Actions and 

Interference with Constitutionally 

Protected Property Rights, 53 FR 8859 

(March 18, 1988), that this regulation 

would not result in any takings that 

might require compensation under the 

Fifth Amendment to the U.S. 

Constitution. 

J. Review Under the Treasury and 

General Government Appropriations 

Act, 2001 

The Treasury and General 

Government Appropriations Act, 2001 

(44 U.S.C. 3516 note) provides for 

agencies to review most disseminations 

of information to the public under 

guidelines established by each agency 

pursuant to general guidelines issued by 


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Federal Register / Vol. 73, No. 165 / Monday, August 25, 2008 / Proposed Rules 50133 

OMB. The OMB’s guidelines were 

published at 67 FR 8452 (February 22, 

2002), and DOE’s guidelines were 

published at 67 FR 62446 (October 7, 

2002). DOE has reviewed today’s Notice 

under the OMB and DOE guidelines and 

has concluded that it is consistent with 

applicable policies in those guidelines. 

K. Review Under Executive Order 13211 

Executive Order 13211, Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use, 66 FR 28355 (May 

22, 2001) requires Federal agencies to 

prepare and submit to the OIRA, OMB, 

a Statement of Energy Effects for any 

proposed significant energy action. A 

significant energy action is defined as 

any action by an agency that 

promulgated or is expected to lead to 

promulgation of a final rule, and that (1) 

is a significant regulatory action under 

Executive Order 12866, or any successor 

order; and (2) is likely to have a 

significant adverse effect on the supply, 

distribution, or use of energy, or (3) is 

designated by the Administrator of 

OIRA as a significant energy action. For 

any proposed significant energy action, 

the agency must give a detailed 

statement of any adverse effects on 

energy supply, distribution, or use 

should the proposal be implemented, 

and of reasonable alternatives to the 

action and their expected benefits on 

energy supply, distribution, and use. 

Today’s regulatory action would not 

have a significant adverse effect on the 

supply, distribution, or use of energy 

and, therefore, is not a significant 

energy action. Accordingly, DOE has not 

prepared a Statement of Energy Effects. 

L. Review Under the Information 

Quality Bulletin for Peer Review 

On December 16, 2004, the OMB, in 

consultation with the Office of Science 

and Technology (OSTP), issued its Final 

Information Quality Bulletin for Peer 

Review (Bulletin). 70 FR 2664 (January 

14, 2005). The Bulletin establishes that 

certain scientific information shall be 

peer reviewed by qualified specialists 

before it is disseminated by the Federal 

Government, including influential 

scientific information related to agency 

regulatory actions. The purpose of the 

bulletin is to enhance the quality and 

credibility of the Government’s 

scientific information. Under the 

Bulletin, the energy conservation 

standards rulemaking analyses are 

‘‘influential scientific information.’’ The 

Bulletin defines ‘‘influential scientific 

information’’ as ‘‘scientific information 

the agency reasonably can determine 

will have, or does have, a clear and 

substantial impact on important public 

policies or private sector decisions.’’ 70 

FR 2667 (January 14, 2005). 

In response to OMB’s Bulletin, DOE 

conducted formal, in-progress peer 

reviews of the energy conservation 

standards development process and 

analyses and has prepared a Peer 

Review Report pertaining to the energy 

conservation standards rulemaking 

analyses. The Energy Conservation 

Standards Rulemaking Peer Review 

Report dated February 2007 has been 

disseminated and is available at http:// 

www.eere.energy.gov/buildings/ 

appliance_standards/ peer_review.html. 

VII. Public Participation 

A. Attendance at Public Meeting 

The time, date and location of the 

public meeting are provided in the 

DATES and ADDRESSES sections at the 

beginning of this document. Anyone 

who wants to attend the public meeting 

must notify Ms. Brenda Edwards at 

(202) 586–2945. As explained in the 

ADDRESSES section, foreign nationals 

visiting DOE headquarters are subject to 

advance security screening procedures. 

B. Procedure for Submitting Requests To 

Speak 

Any person who has an interest in 

today’s Notice, or who is a 

representative of a group or class of 

persons that has an interest in these 

issues, may request an opportunity to 

make an oral presentation. Please handdeliver requests to speak to the address 

shown under the heading ‘‘Hand 

Delivery/Courier’’ in the ADDRESSES

section of this NOPR, between 9 a.m. 

and 4 p.m., Monday through Friday, 

except Federal holidays. Also, requests 

may be sent by mail to the address 

shown under the heading ‘‘Postal Mail’’ 

in the ADDRESSES section of this NOPR, 

or by e-mail to 

Brenda.Edwards@ee.doe.gov. 

Persons requesting to speak should 

briefly describe the nature of their 

interest in this rulemaking and provide 

a telephone number for contact. DOE 

asks persons selected to be heard to 

submit a copy of their statements at 

least two weeks before the public 

meeting, either in person, by postal 

mail, or by e-mail as described in the 

preceding paragraph. Please include an 

electronic copy of your statement on a 

computer diskette or compact disk 

when delivery is by postal mail or in 

person. Electronic copies must be in 

WordPerfect, Microsoft Word, Portable 

Document Format (PDF), or text 

(American Standard Code for 

Information Interchange (ASCII)) file 

format. At its discretion, DOE may 

permit any person who cannot supply 

an advance copy of his or her statement 

to participate, if that person has made 

alternative arrangements with the 

Building Technologies Program. In such 

situations, the request to give an oral 

presentation should ask for alternative 

arrangements. 

C. Conduct of Public Meeting 

DOE will designate a DOE official to 

preside at the public meeting and may 

also use a professional facilitator to aid 

discussion. The meeting will not be a 

judicial or evidentiary-type public 

hearing, but DOE will conduct it in 

accordance with 5 U.S.C. 553 and 

Section 336 of EPCA. (42 U.S.C. 6306) 

A court reporter will be present to 

record and transcribe the proceedings. 

DOE reserves the right to schedule the 

order of presentations and to establish 

the procedures governing the conduct of 

the public meeting. After the public 

meeting, interested parties may submit 

further comments about the 

proceedings, and any other aspect of the 

rulemaking, until the end of the 

comment period. 

The public meeting will be conducted 

in an informal, conference style. DOE 

will present summaries of comments 

received before the public meeting, 

allow time for presentations by 

participants, and encourage all 

interested parties to share their views on 

issues affecting this rulemaking. Each 

participant will be allowed to make a 

prepared general statement (within time 

limits determined by DOE) before 

discussion of a particular topic. DOE 

will permit other participants to 

comment briefly on any general 

statements. 

At the end of all prepared statements 

on a topic, DOE will permit participants 

to clarify their statements briefly and 

comment on statements made by others. 

Participants should be prepared to 

answer questions by DOE and by other 

participants concerning these issues. 

DOE representatives may also ask 

questions of participants concerning 

other matters relevant to the public 

meeting. The official conducting the 

public meeting will accept additional 

comments or questions from those 

attending, as time permits. The 

presiding official will announce any 

further procedural rules or modification 

of the above procedures that may be 

needed for proper conduct of the public 

meeting. 

DOE will make the entire record of 

this proposed rulemaking, including the 

transcript from the public meeting, 

available for inspection at the U.S. 

Department of Energy, Resource Room 

of the Building Technologies Program, 

950 L’Enfant Plaza, SW., 6th Floor, 


pwalker on PROD1PC71 with PROPOSALS2
50134 Federal Register / Vol. 73, No. 165 / Monday, August 25, 2008 / Proposed Rules 

Washington, DC 20024, (202) 586–2945, 

between 9 a.m. and 4 p.m., Monday 

through Friday, except Federal holidays. 

Any person may purchase a copy of the 

transcript from the transcribing reporter. 

D. Submission of Comments 

DOE will accept comments, data, and 

information regarding all aspects of this 

NOPR before or after the public meeting, 

but no later than the date provided at 

the beginning of this notice of proposed 

rulemaking. Please submit comments, 

data, and information electronically to 

the following e-mail address: 

commercialrefrigeration.rulemaking@ee.

doe.gov. Submit electronic comments in 

WordPerfect, Microsoft Word, PDF, or 

ASCII file format and avoid the use of 

special characters or any form of 

encryption. Comments in electronic 

format should be identified by the 

docket number EE–2006–STD–0126 

and/or RIN 1904–AB59, and whenever 

possible carry the electronic signature of 

the author. Absent an electronic 

signature, comments submitted 

electronically must be followed and 

authenticated by submitting a signed 

original paper document. No 

telefacsimiles (faxes) will be accepted. 

Under 10 CFR 1004.11, any person 

submitting information that he or she 

believes to be confidential and exempt 

by law from public disclosure should 

submit two copies: One copy of the 

document including all the information 

believed to be confidential, and one 

copy of the document with the 

information believed to be confidential 

deleted. DOE will make its own 

determination about the confidential 

status of the information and treat it 

according to its determination. 

Factors of interest to DOE when 

evaluating requests to treat submitted 

information as confidential include (1) a 

description of the items; (2) whether 

and why such items are customarily 

treated as confidential within the 

industry; (3) whether the information is 

generally known by, or available from, 

other sources; (4) whether the 

information has previously been made 

available to others without obligation 

concerning its confidentiality; (5) an 

explanation of the competitive injury to 

the submitting person which would 

result from public disclosure; (6) when 

such information might lose its 

confidential character due to the 

passage of time; and (7) why disclosure 

of the information would be contrary to 

the public interest. 

E. Issues on Which DOE Seeks Comment 

DOE is particularly interested in 

receiving comments and views of 

interested parties concerning: 

1. LED Price Projections 

TSL 5 has an estimated ¥$200 

million burden on the Nation. DOE 

recognizes that anticipated reductions 

in LED lighting costs by the effective 

date of the rule could shift the NPV, at 

the seven percent discount rate, for TSL 

5 from a negative NPV (¥$200 million) 

to a positive NPV. DOE calculated that 

a reduction in LED system cost of six 

percent would be sufficient to ensure a 

slightly positive aggregate NPV at TSL 5, 

at the seven percent discount rate, when 

compared with the base case. DOE fully 

expects that the aggregate six percent 

reduction in LED system costs could be 

attained and even exceeded by 2012 

because of the rapid development of 

LED technology. Furthermore, if LED 

system costs achieve the 50 percent 

reduction projection, the NPV at a seven 

percent discount rate for TSL 5 would 

be substantially positive. DOE requests 

data or information on projected LED 

cost reductions and basis for such 

projections. DOE also seeks comment on 

its consideration of projected LED 

prices. DOE also seeks comment on the 

extent to which stakeholders expect 

projected LED cost reductions would 

occur, the timing of the projected LED 

cost reductions, and the certainty of the 

projected LED cost reductions. Also, 

considering the rapid development of 

LED technology and the steady 

reductions in cost, DOE seeks comment 

on the extent to which manufacturers 

would adopt LED technology into the 

design of commercial refrigeration 

equipment in the absence of standards. 

DOE recognizes that LED system 

replacement costs assumed in its LCC 

analysis would also be affected by 

projected LED cost reductions and seeks 

comment on how it can best predict the 

cost for LED fixture replacements in the 

LCC analysis. (See Section V.C of this 

NOPR for further details.) 

2. Base Case Efficiency 

DOE recognizes that baseline 

efficiency trends can change if 

equipment costs are different than those 

projected. For example, if LED prices 

drop more than assumed in the 

engineering analysis, consumer demand 

for LED-equipped equipment could 

change. DOE seeks comment on whether 

shipments of LED-equipped equipment 

would change if LED costs drop and if 

so, the extent and timing of such 

shipment changes. See Section IV.G.1. 

3. Operating Temperature Ranges 

One factor in determining which 

equipment class a commercial 

refrigeration equipment unit belongs to 

is its designed operating temperature. 

DOE is organizing equipment classes 

based on three operating temperature 

ranges. Medium temperature equipment 

operates at or above 32 °F, low 

temperature equipment operates at 

temperatures below 32 °F and greater 

than 5 °F, and ice-cream temperature 

equipment operates at or below ¥15 °F. 

DOE seeks comment on the 

temperatures selected to categorize 

equipment classes. (See Section IV.A.2 

of this NOPR for further details.) 

4. Offset Factors 

For the NOPR, DOE developed offset 

factors as a way to adjust the energy 

efficiency requirements for smallersized equipment in each equipment 

class analyzed. These offset factors 

account for certain components of the 

refrigeration load (such as the 

conduction end effects) that remain 

constant even when equipment sizes 

vary. These constant loads affect smaller 

cases disproportionately. The offset 

factors are intended to approximate 

these constant loads and provide a fixed 

end point, corresponding to a zero TDA 

or zero volume case, in an equation that 

describes the relationship between 

energy consumption and the 

corresponding TDA or volume metric. 

DOE seeks comment on the use of offset 

factors and the methodology used to 

calculate them. (See Section V.A of this 

NOPR and Chapter 5 of the TSD for 

further details.) 

5. Extension of Standards 

DOE developed an extension 

approach to applying the standards 

developed for these 15 primary 

equipment classes to the remaining 23 

secondary classes. This approach 

involves extension multipliers 

developed using both the 15 primary 

equipment classes analyzed and a set of 

focused matched-pair analyses. DOE 

believes that standards for certain 

primary equipment classes can be 

directly applied to other similar 

secondary equipment classes. DOE 

seeks comment on its approach to 

extending the results of the engineering 

analysis to the 23 secondary equipment 

classes. (See Section V.A of this NOPR 

and Chapter 5 of the TSD for further 

details.) 

6. Standards for Hybrid Cases and 

Wedges 

There are certain types of equipment 

that meet the definition of commercial 

refrigeration equipment (Section 

136(a)(3) of EPACT 2005), but do not 

fall easily into any of the 38 equipment 

classes defined in the market and 

technology assessment. One of these 

types is hybrid cases, where two or 


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more compartments are in different 

equipment families and contained in 

one cabinet. Another is refrigeratorfreezers, which have two compartments 

in the same equipment family but with 

different operating temperatures. There 

may also exist hybrid refrigeratorfreezers, where two or more 

compartments are in different 

equipment families and have different 

operating temperatures. Another is 

wedge cases, which form miter 

transitions between standard display 

case lineups. DOE seeks comment on 

proposed language that will allow 

manufacturers to determine appropriate 

standard levels for these types of 

equipment. (See Section 0 of this NOPR 

for further details.) 

7. Standard Levels 

If, based on comment, DOE were to 

revise the LED system costs as described 

above (section V.C) the economic 

impacts of TSL 5 would change. DOE 

seeks comments on its consideration of 

TSL 5 and whether the benefits would 

outweigh the burdens. 

VIII. Approval of the Office of the 

Secretary 

The Secretary of Energy has approved 

publication of this proposed rule. 

Issued in Washington, DC, on August 12, 

2008. 

Alexander A. Karsner, 

Assistant Secretary, Energy Efficiency and 

Renewable Energy. 

List of Subjects in 10 CFR Part 431 

Administrative practice and 

procedure, Energy conservation, 

Household appliances. 

For the reasons set forth in the 

preamble, Chapter II of Title 10, Code of 

Federal Regulations, Part 431 is 

proposed to be amended to read as set 

forth below. 

PART 431—ENERGY EFFICIENCY 

PROGRAM FOR CERTAIN 

COMMERCIAL AND INDUSTRIAL 

EQUIPMENT 

1. The authority citation for part 431 

continues to read as follows: 

Authority: 42 U.S.C. 6291–6317. 

2. Section 431.62 of subpart C is 

amended by adding in alphabetical 

order new definitions for ‘‘air-curtain 

angle,’’ ‘‘commercial hybrid refrigerator, 

freezer, and refrigerator-freezer,’’ ‘‘door 

angle,’’ ‘‘horizontal closed,’’ horizontal 

open’’, ‘‘semivertical open,’’ ‘‘vertical 

closed,’’ ‘‘vertical open,’’ and ‘‘wedge 

case’’ to read as follows: 

§ 431.62 Definitions concerning 

commercial refrigerators, freezers and 

refrigerator-freezers. 

Air-curtain angle means: 

(1) For equipment without doors and 

without a discharge air grille or 

discharge air honeycomb, the angle 

between a vertical line extended down 

from the highest point on the 

manufacturer’s recommended load limit 

line and the load limit line itself, when 

the equipment is viewed in crosssection; and 

(2) For all other equipment without 

doors, the angle formed between a 

vertical line and the straight line drawn 

by connecting the point at the inside 

edge of the discharge air opening with 

the point at inside edge of the return air 

opening, when the equipment is viewed 

in cross-section. 

* * * * * 

Commercial hybrid refrigerator, 

freezer, and refrigerator-freezer means a 

commercial refrigerator, freezer, or 

refrigerator-freezer that has two or more 

chilled and/or frozen compartments that 

are (1) in two or more different 

equipment families, (2) contained in one 

cabinet and (3) sold as a single unit. 

* * * * * 

Door angle means: 

(1) For equipment with flat doors, the 

angle between a vertical line and the 

line formed by the plane of the door, 

when the equipment is viewed in crosssection; and 

(2) For equipment with curved doors, 

the angle formed between a vertical line 

and the straight line drawn by 

connecting the top and bottom points 

where the display area glass joins the 

cabinet, when the equipment is viewed 

in cross-section. 

* * * * * 

Horizontal Closed means equipment 

with hinged or sliding doors and a door 

angle greater than or equal to 45°. 

Horizontal Open means equipment 

without doors and an air-curtain angle 

greater than or equal to 80° from the 

vertical. 

* * * * * 

Semivertical Open means equipment 

without doors and an air-curtain angle 

greater than or equal to 10° and less 

than 80° from the vertical. 

* * * * * 

Vertical Closed means equipment 

with hinged or sliding doors and a door 

angle less than 45°. 

Vertical Open means equipment 

without doors and an air-curtain angle 

greater than or equal to 0° and less than 

10° from the vertical. 

Wedge case means a commercial 

refrigerator, freezer, or refrigeratorfreezer that forms the transition between 

two regularly-shaped display cases. 

3. Section 431.66 of subpart C is 

amended by adding new paragraphs 

(a)(3) and (d) to read as follows: 

§ 431.66 Energy conservation standards 

and their effective dates. 

(a) * * * 

(3) The term ‘‘TDA’’ means the total 

display area (ft2) as defined in the AirConditioning and Refrigeration Institute 

Standard 1200–2006. 

* * * * * 

(d) Each commercial refrigerator, 

freezer, and refrigerator-freezer with a 

self-contained condensing unit and 

without doors; commercial refrigerator, 

freezer, and refrigerator-freezer with a 

remote condensing unit; and 

commercial ice-cream freezer, 

manufactured on or after January 1, 

2012, shall have a daily energy 

consumption (in kilowatt hours per day) 

that does not exceed the levels 

specified: 

(1) For equipment other than hybrid 

equipment, refrigerator-freezers or 

wedge cases: 

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BILLING CODE 6450–01–C 

(2) For commercial refrigeration 

equipment with two or more 

compartments (hybrid refrigerators, 

hybrid freezers, hybrid refrigeratorfreezers, and non-hybrid refrigerator 

freezers), the maximum daily energy 

consumption (MDEC) for each model 

shall be the sum of the MDEC values for 

all of its compartments. For each 

compartment, measure the TDA or 

volume of that compartment, and 

determine the appropriate equipment 

class based on that compartment’s 

equipment family, condensing unit 

configuration, and designed operating 

temperature. The MDEC value for each 

compartment shall be the amount 

derived by entering that compartment’s 

TDA or volume into the standard 

equation in paragraph (d)(1) of this 

section for that compartment’s 

equipment class. Measure the calculated 

daily energy consumption (CDEC) or 

total daily energy consumption (TDEC) 

for the entire case: 

(i) For remote condensing commercial 

hybrid refrigerators, hybrid freezers, 

hybrid refrigerator-freezers, and nonhybrid refrigerator-freezers, where two 


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or more independent condensing units 

each separately cool only one 

compartment, measure the total 

refrigeration load of each compartment 

separately according to the ANSI/ 

ASHRAE Standard 72–2005 test 

procedure. Calculate compressor energy 

consumption (CEC) for each 

compartment using Table 1 in ANSI/ 

ARI Standard 1200–2006 using the 

evaporator temperature for that 

compartment. The calculated daily 

energy consumption (CDEC) for the 

entire case shall be the sum of the CEC 

for each compartment, fan energy 

consumption (FEC), lighting energy 

consumption (LEC), anti-condensate 

energy consumption (AEC), defrost 

energy consumption (DEC), and 

condensate evaporator pan energy 

consumption (PEC) (as measured in 

ANSI/ARI Standard 1200–2006). 

(ii) For remote condensing 

commercial hybrid refrigerators, hybrid 

freezers, hybrid refrigerator-freezers, 

and non-hybrid refrigerator-freezers, 

where two or more compartments are 

cooled collectively by one condensing 

unit, measure the total refrigeration load 

of the entire case according to the ANSI/ 

ASHRAE Standard 72–2005 test 

procedure. Calculated a weighted 

saturated evaporator temperature for the 

entire case by (A) multiplying the 

saturated evaporator temperature of 

each compartment by the volume of that 

compartment (as measured in ANSI/ARI 

Standard 1200–2006), (B) summing the 

resulting values for all compartments, 

and (C) dividing the resulting total by 

the total volume of all compartments. 

Calculate the CEC for the entire case 

using Table 1 in ANSI/ARI Standard 

1200–2006, using the total refrigeration 

load and the weighted average saturated 

evaporator temperature. The CDEC for 

the entire case shall be the sum of the 

CEC, FEC, LEC, AEC, DEC, and PEC. 

(iii) For self-contained commercial 

hybrid refrigerators, hybrid freezers, 

hybrid refrigerator-freezers, and nonhybrid refrigerator-freezers, measure the 

total daily energy consumption (TDEC) 

for the entire case according to the 

ANSI/ASHRAE Standard 72–2005 test 

procedure. 

(3) For remote-condensing and selfcontained wedge cases, measure the 

CDEC or TDEC according to the ANSI/ 

ASHRAE Standard 72–2005 test 

procedure. The MDEC for each model 

shall be the amount derived by 

incorporating into the standards 

equation in paragraph (d)(1) of this 

section for the appropriate equipment 

class a value for the TDA that is the 

product of (i) the vertical height of the 

air-curtain (or glass in a transparent 

door) and (ii) the largest overall width 

of the case, when viewed from the front. 

[FR Doc. E8–19063 Filed 8–22–08; 8:45 am] 

BILLING CODE 6450–01–P 


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