58772 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 

DEPARTMENT OF ENERGY 

10 CFR Part 431 

[Docket Number: EERE–2007–BT–STD– 

0012] 

RIN 1904–AB44 

Energy Conservation Program for 

Commercial and Industrial Equipment: 

Packaged Terminal Air Conditioner 

and Packaged Terminal Heat Pump 

Energy Conservation Standards 

AGENCY: Office of Energy Efficiency and 

Renewable Energy, Department of 

Energy. 

ACTION: Final rule. 

SUMMARY: The Department of Energy 

(DOE) has determined that its adoption 

of amended energy conservation 

standards for commercial standard size 

packaged terminal air conditioners 

(PTACs) and packaged terminal heat 

pumps (PTHPs), at efficiency levels 

more stringent than those in American 

Society of Heating, Refrigerating, and 

Air-Conditioning Engineers (ASHRAE)/ 

Illuminating Engineering Society of 

North America (IESNA) Standard 90.1– 

1999, is supported by clear and 

convincing evidence that such 

standards would result in significant 

additional conservation of energy and 

are technologically feasible and 

economically justified. On this basis, 

DOE is today amending the existing 

energy conservation standards for these 

types of equipment. In addition, DOE 

has determined that its adoption of 

amended energy conservation standards 

more stringent than the efficiency levels 

specified by ASHRAE Standard 90.1– 

1999 for non-standard size PTACs and 

PTHPs is not supported by clear and 

convincing evidence, thus, DOE is 

adopting the efficiency levels in 

ASHRAE Standard 90.1–1999 for nonstandard size PTACs and PTHPs in 

today’s final rule. 

DATES: The effective date of this rule is 

November 6, 2008. The standards 

established in today’s final rule will be 

applicable starting October 8, 2012 for 

standard size PTACs and PTHPs. The 

standards established in today’s final 

rule will be applicable starting October 

7, 2010 for non-standard size PTACs 

and PTHPs. 

ADDRESSES: For access to the docket to 

read background documents, the 

technical support document, transcripts 

of the public meetings in this 

proceeding, 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. For more information about 

visiting the Resource Room, please call 

Ms. Brenda Edwards at (202) 586–2945. 

(Note: DOE’s Freedom of Information 

Reading Room no longer houses 

rulemaking materials.) You may also 

obtain copies of the final rule notice in 

this proceeding, related documents (e.g., 

the notice of proposed rulemaking and 

technical support document DOE used 

to reassess whether to adopt certain 

efficiency levels in ASHRAE Standard 

90.1), draft analyses, public meeting 

materials, and related test procedure 

documents from the Office of Energy 

Efficiency and Renewable Energy’s Web 

site at http://www.eere.energy.gov/

buildings/appliance_standards/

commercial/packaged_ac_hp.html. 

FOR FURTHER INFORMATION CONTACT: Wes 

Anderson, Project Manager, Energy 

Conservation Standards for Packaged 

Terminal Air Conditioners and 

Packaged Terminal Heat Pumps, U.S. 

Department of Energy, Energy Efficiency 

and Renewable Energy, Building 

Technologies Program, EE–2J, 1000 

Independence Avenue, SW., 

Washington, DC 20585–0121. Phone: 

(202) 586–7335. E-mail: 

Wes.Anderson@ee.doe.gov. 

Francine Pinto, Esq., or Michael Kido, 

Esq., U.S. Department of Energy, Office 

of General Counsel, GC–72, 1000 

Independence Avenue, SW., 

Washington, DC 20585. Phone: (202) 

586–9507. E-mail: Francine.Pinto@hq.

doe.gov or Michael.Kido@hq.doe.gov. 

SUPPLEMENTARY INFORMATION: 

I. Summary of the Final Rule and Its Benefits 

A. The Standard Levels 

B. Current Federal Standards for Packaged 

Terminal Air Conditioners and Packaged 

Terminal Heat Pumps 

C. Benefits to Customers of Packaged 

Terminal Air Conditioners and Packaged 

Terminal Heat Pumps 

D. Impact on Manufacturers 

E. National Benefits 

F. Other Considerations 

G. Conclusion 

II. Introduction 

A. Authority 

B. Background 

1. Current Standards 

2. History of Standards Rulemaking for 

Packaged Terminal Equipment 

III. General Discussion 

A. Test Procedures 

B. Technological Feasibility 

1. General 

2. Maximum Technologically Feasible 

Levels 

C. Energy Savings 

D. Economic Justification 

1. Economic Impact on Commercial 

Consumers and Manufacturers 

2. Life-Cycle Costs 

3. Energy Savings 

4. Lessening of Utility or Performance of 

Equipment 

5. Impact of Any Lessening of Competition 

6. Need of the Nation To Conserve Energy 

7. Other Factors 

IV. Analysis Methodology and Discussion of 

Comments on Analysis Methodology 

A. Market and Technology Assessment 

1. Equipment Classes—Generally 

2. Comments 

B. Screening Analysis 

1. Scroll Compressors 

2. ECM Motors 

3. Fan Motors 

4. Micro-Channel Heat Exchangers 

5. Thermal Expansion Valves 

C. Engineering Analysis 

1. Material Prices for the Cost Model 

2. Impacts of the Refrigerant Phaseout on 

PTAC and PTHP Equipment 

Performance 

3. Manufacturer Production Cost Increases 

With R–410A 

D. Energy Use Characterization 

E. Life-Cycle Cost Analysis 

1. Equipment Prices 

2. Installation Costs 

3. Annual Energy Use 

4. Electricity Prices 

5. Maintenance Costs 

6. Repair Costs 

7. Equipment Lifetime 

8. Discount Rate 

F. National Impact Analysis—National 

Energy Savings and Net Present Value 

Analysis 

1. Shipments Analysis 

2. Base Case and Standards Case 

Forecasted Distribution of Efficiencies 

G. Manufacturer Impact Analysis 

1. GRIM Input Updates 

2. Cumulative Regulatory Burden 

3. Employment Impacts 

H. Employment Impact Analysis 

I. Utility Impact Analysis 

J. Environmental Analysis 

K. Other Comments 

1. Burdens on Small, Non-Standard Size 

PTAC and PTHP Manufacturers 

2. PTAC and PTHP Labeling 

V. Analytical Results and Conclusions 

A. Trial Standard Levels 

B. Significance of Energy Savings 

C. Economic Justification 

1. Economic Impact on Commercial 

Consumers 

2. Economic Impact on Manufacturers 

3. National Net Present Value and Net 

National 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 

D. Conclusion 

1. Standard Size PTACs and PTHPs 

2. Non-Standard Size PTACs and PTHPs 

VI. Procedural Issues and Regulatory Review 

A. Review Under Executive Order 12866 

B. Review Under the Regulatory Flexibility 

Act 

1. Reasons for the Final Rule 

2. Objectives of, and Legal Basis for, the 

Rule 

3. Description and Estimated Number of 

Small Entities Regulated 


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4. Description and Estimate of Compliance 

Requirements 

5. Significant Issues Raised by Public 

Comments 

6. Steps DOE Has Taken To Minimize the 

Economic Impact on Small, NonStandard Size PTAC and PTHP 

Manufacturers 

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 of 1999 

I. Review Under Executive Order 12630 

J. Review Under the Treasury and General 

Government Appropriations Act of 2001 

K. Review Under Executive Order 13211 

L. Review Under the Information Quality 

Bulletin for Peer Review 

M. Congressional Notification 

VII. Approval of the Office of the Secretary 

I. Summary of the Final Rule and Its 

Benefits 

A. The Standard Levels 

The Energy Policy and Conservation 

Act, as amended (EPCA), (42 U.S.C. 

6291, et seq.), establishes mandatory 

energy conservation standards for 

certain commercial equipment covered 

by the American Society of Heating, 

Refrigerating, and Air-Conditioning 

Engineers (ASHRAE) and the 

Illuminating Engineering Society of 

North America (IESNA) Standard 90.1, 

including packaged terminal air 

conditioners (PTACs) and packaged 

terminal heat pumps (PTHPs) 

(collectively referred to as ‘‘packaged 

terminal equipment’’). EPCA states that 

the Department of Energy (DOE) may 

prescribe amended standards for this 

equipment that exceed the stringency of 

efficiency levels contained in 

amendments to ASHRAE Standard 90.1, 

only if DOE determines by rule that any 

such standard ‘‘would result in 

significant additional conservation of 

energy and is technologically feasible 

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

6313(a)(6)(A)(ii)(II)) This determination 

must be ‘‘supported by clear and 

convincing evidence.’’ Id. If DOE is 

unable to find that clear and convincing 

evidence exists that a more stringent 

efficiency level than the efficiency level 

contained in ASHRAE Standard 90.1 

would result in a significant additional 

energy savings and is technologically 

feasible and economically justified, then 

EPCA states DOE must establish an 

amended uniform national standard for 

the product at the minimum level 

specified in the amended ASHRAE/IES 

Standard 90.1. (42 U.S.C. 

6313(a)(6)(A)(ii)(I)) The standards in 

today’s final rule, which apply to all 

packaged terminal equipment, satisfy 

these requirements and will achieve the 

maximum improvements in energy 

efficiency that are technologically 

feasible and economically justified. (See 

42 U.S.C. 6316(a); 42 U.S.C. 

6295(o)(2)(A).) 

Table I.1 shows the amended energy 

conservation standards that DOE is 

adopting today. These amended energy 

conservation standards will apply to 

standard size PTACs and PTHPs 

manufactured for sale in the United 

States, or imported to the United States, 

on or after October 8, 2012 and nonstandard size PTACs and PTHPs 

manufactured for sale in the United 

States, or imported to the United States, 

on or after October 7, 2010. 

TABLE I.1—AMENDED ENERGY CONSERVATION STANDARDS FOR PTACS AND PTHPS

Equipment class 

Energy conservation standards * 

Equipment Category Cooling capacity 

(British thermal units per hour [Btu/h]) 

PTAC ................. Standard Size ** ..................................... <7,000 .................................................... EER = 11.7 

7,000–15,000 ......................................... EER = 13.8¥(0.300 × Cap ††) 

>15,000 .................................................. EER = 9.3 

Non-Standard Size † ............................... <7,000 .................................................... EER = 9.4 

7,000–15,000 ......................................... EER = 10.9 ¥ (0.213 × Cap ††) 

>15,000 .................................................. EER = 7.7 

PTHP ................. Standard Size ** ..................................... <7,000 .................................................... EER = 11.9 

COP = 3.3 

7,000–15,000 ......................................... EER = 14.0 ¥ (0.300 × Cap ††) 

COP = 3.7 ¥ (0.052 × Cap ††) 

>15,000 .................................................. EER = 9.5 

COP = 2.9 

Non-Standard Size † ............................... <7,000 .................................................... EER = 9.3 

COP = 2.7 

7,000–15,000 ......................................... EER = 10.8 ¥ (0.213 × Cap ††) 

COP = 2.9 ¥ (0.026 × Cap ††) 

>15,000 .................................................. EER = 7.6 

COP = 2.5 

* For equipment rated according to the DOE test procedure (Air-Conditioning and Refrigeration Institute [ARI] Standard 310/380–2004), all energy efficiency ratio (EER) values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled equipment and evaporatively cooled equipment and at 85 °F entering water temperature for water-cooled equipment. All coefficient of performance (COP) values must be rated at 47 °F 

outdoor dry-bulb temperature for air-cooled equipment. 

** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions having an external wall opening greater than or equal to 16 

inches high or greater than or equal to 42 inches wide, and a cross-sectional area greater than or equal to 670 square inches. † Non-standard size refers to PTAC or PTHP equipment with existing wall sleeve dimensions having an external wall opening of less than 16 

inches high or less than 42 inches wide, and a cross-sectional area less than 670 square inches. †† Cap means cooling capacity in thousand Btu/h (kBtu/h) at 95 °F outdoor dry-bulb temperature. 

DOE only presents the benefits and 

burdens of adopting a standard level 

higher than the efficiency levels 

specified in ASHRAE Standard 90.1– 

1999. The benefits and burdens of 

adopting the efficiency levels in 

ASHRAE Standard 90.1–1999 for nonstandard size PTACs and PTHPs are not 

calculated in this rulemaking because 


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DOE considers this the baseline 

efficiency levels even though they 

represent an increase in energy 

efficiency when compared to the current 

Federal energy conservation standards. 

B. Current Federal Standards for 

Packaged Terminal Air Conditioners 

and Packaged Terminal Heat Pumps 

Table I.2 presents the minimum 

efficiency levels in the current Federal 

energy conservation standards for 

PTACs and PTHPs. 

TABLE I.2—EXISTING FEDERAL ENERGY CONSERVATION STANDARDS FOR PTACS AND PTHPS

Equipment class 

Existing Federal energy conservation 

standards* Equipment Cooling capacity 

(Btu/h) 

PTAC ....................................................................... <7,000 ..................................................................... EER = 8.88 

7,000–15,000 .......................................................... EER = 10.0 ¥ (0.16 × Cap**) 

>15,000 ................................................................... EER = 7.6 

PTHP ....................................................................... <7,000 ..................................................................... EER = 8.88 

COP = 2.7 

7,000–15,000 .......................................................... EER = 10.0 ¥ (0.16 × Cap**) 

COP = 1.3 + (0.16 × EER) 

>15,000 ................................................................... EER = 7.6 

COP = 2.5 

* For equipment rated according to the ARI standards, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled products and evaporatively cooled products and at 85 °F entering water temperature for water-cooled products. All COP values must be rated at 

47 °F outdoor dry-bulb temperature for air-cooled products, and at 70 °F entering water temperature for water-source heat pumps. 

** Cap means cooling capacity in kBtu/h at 95 °F outdoor dry-bulb temperature. 

C. Benefits to Customers of Packaged 

Terminal Air Conditioners and 

Packaged Terminal Heat Pumps 

Table I.3 presents the impacts on 

commercial customers of the energy 

conservation standards adopted in 

today’s final rule. 

TABLE I.3—IMPACTS OF NEW STANDARDS FOR A SAMPLE OF COMMERCIAL CUSTOMERS * 

Equipment class Amended energy 

conservation standard 

Total 

installed 

cost 

Total installed cost 

increase 

Life-cycle 

cost savings 

Payback 

period 

(years) 

Standard Size PTAC, 9,000 Btu/h Cooling Capacity ...... 11.1 EER ........................... 1,229 $22 ($3) 13.7 

Standard Size PTAC, 12,000 Btu/h Cooling Capacity .... 10.2 EER ........................... 1,469 16 (2) 13.1 

Standard Size PTHP, 9,000 Btu/h Cooling Capacity ...... 11.3 EER ........................... 1,362 40 28 4.4 

3.2 COP 

Standard Size PTHP, 12,000 Btu/h Cooling Capacity .... 10.4 EER ........................... 1,603 38 24 4.6 

3.0 COP 

Non-Standard Size PTAC, 11,000 Btu/h Cooling Capacity.8.6 EER ............................. 1,570 ** N/A ** N/A ** N/A 

Non-Standard Size PTHP, 11,000 Btu/h Cooling Capacity.8.5 EER ............................. 1,692 ** N/A ** N/A ** N/A 

2.6 COP 

* The values in Table I.3 represent average values and all monetary values are expressed in 2007$. 

** DOE did not calculate the implications on commercial customers of non-standard equipment because DOE is adopting the efficiency levels 

in ASHRAE Standard 90.1–1999 (i.e., the baseline efficiency levels). 

The economic impacts on commercial 

consumers (i.e., the average life-cycle 

cost (LCC) savings) are positive. For 

example, the typical, standard size 

PTAC with a cooling capacity of 9,000 

Btu/h that meets the existing Federal 

energy conservation standards has an 

installed price of $1,207 and an annual 

energy cost of $109 (cooling only). A 

typical, standard size PTHP of the same 

cooling capacity that meets the existing 

Federal energy conservation standards 

has an installed price of $1,362 and an 

annual energy cost of $209. To meet the 

new standard, DOE estimates that the 

installed price of a typical, standard size 

PTAC with a cooling capacity of 9,000 

Btu/h will be $1,229, an increase of $22. 

This price increase will be offset by an 

annual energy savings of about $3. 

Similarly, for a typical, standard size 

PTHP of the same cooling capacity to 

meet the new standard, the increase in 

installed price would be $40, offset by 

an annual energy savings of $11. 

Whereas the typical, non-standard size 

PTAC that meets the ASHRAE Standard 

90.1–1999 efficiency levels has an 

installed price of $1,570 and an annual 

energy cost of $180. 

D. Impact on Manufacturers 

Using a real corporate discount rate of 

five-percent, DOE estimates the net 

present value (NPV) of the standard size 

packaged terminal equipment industry 

to be $427 million in 2007$ and the 

NPV of the non-standard size packaged 

terminal equipment industry to be $30 

million in 2007$. DOE expects the 

impact of today’s standards on the 

industry net present value (INPV) of 

manufacturers of standard size packaged 

terminal equipment to be between a 

two-percent loss and a 14 percent loss 

(¥$8 million to ¥$61 million). Based 


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1Energy Informaton Agency. 2003 CBECS public 

use sample, where specific building activity = 

‘‘motel or inn’’ (PBAPLUS8=39). Anual electricity 

use averages about 177,700 kWh per yer. 

2This part was originally titled Part C. However, 

it was redesignated Part A–1 after Part B of Title 

III of EPCA was repealed by Public Law 109–58. 

on DOE’s interviews with the 

manufacturers of PTACs and PTHPs, 

DOE expects minimal plant closings or 

loss of employment as a result of the 

standards for both the standard size and 

non-standard size industries. 

E. National Benefits 

DOE estimates the amended energy 

conservation standards will save 

approximately 0.032 quads (quadrillion 

(1015) Btu) of energy over 30 years 

(2012–2042). This is equivalent to all 

the electricity used annually by 

approximately 500 motels.1

By 2042, DOE expects the energy 

savings from the standards to eliminate 

the need for approximately one new 82- 

megawatt (MW) power plant. These 

energy savings will result in cumulative 

greenhouse gas emission reductions of 

approximately 1.06 million tons (Mt) of 

carbon dioxide (CO2), or an amount 

equal to that produced by 

approximately 6,700 cars every year. 

Additionally, the standards will help 

alleviate air pollution by resulting in 

between approximately 90 and 2,130 

tons (0.09 and 2.13 kilotons (kt)) of 

nitrogen oxides (NOX) cumulative 

emission reductions from 2012 through 

2042. Finally, the standards will also 

alleviate air pollution by resulting in 

between approximately 0 and 0.037 tons 

of mercury (Hg) cumulative emission 

reductions from 2012 through 2042. 

The national NPV of the standard for 

standard size PTACs and PTHPs is $10 

million using a seven-percent discount 

rate and $54 million using a threepercent discount rate, cumulative from 

2012 to 2062 in 2007$. This is the 

estimated total value of future savings 

minus the estimated increased 

equipment costs, discounted to 2008. 

The benefits and costs of today’s final 

rule can also be expressed in terms of 

annualized 2007$ values over the 

forecast period 2012 through 2042. 

Using a seven-percent discount rate for 

the annualized cost analysis, the cost of 

the amended energy conservation 

standards established in today’s final 

rule for standard size PTACs and PTHPs 

is $4.7 million per year in increased 

equipment and installation costs while 

the annualized benefits are $5.7 million 

per year in reduced equipment 

operating costs. Using a three-percent 

discount rate, the cost of the amended 

energy conservation standards 

established in today’s final rule for 

standard size PTACs and PTHPs is $4.1 

million per year, whereas the benefits of 

today’s amended energy conservation 

standards are $6.5 million per year. 

F. Other Considerations 

DOE noted in the April 2008 Notice 

of Proposed Rulemaking (NOPR) that 

PTAC and PTHP equipment 

manufacturers also face a mandated 

refrigerant phaseout on January 1, 2010. 

73 FR 18858, 18860 (April 7, 2008). R– 

22, the only refrigerant currently used 

by PTACs and PTHPs, is a 

hydrochlorofluorocarbon (HCFC) 

refrigerant subject to the phaseout 

requirement. Phaseout of this refrigerant 

could have a significant impact on the 

manufacturing, performance, and cost of 

PTAC and PTHP equipment. DOE 

discussed and estimated the impacts of 

the refrigerant phaseout on PTAC and 

PTHP equipment and on the 

manufacturers of this equipment in the 

NOPR, see generally, 73 FR 18872–74, 

and today’s final rule. 

G. Conclusion 

DOE concludes that the benefits 

(energy savings, commercial customer 

LCC savings, positive national NPV, and 

emissions reductions) to the Nation of 

the amended standards for standard size 

equipment outweigh their costs (loss of 

manufacturer INPV and commercial 

customer LCC increases for some users 

of PTACs and PTHPs). DOE believes 

that these amended standards are 

technologically feasible, economically 

justified, and will save additional 

significant amounts of energy as 

compared to the savings that would 

result from adoption of the efficiency 

levels for standard size PTACs and 

PTHPs in ASHRAE Standard 90.1–1999. 

DOE also believes that the standards for 

non-standard size equipment (i.e., the 

efficiency levels in ASHRAE Standard 

90.1–1999) are technologically feasible, 

economically justified, and will save 

significant amounts of energy compared 

to the current Federal energy 

conservation standards. Finally, DOE 

concludes that today’s standards for 

PTACs and PTHPs are designed to 

achieve the maximum improvements in 

energy efficiency that are 

technologically feasible and 

economically justified. Currently, 

PTACs and PTHPs that meet the new 

standard levels are commercially 

available utilizing R–22 refrigerant. DOE 

believes that PTACs and PTHPs 

utilizing R–410A equipment at the new 

standard levels will be commercially 

available by the effective dates of the 

new standard levels. 

II. Introduction 

A. 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 Industrial 

Equipment,’’ including PTACs and 

PTHPs, the subjects of this rulemaking.2

DOE publishes today’s final rule 

pursuant to Part A–1 of Title III, which 

provides for test procedures, labeling, 

and energy conservation standards for 

PTACs and PTHPs and certain other 

equipment, and authorizes DOE to 

require information and reports from 

manufacturers. The test procedure for 

PTACs and PTHPs appears in title 10 

Code of Federal Regulations (CFR) 

section 431.96. 

EPCA established Federal energy 

conservation standards that generally 

correspond to the levels in ASHRAE 

Standard 90.1, effective October 24, 

1992, for most types of covered 

equipment listed in section 342(a) of 

EPCA, including PTACs and PTHPs. (42 

U.S.C. 6313(a)) For each type of 

equipment, EPCA directs that if 

ASHRAE Standard 90.1 is amended, 

DOE must adopt an amended standard 

at the new level in ASHRAE Standard 

90.1, unless clear and convincing 

evidence supports a determination that 

adoption of a more stringent level as a 

national standard would produce 

significant additional energy savings 

and be technologically feasible and 

economically justified. (42 U.S.C. 

6313(a)(6)(A)(ii)(II)) 

EPCA also provides that in deciding 

whether a more stringent standard is 

economically justified for equipment 

such as PTACs and PTHPs, DOE must, 

after receiving comments on the 

proposed standard, determine whether 

the benefits of such a standard exceed 

its burdens by considering the following 

seven factors to the greatest extent 

practicable: 

1. The economic impact of the 

standard on manufacturers and 

consumers of the products subject to the 

standard; 

2. The savings in operating costs 

throughout the estimated average life of 

products in the type (or class) compared 

to any increase in the price, initial 

charges, or maintenance expenses for 

the covered products that are likely to 


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result from the imposition of the 

standard; 

3. The total projected amount of 

energy savings likely to result directly 

from the imposition of the standard; 

4. Any lessening of the utility or the 

performance of the products likely to 

result from the imposition of the 

standard; 

5. The impact of any lessening of 

competition, as determined in writing 

by the Attorney General, that is likely to 

result from the imposition of the 

standard; 

6. The need for national energy 

conservation; and 

7. Other factors the Secretary of 

Energy (Secretary) considers relevant. 

(42 U.S.C. 6316(a); 42 U.S.C. 

6295(o)(2)(B)(i)–(ii)) 

EPCA also contains an ‘‘antibacksliding’’ provision, which prohibits 

DOE from prescribing any amended 

energy conservation standard that either 

increases the maximum allowable 

energy use or decreases the minimum 

required energy efficiency of covered 

equipment. (42 U.S.C. 6316(a); 42 U.S.C. 

6295(o)(1)) It is a fundamental principle 

in EPCA’s statutory scheme that DOE 

cannot amend standards downward; 

that is, DOE may not weaken standards 

that have been previously promulgated. 

Natural Resources Defense Council v. 

Abraham, 355 F.3d 179 (2d Cir. 2004). 

In addition, EPCA, as amended (42 

U.S.C. 6295(o)(2)(B)(iii)), establishes a 

rebuttable presumption that a standard 

is economically justified if the Secretary 

finds that ‘‘the additional cost to the 

consumer of purchasing a product 

complying with an energy conservation 

standard level will be less than three 

times the value of the energy (and as 

applicable, water) savings during the 

first year that the consumer will receive 

as a result of the standard,’’ as 

calculated under the test procedure in 

place for that standard. This approach 

provides an alternative path in 

establishing economic justification 

under the EPCA factors. (42 U.S.C. 

6295(o)(2)(B)(iii)) DOE considered this 

test, but believes that the criterion it 

applies (i.e., a limited payback period) 

is not sufficient for determining 

economic justification. Instead, DOE has 

considered a full range of impacts, 

including those to the consumer, 

manufacturer, Nation, and environment. 

Additionally, the Secretary may not 

prescribe an amended 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 product type (or class)’’ with 

performance characteristics, features, 

sizes, capacities, and volumes that are 

substantially the same as those generally 

available in the United States at the time 

of the Secretary’s finding. (42 U.S.C. 

6316(a); 42 U.S.C. 6295(o)(4)) 

Section 325(q)(1) of EPCA directs that 

DOE must specify a different standard 

level than that which applies generally 

to such type or class of equipment for 

any group of products ‘‘which have the 

same function or intended use, if * * * 

products within such group—(A) 

consume a different kind of energy from 

that consumed by other covered 

products within such type (or class); or 

(B) have a capacity or other 

performance-related feature which other 

products 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 products 

within that type or class. (42 U.S.C. 

6295(q)(1)(A) and (B)) In determining 

whether a performance-related feature 

justifies such a different standard for a 

group of products, DOE must consider 

‘‘such factors as the utility to the 

consumer of such a feature’’ and other 

factors DOE deems appropriate. (42 

U.S.C. 6295(q)(1)) Any rule prescribing 

such a standard must include an 

explanation of the basis on which DOE 

established such higher or lower level. 

(42 U.S.C. 6295(q)(2)) 

Federal energy efficiency 

requirements for commercial equipment 

generally supersede State laws or 

regulations concerning energy 

conservation testing, labeling, and 

standards. (42 U.S.C. 6297(a)–(c); 42 

U.S.C. 6316(a) and (b)) However, DOE 

can grant waivers of preemption for 

particular State laws or regulations, in 

accordance with the procedures and 

other provisions of section 327(d) of the 

Act, as amended. (42 U.S.C. 6297(d); 42 

U.S.C. 6316(b)(2)(D)) 

B. Background 

1. Current Standards 

As described in greater detail in the 

NOPR, 73 FR 18861–62, the current 

energy conservation standards in EPCA 

for PTACs and PTHPs apply to all 

equipment manufactured on or after 

January 1, 1994. (42 U.S.C. 6313(a)(3); 

10 CFR 431.97) Table I.2 details these 

standards. 

2. History of Standards Rulemaking for 

Packaged Terminal Equipment 

On October 29, 1999, ASHRAE 

adopted ASHRAE Standard 90.1–1999, 

which revised the efficiency levels for 

various categories of commercial 

equipment covered by EPCA, including 

PTACs and PTHPs. In amending the 

ASHRAE Standard 90.1–1989 levels for 

packaged terminal equipment, ASHRAE 

used the equipment classes contained in 

EPCA, which are distinguished by 

equipment type (i.e., air conditioner 

(PTAC) or heat pump (PTHP)) and 

cooling capacity. However, ASHRAE 

further divided these classes by wall 

sleeve dimensions, because they affect 

the energy efficiency of PTACs and 

PTHPs. Table II.1 shows the efficiency 

levels in ASHRAE Standard 90.1–1999 

for this equipment. 

TABLE II.1—ASHRAE STANDARD 90.1–1999 ENERGY EFFICIENCY LEVELS FOR PTACS AND PTHPS

Equipment class 

ASHRAE standard 90.1–1999 efficiency 

levels * Equipment Category Cooling capacity 

(Btu/h) 

PTAC ................. Standard Size ** ..................................... <7,000 .................................................... EER = 11.0 

7,000–15,000 ......................................... EER = 12.5 ¥ (0.213 × Cap ††) 

>15,000 .................................................. EER = 9.3 

Non-Standard Size † ............................... <7,000 .................................................... EER = 9.4 

7,000–15,000 ......................................... EER = 10.9 ¥ (0.213 × Cap ††) 

>15,000 .................................................. EER = 7.7 

PTHP ................. Standard Size ** ..................................... <7,000 .................................................... EER = 10.8 

COP = 3.0 

7,000–15,000 ......................................... EER = 12.3 ¥ (0.213 × Cap ††) 

COP = 3.2 ¥ (0.026 × Cap ††) 


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3U.S. Department of Energy, Office of Energy 

Efficiency and Renewable Energy. ‘‘Energy 

Conservation Program for Consumer Products: 

Screening Analysis for EPACT-Covered Commercial 

HVAC and Water-Heating Equipment Screening 

Analysis.’’ April 2000. http://www.eere.energy.gov/ 

buildings/highperformance/pdfs/screening_

analysis_main.pdf. 

TABLE II.1—ASHRAE STANDARD 90.1–1999 ENERGY EFFICIENCY LEVELS FOR PTACS AND PTHPS—Continued 

Equipment class 

ASHRAE standard 90.1–1999 efficiency 

levels * Equipment Category Cooling capacity 

(Btu/h) 

>15,000 .................................................. EER = 9.1 

COP = 2.8 

Non-Standard Size † ............................... <7,000 .................................................... EER = 9.3 

COP = 2.7 

7,000–15,000 ......................................... EER = 10.8 ¥ (0.213 × Cap ††) 

COP = 2.9 ¥ (0.026 × Cap ††) 

>15,000 .................................................. EER = 7.6 

COP = 2.5 

* For equipment rated according to ARI standards, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled products 

and evaporatively cooled products and at 85 °F entering water temperature for water-cooled products. All COP values must be rated at 47 °F 

outdoor dry-bulb temperature for air-cooled products. 

** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or 

equal to 42 inches wide. † Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide. 

ASHRAE Standard 90.1–1999 also includes a factory labeling requirement for non-standard size PTAC and PTHP equipment as follows: ‘‘MANUFACTURED FOR REPLACEMENT APPLICATIONS ONLY; NOT TO BE INSTALLED IN NEW CONSTRUCTION PROJECTS.’’ †† Cap means cooling capacity in kBtu/h at 95 °F outdoor dry-bulb temperature. 

After publication of ASHRAE 

Standard 90.1–1999, DOE analyzed 

many of its equipment categories to 

evaluate possible consideration of more 

stringent efficiency levels than those 

specified in the Standard. DOE 

summarized this analysis in a report, 

Screening Analysis for EPACT-Covered 

Commercial HVAC [Heating, Ventilating 

and Air-Conditioning] and WaterHeating Equipment (commonly referred 

to as the 2000 Screening Analysis).3 On 

January 12, 2001, DOE published a final 

rule adopting the efficiency levels in 

ASHRAE Standard 90.1–1999 for many 

types of commercial HVAC and water 

heating equipment, excluding packaged 

terminal equipment and certain other 

types of equipment. 66 FR 3336. 

Regarding PTACs and PTHPs, the 

preamble to the final rule stated that the 

2000 Screening Analysis indicated at 

least a reasonable possibility of finding 

‘‘clear and convincing evidence’’ that 

more stringent standards ‘‘would be 

technologically feasible and 

economically justified and would result 

in significant additional conservation of 

energy.’’ 66 FR 3349–50. Under EPCA, 

these are the criteria for DOE’s adoption 

of standards more stringent than the 

efficiency levels in ASHRAE Standard 

90.1. (42 U.S.C. 6313(a)(6)(A)(ii)(II)). 

More recently, DOE announced the 

availability of a technical support 

document (TSD) it developed to reassess 

whether to adopt as national standards 

certain efficiency levels that were in 

amendments to ASHRAE Standard 90.1, 

including the levels in the 1999 

amendments for PTACs and PTHPs. 71 

FR 12634 (March 13, 2006) (Notice of 

Availability). According to DOE, 

although the revised analysis in the TSD 

reduced the potential energy savings 

that might result from standards more 

stringent than the efficiency levels 

specified in ASHRAE Standard 90.1– 

1999 for PTACs and PTHPs, DOE was 

inclined to pursue standards that are 

more stringent because there was a 

possibility that clear and convincing 

evidence exists that such standards are 

warranted. Id. at 12638–39. DOE stated 

that it would explore more stringent 

efficiency levels than those in ASHRAE 

Standard 90.1–1999 for PTACs and 

PTHPs through a separate rulemaking. 

Id. at 12639. 

DOE proposed energy conservation 

standards for PTACs and PTHPs in a 

NOPR published on April 7, 2008. 73 

FR 18858. In conjunction with the 

NOPR, DOE also published on its Web 

site the complete TSD for the proposed 

rule, which incorporated the final 

analyses that DOE conducted and 

technical support documentation of 

each analysis. The NOPR TSD included 

the LCC spreadsheets, the national 

impact analysis spreadsheets, and the 

manufacturer impact analysis (MIA) 

spreadsheet—all of which are available 

on DOE’s PTAC and PTHP webpage. 

The proposed standards were as 

follows: 

TABLE II.2—NOPR PROPOSED ENERGY CONSERVATION STANDARDS FOR PTACS AND PTHPS

Equipment class 

Proposed energy conservation standards * 

Equipment Category Cooling capacity 

(Btu/h) 

PTAC ................ Standard Size ** ............................ <7,000 ........................................... EER = 11.4 

7,000–15,000 ................................ EER = 13.0¥(0.233 × Cap ††) 

>15,000 ......................................... EER = 9.5 

Non-Standard Size ........................ <7,000 ........................................... EER = 10.2 

7,000–15,000 ................................ EER = 11.7¥(0.213 × Cap ††) 

>15,000 ......................................... EER = 8.5 


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4 DOE expects the overall system efficiency of 

R–410A PTAC and PTHP equipment will be lower 

than if that equipment used R–22, which DOE 

estimated using an overall system performance 

degradation. This estimate is based on data 

submitted by manufacturers and AHRI pointing to 

a decline in performance when using R–410A 

refrigerant in place of R–22 refrigerant. 

TABLE II.2—NOPR PROPOSED ENERGY CONSERVATION STANDARDS FOR PTACS AND PTHPS—Continued 

Equipment class 

Proposed energy conservation standards * 

Equipment Category Cooling capacity 

(Btu/h) 

PTHP ................ Standard Size ** ............................ <7,000 ........................................... EER = 11.8 

COP = 3.3 

7,000–15,000 ................................ EER = 13.4¥(0.233 × Cap ††) 

COP = 3.7¥(0.053 × Cap ††) 

>15,000 ......................................... EER = 9.9 

COP = 2.9 

Non-Standard Size ........................ <7,000 ........................................... EER = 10.8 

COP = 3.0 

7,000–15,000 ................................ EER = 12.3¥(0.213 × Cap ††) 

COP = 3.1¥(0.026 × Cap ††) 

>15,000 ......................................... EER = 9.1 

COP = 2.8 

* For equipment rated according to the DOE test procedure (ARI Standard 310/380–2004), all EER values must be rated at 95 °F outdoor drybulb temperature for air-cooled equipment and evaporatively cooled equipment and at 85 °F entering water temperature for water-cooled equipment. All COP values must be rated at 47 °F outdoor dry-bulb temperature for air-cooled equipment, and at 70 °F entering water temperature for 

water-source heat pumps. 

** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or 

equal to 42 inches wide. † Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide. †† Cap means cooling capacity in kBtu/h at 95 °F outdoor dry-bulb temperature. 

The NOPR also included additional 

background information on the history 

of this rulemaking. 73 FR 18862–63. 

DOE held a public meeting in 

Washington, DC, on May 1, 2008, to 

accept oral comments on and solicit 

information relevant to the proposed 

rule. 

III. General Discussion 

A. Test Procedures 

Section 343(a) of EPCA, as amended, 

authorizes the Secretary to amend the 

test procedures for PTACs and PTHPs to 

the latest version generally accepted by 

industry or the rating procedures 

developed or recognized by the ARI, or 

ASHRAE as referenced in ASHRAE 

Standard 90.1, unless the Secretary 

determines by clear and convincing 

evidence that the latest version of the 

industry test procedure does not meet 

specific requirements. (See 42 U.S.C. 

6314(a)(4) As the NOPR explains, DOE 

has determined that its existing test 

procedure for PTACs and PTHPs does 

not need modification. 73 FR 18863. 

Accordingly, DOE has not adopted a 

revised test procedure for this 

equipment. 

B. Technological Feasibility 

1. General 

To adopt standards for PTACs and 

PTHPs that are more stringent than the 

efficiency levels in ASHRAE Standard 

90.1 as amended, DOE must determine, 

supported by clear and convincing 

evidence, that such standards are 

technologically feasible. (42 U.S.C. 

6313(a)(6)(A)(ii)(II)) DOE considers a 

design option to be technologically 

feasible if it is in use by the respective 

industry or if research has progressed to 

the development of a working 

prototype. DOE defines technological 

feasibility as follows: ‘‘Technologies 

incorporated in commercially available 

products or in working prototypes will 

be considered technologically feasible.’’ 

10 CFR part 430, subpart C, appendix A, 

section 4(a)(4)(i). 

This final rule considers the same 

design options as those evaluated in the 

NOPR. (See the final rule TSD 

accompanying this notice, Chapter 4.) 

Based on equipment literature, the 

teardown analysis, manufacturer 

interviews, and the equipment 

performance degradations provided by 

AHRI during the NOPR phase of the 

rulemaking, DOE considered the 

following design options in the final 

rule analysis: (1) Higher efficiency 

compressors; (2) increasing the heat 

exchanger area; and (3) recircuiting the 

heat exchanger coils. Since these three 

design options are commercially 

available, have been used in PTAC and 

PTHP equipment, and are the most 

common ways by which manufacturers 

improve the energy efficiency of their 

PTACs and PTHPs, DOE has determined 

that clear and convincing evidence 

supports the conclusion that all of the 

efficiency levels evaluated in this notice 

are technologically feasible. DOE further 

discusses the technical feasibility of 

PTAC and PTHP equipment utilizing R– 

410A in section IV.C. of today’s notice. 

2. Maximum Technologically Feasible 

Levels 

In order to evaluate whether energy 

conservation standards for PTACs and 

PTHPs are economically justified, DOE 

determines the maximum improvement 

in energy efficiency or maximum 

reduction in energy use that is 

technologically feasible. (42 U.S.C. 

6316(a); 42 U.S.C. 6295(p)(2)) DOE 

determined the maximum 

technologically feasible level (‘‘maxtech’’) efficiency levels in its 

engineering analysis for the NOPR. 73 

FR 18863–64. (See NOPR TSD Chapter 

5.) In the NOPR, DOE based its 

identification of the max-tech efficiency 

levels on standard size and nonstandard size PTAC and PTHP 

equipment utilizing R–22 that is 

currently available on the market. For 

the final rule, DOE revised the max-tech 

efficiency levels for standard size and 

non-standard size PTACs and PTHPs 

based on submitted comments, which 

are discussed in section IV.C of today’s 

notice. The max-tech efficiency levels 

considered for today’s final rule are 

based on the efficiency levels identified 

in the NOPR and factor performance 

degradations stemming from the switch 

to R–410A refrigerant.4 Table III.1 lists 

the max-tech efficiency levels that DOE 

identified for this rulemaking for the 


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estimated system performance of 

equipment utilizing R–410A. DOE 

discusses these levels further in section 

IV.C. 

TABLE III.1—R–410A MAX-TECH EFFICIENCY LEVELS (7,000–15,000 BTU/H EQUIPMENT CLASSES) * 

Equipment type Equipment class Cooling capacity 

(Btu/h) R–410A ‘‘Max-Tech’’ efficiency level ** 

PTAC ................ Standard Size † ............................. 9,000 ............................................. 11.5 EER 

12,000 ........................................... 10.8 EER 

Non-Standard Size †† .................... 11,000 ........................................... 10.0 EER 

PTHP ................ Standard Size † ............................. 9,000 ............................................. 11.5 EER 

3.3 COP 

12,000 ........................................... 10.8 EER 

3.1 COP 

Non-Standard Size †† .................... 11,000 ........................................... 10.0 EER 

2.9 COP 

* As discussed in the NOPR, DOE is presenting the results for two cooling capacities of standard size PTACs and PTHPs, 9,000 and 12,000 

Btu/h, which fall within the equipment classes of PTACs and PTHPs with cooling capacities of 7,000–15,000 Btu/h. 73 FR 18870–18871. 

** For equipment rated according to the DOE test procedure, all EER values would be rated at 95 °F outdoor dry-bulb temperature for aircooled products and evaporatively cooled products and at 85 °F entering water temperature for water-cooled products. All COP values must be 

rated at 47 °F outdoor dry-bulb temperature for air-cooled products and at 70 °F entering water temperature for water-source heat pumps. †Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions having an external wall opening of greater than or equal to 16 

inches high or greater than or equal to 42 inches wide, and having a cross-sectional area greater than or equal to 670 square inches. †† Non-standard size refers to PTAC or PTHP equipment with existing wall sleeve dimensions having an external wall opening of less than 16 

inches high or less than 42 inches wide, and having a cross-sectional area less than 670 square inches. 

C. Energy Savings 

DOE forecasted energy savings in its 

national energy savings (NES) analysis 

using an NES spreadsheet tool, which 

the NOPR discussed in greater detail. 

See generally, 73 FR 18864, 18876, 

18880–83, 18899. 

Among the criteria that govern DOE’s 

adoption of more stringent standards for 

PTACs and PTHPs than the amended 

levels in ASHRAE Standard 90.1, clear 

and convincing evidence must support 

a determination that the standards 

would result in ‘‘significant’’ energy 

savings. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) 

Although EPCA does not define 

‘‘significant,’’ the U.S. Court of Appeals 

for the District of Columbia indicated 

that Congress intended ‘‘significant’’ 

energy savings to mean savings that 

were not ‘‘genuinely trivial’’ in Section 

325 of the Act. Natural Resources 

Defense Council v. Herrington, 768 F.2d 

1355, 1373 (D.C. Cir. 1985). DOE’s 

estimates of the energy savings for each 

of the TSLs considered for today’s rule 

provide clear and convincing evidence 

that the additional energy savings each 

would achieve by exceeding the 

corresponding efficiency levels in 

ASHRAE Standard 90.1–1999 are 

nontrivial. Therefore, DOE considers 

these savings to be ‘‘significant’’ as 

required by 42 U.S.C. 

6313(a)(6)(A)(ii)(II). 

D. Economic Justification 

As noted earlier, EPCA provides 

seven factors to be evaluated in 

determining whether an energy 

conservation standard for PTACs and 

PTHPs is economically justified. (42 

U.S.C. 6316(a); 42 U.S.C. 

6295(o)(2)(B)(i)–(ii)) The following 

paragraphs discuss how DOE has 

addressed each of those seven factors in 

this rulemaking. 

1. Economic Impact on Commercial 

Consumers and Manufacturers 

DOE considered the economic impact 

of the standards on commercial 

consumers and manufacturers. For 

customers, DOE measures the economic 

impact as the change in installed cost 

and life-cycle operating costs, i.e., the 

LCC. (See section V.C.1 and Chapter 8 

of the TSD.) DOE investigates the 

impacts of amended energy 

conservation standards of PTACs and 

PTHPs on manufacturers through the 

manufacturer impact analysis (MIA). 

(See section V.C.2 and Chapter 13 of the 

TSD.) This factor is discussed in detail 

in the NOPR. See generally 73 FR 

18860–61, 18864–66, 18869, 18883–87, 

18893–99, 18906–07, 18910–12. 

2. Life-Cycle Costs 

DOE considered life-cycle costs of 

PTACs and PTHPs. This factor is 

discussed in detail in the NOPR. See 

generally 73 FR 18860–61, 18865, 

18876–80, 18883, 18888, 18891–93. 

DOE calculated the sum of the purchase 

price and the operating expense— 

discounted over the lifetime of the 

equipment—to estimate the range in 

LCC benefits that commercial customers 

would expect to achieve due to the 

standards. 

3. Energy Savings 

Although significant additional 

conservation of energy is a separate 

statutory requirement for imposing a 

more stringent energy conservation 

standard than the level in the most 

current ASHRAE Standard 90.1, EPCA 

also requires that DOE consider the total 

projected energy savings that will likely 

result directly from the standard in 

determining whether a standard is 

economically justified. (42 U.S.C. 

6316(a); 42 U.S.C. 6295(o)(2)(B)(i)(III)) 

DOE used the NES spreadsheet results 

in its consideration of total projected 

savings. 73 FR 18860–61, 18864, 18876, 

18880–83, 18899. DOE presents the 

energy savings at each TSL for standard 

size and non-standard size PTACs and 

PTHPs in section V.B of today’s notice. 

4. Lessening of Utility or Performance of 

Equipment 

In selecting today’s standard levels, 

DOE sought to avoid new standards for 

PTACs and PTHPs that would lessen the 

utility or performance of that 

equipment. (42 U.S.C. 6316(a); 42 U.S.C. 

6295(o)(2)(B)(i)(IV)) 73 FR 18865, 

18866–68, 18900. The design options 

considered in the engineering analysis 

of this rulemaking, which include 

higher efficiency compressors, 

increasing the heat exchanger area, and 

recircuiting the heat exchanger coils, do 

not involve changes in equipment 

design or unusual installation 

requirements that could reduce the 

utility or performance of PTACs and 

PTHPs. In the NOPR, DOE considered 


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58780 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 

5 ‘‘DOJ, No. 21 at pp 1–2’’ refers to (1) a statement 

that was submitted by the Department of Justice and 

is recorded in the Resource Room of the Building 

Technologies Program in the docket under ‘‘Energy 

Conservation Program for Commercial and 

Industrial Equipment: Packaged Terminal Air 

Conditioner and Packaged Terminal Heat Pump 

Energy Conservation Standards,’’ Docket Number 

EERE–2007–BT–STD–0012, as comment number 

21; and (2) a passage that appears on pages 1 and 

2 of that statement. 

industry concerns that one-third of the 

non-standard size market subject to the 

more stringent standards under 

ASHRAE Standard 90.1–1999 definition 

would not be able to meet the efficiency 

levels specified by ASHRAE Standard 

90.1–1999 for standard size equipment 

due to the physical size constraints of 

the wall sleeve if this equipment class 

delineation was adopted. In today’s 

final rule, DOE is adopting the 

equipment class delineations specified 

in Addendum t to ASHRAE Standard 

90.1–2007. This action should mitigate 

manufacturers’ concerns regarding the 

misclassification of non-standard 

equipment classes. DOE further 

discusses the equipment classes it is 

adopting today and the comments 

received from interested parties 

regarding equipment classes in section 

IV.A of today’s rulemaking. 

5. Impact of Any Lessening of 

Competition 

DOE considers any lessening of 

competition likely to result from 

standards. As discussed in the NOPR 

(73 FR 18865, 18900), DOE requested 

that the Attorney General transmit to the 

Secretary a written determination of the 

impact of any lessening of competition 

likely to result from the proposed 

standards, together with an analysis of 

the nature and extent of such impact. 

(42 U.S.C. 6316(a); 42 U.S.C. 

6295(o)(2)(B)(i)(V) and (B)(ii)) 

To assist the Attorney General in 

making such a determination, DOE 

provided DOJ with copies of the 

proposed rule and the TSD for review. 

(DOJ, No. 21 at p. 1–2) 5 The Attorney 

General’s response is discussed in 

section IV.K.1, and is reprinted at the 

end of today’s rulemaking. 

6. Need of the Nation To Conserve 

Energy 

In considering standards for PTACs 

and PTHPs, the Secretary must consider 

the need of the Nation to conserve 

energy. (42 U.S.C. 6316(a); 42 U.S.C. 

6295(o)(2)(B)(i)(VI)) The Secretary 

recognizes that energy conservation 

benefits the Nation in several important 

ways. The non-monetary benefits of the 

standards will likely be reflected in 

improvements to the security and 

reliability of the Nation’s energy system. 

Today’s standards also will likely result 

in environmental benefits. As discussed 

in the proposed rule, DOE has 

considered these factors in adopting 

today’s standards. See generally, 73 FR 

at 18860, 18865, 18888, 18900–02, 

18912. 

7. Other Factors 

In determining whether a standard is 

economically justified, EPCA directs the 

Secretary of Energy to consider any 

other factors that the Secretary deems to 

be relevant. (42 U.S.C. 6316(a); 42 

U.S.C. 6295(o)(2)(B)(i)(VII)) In adopting 

today’s standard, DOE considered (1) 

the impacts of setting different amended 

standards for PTACs and PTHPs, (2) the 

potential that amended standards could 

cause equipment switching (i.e., 

purchase of PTACs instead of PTHPs) 

and the effects of any such switching, 

(3) the uncertainties associated with the 

impending phaseout in 2010 of R–22 

refrigerant, and (4) the impact of 

amended standards on the manufacture 

of and market for non-standard size 

packaged terminal equipment (e.g., 

impacts on small businesses). See 

generally, 73 FR at 18860, 18865–66, 

18872–74, 18882, 18884–87, 18893–98, 

18902, 18911–12. 

IV. Analysis Methodology and 

Discussion of Comments on Analysis 

Methodology 

DOE used several analytical tools that 

it developed previously and adapted for 

use in this rulemaking. The first tool is 

a spreadsheet that calculates LCC and 

payback period (PBP). The second tool 

calculates national energy savings and 

national NPV. DOE also used the 

Government Regulatory Impact Model 

(GRIM), among other methods, in its 

MIA. Finally, DOE developed an 

approach using the National Energy 

Modeling System (NEMS) to estimate 

impacts of PTAC and PTHP energy 

efficiency standards on electric utilities 

and the environment. The NOPR 

discusses each analytical tool in detail. 

73 FR at 18866–89. 

As a basis for this final rule, DOE has 

continued to use the spreadsheets and 

approaches described above and in the 

NOPR. DOE used the same general 

methodology as applied in the NOPR, 

but revised some of the assumptions 

and inputs for the final rule in response 

to comments from interested parties. 

The following paragraphs discuss these 

revisions. 

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. DOE presented various 

subjects in the market and technology 

assessment for this rulemaking. (See the 

NOPR and Chapter 3 of the NOPR TSD.) 

These include equipment classes, 

manufacturers, quantities and types of 

equipment sold and offered for sale, 

retail market trends, and regulatory and 

nonregulatory programs. 73 FR 18866– 

69 and Chapter 3 of the NOPR TSD. In 

response to publication of the NOPR, 

DOE received comments from interested 

parties about the establishment of 

equipment classes for the rulemaking. 

1. Equipment Classes—Generally 

When evaluating and establishing 

energy conservation standards, DOE 

generally divides covered equipment 

into equipment classes by the type of 

energy used, capacity, or other 

performance-related features that affect 

efficiency. Different energy conservation 

standards may apply to different 

equipment classes. (42 U.S.C. 6316(a); 

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

PTACs and PTHPs can be divided 

into various equipment classes 

categorized by physical characteristics 

that affect equipment efficiency. Key 

characteristics that affect the energy 

efficiency of the PTAC or PTHP are 

whether the equipment has reverse 

cycle heating (i.e., air conditioner or 

heat pump), the cooling capacity, and 

the physical dimensions of the unit. 

In the NOPR, DOE presented two 

alternative methods for defining PTAC 

and PTHP equipment classes. 73 FR 

18866–18868. DOE explained the two 

alternative methods of defining the 

PTAC and PTHP equipment classes 

consistent with the delineations 

provided in ASHRAE Standard 90.1– 

1999 or Addendum t to ASHRAE 

Standard 90.1–2007 in the NOPR. Id. at 

18867. 

ASHRAE Standard 90.1–1999 refers to 

wall sleeve dimensions in two 

categories: ‘‘New Construction’’ and 

‘‘Replacement.’’ Although ASHRAE 

Standard 90.1–1999 does not describe 

‘‘New Construction,’’ Table 6.21D, 

footnote b of ASHRAE Standard 90.1– 

1999 states that ‘‘replacement’’ 

efficiencies apply only to units that are: 

(1) ‘‘Factory labeled as follows: 

Manufactured for Replacement 

Applications Only; Not to be Installed 

in New Construction Projects’’; and (2) 

manufactured ‘‘with existing wall 

sleeves less than 16 inches high and less 

than 42 inches wide.’’ Based on this 


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Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 58781 

6The Air-Conditioning and Refrigeration Institute 

(ARI) and the Gas Appliance Manufacturers 

Association (GAMA) announced on December 17, 

2007, that their members voted to approve the 

merger of the two trade associations to represent the 

interests of cooling, heating, and commercial 

refrigeration equipment manufacturers. The merged 

association became AHRI on Jan. 1, 2008. 

7A notation in the form ‘‘ECR, Public Meeting 

Transcript, No. 12 at pp. 30, 37, 182’’ identifies (1) 

an oral comment that DOE received during the May 

30, 2008, NOPR public meeting by ECR, which was 

recorded in the public meeting transcript in the 

docket for this rulemaking as comment number 12; 

and (2) a passage that appears on page 30 of that 

transcript. 

provision, DOE understands that the 

‘‘New Construction’’ category under 

ASHRAE Standard 90.1–1999 is 

residual, and covers all other PTAC and 

PTHPs. Hence, this category consists of 

equipment with wall sleeve dimensions 

greater than or equal to 16 inches high 

and greater than or equal to 42 inches 

wide, or lacking the requisite label. 

Addendum t to ASHRAE Standard 

90.1–2007 includes a new definition for 

non-standard size PTACs and PTHPs in 

place of the ‘‘replacement’’ delineation 

in ASHRAE Standard 90.1–1999. The 

new definition reads as follows: 

‘‘equipment with existing sleeves 

having an external wall opening of less 

than 16 in. high or less than 42 in. wide, 

and having a cross-sectional area less 

than 670 in 2.’’ 

2. Comments 

In the NOPR, DOE stated that 

ASHRAE must adopt AHRI’s 6

continuous maintenance proposal 

before DOE can officially use this 

definition as the basis for DOE’s 

standard because AHRI’s proposed 

definitions would effectively reclassify 

some equipment under ASHRAE 90.1– 

1999’s delineations as non-standard size 

equipment. (42 U.S.C. 6313(a)(6)(A)(ii)) 

When the NOPR was published, AHRI’s 

continuous maintenance proposal on 

PTACs and PTHPs had been approved 

by ASHRAE as Addendum t to ASHRAE 

Standard 90.1–2007. At the time of the 

NOPR, that Addendum was the subject 

of public review by ASHRAE. DOE 

stated in the NOPR that if ASHRAE 

were to adopt the Addendum before 

September 2008, which is the deadline 

by which DOE must issue a final rule for 

this rulemaking, DOE proposed to 

incorporate the modified definition 

specified by that version of the ASHRAE 

standard in its final rule. In the NOPR, 

DOE sought comment from interested 

parties on its proposal to adopt 

Addendum t to ASHRAE Standard 

90.1–2007. 73 FR 18867. 

AHRI commented that all standard 

and non-standard manufacturers who 

are AHRI members support adoption of 

Addendum t. AHRI had not received 

comments challenging the content in 

Addendum t during ASHRAE’s formal 

comment period, and ASHRAE was 

planning to adopt the Addendum 

during the ASHRAE annual meeting in 

June 2008. AHRI added that 

manufacturers believe that the 

definitions in Addendum t are needed 

to deter against the reclassification of 

large numbers of non-standard size 

PTACs and PTHPs as standard 

equipment, which will not be able to 

meet the proposed standards. (Public 

Meeting Transcript, No. 12 at p. 31–32, 

AHRI, No. 23 at pp. 6–7) 7

ECR, McQuay, Carrier, and Ice Air 

also commented that DOE should use 

the delineations within Addendum t to 

classify non-standard equipment. 

(Public Meeting Transcript (ECR and 

McQuay), No. 12 at p. 31; ECR, No. 15 

at p. 4; Carrier, No. 16 at p. 1; Ice Air, 

No. 25 at p. 5) ECR also noted that if 

DOE used the delineations in ASHRAE 

Standard 90.1–1999 to define the 

equipment classes for PTACs and 

PTHPs, approximately 50 percent of 

their equipment would be eliminated 

from the market as a result of being 

reclassified into the standard size 

category. (ECR, No. 15 at p. 4) 

ECR commented that non-standard 

equipment is burdened by space 

constraints that are more stringent than 

the constraints for standard size PTACs 

and PTHPs. ECR added that the 

delineations within ASHRAE Standard 

90.1–1999, coupled with the proposed 

standards (TSL 4), would force 

manufacturers to include more heat 

exchanger surface area within the 

limited volumes of physical chassis of 

the equipment, to use compressors 

incorporating inverter technology, and 

to use variable speed motors, which 

would result in equipment switching. 

(ECR, No. 15 at p. 2) 

AHRI, ECR, McQuay, Ice Air, and 

Cold Point also commented that nonstandard size PTACs and PTHPs meet a 

specific demand that exists in the 

market, particularly for older buildings. 

These commenters stated that if DOE 

adopted the delineations in ASHRAE 

Standard 90.1–1999, which could 

further eliminate non-standard size 

PTACs and PTHPs from the market, this 

would decrease competition and limit 

customer choices. (Public Meeting 

Transcript, No. 12 at pp. 20 (ECR), 22 

(AHRI), 38 (McQuay); AHRI, No. 23 at 

p. 7; ECR, No. 15 at p. 4; Ice Air, No. 

25 at p. 4; Cold Point, No. 18 at p. 2) 

DOE also received comments about 

the potential for creating a loophole by 

adopting Addendum t in the final rule. 

In this regard, these commenters 

supported DOE’s adoption of an 

alternative definition for non-standard 

size PTACs and PTHPs. 

Specifically, General Electric (GE) and 

the American Council for an Energy 

Efficient Economy (ACEEE) 

recommended that DOE modify the nonstandard definitions and equipment 

classes to have the wall sleeve 

dimension requirements set 

significantly below the proposed 

dimensions, consistent with the nonstandard size equipment currently on 

the market. (Public Meeting Transcript, 

No. 12 at pp. 16 (GE), 33–34 (GE), 36– 

37 (ACEEE), 208 (ACEEE); GE, No. 8 at 

p. 2; GE, No. 20 at pp. 2–3) GE asked 

DOE to make the difference in the wall 

sleeve dimensions of standard size and 

non-standard size PTACs and PTHPs 

large enough to prevent non-standard 

PTACs/PTHPs from being installed in 

standard size PTAC and PTHP 

openings. GE used the example of a 

PTAC (15.75 × 41.75 inches) that GE 

believes could easily fit inside a 

standard size PTAC wall sleeve, yet this 

unit would be classified as non-standard 

size equipment subject to less stringent 

energy conservation standards. (Public 

Meeting Transcript, No. 12 at pp. 16, 

33–34; GE, No. 8 at p. 2) 

GE stated that the wording in 

Addendum t might encourage the 

design of new PTAC and PTHP 

equipment that may circumvent the 

intent of DOE’s regulations. (Public 

Meeting Transcript, No. 12 at pp. 16, 

33–34; GE, No. 8 at p. 2) As an 

alternative, GE suggested DOE use the 

wall sleeve dimensions of the largest 

non-standard size PTAC and PTHP 

equipment currently on the market to 

define non-standard size PTACs and 

PTHPs. (Public Meeting Transcript, No. 

12 at p. 33) 

ECR, McQuay, and AHRI responded 

to concerns about the potential for a 

loophole for less efficient standard size 

equipment to enter the market if DOE 

adopts the delineations in Addendum t. 

(ECR, No. 15 at pp. 1, 4; Public Meeting 

Transcript, No. 12 at pp. 20 (ECR), 22 

(AHRI), 31–32 (AHRI), 38 (McQuay)) 

AHRI stated that the same potential 

loophole exists in the delineations 

within ASHRAE Standard 90.1–1999 for 

standard size and non-standard size 

PTACs and PTHPs. AHRI commented 

that if manufacturers want to introduce 

less efficient standard size equipment 

with wall sleeve dimensions just shy of 

the standard size limitations, 

manufacturers would have introduced 

this type of equipment already because 

this loophole has been in existence 

since 1999. However, AHRI pointed out 

that none of the manufacturers in the 

PTAC and PTHP industry have taken 


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58782 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 

8To obtain a copy of Addendum t to ASHRAE 

Standard 90.1–2007, contact the ASHRAE 

publications department at: orders@ashrae.org or 

1–(800) 527–4723. 

advantage of this potential loophole. 

AHRI also noted that Addendum t 

requires non-standard size equipment to 

be labeled to prevent misapplications of 

less efficient non-standard equipment 

entering into newly constructed 

projects. (AHRI, No. 23 at pp. 6–7) 

ECR also commented that it does not 

believe that non-standard size 

equipment will be used in newly 

constructed buildings. ECR stated that 

commercial customers would not 

purchase non-standard equipment 

because it is rated at lower efficiencies; 

rather, customers make purchases based 

on the characteristics and needs of the 

installation (i.e., wall sleeve 

dimensions). Placing non-standard size 

equipment in newly constructed 

buildings does not make economic 

sense. (ECR, No. 15 at pp. 1, 4; Public 

Meeting Transcript, No. 12 at p. 20) 

McQuay pointed out that non-standard 

equipment is needed to meet a specific 

demand that exists in the market, 

particularly for older buildings, and that 

phasing out the market would decrease 

competition and limit customer choices. 

(Public Meeting Transcript, No. 12 at p. 

38) If DOE were to adopt the 

delineations within ASHRAE Standard 

90.1–1999, ECR believes building 

owners and commercial customers 

would keep their older, much less 

efficient units in place longer because 

replacements could become unavailable. 

(ECR, No. 15 at p. 1) 

On June 22, 2008, ASHRAE Standard 

90.1’s committee voted to officially 

approve the publication of Addendum t 

to ASHRAE Standard 90.1–2007 for 

PTACs and PTHPs.8 This action 

finalizes Addendum t, which means 

that DOE can officially use this 

delineation as the basis for amended 

energy conservation standards. (42 

U.S.C. 6313(a)(6)(A)(ii)) 

DOE divides equipment classes by the 

type of energy used or by capacity or 

other performance-related features that 

affect efficiency. Different energy 

conservation standards may apply to 

different equipment classes. (42 U.S.C. 

6295(q)) When installed, PTACs and 

PTHPs are fitted into a wall sleeve. 

There is a wide variety of wall sleeve 

sizes found in different buildings. Wall 

sleeve sizes are market driven (i.e., the 

applications or facilities where the 

PTACs or PTHPs are installed is what 

determines the ‘‘market standard’’ wall 

sleeve dimension) and this factor 

requires manufacturers to offer various 

PTACs and PTHPs that can fit into 

various wall sleeve dimensions. For 

new units, the industry has 

standardized the wall sleeve dimension 

for PTACs and PTHPs in buildings over 

the past 20 years to be 16 inches high 

by 42 inches wide. Therefore, units that 

have a wall sleeve dimension of 16 

inches high by 42 inches wide are 

considered ‘‘standard size’’ equipment 

and all other units are considered ‘‘nonstandard size’’ equipment. In contrast, 

the industry does not have a common 

wall sleeve dimension that is typical for 

all older existing facilities. These 

facilities, such as high-rise buildings 

found in large cities, typically use nonstandard size equipment. In these 

installations, altering the existing wall 

sleeve opening to accommodate the 

more efficient, standard size equipment 

could include extensive structural 

changes to the building, which could be 

very costly, and is, therefore, rarely 

done. 

DOE believes that wall sleeve sizes 

are performance-related features that 

affect PTAC and PTHP efficiency. 

Manufacturers typically use various 

heat exchanger sizes in different wall 

sleeve size equipment, and the size of 

the heat exchanger directly affects the 

energy efficiency of the equipment. By 

examining the market data, DOE found 

that non-standard size PTACs and 

PTHPs typically are less efficient than 

standard size PTACs and PTHPs. 

Consequently, DOE is adopting the 

delineations in Addendum t to ASHRAE 

Standard 90.1–2007 to differentiate 

between standard size and non-standard 

size equipment. 

DOE believes the delineations within 

Addendum t will help to mitigate the 

impacts on manufacturers of nonstandard size equipment, and will not 

cause any equipment unavailability 

issues for commercial customers. DOE 

was concerned that, absent nonstandard equipment, commercial 

customers could be forced to invest in 

costly building modifications to convert 

non-standard sleeve openings to 

standard size dimensions. Alternatively, 

customers may choose to use less 

efficient through-the-wall air 

conditioners or maintain their older, 

less efficient equipment longer in the 

absence of non-standard PTACs and 

PTHPs. 

Although DOE acknowledges GE’s 

and ACEEE’s concern about the 

potential loophole in the definition, 

DOE believes that the effects of this 

loophole will be reduced due to the 

labeling requirements specified in 

Addendum t. DOE is not adopting the 

labeling requirement set forth in 

Addendum t, but believes that nonstandard manufacturers will still be 

required to use this labeling through 

some of their State building code 

regulations, which require the use of 

such labels on PTAC and PTHP 

equipment. DOE believes ASHRAE’s 

labeling requirement will deter less 

efficient equipment from entering into 

newly constructed buildings. 

Additionally, DOE agrees with AHRI’s 

assertion that if manufacturers wanted 

to introduce less standard size 

equipment with wall sleeve dimensions 

just shy of the standard size limitations 

they could have done this in today’s 

market. DOE believes the market forces 

surrounding the standardized sleeve 

size have deterred standard size 

manufacturers from producing this type 

of equipment because of the unique 

non-standard size industry and the cost 

implications of producing customized 

equipment. Further, DOE believes these 

market forces will continue to deter 

standard size manufacturers from taking 

advantage of this potential loophole 

after the adoption of the delineations in 

Addendum t to ASHRAE Standard 

90.1–2007. 

In today’s final rule, DOE incorporates 

the following definitions of standard 

size and non-standard size PTACs and 

PTHPs as presented in Addendum t to 

ASHRAE Standard 90.1-2007: 

• Standard size refers to a PTAC or a 

PTHP with wall sleeve dimensions 

having an external wall opening of 

greater than or equal to 16 inches high 

or greater than or equal to 42 inches 

wide, and having a cross-sectional area 

greater than or equal to 670 square 

inches. 

• Non-standard size refers to a PTAC 

or a PTHP with existing wall sleeve 

dimensions having an external wall 

opening of less than 16 inches high or 

less than 42 inches wide, and having a 

cross-sectional area less than 670 square 

inches. 

DOE added these two definitions of 

standard size and non-standard size to 

be codified at 10 CFR 431.2. Consistent 

with the definitions, DOE has defined 

the equipment classes for today’s final 

rule for PTACs and PTHPs (as shown in 

Table IV.1). 


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Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 58783 

TABLE IV.1—EQUIPMENT CLASSES FOR PTACS AND PTHPS IF ASHRAE ADOPTS ADDENDUM TO ASHRAE STANDARD

90.1–2007 

Equipment class 

Equipment Category Cooling capacity 

(Btu/h) 

PTAC .................................................................................... Standard Size * .................................................................... <7,000 

7,000–15,000 

>15,000 

Non-Standard Size ** .......................................................... <7,000 

7,000–15,000 

>15,000 

PTHP .................................................................................... Standard Size * .................................................................... <7,000 

7,000–15,000 

>15,000 

Non-Standard Size ** .......................................................... <7,000 

7,000–15,000 

>15,000 

* Standard size refers to PTAC or PTHP equipment with wall sleevedimensions having an external wall opening of greater than or equal to 16 

inches high or greater than or equal to 42 inches wide, and having a cross-sectional area greater than or equal to 670 square inches. 

** Non-standard size refers to PTAC or PTHP equipment with existing wall sleeve dimensions having an external wall opening of less than 16 

inches high or less than 42 inches wide, and having a cross-sectional area less than 670 square inches. 

B. Screening Analysis 

The purpose of the screening analysis 

is to evaluate the technologies that 

improve equipment efficiency, to 

determine which technologies to 

consider further, and which to screen 

out. In developing the screening 

analysis for the NOPR, DOE consulted 

with a range of parties, including 

industry, technical experts, and others 

to develop a list of technologies for 

consideration. DOE then applied the 

four screening criteria to determine 

which technologies are unsuitable for 

further consideration in the rulemaking 

(10 CFR part 430, subpart C, appendix 

A4.(a)(4) and 5.(b)). DOE presented its 

results of the screening analysis in the 

NOPR and in Chapter 4 of the NOPR 

TSD. In response to the NOPR, DOE 

received one comment about the 

technology options that it considered in 

the screening analysis. 

ACEEE commented that DOE should 

not have screened out some of the 

technology options. Instead, DOE 

should have further considered these 

options in the engineering analysis. 

(Public Meeting Transcript, No. 12 at 

pp. 49–52, 64–65) ACEEE stated that 

DOE neglected to examine other types of 

compressors (such as scroll 

compressors), electronically 

commutated motor (ECM) fans, clutched 

fan motors, micro-channel heat 

exchangers, and thermostatic expansion 

valves (TXVs). According to ACEEE, the 

compressor choices for PTACs should 

not be different from those used for 

residential refrigerators because the 

loads are similar. ACEEE added that 

micro-channel heat exchangers 

allegedly cost less to implement, require 

less refrigerant and space, and have 

been used in air conditioning 

applications within automobiles. 

(Public Meeting Transcript, No. 12 at 

pp. 50–51) 

1. Scroll Compressors 

As presented in Chapter 4 of the 

NOPR TSD, scroll compressors are an 

alternative to rotary compressors in airconditioning applications. Scroll 

compressors are more efficient than 

rotary compressors at higher cooling 

capacities than are typically found in 

packaged terminal equipment. Whereas 

rotary compressors use a rotating 

motion to compress refrigerant gases, 

scroll compressors use two nutating 

spirals—one fixed and the other 

rotating. Although scroll compressors 

can be more efficient than rotary 

compressors, they typically are more 

expensive, heavier, and larger than 

rotary compressors of the same cooling 

capacities. 

After reviewing publicly available 

equipment literature and specifications 

for scroll compressors currently 

available on the market, DOE 

determined that manufacturers typically 

produce scroll compressors with cooling 

capacities of approximately 20,000 

Btu/h or higher, and that the majority of 

equipment using scroll compressors is 

typically rated at capacities higher than 

40,000 Btu/h. Manufacturers also 

produce scroll compressors with 

housings larger than those used for 

compressors found in PTACs and 

PTHPs. DOE found that scroll 

compressors are typically built to be 16 

inches or higher in height and that 

capacity ratings do not impact scroll 

compressor heights significantly. For 

example, DOE found that the height of 

a scroll compressor only decreases by 

approximately 1.5 inches when capacity 

decreases from 80,000 to 20,000 Btu/h. 

However, significant improvements in 

efficiency, when compared to rotary 

compressors, are generally achieved 

with higher capacity models. DOE’s 

market review also found that scroll 

compressors weigh more than PTAC 

and PTHP compressors. Scroll 

compressors typically weigh 50 pounds 

or more, compared with the 25 to 30 

pounds for a PTAC/PTHP rotary 

compressor found in PTACs and PTHPs. 

Ultimately, DOE screened out scroll 

compressors as a viable design option. 

As stated in the NOPR and subsequently 

confirmed by DOE using updated data, 

manufacturers do not produce scroll 

compressors for PTAC and PTHP 

applications, making it unlikely that 

this technology option could be readily 

applied to these products. DOE also 

screened out scroll compressors because 

their manufacturers have yet to produce 

a full line of scroll compressors that 

meet the size limitations, capacity 

requirements, and voltage requirements 

of packaged terminal equipment. The 

size limitation is particularly 

problematic when given the installation 

limitations of the sleeve sizes for PTACs 

and PTHPs. 

2. ECM Motors 

As presented in Chapter 4 of the 

NOPR TSD, there are multiple types of 

electric fan motors that manufacturers 


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58784 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 

can choose from to blow air over the 

condenser and evaporator coils. Since 

the PTAC and PTHP industries have a 

relatively small number of annual 

shipments, manufacturers typically 

have to choose their motors from 

existing motor lines, rather than having 

motors customized for their specific 

needs. The type of motor and its power 

rating are typically indicative of its 

efficiency. For example, shaded pole 

motors are generally the lowest 

efficiency motors that are available, 

particularly at very low power levels. By 

contrast, the electronically commutated 

motors (ECM) or brushless permanent 

magnet motors (BPMs) are typically the 

most efficient motors for the low power 

levels. 

DOE determined that the PTAC and 

PTHP industries have not adopted 

ECMs or similar high efficiency motors 

due to size and weight constraints. The 

size limitation is particularly 

problematic when given the installation 

limitations of the sleeve sizes for PTACs 

and PTHPs, particularly for nonstandard PTACs. Ultimately, DOE 

screened out high efficiency motors as 

a viable design option. As stated in the 

NOPR and subsequently confirmed by 

DOE using updated data and through 

discussions with industry experts, DOE 

found high efficiency motors are not 

available in the full ranges of sizes 

needed for the PTAC and PTHP 

industries making it unlikely that this 

technology option could be readily 

applied to these products. DOE believes 

that, given these circumstances, it 

would not be practical to manufacture, 

install, and service this technology on 

the scale necessary to serve the relevant 

market at the time of the effective date 

of an amended standard. 

3. Fan Motors 

ACEEE commented on clutched fan 

motors, but DOE did not consider this 

technology. Although the automotive 

industry uses clutched fans to engage 

and disengage a vehicle’s cooling fan 

from the belt driven by the engine, using 

a clutched fan would not provide 

appreciable benefits within the energy 

efficiency context. In theory, these 

devices would work with PTACs and 

PTHPs to reduce the load on a single fan 

motor used to drive both the evaporator 

and the condenser fan blades when the 

refrigerating system is not operating by 

disengaging the condenser fan. In this 

way, power input could be reduced 

during times when only the indoor 

blower is running to recirculate air, or 

when electric resistance heating is being 

provided. However, the measure of 

energy use for PTACs in cooling mode 

is based on full cooling operation, in 

which both the indoor blower and the 

condenser fan must operate. Hence, 

including a clutched condenser fan 

would not provide measurable energy 

efficiency benefits. 

4. Micro-Channel Heat Exchangers 

As presented in Chapter 4 of the 

NOPR TSD, micro-channel heat 

exchangers have a rectangular 

aluminum cross-section containing 

several small channels through which 

refrigerant passes. Aluminum fins with 

a corrugated shape are brazed at a 90- 

degree angle between the rectangular 

tubes. Micro-channel heat exchanger 

designs provide more heat transfer per 

volume of heat exchanger core and can 

provide more heat transfer per unit of 

face area. In addition, these designs 

have lower airside pressure drop than 

similarly performing conventional coils, 

which reduces the fan power 

requirement. The small size and lower 

airside pressure drop that results from 

micro-channel heat exchangers provide 

opportunities to reduce the size and 

weight of the heat exchanger. This 

explains the frequent use of microchannel heat exchangers in automobile 

air-conditioning systems, where their 

small size and high performance allow 

car designers to minimize air resistance 

by lowering the leading edge of the car. 

As stated in the NOPR TSD, DOE 

screened out micro-channel heat 

exchangers from the engineering 

analysis. 73 FR 18869–70. Through 

review of publicly available literature, 

product specifications, and discussions 

with manufacturers, DOE determined 

that micro-channel heat exchangers 

have inherent problems with 

performance and condensate removal 

when installed in PTAC equipment. In 

particular, manufacturers observed that 

the smaller airflow passages between 

plate fins are subject to clogging in 

installations where debris is present, 

which can affect both the heat 

exchanger and fan motor performance. 

Additionally, for PTACs and PTHPs 

operating in cooling mode, condensate 

buildup on the evaporator of the 

installation may result in icing, which is 

harder to remove from small horizontal 

micro-channel heat exchanger passages 

than from the vertical fins found in the 

currently used tube and fin heat 

exchangers. 

For the reasons stated above, 

manufacturers have chosen not to install 

micro-channel heat exchangers in PTAC 

and PTHP designs. DOE determined that 

this technology has not yet penetrated 

the PTAC and PTHP industry and that 

design challenges still exist. At this 

time, DOE believes microchannel heat 

exchangers are technologically 

infeasible in PTAC and PTHP 

applications. DOE understands that 

manufacturers are conducting research 

into the use of micro-channel heat 

exchangers in their PTACs and PTHP 

design at this time. However, DOE does 

not have definite knowledge of whether 

their research efforts will be successful, 

of when mirco-channel heat exchangers 

could appear in either prototypes or 

equipment designs, and what the cost 

implications would be and the 

contribution to system performance 

would be. Because this technology is in 

the research stage for the PTAC 

industry, it is also not possible to assess 

whether it will have any adverse 

impacts on equipment utility to 

customers or equipment availability, or 

on customer health or safety. 

5. Thermal Expansion Valves 

Regarding ACEEE’s comments about 

TXVs, DOE did not consider this 

technology for PTACs or PTHPs. TXVs 

are expansion devices that meter the 

flow of refrigerant from the condenser to 

the evaporator at a rate equivalent to the 

amount of refrigerant being boiled off in 

the evaporator. For example, when the 

evaporator is exposed to high 

temperatures, the TXV will open to 

allow faster flow of refrigerant to match 

the higher boiling rate caused by higher 

temperatures. Alternatively, for lower 

temperatures, the TXV will reduce the 

flow rate to match the lower boiling rate 

caused by cooler temperatures. 

Typically, TXVs are installed in central 

air conditioning applications where 

equipment is rated with the seasonal 

energy efficiency ratio (SEER) metric 

and testing occurs at various operating 

conditions and temperatures. In 

contrast, PTACs and PTHPs are 

measured using the EER metric, with 

testing occurring at a constant 

temperature of 95 degrees F. Therefore, 

the energy efficiency benefits of a TXV 

will not affect the EER rating of a PTAC 

because the orifice of the TXV and the 

flow of refrigerant would remain 

constant during testing. Therefore, DOE 

does not consider TXVs to be a 

technology for improving the EER of 

PTACs and PTHPs. 

C. Engineering Analysis 

The purpose of the engineering 

analysis is to establish the relationship 

between the cost and efficiency of 

PTACs and PTHPs and to show the 

manufacturing costs required to achieve 

that increased efficiency level. As 

detailed in the NOPR, DOE’s 

engineering analysis for PTACs and 

PTHPs estimated the baseline 

manufacturer cost, as well as the 

incremental cost for equipment at 


pwalker on PROD1PC71 with RULES3
Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 58785 

9Bureau of Labor Statistics (BLS) for Copper 

(WPU102502), Cold Rolled Steel (WPU101707), and 

All Commodities (WPU00000000) as tracked in the 

Producer Price Index (PPI) database of the BLS. To 

download the data or to discover how it is gathered, 

please see http://www.bls.gov. 

efficiency levels above the baseline. 73 

FR 18870–74. DOE presented its 

engineering analysis in the NOPR, 

which included a discussion on the 

approach, the equipment classes 

analyzed, the cost model, the baseline 

equipment, the alternative refrigerant 

analysis, the cost efficiency results, and 

mappings of the EER and COP values. 

In response to DOE’s presentation of the 

engineering analysis in the NOPR, DOE 

received comments on the following 

topics: Standard size equipment 

performance in systems using R–410A 

refrigerant, max-tech efficiency levels 

analyzed for standard size equipment, 

energy-efficiency equations for standard 

size equipment, max-tech efficiency 

levels analyzed for non-standard size 

equipment, energy-efficiency for nonstandard size equipment, compressor 

availability, and the manufacturer 

production cost increases with the 

introduction and use of R–410A. DOE 

discusses each of these topics and the 

updates to the cost model for the final 

rule in the subsections below. 

1. Material Prices for the Cost Model 

In the NOPR analyses, DOE used fiveyear average material prices from years 

2002 through 2006. 73 FR 18871. For 

the final rule, DOE updated the five-year 

averages to include material price data 

from 2007 and 2008. DOE uses a fiveyear span to normalize the fluctuating 

prices experienced in the commodities 

market to screen out temporary dips or 

spikes. DOE believes a five-year span is 

the longest span that would still provide 

appropriate weighting to current prices 

experienced in the market. 

DOE basis for its belief relies on 

updated commodity pricing data, which 

point to continued increases. For 

example, the 5-year time period ending 

in mid-2008 has higher commodity 

indices than a 5-year ending in mid2006 by 10 percent, 28 percent, and 45 

percent for All Commodities, Steel, and 

Copper, respectively.9 Considering the 

significant amount of steel and copper 

in each PTAC or PTHP, incorporating 

commodity prices that reflect 5-year 

average prices as close to the current 

conditions best reflect the market 

conditions. DOE believes it is 

appropriate to use prices from 2007 and 

2008 in the data span because it more 

closely represents current PTAC and 

PTHP material prices and 

manufacturing conditions. DOE 

calculated a new five-year average 

materials price for cold rolled steel, 

aluminized steel, galvanized steel, 

painted cold rolled steel, and stainless 

steel. DOE used the U.S. Department of 

Labor’s Bureau of Labor Statistics (BLS) 

Producer Price Indices (PPIs) for various 

materials from 2004 to 2008 to calculate 

new averages, which incorporate the 

changes within each material industry 

and inflation. Finally, DOE adjusted all 

averages to 2007$ using the grossdomestic-product implicit-price 

deflator. 

As was the case for the NOPR, DOE 

developed a material-price-sensitivity 

analysis. DOE used the annual average 

price for each of the raw materials from 

2008 to calculate the current 

manufacturing product costs (MPCs). 

DOE expressed the material price 

sensitivity results in 2007$. The results 

for the material-price-sensitivity 

analysis are presented in Chapter 5 of 

the final rule TSD. 

2. Impacts of the Refrigerant Phaseout 

on PTAC and PTHP Equipment 

Performance 

a. Standard Size Equipment 

Performance in Systems Using R–410A 

Refrigerant 

GE commented that R–410A 

refrigerant has been in use for years by 

the air conditioning industry. Even 

though GE believes switching to R– 

410A refrigerant in PTAC and PTHP 

equipment will have a negative impact 

on system efficiency, GE believes the 

difference can be made up with a 

combination of higher efficiency 

compressors, motors, as well as 

increases in heat exchanger size. GE 

stated that manufacturers have been 

aware of the future requirements and 

should be far along with developments 

and designs to meet both amended 

energy conservation standards and R– 

410A requirements. GE also pointed out 

that one manufacturer has produced an 

R–410A PTHP that exceeds the 

proposed energy conservation standard 

level in the NOPR (i.e., 11.5 EER for 

standard equipment) and is currently 

available on the market. (GE, No. 20 at 

pp. 2–3; Public Meeting Transcript, No. 

12 at pp. 17–18, 66) GE noted that it is 

finishing the design and test phase for 

several models and is confident that it 

can manufacture standard size R–410A 

PTACs and PTHPs at TSL 4 efficiency 

levels (i.e., the proposed energy 

conservation standards for PTHPs in the 

NOPR). GE added that achieving an 

efficiency level that is 10 percent higher 

than the proposed standard for a 

potential ENERGY STAR category is 

also possible with existing technology. 

(GE, No. 20 at p. 3; Public Meeting 

Transcript, No. 12 at p. 66) 

In addition to comments from 

manufacturers of standard size PTACs 

and PTHPs, DOE also received 

confidential performance test data that 

characterizes the equipment 

performance degradations in standard 

size PTACs and PTHPs using R–410A 

refrigerant. The confidential data DOE 

received regarding standard size 

equipment performance suggests the 

performance degradation can vary 

greatly depending upon the cooling 

capacity of the equipment. DOE further 

addresses comments from interested 

parties and its analysis of the variation 

in standard size equipment performance 

with changes in cooling capacity in 

DOE’s discussion of the energyefficiency equations, below. 

DOE reviewed the data submitted by 

manufacturers and comments from 

interested parties and found, in general, 

the system performance degradations for 

PTAC and PTHP equipment with R– 

410A, as described in the NOPR, were 

in the middle of the range of the 

submitted data. For today’s final rule, 

DOE used the same system performance 

degradations for PTAC and PTHP 

equipment with R–410A refrigerants as 

described in the NOPR. 73 FR 18873. 

Because standard size PTAC and PTHP 

equipment utilizing R–22 refrigerants 

exists at efficiency levels well above the 

efficiency levels in ASHRAE Standard 

90.1–1999, DOE believes that 

manufacturers will be able to produce 

equipment utilizing R–410A at 

efficiency levels specified by ASHRAE 

Standard 90.1–1999 and higher 

efficiency levels in 2012. As GE noted, 

one standard size manufacturer is 

already producing R–410A equipment at 

efficiency levels above ASHRAE 

Standard 90.1–1999 efficiency levels. 

Lastly, the comments submitted by GE 

establishes that PTAC and PTHP 

prototypes utilizing R–410A refrigerant 

have been developed and will be able to 

meet the proposed efficiency levels, i.e., 

TSL 4, for standard size PTACs and 

PTHPs. 

As DOE reviewed the data submitted 

by interested parties, DOE generally 

found larger performance degradations 

at higher cooling capacities for standard 

size equipment. As a PTAC or PTHP 

increases in capacity, manufacturers 

typically increase the surface area or 

add a row to the heat exchanger in order 

to increase unit capacity. Even at larger 

cooling capacities, manufacturers have 

to maintain the same physical box 

sleeve, leaving little space for additional 

efficiency modifications (e.g., adding 

heat exchanger area). DOE considered 

the effects of the R–410A refrigerant 


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58786 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 

10The Air-Conditioning, Heating and 

Refrigerating Institute, Directory of Certified 

Product Performance for Packaged Terminal Air 

Conditioners and Packaged Terminal Heat Pumps. 

2008. <http://www.ahridirectory.org/ahriDirectory/ 

pages/home.aspx>. 

phaseout on the entire range of cooling 

capacities as part of the generation of 

the energy-efficiency equations that 

translates the results for the 

representative cooling capacities to the 

entire cooling capacity range. See 

section IV.C.2.c for additional details on 

how DOE extended the results for the 

representative cooling capacities to the 

full range of cooling capacities for 

standard size PTACs and PTHPs. 

b. ‘‘Max-Tech’’ Efficiency Levels 

Analyzed for Standard Size Equipment 

AHRI and the People’s Republic of 

China, through its WTO/TBT National 

Notification and Enquiry Center (PRC), 

commented that the max-tech levels are 

inaccurate because they are based on R– 

22 refrigerant and there is no equipment 

in the 2008 AHRI Directory of Certified 

Product Performance (AHRI Certified 

Directory) 10 operating with R–410A 

refrigerant. AHRI and the PRC also 

commented about the difficulty in 

reaching the max-tech efficiency levels 

with R–410A refrigerant and assert that 

attaining those efficiency levels is not 

possible at this time. (Public Meeting 

Transcript, No. 12 at pp. 168–169; PRC, 

No. 17 at p. 3) 

DOE agrees that with the prohibition 

on R–22 refrigerant, and the expected 

use of R–410A refrigerant as the most 

likely alternative, system performance 

will decline. The max-tech efficiency 

level should be based on the most likely 

refrigerant, which is R–410A. 

Accordingly, DOE revised the max-tech 

efficiency levels for standard size 

PTACs and PTHPs in the final rule 

analysis. DOE applied the system 

performance degradations described in 

the NOPR to the AHRI certified market 

data for standard size equipment. (See 

graphs in Chapter 5 of the final rule 

TSD.) DOE used the modified market 

data to estimate the max-tech efficiency 

levels corresponding to current models 

utilizing R–410A and has identified 

these efficiency levels in section III.B for 

the representative cooling capacities. 

DOE estimates that these performance 

degradations will fall within five to 

eight percent depending on cooling 

capacity when compared to an R–22 

baseline. 

c. Energy-Efficiency Equations for 

Standard Size Equipment 

In response to the NOPR, DOE also 

received a comment on its approach for 

calculating the energy efficiency 

equations for standard size PTACs and 

PTHPs. Carrier commented that the 

engineering extrapolations might not 

provide an accurate view of the maxtech efficiency levels for larger size 

equipment. In particular, Carrier 

commented that the PTAC efficiency 

levels proposed in the NOPR are 

achievable, but the PTHP proposed 

efficiency levels in the NOPR may be 

unachievable in equipment with a 

cooling capacity of 12 kBtu/h and 

above. (Carrier, No. 16 at p. 2) 

DOE further considered the effects of 

R–410A on system performance for 

larger cooling capacities in the 

engineering analysis. DOE found that as 

a standard size PTAC or PTHP increases 

in capacity, manufacturers typically 

increase the coil surface area or add a 

coil row to the heat exchanger in order 

to increase unit capacity. Manufacturers 

of standard size PTACs and PTHPs 

maintain the same physical box sleeve 

(i.e., 42 inches by 16 inches) across all 

models regardless of cooling capacity. 

This sleeve size is an established 

common sleeve size that allows 

standardization across the industry. 

This common sleeve size allows endusers to simply slide replacement units 

into existing wall sleeve openings. 

However, the standard size wall sleeve 

imposes a limitation on the total volume 

available into which all components 

must fit. Manufacturers add heat 

exchanger coil area or coil volume to 

either increase the cooling capacity or to 

obtain higher efficiencies. This fixed 

volume limits the size of the box into 

which the unit’s components must fit. 

In turn, this fixed volume limits the size 

of heat exchangers and other 

components that can be used to increase 

efficiency and there are accompanying 

decreases in thermodynamic returns 

when making such changes. Thus, 

higher capacity units often have lower 

energy efficiency potentials due to the 

size constraints of the box sleeve. 

In order to consider the effects of the 

refrigerant phaseout on larger capacity 

units, DOE reviewed the market data for 

standard size equipment in the AHRI 

Certified Directory. DOE applied the 

efficiency degradations distinguished by 

cooling capacity ranges estimated in the 

engineering analysis to each of the 

models in the AHRI Certified Directory. 

DOE used these data to estimate the 

overall system performance of the 

models in the AHRI Certified Directory 

utilizing R–410A refrigerant. From these 

data, DOE plotted each TSL it 

considered as part of the final rule to see 

if there were models in the full range of 

cooling capacity with estimated 

performance utilizing R–410A 

refrigerant that would meet the TSL 

being considered. 

For TSL A, which is the amended 

standard level for standard size PTACs 

and PTHPs, DOE adjusted the slope of 

the energy-efficiency equation from the 

revised slopes calculated in the NOPR 

for TSLs 1 through 7. This adjustment 

was based on manufacturer comment 

and DOE data pointing to the reduced 

opportunities for achieving greater 

efficiencies for larger capacity PTAC 

and PTHP equipment. By revising the 

slope in this manner, DOE could create 

and ultimately, adopt, a standard level 

that is more stringent for lower cooling 

capacities, where manufacturers have 

additional physical space to add 

efficiency improvements, but is less 

stringent for higher cooling capacities, 

where manufacturers are physically 

constrained by the physical dimensions 

of the box sleeve and less able to 

introduce efficiency improvements. See 

Chapter 9 of the final rule TSD for 

additional details and graphic 

demonstrations of the energy-efficiency 

equations for each TSL, including 

today’s amended energy conservation 

standard for standard size PTACs and 

PTHPs. 

d. Efficiency Levels Analyzed for NonStandard Size Equipment 

In the NOPR, DOE explicitly analyzed 

one cooling capacity of non-standard 

equipment (i.e., 11,000 Btu/h). Based 

upon this cooling capacity, DOE 

demonstrated a typical design option 

pathway a manufacturer could use to 

increase the efficiency of its nonstandard PTAC and PTHP equipment. 

To account for the potential loss of 

system efficiency as a result of the R– 

22 refrigerant phaseout, DOE applied an 

overall system degradation of 6.8 

percent, which effectively shifted the 

cost-efficiency curve to the left (in the 

direction of decreasing efficiency for the 

same cost). Thus, for any given 

efficiency level, the MPC increase will 

be greater when R–410A refrigerants are 

used. By degrading expected system 

performance, DOE accounts for the shift 

in the baseline performance that a 

system converted to R–410A use 

typically exhibits. Using the design 

option pathway described in the 

engineering analysis, the maximum 

efficiency level analyzed is 10.0 EER for 

non-standard equipment with a cooling 

capacity of 11,000 Btu/h using R–410A. 

e. Energy-Efficiency Equations for NonStandard Size Equipment 

In response to the NOPR, DOE 

received several comments on its 

approach for calculating the energyefficiency equations for non-standard 


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Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 58787 

size PTACs and PTHPs. Specifically, 

DOE retained the ASHRAE Standard 

90.1–1999 slope from the energyefficiency equation, which characterizes 

the relationship between EER and 

cooling capacity for non-standard 

PTACs and PTHPs in the NOPR. 73 FR 

18890–91. 

ECR and AHRI commented that they 

are particularly concerned about 

reaching the efficiency levels for the 

larger capacity, non-standard size 

equipment. (AHRI, No. 23 at pp. 4–5; 

Public Meeting Transcript (ECR), No. 12 

at p. 170) ECR specifically commented 

that it is concerned about the 

methodology DOE used to develop the 

energy-efficiency equations for nonstandard equipment. (ECR, No. 15 at p. 

2) ECR and Ice Air commented that the 

proposed energy conservation standard 

for non-standard PTHPs is too high for 

all capacities considering the system 

performance degradations from 

switching to R–410A refrigerant. (Public 

Meeting Transcript, No. 12 at pp. 56–60; 

Ice Air, No. 25 at p. 2) 

DOE further considered the effects of 

R–410A on system performance in the 

engineering analysis for larger cooling 

capacities of non-standard PTACs and 

PTHPs. As explained above, DOE found 

that as a non-standard size PTAC or 

PTHP increases in capacity, 

manufacturers typically increase the 

coil surface area or add a coil row to the 

heat exchanger in order to increase unit 

capacity. The fixed volume of the box 

sleeve imposes a physical limit on the 

size of heat exchangers and other unit 

components that can be used to increase 

efficiency. Thus, higher capacity units 

often have lower energy efficiency 

potential due to the size constraints of 

the box. 

In order to consider the effects on 

larger capacity units, DOE reviewed the 

market data for non-standard size 

equipment in manufacturer equipment 

catalogs. DOE applied the efficiency 

degradations distinguished by cooling 

capacity ranges estimated in the 

engineering analysis to each of the nonstandard models offered for sale and 

described in manufacturer equipment 

catalogs. DOE used this data to estimate 

the overall system performance of the 

models on the market utilizing R–410A 

refrigerant. DOE was able to plot each of 

the TSLs it considered as part of the 

final rule (i.e., TSL 1 through 5) to see 

if there were models in the full range of 

cooling capacities with estimated 

performance utilizing R–410A 

refrigerant that would meet the TSL 

being considered. These plots 

demonstrated the specific cooling 

capacities where the TSL or amended 

standard would be eliminating all of the 

models from the market using the 

estimated R–410A performance. See 

Chapter 9 of the final rule TSD for 

additional details and graphic 

demonstrations of the energy-efficiency 

equations for each TSL, including 

today’s amended energy conservation 

standard for non-standard size PTACs 

and PTHPs. 

DOE further considered the effects of 

the refrigerant phaseout on larger 

cooling capacities when weighing the 

benefits and the burdens for nonstandard equipment. See section V.D for 

additional information. 

f. Compressor Availability 

AHRI, Carrier, Ice Air, ECR, and 

Goodman stated that the true impact on 

PTAC and PTHP equipment efficiency 

levels cannot currently be assessed 

because the lack of available 

components across the range of 

equipment capacities prevents 

comprehensive equipment testing. 

These manufacturers also stated that R– 

410A compressors are not available in 

all required capacities and voltages. 

Further, compressor manufacturers have 

not committed to improving compressor 

performance of rotary compressors. 

(Public Meeting Transcript (ECR), No. 

12 at p. 68–69; Public Meeting 

Transcript (Goodman), No. 12 at p. 174; 

AHRI, No. 23 at p. 4; Carrier, No. 16 at 

p. 5; Ice Air, No. 25 at pp. 1–2) 

As DOE presented in the NOPR, DOE 

found the availability of R–410A 

compressors in a wide range of 

efficiencies and voltages remains 

uncertain. Several compressor 

manufacturers make R–22 PTAC and 

PTHP compressors of different 

capacities, voltages, and efficiencies for 

standard and non-standard equipment. 

As the market transitions to the use of 

R–410A, manufacturers may only 

develop and offer one line of 

compressors for PTACs and PTHPs. In 

engineering interviews conducted for 

the NOPR, compressor manufacturers 

commented on the uncertainties 

surrounding R–410A compressors and 

their performance characteristics when 

compared to R–22 compressors. 73 FR 

18874. DOE noted in the NOPR that 

compressor manufacturers stated in 

interviews that they expect to offer R– 

410A compressors at only one efficiency 

level in the initial stages of the R–22 

refrigerant phaseout, which could 

further reduce compressor options for 

PTAC and PTHP manufacturers. Id. 

In response to comments and the 

uncertainty surrounding compressor 

options for manufacturers, DOE gave 

particular attention to the PTAC and 

PTHP efficiency levels that cannot be 

met with current technologies and 

practices with R–410A in weighing the 

benefits and burdens of the various 

TSLs. However, DOE notes that GE 

stated its working prototypes have 

experienced significantly less 

performance degradation due to R–410A 

conversion than was modeled in the 

engineering analysis. (GE, No. 20 at p. 

2) Based on manufacturer feedback 

during interviews and historic 

precedent in other air-conditioning 

markets where similar refrigerant 

transitions have taken place, DOE 

acknowledges that the R–410A 

compressors available for use in PTAC 

and PTHP equipment could be less 

efficient than similar compressors that 

use R–22 refrigerant at the time of the 

R–22 phaseout. Even though DOE 

received comments during engineering 

interviews stating compressor 

manufacturers may only offer one rotary 

compressor line when the refrigerant 

phaseout occurs, DOE believes 

compressor manufacturers will continue 

their development efforts and 

eventually offer compressors in the full 

range of cooling capacities, voltages, 

and efficiencies as they do today. 

Similar market transformations have 

occurred in other industries and while 

the initial set of compressors were less 

efficient, the markets eventually 

matured to offer manufacturers a variety 

of compressors. See Chapter 5 of the 

TSD for additional information. In 

addition, DOE believes the amended 

energy conservation standards being 

adopted in today’s final rule will aid the 

PTAC and PTHP industry and provide 

compressor manufacturers with target 

efficiencies for which they can 

concentrate their research and 

development efforts. 

3. Manufacturer Production Cost 

Increases With R–410A 

Goodman stated that DOE’s estimate 

of a two percent manufacturing cost 

increase for converting standard size 

PTAC and PTHP equipment to utilize 

R–410A refrigerant is too low. (Public 

Meeting Transcript, No. 12 at pp. 46–47, 

74) 

Goodman misstates DOE’s estimate. 

DOE did not use a two percent cost 

increase. To derive the baseline MPCs 

for the R–410A PTACs and PTHPs used 

in the NOPR, DOE estimated the 

R–410A refrigerant pricing, R–410A 

compressor pricing, as well as other 

design changes necessary to 

accommodate the alternative refrigerant, 

and incorporated them into the same 

cost model used for the R–22 

engineering analysis. Based on technical 

journals and manufacturer interviews, 

DOE increased the tube wall thicknesses 

of all heat exchangers by 25 percent to 


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58788 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 

11This is the price at which the manufacturer can 

recover both production and non-production costs 

and earns a profit. 

account for the higher pressures 

associated with R–410A refrigerant. 

DOE also used a refrigerant price for 

R–410A based upon cost estimates from 

refrigerant suppliers and engineering 

interviews with manufacturers. During 

engineering interviews, PTAC and 

PTHP equipment and component 

manufacturers stated that compressor 

prices would increase between 10 

percent and 20 percent from current 

R–22 compressor prices. To incorporate 

manufacturers’ comments, DOE 

estimated that compressor costs would 

increase by 15 percent. Using the above 

estimates, DOE calculated the baseline 

manufacturer selling price (MSPs) 11 of 

R–410 standard size equipment to be at 

least 10 percent more than its’ R–22 

counterpart, on average. See Chapter 5 

of the final rule TSD for additional 

details of the R–410A analysis and 

results. See TSD, Chapter 5, Section 5.8 

(detailing representative capacities of 

standard size equipment using R–410A). 

Accordingly, DOE believes 

Goodman’s statement mischaracterizes 

the estimated manufacturing cost 

increases in the NOPR. DOE has 

continued to use the same methodology 

as presented in the NOPR to develop the 

R–410A manufacturer production costs 

for both standard size and non-standard 

size equipment. After DOE revised the 

cost model in response to comments 

from interested parties, DOE calculated 

the baseline MSPs to be at least 15 

percent more than its R–22 counterpart, 

on average, for standard size PTAC and 

PTHP equipment. Additional details 

and results can be found in section 5.8 

of Chapter 5 of the final rule TSD. 

D. Energy Use Characterization 

The building energy use 

characterization analysis assessed the 

energy savings potential of PTAC and 

PTHP equipment at different efficiency 

levels. The analysis estimates the energy 

use of PTACs and PTHPs at specified 

energy efficiency levels through energy 

use simulations for key commercial 

building types across a range of climate 

zones. The energy simulations yielded 

hourly estimates of building energy 

consumption, including lighting, plug 

loads, and air-conditioning and heating 

equipment. The analysis extracted the 

annual energy consumption of the 

PTACs and PTHPs for use in subsequent 

analyses, including the LCC, PBP, and 

NES. 

DOE did not consider a rebound effect 

in the final rule analysis when 

determining the reduction in energy 

consumption of PTAC and PTHP 

equipment due to increased efficiency. 

The rebound effect occurs when a piece 

of equipment is made more efficient 

such that the operating costs come 

down to a point that either the use of 

the product increases or the market 

increases, resulting in lower than 

expected energy savings. Because the 

user of the equipment (e.g., the 

customer in a hotel room) does not pay 

the utility bill, DOE assumed that 

increasing the efficiency of the 

equipment will not affect the usage or 

market for the equipment and, as a 

result, no rebound effect would occur. 

DOE requested comment on this 

assumption in the NOPR. 73 FR 18876. 

The commenters all agreed that there 

would be no rebound effect for PTACs 

and PTHPs. (Public Meeting Transcript 

(ECR), No. 12 at p. 138, GE, No. 8 at p. 

2, Carrier, No. 16 at p. 2) Based on the 

above, DOE did not incorporate a 

rebound effect into the final rule 

analysis. 

E. Life-Cycle Cost Analysis 

For each efficiency level analyzed, the 

LCC analysis requires input data for the 

total installed cost of the equipment, its 

operating cost, and the discount rate. 

Table IV.2 summarizes the inputs and 

key assumptions used to calculate the 

customer economic impacts of all 

energy efficiency levels analyzed in this 

rulemaking. DOE also calculated the 

PBP of the TSLs relative to a baseline 

efficiency level. The PBP measures the 

amount of time it takes the commercial 

customer to recover the assumed higher 

purchase expense of more energy 

efficient equipment through lower 

operating costs. Similar to the LCC, the 

PBP is based on the total installed cost 

and operating expenses, and is 

calculated as a range of payback periods 

depending on the probability 

distributions of the two key inputs (i.e., 

the supply chain markups and where 

the unit is likely to be shipped). Unlike 

its calculation of the LCC, DOE’s 

calculation of the PBP considered only 

the first year’s operating expenses. 

Because the PBP does not account for 

changes in operating expense over time 

or the time value of money, it is also 

referred to as a simple payback period. 

Aside from the installation cost, the 

primary change for the final rule 

analysis affecting PBP is the electricity 

price forecasted for 2012 based on the 

2007 EIA State energy price data and the 

AEO2008 electricity price forecasts. 

Chapter 8 of the TSD discusses the PBP 

calculation in more detail. 

TABLE IV.2—FINAL RULE INPUTS AND KEY ASSUMPTIONS USED IN THE LCC AND PBP ANALYSES

Inputs NOPR description Changes for final rule 

Overall 

LCC Reporting ..................... All cost inputs and LCC analysis and reporting done in 

2006 dollars (2006$).

Updated cost inputs and LCC reporting to 2007 dollars 

(2007$). 

Affecting Total Installed Cost 

Equipment Price ................... Derived by multiplying MSP (from the engineering analysis) by wholesaler markups and contractor markups 

plus sales tax (from markups analysis). Used the 

probability distribution for the different markups to describe their variability.

All MSPs updated to 2007. Updated wholesaler markup 

to use 2007 industry (Heating, Airconditioning and 

Refrigeration Distributors International (HARDI)) data. 

Sales tax data updated to 2008. Used State population 

weights to determine distribution of sales updated to 

2007 census data. 

Installation Cost ................... Includes installation labor, installer overhead, and any 

miscellaneous materials and parts, derived from RS 

Means CostWorks 2007.

Used RS Means CostWorks 2008 data to update installation costs. 


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Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 58789 

12R.S. Means Company, Inc. 2007. RS Means 

CostWorks 2007. Kingston, Massachusetts. 

TABLE IV.2—FINAL RULE INPUTS AND KEY ASSUMPTIONS USED IN THE LCC AND PBP ANALYSES

Inputs NOPR description Changes for final rule 

Affecting Operating Cost 

Annual Energy Use .............. Derived from whole-building hourly energy use simulation for PTACs or PTHPs in a representative hotel/ 

motel building in various climate locations (from energy use characterization analysis). Used annual 

electricity use per unit. Used the probability distribution to account for which State a unit will be shipped 

to, which in turn affects the annual energy use.

No change. 

Electricity Price .................... Calculated average commercial electricity price in each 

State, as determined from DOE Energy Information 

Administration (EIA) data for 2006. Used the 

AEO2007 forecasts to estimate the future electricity 

prices. Used the probability distribution for the electricity price.

Used EIA data for 2007 to update the analysis for average electricity price by state. Used the AEO2008 

electricity price forecasts to calculate future prices. 

Maintenance Cost ................ Annual maintenance cost did not vary as a function of 

efficiency.

Annual maintenance costs updated to use RS Means 

CostWorks 2008 data. 

Repair Cost .......................... Estimated the annualized repair cost for baseline efficiency PTAC and PTHP equipment as $15, based on 

costs of extended warranty contracts for PTACs and 

PTHPs (Chapter 8 of the TSD). Assumed that repair 

costs would vary in direct proportion with the MSP at 

higher efficiency levels because it generally costs 

more to replace components that are more efficient.

No change. 

Affecting Present Value of Annual Operating Cost Savings 

Equipment Lifetime .............. Used the probability distribution of lifetimes, with mean 

lifetime for each of four equipment classes assumed 

to be 10 years based on literature reviews and consultation with industry experts.

No change. 

Discount Rate ...................... Mean real discount rates ranging from 5.7% for owners 

of health care facilities to 8.2% for independent hotel/ 

motel owners. Used the probability distribution for the 

discount rate.

Used 2008 financial data discount rate calculations to 

update discount rates. 

Mean real discount rates ranging from 5.53% for owners of large motel/hotel chains to 8.14% for offices. 

Date Standards Become Effective.September 30, 2012 (4 years after the publication of 

the final rule).

No change. 

Analyzed Efficiency Levels 

Analyzed Efficiency Levels .. Baseline efficiency levels (ASHRAE Standard 90.1– 

1999) and five higher efficiency levels above the 

baseline for six equipment classes. (DOE also considered levels that were combinations of efficiency 

levels for PTACs and PTHPs.) 

No change for standard size PTAC and PTHP equipment classes. 

Only three efficiency levels above the baseline analyzed for non-standard size equipment classes. 

For this final rule, DOE did not 

introduce changes to the life-cycle cost 

methodology described in the NOPR. 

However, as the following sections 

discuss in more detail, DOE revised the 

inputs to the LCC analysis. 

1. Equipment Prices 

The price of a PTAC or PTHP reflects 

the application of distribution channel 

markups and the addition of sales tax to 

the MSP as described in the NOPR. 

Modifications made for the final rule 

include using the latest MSP data in 

2007$ and incorporating changes to the 

material prices discussed previously, 

updating the wholesale markups to use 

2007 data available from the HARDI 

2007 Profit Report, updating State sales 

tax data to 2008 data from the Sales Tax 

Clearing House Web site, and updating 

State population data (used for 

allocating national shipments to Statelevel shipments) to use 2007 

information from the U.S. Census 

Bureau. 

2. Installation Costs 

For the NOPR, DOE derived 

installation costs for PTACs and PTHPs 

from data provided in RS Means 

CostWorks 2007 (RS Means).12 For the 

final rule, DOE updated the installation 

costs using the RS Means CostWorks 

2008 data. Several commenters gave 

their views on whether higher 

installation costs should be assumed for 

PTHP equipment compared with PTAC 

equipment. Goodman commented that 

drain systems for PTHP installations as 

required by several of the building 

codes might be fairly expensive, 

resulting in higher installation costs for 

PTHP compared to PTAC equipment. 

Goodman pointed out that the odds of 

replacing a PTAC with a PTHP are low 

because of the additional cost to add 

drains during equipment replacement. 

(Goodman, No 8.4 at p. 116) GE 

commented that DOE does not need to 

include a significant cost in the LCC for 

a drainage system because several 

manufacturers offer low cost kits and 

special models that remove moisture 

without the use of a drainage system. 

(GE, No. 20 at p. 3) Since there was 

differing opinion with regard to whether 

higher installation costs would be 

required for PTHP equipment and since 

these installation costs were held 

constant for all efficiency levels and 

would not affect the LCC savings or 

NPV figures calculated for higher 


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13EIA’s CBECS 2003 is the most recent version 

of this data set. 

efficiency PTHP or PTAC standards, 

DOE did not further modify the 

installation costs beyond what was 

reflected in the RS Means CostWorks 

data. 

3. Annual Energy Use 

DOE estimated the electricity 

consumed in kilowatt hours per year 

(kWh/year) by the PTAC and PTHP 

equipment based on the whole-building 

energy use characterization as described 

in the NOPR. 73 FR 18876. DOE also 

used the same energy use data and 

characterization developed for the 

NOPR analysis in the final rule. See 

Chapter 7 of the NOPR and FR TSDs for 

additional information. 

4. Electricity Prices 

Electricity prices are needed to 

convert the electric energy savings into 

energy cost savings. DOE updated the 

State-by-State average electricity price 

information for the commercial sector to 

reflect 2007 data available from EIA. 

DOE further adjusted these prices to 

reflect average electricity prices for the 

four types of businesses DOE identified 

that use PTAC and PTHP equipment. 

DOE identified these businesses using 

Commercial Buildings Energy 

Consumption Survey (CBECS) 2003 

data,13 as described in the NOPR. To 

develop the LCC distributions, DOE 

continued to use a probability 

distribution to determine not only 

which State received the shipment of 

equipment, but also which business 

types would purchase the equipment 

and what electricity price they would 

pay. State populations formed the basis 

for allocating the equipment shipment 

distribution to different States. DOE 

updated these State-by-State population 

data with 2007 data published by the 

U.S. Census. The State-average effective 

prices (2007$) range from approximately 

5.1 cents per kWh to approximately 28.0 

cents per kWh. Chapter 8 of the TSD 

details the development and use of 

State-average electricity prices by 

business type. 

The electricity price trend provides 

the relative change in electricity prices 

for future years to 2042. DOE applied 

the AEO2008 reference case as the 

default scenario and extrapolated the 

trend in values from 2020 to 2030 of the 

forecast to establish prices for 2030 to 

2042, as in the NOPR. DOE provided a 

sensitivity analysis of the LCC savings 

and PBP results to future electricity 

price scenarios. Because EIA did not 

publish its high- and low-growth 

forecasts in time for incorporation into 

this final rule, DOE developed high- and 

low-growth electricity forecasts 

corresponding to the AEO2008 

forecasts. DOE calculated the ratio of the 

AEO2007 high- or low-growth 

forecasted electricity price to the 

AEO2007 reference case forecast for 

each year. DOE then applied those 

ratios, respectively, to the AEO2008 

reference case prices. 

5. Maintenance Costs 

Maintenance costs are the customer’s 

costs to keep equipment in top 

operating condition. For the NOPR, DOE 

estimated annual routine maintenance 

costs for PTAC and PTHP equipment at 

$50 per year per unit. DOE explained 

that this estimate was based on 

statements made during informational 

interviews with manufacturers. Because 

data were not available to indicate how 

maintenance costs vary with equipment 

efficiency, DOE thus determined to use 

this preventative maintenance costs that 

remain constant as equipment efficiency 

is increased. 73 FR 18879. For the final 

rule, DOE updated the maintenance 

costs to reflect data for packaged 

terminal equipment available in RS 

Means Costworks 2008. 

In the NOPR, DOE specifically 

requested comments on its estimate for 

maintenance costs and whether the 

assumptions made would be the same 

under R–410A. GE commented that 

repair and maintenance costs (primarily 

cleaning) would be fixed costs and 

handled either in house or contracted 

out. GE’s experience working with their 

customers is that maintenance costs are 

not a function of equipment efficiency, 

even though GE equipment efficiencies 

have increased nearly 10% in the past 

5 years. (Public Meeting Transcript, No. 

12 at p. 99) Goodman commented that 

third-party servicers or hoteliers 

themselves may be better sources of 

maintenance cost data than 

manufacturers. (Public Meeting 

Transcript, No. 12 at pp. 111–112) AHRI 

commented that maintenance costs will 

increase with heat exchanger surface 

area that is commensurate with higher 

efficiency equipment. (Public Meeting 

Transcript, No. 12 at pp. 97–98) 

Goodman expressed concerns over 

condenser maintenance if 

manufacturers use closer fin spacing or 

three or four row coils due to the slinger 

ring throwing water on the coil and dirt 

buildup. Goodman also pointed out that 

dirty condensers can degrade 

compressors through overheating. This 

compressor degradation is a long-term 

impact not improved by coil cleaning. 

(Public Meeting Transcript, No. 12 at 

pp. 111–112) ACEEE commented that 

equipment redesigns are likely to result 

in reduced repair costs, which would 

offset any additional maintenance costs. 

(Public Meeting Transcript, No. 12 at p. 

98) 

Although opinions were expressed 

that maintenance costs might increase 

as a function of efficiency level, this 

appears not to be the case in GE’s 

experience. Accordingly, DOE decided 

to use the Means CostWorks 2008 

estimate of preventive maintenance 

costs, which remain constant as 

equipment efficiency increases. 

6. Repair Costs 

The repair cost is the customer’s cost 

of replacing or repairing components 

that have failed in the PTAC and PTHP 

equipment. DOE estimated annual 

repair costs for the final rule in the same 

way that it estimated annual repair costs 

for the NOPR. DOE estimated the 

annualized repair cost for baseline 

efficiency PTAC and PTHP equipment 

at $15, based on costs of extended 

warranty contracts for PTACs and 

PTHPs. After analyzing these data, DOE 

determined that repair costs would 

increase in direct proportion with 

increases in equipment prices. See 

Chapter 8 of the TSD for additional 

details. 

In the NOPR, DOE specifically 

requested comment on its estimation for 

repair costs, as well as installation and 

maintenance costs. The comments DOE 

received addressed several areas. GE 

commented that it does not expect the 

compressor service call rate to increase 

for higher efficiency equipment because 

GE already has rotary compressors in 

service. (GE, No. 20 at p. 2) Carrier 

stated that it would expect to see 

slightly higher repair costs overall for 

R–410A refrigerant equipment because 

of the more hygroscopic nature of R– 

410A. (Carrier, No. 16 at p. 3) ECR 

warned that if efficiency standards are 

set too high, existing R–22 refrigerant 

equipment may be kept in place longer, 

which may result in increased repair 

costs. Although DOE recognizes that 

overall repair costs may increase under 

R–410A, commenters provided no data 

to refine DOE’s repair cost estimate for 

equipment using R–410A refrigerant. 

Because no commenter expressed 

disagreement with DOE’s methodology 

of scaling repair costs with efficiency 

level, DOE continued to use the same 

approach in the final rule. DOE 

recognizes that the extension of life for 

R–22 equipment is possible under any 

scenario, but has no data with which to 

refine its shipment or repair cost 

analysis. DOE believes that the impact 

of life extension for R–22 equipment 

would, if it occurs, primarily affect the 

energy savings estimate. However, 


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14The Weibull distribution is a continuous 

probability distribution used to understand the 

failure and durability of equipment. It is popular 

because it is extremely flexible and can accurately 

model various types of failure processes. A twoparameter version of the Weibull was used and is 

described in chapter 8 of the TSD, 

because extension of life generally 

increases the period over which a 

purchased product can provide services 

regardless of efficiency level or 

refrigerant, DOE does not expect a 

significant impact on the economics of 

higher-efficiency PTAC and PTHP 

equipment to the Nation. 

7. Equipment Lifetime 

DOE defines equipment lifetime as 

the age when a PTAC or PTHP unit is 

retired from service. For the NOPR, DOE 

used a typical lifetime of 10 years after 

reviewing available data sources and 

concluding that a 10-year life is 

appropriate for PTAC and PTHP 

equipment. DOE incorporated 

variability in lifetime in its LCC analysis 

using a Weibull 14 statistical distribution 

with an average lifetime of 10 years and 

a maximum lifetime of 20 years. In 

response to the NOPR, DOE received no 

comments on the lifetime assumptions 

for new equipment purchases that 

would affect the LCC analysis. DOE, 

therefore, retained the same lifetime 

assumptions and methodologies 

developed for the NOPR in the final rule 

analysis. See Chapter 8 of the TSD for 

additional information. 

8. Discount Rate 

The discount rate is the rate at which 

future expenditures are discounted to 

establish their present value. DOE 

estimated the discount rate by 

estimating the weighted average cost of 

capital (WACC) for purchasers of PTAC 

and PTHP equipment based on 

weighting the cost of both debt and 

equity capital used to fund investments. 

For the NOPR, DOE used financial 

information from a sample of 

companies, including large hotel/motel 

chains and health-care chains drawn 

from a database of U.S. companies on 

the Damodaran Online Web site. See 

http://pages.stern.nyu.edu/~adamodar. 

The NOPR used the data available in 

2007. The final rule’s analysis relies on 

the same data source to develop 

discount rates, but was updated to 

reflect the data available in January 

2008. 

DOE calculated the weighted average 

after-tax discount rate for PTAC and 

PTHP purchases, adjusted for inflation, 

as 5.53 percent for large hotel chains 

and 5.64 percent for health care 

institutions (nursing homes and assisted 

living facilities). The cost of capital for 

independent hoteliers and small office 

companies is more difficult to 

determine because these business types 

are not explicitly identified in the 

Damodaran data. For the final rule, DOE 

used the same methodology that it used 

to determine the discount rates for these 

business types in the NOPR. 

Specifically, DOE developed an 8.03 

percent after-tax discount rate for 

independent hoteliers and an 8.14 

percent after-tax rate for small offices. 

These values vary only slightly from 

those presented in the NOPR. Chapter 8 

of the TSD provides more detail on the 

calculation of discount rates. 

F. National Impact Analysis—National 

Energy Savings and Net Present Value 

Analysis 

The National Impact Analysis (NIA) 

evaluates the impact of an amended 

energy conservation standard from a 

national perspective rather than from 

the customer perspective, which is 

represented by the LCC. This analysis 

assesses the NES and the NPV (future 

amounts discounted to the present) of 

total commercial customer costs and 

savings, which are expected to result 

from amended energy conservation 

standards for PTACs and PTHPs at 

specific efficiency levels. DOE followed 

the same analysis approach for the NIA 

as it used for the NOPR analysis, using 

a Microsoft Excel spreadsheet model to 

calculate the energy savings and the 

national economic costs and savings 

from amended energy conservation 

standards. 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 

energy savings and NPV, using the 

annual energy consumption and total 

installed cost data from the LCC 

analysis. DOE forecasted the energy 

savings, energy cost savings, equipment 

costs, and NPV of benefits for each TSL 

from 2012 through 2042. The forecasts 

provided annual and cumulative values 

for all four output parameters. 

For each TSL, DOE calculated the 

NES and NPV as the difference between 

a base case forecast (without amended 

standards) and the standards case (with 

amended standards). The NES refers to 

cumulative energy savings from 2012 

through 2042. The NPV refers to 

cumulative monetary savings. DOE 

calculated net monetary savings in each 

year relative to the base case as the 

difference between total operating cost 

savings and increases in total installed 

equipment cost. Cumulative savings are 

the sum of the annual NPV over the 

specified period. DOE accounted for 

operating cost savings until 2062 (i.e., 

until all the equipment installed 

through 2042 is retired). 

DOE built up the NES analysis from 

a combination of unit energy savings for 

each class of PTAC or PTHP equipment 

analyzed and estimated shipments of 

units in this class at each efficiency 

level from 2012 through 2042. Unit 

energy savings for each equipment class 

are the weighted-average values 

calculated in the LCC and PBP 

spreadsheet. These calculations 

involved multiple steps. First, DOE 

calculated the national site energy 

consumption (i.e., the energy directly 

consumed by the units of equipment in 

operation) for PTACs or PTHPs for each 

year, beginning with the expected 

effective date of the standards (2012) for 

the base-case forecast and the standards 

case forecast. Second, DOE determined 

the annual site energy savings, 

consisting of the difference in site 

energy consumption between the base 

case and the standards case. Third, DOE 

converted the annual site energy savings 

into the annual amount of energy saved 

at the source of electricity generation 

(the source energy). DOE used a site-tosource conversion factor developed 

from an analysis of the marginal impacts 

of changes in PTAC and PTHP energy 

use on the energy source energy inputs 

in DOE’s Utility Impacts analysis. 

Finally, DOE summed the annual source 

energy savings from 2012 to 2042 to 

calculate the total NES for that period. 

DOE performed these calculations for 

each TSL and equipment class 

considered in this rulemaking. 

Changes in inputs to the analyses and 

reporting drove the modifications to the 

NIA analyses and results. Changes to the 

NES results between the NOPR and final 

rule were due to a reduction in the TSL 

levels considered for non-standard 

PTAC and PTHP equipment classes and 

a change in the mix of equipment 

efficiencies used in the base case and 

standards case equipment efficiency 

forecasts. Although DOE used the same 

economic model for predicting the 

distribution of equipment efficiencies in 

both the final rule and the NOPR, these 

changes in the installed equipment 

prices and the lower R–410A max tech 

efficiency levels resulted in slight shifts 

to the overall efficiency distributions for 

each equipment class. In addition, the 

site-to-source energy conversion factor 

developed for the final rule used EIA’s 

NEMS model consistent with AEO2008. 

The calculated conversion factors in the 

final rule differed from that calculated 

for the NOPR, which relied on EIA’s 

AEO2007. 

To estimate NPV, DOE calculated the 

net impact as the difference between 


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total operating cost savings (including 

electricity, repair, and maintenance cost 

savings) and increases in total installed 

costs (including MSP, sales taxes, 

distribution chain markups, and 

installation cost). DOE calculated the 

NPV of each TSL over the life of the 

equipment by determining: (1) The 

difference between the equipment costs 

under the TSL case and the base case in 

order to obtain the net equipment cost 

increase resulting from the TSL; (2) the 

difference between the base case 

operating costs and the TSL operating 

costs in order to obtain the net operating 

cost savings from the TSL; and (3) the 

difference between the net operating 

cost savings and the net equipment cost 

increase in order to obtain the net 

savings (or expense) for each year. DOE 

then discounted the annual net savings 

(or expenses) to 2008 for PTACs and 

PTHPs bought between 2012 and 2042, 

and summed the discounted values to 

provide the NPV of a TSL. DOE used 

discount rates of 7 percent and 3 

percent in accordance with Office of 

Management and Budget (OMB) 

guidance to evaluate the impacts of 

regulations. An NPV greater than zero 

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

reduce 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. 

Changes in inputs to the analyses and 

reporting drove modifications to the 

NPV analyses and results. Changes to 

the NES results were due to (1) a 

reduction in the number of TSL levels 

considered for non-standard PTAC and 

PTHP equipment classes, (2) a change in 

the mix of equipment efficiencies used 

in the base case and standards case 

equipment efficiency forecasts, and (3) 

the use of electricity price forecasts from 

the AEO 2008 reference case. As with 

the LCC analysis, DOE analyzed highand low-growth energy price forecasts. 

Because EIA had not published actual 

high- and low-growth forecasts in time 

for the final rule analysis, DOE 

developed high- and low-growth 

scenarios based on the AEO2008 

reference case forecast. DOE applied the 

ratio of the year-by-year energy prices 

from the AEO2007 high- and lowgrowth price forecasts, respectively, to 

the AEO2007 reference case forecast. 

Chapter 10 of the TSD provides a full 

discussion of the NIA. Table IV.3 

summarizes the inputs and key 

assumptions used to calculate the 

national energy savings and national 

economic impacts of all energy 

efficiency levels analyzed in this 

rulemaking. 

TABLE IV.3—SUMMARY OF NES AND NPV MODEL INPUTS

Inputs NOPR description Changes for final rule 

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

of the TSD).

No change. 

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

Base Case Efficiencies ........ Distribution of base case shipments by efficiency level Equipment costs and economic benefits for each TSL 

level come from final rule LCC analysis. 

Standard Case Efficiencies .. Distribution of shipments by efficiency level for each 

standards case. Standards case annual shipmentweighted market shares remain the same as in the 

base case and each standard level for all efficiencies 

above the TSL. All other shipments are at the TSL 

efficiency.

Equipment costs and economic benefits for each TSL 

level come from final rule LCC analysis. 

Only three TSL levels considered for non-standard 

PTAC and PTHP equipment. 

Annual Energy Use per Unit Annual national weighted-average values are a function 

of efficiency level.

No change. 

Total Installed Cost per Unit Annual weighted-average values are a function of efficiency level.Updated with values from final rule LCC analysis. 

Repair Cost per Unit ............ Annual weighted-average values increase with manufacturer’s cost level.Updated with values from final rule LCC analysis. 

Maintenance Cost per Unit .. Annual weighted-average value equals $50 (Chapter 8 

of the TSD).

Updated with values from final rule LCC analysis. 

Escalation of Electricity 

Prices.

2007 EIA AEO forecasts (to 2030) and extrapolation 

beyond 2030.

2008 EIA AEO forecasts (to 2030) and extrapolation for 

beyond 2030. 

Electricity Site-to-Source 

Conversion Factor.

Conversion factor varies yearly and is generated by 

EIA’s NEMS * model for AEO2007. Includes the impact of electric generation, transmission, and distribution losses.

Developed conversion factor using EIA’s NEMS model 

for AEO 2008. 

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

Present Year ........................ Future costs are discounted to year 2008 ...................... No change. 

* Chapter 14 on the utility impact analysis provides more detail on NEMS model. 

1. Shipments Analysis 

DOE developed shipments projections 

under a base case and each of the 

standards cases using the identical 

shipments model used in the NOPR 

analysis. The NOPR and Chapter 10 of 

the TSD describe this model in more 

detail. 

The NES spreadsheet model contains 

a provision for a change in projected 

shipments in response to efficiency 

level increases, but DOE has no 

information with which to calibrate 

such a relationship. For the NOPR 

analysis, DOE assumed that the 

shipments do not change in response to 

the changing TSLs. ECR and Cold Point 

commented that if DOE sets a high or 

unrealistic efficiency level for nonstandard PTAC or PTHP equipment, 

customers might choose to extend the 

life of existing equipment that uses 

R–22 refrigerant. (Public Meeting 

Transcript (ECR), No. 12 at pp. 100–101, 

Cold Point, No. 18 at p. 2) However, 

commenters provided no data to suggest 

specific changes that DOE could make 

to its shipments analysis to account for 

this possible impact. For the final rule 

analysis, DOE presumed that projected 

industry shipments by product class do 

not change in response to changing 

TSLs. See discussion of equipment 

lifetime in section IV.E.7. 

GE, ECR, and Carrier commented that 

it was possible that customers could 

switch to a less efficient class of HVAC 

equipment than a packaged terminal 

unit, such as a through-the-wall air 


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conditioner or a window air 

conditioner, which does not have a heat 

pump option for providing space heat. 

Carrier elaborated that this kind of 

equipment switch would occur mostly 

in small, independent, motel markets. 

(Public Meeting Transcript (GE), No. 12 

at p. 141; Public Meeting Transcript 

(ECR), No. 12 at p. 141–141; Public 

Meeting Transcript (Carrier), No. 12 at 

p. 143) 

Several interested parties commented 

that DOE’s proposed standard level in 

the NOPR, TSL 4, had higher cooling 

efficiency requirements for PTHP 

equipment compared with PTAC 

equipment of the same capacity. This 

difference would mean higher 

proportional costs for PTHP equipment 

under the new energy conservation 

standard compared with PTAC 

equipment, and is likely to result in 

some current or future PTHP customers 

choosing to purchase PTAC equipment. 

If this occurs, there would be a decrease 

in overall equipment efficiency due to 

the much lower heating efficiency of 

PTAC compared with PTHP equipment. 

Several manufacturers expressed 

concern that people would be forced by 

cost or lack of products at the proposed 

standard levels to shift from PTHP to 

PTAC—forcing people into a less 

efficient product and negating much of 

the energy savings from the rule. (Public 

Meeting Transcript (ECR), No. 12 at pp. 

141–142; ECR, No. 15 at p. 3; Ice Air, 

No. 25 at pp. 3–4; Public Meeting 

Transcript (Goodman), No. 12 at p. 142) 

AHRI and Carrier both agreed that 

higher efficiency levels for PTHPs will 

cause a shift to less efficient PTACs. 

(AHRI, No. 23 at p. 8; Carrier, No. 16 at 

p. 5) 

In contrast, GE stated that the 

probability of users shifting to other 

product classes would be remote. GE 

pointed out that the case for a heat 

pump is compelling when the cost 

differential is $50. In almost all cases, 

the payback for choosing a heat pump 

is less than 1 year. In most cases, GE 

said, its customer base is composed of 

astute business people who are 

concerned about operating costs and 

efficiencies. (Public Meeting Transcript, 

No. 12 at pp. 145–146) AHRI questioned 

GE’s assertion, given that the current 

market is almost evenly split between 

PTAC and PTHP equipment. (Public 

Meeting Transcript, No. 12 at p. 144) 

To address concerns about equipment 

switching, DOE performed a sensitivity 

analysis on the possible impact on 

energy savings due to customers 

switching from PTACs to PTHPs for a 

case where a combined TSL resulted in 

a higher cooling efficiency (EER) might 

be set for PTHPs compared to PTACs of 

the same capacity. This sensitivity 

analysis examined what fraction of the 

future projected PTHP market would 

need to switch from PTHPs to PTACs 

with electric resistance heat to offset the 

energy savings from increased efficiency 

requirements for PTHPs relative to 

PTACs at TSLs 2, 4, and A. It also 

estimated the change in payback period 

for purchasers of PTHP versus PTAC 

equipment at the TSLs. DOE concluded 

that based on this analysis the increase 

in PTHP cost and the resulting change 

in PBP for these TSLs were both small 

and that it was unlikely that the savings 

from higher PTHP standards under 

these TSLs would be offset by customers 

switching to PTAC equipment. Section 

V.B. discusses the results of this 

sensitivity analysis. 

2. Base Case and Standards Case 

Forecasted Distribution of Efficiencies 

The annual energy consumption of a 

PTAC or PTHP unit relates directly to 

the efficiency of the unit. For the final 

rule, DOE used the same methodology 

that was used in the NOPR analysis to 

develop base case and standards case 

efficiency distributions for shipments. 

DOE developed shipment-weighted 

average equipment efficiency forecasts 

that enabled a determination of the 

shipment-weighted annual energy 

consumption values for the base case 

and each TSL analyzed by equipment 

class. DOE developed shipment 

estimates by converting the 2005 PTAC 

and PTHP equipment shipments by 

equipment class into market shares by 

equipment class. DOE then adapted a 

cost-based method used in the NEMS to 

estimate market shares for each 

equipment class by TSL. DOE used 

those market shares and projections of 

shipments by equipment class to 

determine future equipment efficiency 

forecasts both for a base case scenario 

and standards case scenarios. The 

difference in equipment efficiency 

between the base case and standards 

cases was the basis for determining the 

reduction in per-unit annual energy 

consumption that could result from 

amended energy conservation 

standards. Although the methodology 

DOE used was identical to that in the 

NOPR, differences in equipment price 

and annual energy consumption 

established in the LCC analysis resulted 

in slight shifts in the estimated 

shipments by efficiency level. 

For each standards case, DOE 

assumed that shipments at efficiencies 

below the projected minimum standard 

levels were most likely to roll up to 

those efficiency levels in response to an 

increase in energy conservation 

standards. The market shares for 

equipment at higher efficiency levels 

were assumed not to be affected as the 

market already has a choice of that 

equipment. DOE, thus, assumed that the 

new standard would not affect the 

relative attractiveness of equipment 

with efficiencies higher than the 

standard. For further discussion, see 

Chapter 11 of the TSD. 

G. Manufacturer Impact Analysis 

In determining whether a standard for 

a covered product is economically 

justified, the Secretary of Energy is 

required to consider ‘‘the economic 

impact of the standard on the 

manufacturers and on the consumers of 

the products subject to such standard.’’ 

(42 U.S.C. 6295(o)(2)(B)(i)(I)) EPCA also 

requires for an assessment of the impact 

of any lessening of competition as 

determined by the Attorney General. (42 

U.S.C. 6295(o)(2)(B)(i)(V)) DOE 

performed the MIA to estimate the 

financial impact of energy conservation 

standards on the standard size and nonstandard size PTAC and PTHP 

industries, and to assess the impact of 

such standards on employment and 

manufacturing capacity. DOE published 

the results in the NOPR. 73 FR 18883– 

87, 18893–99. For this final rule, while 

DOE did not introduce changes to the 

methodology described in the NOPR, it 

updated the R–410A-shipment forecast 

distribution of shipments based on the 

updated NIA results. (See TSD Chapter 

13.) In response to DOE’s NOPR 

presentation, interested parties provided 

comments on the cumulative regulatory 

burden, small business impacts, and 

employment. 

1. GRIM Input Updates 

The GRIM inputs consists of 

information regarding the standard size 

and non-standard size PTAC and PTHP 

industries’ 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. In response to the 

presentation of the MIA analysis in the 

NOPR, DOE revised several key inputs 

to the GRIM based on more recent 

sources of data for both standard and 

non-standard size PTAC and PTHP 

industries. 

a. Manufacturing Production Costs 

The GRIM uses cost-efficiency curves 

derived in the engineering analysis to 

calculate the MPCs for each equipment 

class at each TSL. By multiplying 

different sets of markups with the 

MPCs, DOE derives the manufacturing 

selling prices (MSP) used to calculate 

industry revenues. For this final rule, 


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DOE used the MPCs from the final rule 

engineering analysis as described in 

Chapter 5 of the TSD. 

b. Shipments and Distributions of 

Efficiencies in the Base Case 

The GRIM estimates manufacturer 

revenues based on total-unit-shipment 

forecasts and the distribution of these 

values by EER. Changes in the efficiency 

mix at each standard level are a key 

driver of manufacturer finances. For the 

final rule analysis, DOE used only the 

NES shipments forecasts and the 

distribution of efficiencies in the base 

case for both standard size and nonstandard size PTACs and PTHPs from 

2007 to 2042. DOE continued to allocate 

the closest representative cooling 

capacity, within the appropriate 

equipment class, to any shipments 

forecasted by the NES of equipment that 

was not within one of the representative 

cooling capacities. For example, the 

total PTAC or PTHP shipments with a 

cooling capacity less than 10,000 Btu/h 

for standard size equipment are 

included with the 9,000 Btu/h 

representative cooling capacity. (See 

Chapter 13 of the final rule TSD.) 

c. R–410A Base Case and Amended 

Energy Conservation Standards Markup 

Scenarios 

The PTAC and PTHP manufacturer 

impact analysis is explicitly structured 

to account for the cumulative burden of 

sequential refrigerant and amended 

energy conservation standards. In the 

NOPR, DOE described the two markup 

scenarios used to calculate the base case 

INPV after implementation of the R–22 

refrigerant phaseout, and the standards 

case INPV at each TSL. (See Chapter 13 

of the NOPR TSD.) For the final rule, 

DOE continued to analyze two distinct 

R–410A base case and amended energy 

conservation standards markup 

scenarios: (1) The flat markup scenario, 

and (2) the partial cost recovery markup 

scenario. Under the flat markup 

scenario, DOE applied a single uniform 

‘‘gross margin percentage’’ markup 

across all TSLs that DOE believes 

represents the current markup for 

manufacturers in the standard and nonstandard size PTAC and PTHP 

industries. The ‘‘partial cost recovery’’ 

scenario implicitly assumes that the 

industries can pass-through only part of 

their regulatory-driven increases in 

production costs to consumers in the 

form of higher prices. As presented in 

the NOPR, these markup scenarios 

characterize the markup conditions 

described by manufacturers, and reflect 

the range of market responses 

manufacturers expect as a result of the 

R–22 phaseout and the amended energy 

conservation standards. See Chapter 13 

of the TSD for additional details of the 

markup scenarios. 

d. Capital and Equipment Conversion 

Expenses 

Energy conservation standards 

typically cause manufacturers to incur 

one-time conversion costs to bring their 

production facilities and equipment 

designs into compliance with the 

amended standards. For the purpose of 

the MIA, DOE classified these one-time 

conversion costs into two major groups: 

equipment conversion and capital 

conversion costs. Equipment conversion 

expenses are one-time investments in 

research, development, testing, and 

marketing that are focused on making 

equipment designs comply with the 

new energy conservation standard. 

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. 

For this final rule, DOE used the same 

capital expenses as presented in the 

NOPR calculated in 2007$ for both 

standard and non-standard size PTAC 

and PTHP industries. For equipment 

conversion expenses for the standard 

size PTAC and PTHP industry, DOE also 

used the same product expenses as 

presented in the NOPR calculated in 

2007$. For equipment conversion 

expenses for the non-standard size 

PTAC and PTHP industry, DOE revised 

figures based on comments from 

interested parties on the NOPR. For 

more information on DOE’s revision to 

the equipment conversion expenses for 

the non-standard size PTAC and PTHP 

industry, see section V.C. and Chapter 

13 of the TSD. 

2. Cumulative Regulatory Burden 

As discussed in the NOPR, one aspect 

of manufacturer burden is the 

cumulative impact of multiple DOE 

standards and other regulatory actions 

that affect the manufacture of the same 

covered equipment. All PTAC and 

PTHP manufacturers believe that the 

EPA-mandated refrigerant phaseout will 

be the largest external burden on PTAC 

and PTHP manufacturers. DOE 

addressed the cumulative regulatory 

burden affecting manufacturers of 

PTACs and PTHPs as a result of the 

refrigerant phaseout by first examining 

impacts on INPV arising from 

converting R–22 to R–410A equipment 

production. DOE then examined the 

possible impacts of amended energy 

conservation standards on the R–410A 

base case. Thus, DOE examined the 

cumulative impacts of both R–410A 

conversion and compliance with the 

proposed energy conservation 

standards. (See Chapter 13 of the TSD.) 

73 FR 18897–98. 

In response to DOE’s NOPR, ECR 

stated that manufacturers are forced to 

consider both the refrigerant phaseout 

and energy conservation standard levels 

due to the timing of the regulations. 

According to ECR, it is difficult to work 

on designs using R–410A knowing that 

the 2012 efficiency levels are not final 

and the efficiency levels proposed in the 

NOPR may change. (Public Meeting 

Transcript, No. 12 at pp. 63–64) 

Similarly, Ice Air stated its concern 

about the cumulative regulatory burden 

placed on manufacturers by the 

refrigerant phaseout and the amended 

energy conservation standards. Ice Air 

warned that the burdens to comply with 

both of these regulatory actions could 

cause manufacturers of non-standard 

size equipment to go out of business and 

could also severely affect the standard 

size industry. (Ice Air, No. 25 at p. 2) 

To assess the impacts on INPV due to 

both refrigerant phaseout and energy 

conservation standards, DOE first 

examined the changes in industry cash 

flows from 2007 to 2010 using only 

equipment with R–22 refrigerant (i.e., 

before the refrigerant phaseout). DOE 

then examined the changes in industry 

cash flows from 2010 through 2042 

using only equipment with R–410A 

refrigerant (i.e., after the refrigerant 

phaseout). The sum of the cash flows 

discounted to the current year equates 

to the INPV used to quantify the impacts 

on the industries. DOE included 

equipment prices using both R–22 and 

R–410A refrigerant estimated in the 

engineering analysis and equipment 

conversion and capital conversion 

expenses related to both energy 

conservation standards and refrigerant 

phaseout in its manufacturer impact 

analysis. Investment estimates used in 

the analysis can be found in the NOPR, 

73 FR 18893–96, and in Chapter 13 of 

the TSD. Although investments needed 

to meet the proposed energy 

conservation standards and refrigerant 

phaseout requirements could vary 

among manufacturers, the values DOE 

used in its analysis are an aggregate of 

information manufacturers provided. 

Given these variations in investment 

within the industry, DOE believes that 

the MIA captures the potential range of 

costs, investments, and impacts on 

manufacturers due to both energy 

conservation standards and the 

refrigerant phaseout. 

AHRI commented that DOE did not 

account for the costs to phase out 

HCFCs from other air-conditioning 

equipment or to comply with other 


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energy conservation standards produced 

by PTAC and PTHP manufacturers. 

(AHRI, No. 23 at p. 5) 

For the NOPR, DOE examined other 

Federal regulations that could affect 

manufacturers of standard and nonstandard size PTACs and PTHPs. 

Chapter 13 of the TSD presents DOE’s 

findings. 73 FR 18897–98. These 

findings generally indicated that the 

refrigerant phaseout is the most 

significant other Federal regulation 

impending in the industry at this time. 

For this final rule, DOE also identified 

the other DOE regulations standard size 

and non-standard size PTAC and PTHP 

manufacturers are facing for other 

equipment they manufacture within 

three prior and three years after the 

effective date of the amended energy 

conservation standards for PTACs and 

PTHPs. DOE identified the costs of 

additional regulations when these 

estimates were available from other DOE 

rulemakings. Chapter 13 of the TSD 

presents additional information 

regarding the cumulative regulatory 

burden analysis. 

3. Employment Impacts 

In response to DOE’s presentation of 

the direct employment impacts 

characterized in the MIA and presented 

in the NOPR TSD, EarthJustice 

commented that DOE’s projection of 

employment impacts of standards on 

the regulated industry demonstrates an 

economic benefit in the form of 

increased employment on a global scale. 

Specifically, EarthJustice comments that 

the benefits from an increase in 

employment would be principally to 

other countries and that DOE does not 

take this into consideration in its 

analysis. (EarthJustice, No. 22 at p. 5) 

DOE believes EarthJustice’s assertion 

that DOE only considered the direct 

employment impacts on international 

manufacturers is incorrect. DOE 

calculated the total labor expenditures 

for the industry using the unit labor 

costs from the engineering analysis and 

the total industry shipments from the 

NES. DOE translated the total labor 

expenditures for the industry to the total 

number of jobs using the average labor 

rate for the industry and the annual 

worker hours. Finally, DOE multiplied 

the total number of jobs by the domestic 

market share to derive the domestic 

number of jobs for the base case and 

each TSL. The direct employment 

results characterized by the MIA 

represent U.S. production workers are 

impacted by this rulemaking in the 

standard and non-standard size PTAC 

and PTHP manufacturing industries. 

See section V.C.2 for the results of the 

direct employment impact analysis. 

Accordingly, DOE has considered all 

employment impacts in weighing the 

benefits and the burdens, including 

direct (as calculated by the MIA) and 

indirect (as calculated by the 

employment impact analysis). 

In response to the increase in direct 

employment characterized by the MIA, 

ECR, a domestic manufacturer of nonstandard size equipment, and McQuay, 

a domestic manufacturer of both 

standard and non-standard size 

equipment, commented that the 

adoption of the proposed amended 

energy conservation standards would 

have adverse impacts on employment 

and their businesses. Specifically, ECR 

commented that adopting TSL 4 from 

the NOPR might have an adverse impact 

on employment and customers in New 

York, where a large volume of 

equipment is produced and shipped. 

(ECR, No. 15 at p. 3; see also Public 

Meeting Transcript, No. 12 at p. 184) 

Similarly, McQuay stated that unlike 

the standard size equipment that is built 

overseas, the non-standard size 

equipment is unique because it is 

developed, manufactured, and 

supported by domestic facilities mainly 

located in the state of New York. Any 

impacts on its non-standard size 

equipment business would have an 

economic impact on McQuay. (Public 

Meeting Transcript, No. 12 at p. 184) 

DOE calculated the potential impacts 

of amended energy conservation 

standards on domestic production 

employment for the non-standard 

industry by bounding the range of 

potential impacts. For the upper bound, 

the direct employment impact analysis 

conducted as part of the MIA estimates 

the number of U.S. production workers 

who are impacted by this rulemaking in 

the non-standard size PTAC and PTHP 

manufacturing industries, assuming that 

shipment levels and product availability 

remain at current levels. In this best 

case scenario, where shipments do not 

decrease and higher efficiency products 

require more labor, the direct 

employment impact analysis shows a 

net increase in the number of domestic 

jobs for the non-standard size 

industries. It is reasonable to assume 

that shipments and product availability 

will continue because consumers will 

continue to demand non-standard 

PTACs and PTHPs for their replacement 

needs. For these customers, 

modifications to their buildings to 

accommodate standard size PTACs and 

PTHPs is a large cost they will try to 

prevent. However, at higher standard 

levels, the product development costs 

are prohibitive for the small domestic 

manufacturers that produce PTACs and 

PTHPs. These domestic manufacturers 

may exit the industry rather than invest 

in new designs. This would result in a 

loss of domestic employment at these 

firms. The unmet demand could be 

satisfied by new domestic 

manufacturers or foreign manufacturers. 

To calculate the lower bound of the 

range of potential impacts, DOE 

developed a scenario where either 

shipments drop or manufacturers 

respond to higher labor requirements by 

shifting production to lower-labor-cost 

countries. For the non-standard 

industry, DOE believes this scenario is 

a possibility because DOE noticed that 

the non-standard market currently offers 

over approximately 40 different 

equipment platforms, many of which 

are built in very low volumes. As a 

result, the non-standard market will 

incur a much higher impact due to fixed 

costs on a per unit basis. Since the nonstandard PTAC and PTHP industry is 

composed chiefly of small businesses, 

any energy conservation standard for 

non-standard PTACs and PTHPs will 

impact mostly small businesses, which 

might choose to exit this industry rather 

than invest the necessary resources to 

convert existing equipment lines. 

Alternatively, manufacturers could 

choose to move their manufacturing 

facilities overseas as a method of 

reducing costs. Consequently, DOE 

assumed that the greater labor 

requirements displace all U.S. 

production workers in the non-standard 

industry and used this condition as a 

lower bound to the potential impacts of 

standards on domestic production 

employment. 

H. Employment Impact Analysis 

When developing a standard for 

adoption, DOE considers its 

employment impact. Direct employment 

impacts are any changes in the number 

of employees for PTAC and PTHP 

manufacturers, their suppliers, and 

related service firms. Indirect impacts 

are changes in 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 PTAC and PTHP 

equipment. The MIA in this rulemaking 

addresses the employment impacts on 

manufacturers of PTACs and PTHPs 

(i.e., the direct employment impacts) 

(Chapter 13 of the TSD). This section 

describes other, primarily indirect, 

employment impacts. 

Indirect employment impacts from 

PTAC and PTHP 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 energy (electricity, 


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gas—including liquefied petroleum 

gas—and oil); (2) reduced spending on 

new energy supply by the utility 

industry; (3) increased spending on the 

purchase price of new PTACs and 

PTHPs; 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. 

DOE estimated indirect national 

employment impacts using an input/ 

output model of the U.S. economy 

called Impact of Sector Energy 

Technologies (ImSET). Developed by 

DOE’s Building Technologies Program, 

the ImSET model estimates changes in 

employment, industry output, and wage 

income in the overall U.S. economy 

resulting from changes in expenditures 

in the 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 PTAC 

and PTHP equipment efficiency 

standards on employment by sector. 

DOE received no comments on the 

employment analysis during the NOPR, 

so it made no changes to the analysis 

and methodology in the final rule. 

The ImSET input/output model 

suggests that the amended PTAC and 

PTHP efficiency standards could 

increase the net demand for labor in the 

economy as the net monetary savings 

from standards are redirected to other 

forms of economic activity. The gains 

would most likely be small relative to 

total national employment, primarily 

due to the small net monetary savings 

from amended PTAC and PTHP energy 

conservation standards available for 

transfer to other sectors, relative to the 

economy as a whole. Chapter 15 of the 

TSD provides more details on the 

employment impact analysis. 

I. 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 AEO2008 

Reference Case and forecasts for policy 

cases incorporating each of the PTAC 

and PTHP TSLs. 

DOE analyzed the effects of amended 

standards on electric utility industry 

generation capacity and fuel 

consumption using a variant of the 

EIA’s NEMS. NEMS, which is available 

in the public domain, is a large, 

multisectoral, 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 of 

NEMS, referred to as NEMS–BT, to 

clarify that NEMS has been modified to 

take into account the energy savings 

from standards for PTAC and PTHP at 

different TSL levels. 

DOE conducted the utility analysis as 

policy deviations from the AEO2008, 

applying the same basic set of 

assumptions. The NEMS–BT is run 

similarly to the AEO2008 NEMS, except 

that PTAC and PTHP 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. Using these inputs, the utility 

analysis 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. Aside from the use of the 

AEO2008, DOE made no other changes 

to the methodology used for the utility 

impact analysis from the NOPR. Chapter 

14 of the TSD provides details of the 

utility analysis methods and results. 

J. Environmental Analysis 

DOE has prepared a draft 

environmental assessment (EA) 

pursuant to the National Environmental 

Policy Act and the requirements under 

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

6316(a), to determine the environmental 

impacts of the amended standards. 

Specifically, DOE estimated the 

reduction in total emissions of carbon 

dioxide (CO2) using the NEMS–BT 

computer model. DOE calculated a 

range of estimates for reduction in NOX

emissions and Hg emissions using 

current power sector emission rates. 

However, the Environmental 

Assessment (see Chapter 16 of the FR 

TSD accompanying this notice) does not 

include the estimated reduction in 

power sector impacts of sulfur dioxide 

(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 

AEO2008 NEMS, except the energy use 

is reduced by the amount of energy 

saved due to the TSLs. DOE obtained 

the inputs of national energy savings 

from the NIA spreadsheet model. For 

the Environmental Assessment, the 

output is the forecasted physical 

emissions. The net benefit of the 

standard is the difference between 

emissions estimated by NEMS–BT and 

the AEO2008 Reference Case. The 

NEMS–BT tracks CO2 emissions using a 

detailed module that provides results 

with a broad coverage of all sectors and 

inclusion of interactive effects. 

The Clean Air Act Amendments of 

1990 set an emissions cap on SO2 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. Because SO2 emissions 

allowances have value, they will almost 

certainly be used by generators, 

although not necessarily immediately or 

in the same year with and without a 

standard in place. In other words, with 

or without a standard, total cumulative 

SO2 emissions will always be at or near 

the ceiling, while there may be some 

timing differences between year-by-year 

forecasts. 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 (CAIR) and Clean Air 

Mercury Rule (CAMR). As discussed 

later in section V.C.6, these rules have 

been vacated by a Federal court. But the 

NEMS–BT model used for today’s final 

rule assumed that both NOX and Hg 

emissions would be subject to CAIR and 

CAMR emissions caps. In the case of 

NOX emissions, CAIR would have 

permanently capped emissions in 28 

eastern States and the District of 

Columbia. Because the NEMS–BT 

modeling assumed NOX emissions 

would be subject to CAIR, DOE 

established a range of NOX reductions 

based on the use of a NOX low and high 

emissions rates (in metric kilotons (kt) 

of NOX emitted per terawatt-hours 

(TWh) of electricity generated) derived 

from the AEO2008. To estimate the 

reduction in NOX emissions, DOE 

multiplied these emission rates by the 

reduction in electricity generation due 

to the standards considered. For 

mercury, because the emissions caps 

specified by CAMR would have applied 

to the entire country, DOE was unable 

to use NEMS–BT model to estimate the 

physical quantity changes in mercury 

emissions due to energy conservation 


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15See http://www.epa.gov/cleanairinterstaterule/. 

standards. To estimate mercury 

emission reductions due to standards, 

DOE used an Hg emission rate (in metric 

tons of Hg per energy produced) based 

on AEO2008. Because virtually all 

mercury emitted from electricity 

generation is from coal-fired power 

plants, DOE based the emission rate on 

the metric tons of mercury emitted per 

TWh of coal-generated electricity. To 

estimate the reduction in mercury 

emissions, DOE multiplied the emission 

rate by the reduction in coal-generated 

electricity associated with standards 

considered. 

In comments on the NOPR, NRDC 

asked if the monetization of carbon 

should have been included in the LCC 

and the NPV analyses and questioned 

DOE’s selection of the $0 to $14 range 

for carbon prices in the NOPR analysis. 

The group recommended that DOE use 

new cost figures for monetizing carbon 

from the new EIA report. (Public 

Meeting Transcript No. 12 at pp. 110– 

111, 192–194) AHRI by contrast 

commented that DOE is acting 

appropriately by not speculating on 

carbon emission pricing. (AHRI, No. 23 

at p. 9) EarthJustice stated that EPCA 

mandates that DOE consider the need 

for national energy conservation and 

determine whether a standard is 

‘‘economically justified’’ require DOE to 

factor economic benefits that are shared 

by the nation as a whole, not just those 

benefits that accrue to PTAC and PTHP 

customers. EarthJustice commented that 

in the case of SO2 emissions and NOX

emissions in states covered by the Clean 

Air Interstate Rule (CAIR)15, DOE 

should monetize the values of total 

change in the value of the allowance 

credits for these emissions and 

incorporate this amount into the NPV 

analysis. In the case of CO2, NOX in 

non-CAIR states, and Hg, EarthJustice 

stated that DOE must consider the value 

of the environmental benefit resulting 

from reduced emissions of these 

pollutants in the NPV analysis. Finally, 

EarthJustice questioned the range of 

valuations for CO2 emissions used in the 

NOPR, pointing out that the high end 

valuation used by DOE was consistent 

with the average value from the IPCC 

source cited by DOE. (EarthJustice, No. 

22 at pp. 4–5) 

DOE has made several additions to its 

monetization of environmental 

emissions reductions in today’s rule, 

which are discussed in Section V.C.6, 

but has chosen to continue to report 

these benefits separately from the net 

benefits of energy savings. Nothing in 

EPCA, nor in the National 

Environmental Policy Act, requires that 

the economic value of emissions 

reduction be incorporated in the net 

present value analysis of the value of 

energy savings. Unlike energy savings, 

the economic value of emissions 

reduction is not priced in the 

marketplace. 

SO2 emissions, which, as discussed 

previously are not impacted by this 

rulemaking, have markets for emissions 

allowances. The market clearing price of 

SO2 emissions is roughly the marginal 

cost of meeting the regulatory cap, not 

the marginal value of the cap itself. 

Further, because SO2 (for the nation) is 

regulated by a cap and trade system, the 

effect of the need to meet these caps is 

already included in the price of energy 

or energy savings. With a cap on SO2, 

the value of energy savings already 

includes the value of SO2 control for 

those consumers experiencing energy 

savings. The economic cost savings 

associated with SO2 emissions caps is 

approximately equal to the change in 

the price of traded allowances resulting 

from energy savings multiplied by the 

number of allowances that would be 

issued each year. That calculation is 

uncertain because the energy savings for 

PTAC and PTHP equipment are so small 

relative to the entire electricity 

generation market that the resulting 

emissions savings would have almost no 

impact on price formation in the 

allowances market and likely would be 

outweighed by uncertainties in the 

marginal costs of compliance with the 

SO2 emissions caps. 

For those emissions currently not 

priced (CO2, Hg, and NOX), only a range 

of estimated economic values based on 

environmental damage studies of 

varying quality and applicability is 

available. Consequently, DOE is 

reporting and weighing these values 

separately and is not including them in 

the NPV analysis. 

K. Other Comments 

1. Burdens on Small, Non-Standard Size 

PTAC and PTHP Manufacturers 

In the MIA conducted for the NOPR, 

DOE determined the impacts on the 

non-standard size PTAC and PTHP 

industry separately from the standard 

size PTAC and PTHP industry due to 

their differences in equipment classes, 

shipment volumes, and equipment 

prices. DOE took into consideration the 

size, location, and specialization of the 

non-standard size PTAC and PTHP 

industry when calculating production 

costs (see Chapter 5 of the NOPR TSD) 

and capital and equipment conversion 

expenses (see Chapter 13 of the NOPR 

TSD) required to meet the proposed 

amended energy conservation 

standards. Due to the limited number of 

publicly owned manufacturers of nonstandard equipment (i.e., the majority of 

non-standard equipment manufacturers 

are privately held companies), DOE 

relied on information provided by 

manufacturers during interviews for the 

NOPR MIA. DOE estimated the industry 

research and development (R&D) 

expenses needed to achieve each trial 

standard level. Details of the R&D 

expenses by equipment class are 

presented in Chapter 13 of the NOPR 

TSD. The TSD generally indicates that 

these equipment conversion expenses 

would be over 20 million dollars for the 

non-standard size industry to transform 

their equipment lines at TSL 1 and 

higher TSLs. In addition, the NOPR 

interviews suggested the kinds of 

impacts imposed by amended energy 

conservation standards on small 

businesses would not largely differ from 

impacts on larger companies within the 

non-standard size equipment industry. 

In response to the presentation of the 

potential impacts on non-standard size 

manufacturers that DOE described in 

the NOPR, AHRI, Ice Air, and ECR each 

provided comments and public 

statements regarding this issue. AHRI 

commented that the relative impacts on 

non-standard size equipment 

manufacturers are greater than the 

impacts on standard size equipment 

manufacturers. (AHRI, No. 23 at p. 5) Ice 

Air commented that the non-standard 

size PTAC and PTHP industry is 

comprised of five or six smaller 

businesses (mainly located in New York 

State) that cannot afford to match the 

R&D spending of large, multi-national 

companies making standard PTACs and 

PTHPs at much higher volumes. Ice Air, 

being one of the smallest manufacturers, 

stated that smaller companies would be 

adversely impacted, with some 

companies forced to go out of business. 

Similarly, Ice Air stated that the 

proposed standards could potentially 

eliminate the ‘‘non-standard’’ segment 

of the industry, including a significant 

portion of its own product offerings of 

non-standard size PTACs and PTHPs. 

Ice Air also stated that the possible 

elimination of non-standard size 

equipment manufacturers may lead to a 

lessening of the competition and limit 

consumers’ choices to the offerings of 

the larger size equipment 

manufacturers. (Ice Air, No. 25 at p. 

2–4) ECR commented that small 

manufacturers of non-standard size 

PTAC and PTHP equipment would be 

negatively impacted at TSL 4 and that 

this proposed standard could impact the 

availability of products for its 

customers, particularly in concentrated 


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areas like New York City that have large 

shipments of non-standard equipment. 

(ECR, No. 15 at p. 3) 

In response to comments from 

interested parties, DOE further reviewed 

the non-standard size PTAC and PTHP 

industry, the data gathered during 

manufacturing interviews, and 

manufacturer literature to determine if 

the amended energy conservation 

standards would disproportionately 

harm the small, non-standard 

manufacturers. 

a. Non-Standard PTAC and PTHP 

Industry Characteristics 

The non-standard PTAC and PTHP 

equipment industry is characterized by 

a wide scope of products being 

manufactured at low production rates. 

Most non-standard units are built-toorder and are commonly customized by 

the manufacturer to accommodate 

specific building requirements. DOE 

review of the non-standard PTAC and 

PTHP market suggests that the nonstandard PTAC and PTHP industry 

supports nearly one hundred different 

legacy models that were formerly made 

under over 30 different brand names. 

The six remaining manufacturers of 

non-standard PTACs and PTHPs 

manufacture approximately 40 different 

replacement model platforms (as 

determined by sleeve size and other 

equipment design requirements to allow 

them to be drop-in replacements) and 

100 models between them in total. Most 

non-standard units are built-to-order 

and are commonly customized by the 

manufacturer to accommodate specific 

building requirements. The number of 

equipment families offered by a 

particular company ranges from seven 

to 40 units, though customization 

subsequently leads to thousands of 

stock-keeping-units (SKUs). 

The wide range of non-standard 

sleeve sizes is the legacy of the early 

PTAC and PTHP industry when over 30 

competitors made these units to suit the 

specific needs and different wall sleeve 

dimensions. Industry consolidation has 

reduced the number of competitors to 

six, though the scope of non-standard 

equipment for sale has not lessened 

significantly. The number of equipment 

platforms offered by any particular nonstandard PTAC and PTHP manufacturer 

ranges from seven to 40 units, though 

multiple capacities per equipment 

platform and any customization options 

subsequently generates thousands of 

SKUs. 

b. Non-Standard PTAC and PTHP 

Market Review 

DOE conducted a market review and 

created a list of every manufacturer that 

produces standard and non-standard 

size PTACs and PTHPs for sale in the 

United States using manufacturer 

catalogs. During interviews and at the 

public meeting, DOE asked interested 

parties and industry representatives if 

they were aware of any other nonstandard manufacturers. DOE reviewed 

publicly available data such as Dun and 

Bradstreet reports and contacted 

manufacturers, where needed, to 

determine whether they meet the SBA’s 

definition of a small business in the 

PTAC and PTHP industry. Table IV.4 

lists the number of all manufacturers 

that supply PTACs and PTHPs in 

standard and/or non-standard sizes, as 

well as the number of small businesses 

in each category. 

TABLE IV.4—PTAC AND PTHP MANUFACTURER CHARACTERISTICS

Market served 

Total number of 

manufacturers in 

each market 

segment 

Total number of 

small businesses 

in each market 

segment 

Standard ...................................................................................................................................................... 9 1 

Non-Standard ............................................................................................................................................... 2 2 

Both Standard and Non-Standard ............................................................................................................... 4 3 

As Table IV.4 illustrates, there is a 

greater proportion of small businesses 

serving the non-standard market than 

the standard market. The standard 

market is characterized by high unit 

volumes and a significant degree of 

commoditization. The non-standard 

market offers significantly more sleeve 

sizes and/or equipment platforms to 

choose from, most of which are made to 

order for specific customers. The 

discrepancy between unit shipments 

and the number of platforms requiring 

significant product development to meet 

upcoming efficiency standards is the 

main reason that the non-standard 

PTAC and PTHP industry is expected to 

experience a greater relative impact for 

any given efficiency level than the 

standard PTAC and PTHP industry. 

DOE found that most small businesses 

in the PTAC and PTHP industries focus 

primarily on manufacturing customized 

and/or non-standard equipment. For 

example, standard size units offered by 

manufacturers of both kinds of 

equipment feature customization 

features such as hydronic coil heating 

that differentiate them from common 

standard PTAC and PTHPs made by 

higher-volume competitors. According 

to interviewees, the higher value that 

customers associate with customized 

and/or non-standard equipment allows 

them to charge higher prices, which in 

turn makes their (higher cost) lowvolume operations viable. 

The much lower volumes and the 

greater number of equipment platforms 

distinguishes the standard from the nonstandard PTAC and PTHP market. 

Whereas standard PTAC and PTHP 

manufacturers only have to modify one 

equipment platform to meet regulatory 

standards, non-standard manufacturers 

may have to update as many as 40 

different equipment platforms in their 

portfolio. Many equipment development 

costs (such as testing, certification, etc.) 

are somewhat fixed, making 

manufacturing scale an important 

consideration in determining whether 

the equipment development 

investments are economically justified. 

Similarly, any capital expenditures, 

such as upgrading manufacturing and 

fabrication lines can be spread across 

much higher unit volumes by highvolume manufacturers. Due to the 

concentration of small businesses in the 

non-standard PTAC and PTHP industry, 

that particular industry segment is more 

vulnerable to impacts from amended 

energy conservation standards. For 

further illustration of the economic 

issues, please refer to the GRIM analysis 

in Chapter 13 of the final rule TSD. 

c. Impacts on Small Businesses in the 

Non-Standard Size PTAC and PTHP 

Industry 

The phaseout of R–22 refrigerant use 

in 2010 adds a two-fold fixed-cost 

burden on all manufacturers: (1) 

Equipment, manufacturing lines, and 

fabrication centers have to be converted 

to R–410A refrigerant use; and (2) all 

equipment platforms will have to 

undergo equipment development, 

testing, and certification. Achieving 

even baseline ASHRAE Standard 90.1– 


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1999 efficiency levels for all extant 

products is likely to be beyond the reach 

of some manufacturers since they lack 

the scale to maintain engineering 

departments with the time, equipment, 

and budget to address multiple 

equipment platform conversions. 

DOE reviewed published efficiency 

ratings for non-standard PTACs and 

PTHPs to estimate the percentage of the 

units on the market that would require 

extensive redesign to achieve the 

baseline standard level once 

manufacturers switch from R–22 to 

alternate refrigerants. Table IV.5 

illustrates the various nominal EERs 

that non-standard PTACs and PTHPs 

have to achieve and what percentage of 

the current models are projected to 

achieve that level despite efficiency 

losses due to a R–410A conversion. This 

table also includes the equipment 

conversion costs for standard PTAC and 

PTHP units made by manufacturers that 

build primarily non-standard equipment 

because these units share more 

characteristics with non-standard 

equipment (such as very low production 

volumes, extensive customization, etc.) 

than with the mass-market standard 

PTACs and PTHPs manufactured by 

high-volume manufacturers. 

TABLE IV.5—CUMULATIVE EQUIPMENT DEVELOPMENT COST ESTIMATES FOR THE NON-STANDARD SIZE PTAC AND PTHP 

INDUSTRY

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

Minimum EER for Non-Standard 

PTACs ...................................... 8 .6 9 .4 9 .4 9 .7 9 .4 10 .0 

Minimum EER for Non-Standard 

PTHPs ...................................... 8 .5 9 .4 9 .7 9 .7 10 .0 10 .0 

Percentage of Equipment Families to At or Above TSL Efficiency Levels ............................ 73% 25% 23% 23% 13% 13% 

Number of Equipment Families 

Requiring Significant Equipment Development to Meet 

Standards ................................. 29 82 84 84 95 95 

Aggregated Industry Burden * ...... 7 .25 20 .50 21 .00 21 .00 23 .75 23 .75 

* Millions of dollars. 

As noted in Table IV.5, DOE 

identified six manufacturers of nonstandard PTACs and PTHPs. DOE 

grouped equipment offered by 

manufacturers into platforms, reflecting 

how some equipment chassis’ are sold 

with minimal modifications under 

different product names. Altogether, 

these six non-standard manufacturers 

offer over 100 different PTAC and PTHP 

equipment model families for sale, 

which represent approximately 40 

different equipment platforms. In 

determining whether equipment 

platforms would be likely to require 

significant equipment development, 

DOE’s estimates accounted for 

published EERs for equipment 

platforms, equipment capacity, and 

anticipated degradation factors as a 

result of adopting R–410A refrigerants. 

DOE took published EER ratings and 

degraded them according to factors from 

the engineering analysis. If one or more 

capacities within an equipment 

platform fell below the EER levels 

prescribed by a TSL (either for PTACs 

or PTHPs), then the equipment platform 

was marked for redesign. Accordingly, 

non-standard platforms that currently 

claim very high EERs are not expected 

to require extensive redesign except at 

very high TSLs. 

During interviews with 

manufacturers, none of the nonstandard PTAC and PTHP 

manufacturers were able to give 

estimates for their total equipment 

conversion costs by efficiency level. As 

a result, DOE estimated the investment 

requirements to upgrade an existing 

equipment platform for optimal R–410A 

operation on the basis of its more 

numerous standard size manufacturer 

responses and its own estimates. 

Even in a best-case scenario ($0.25 

million per equipment platform, 

regardless of efficiency level, based on 

feedback from engineering interview), 

the non-standard PTAC and PTHP 

industry would have great difficulty 

meeting any standards level above 

baseline. As Table IV.5 illustrates, the 

industry burden to upgrade its 

equipment families to meet TSL 1 

would exceed $20 million or 

approximately 40 percent of its total 

annual revenue. Higher TSL levels 

would impose even greater economic 

burdens. However unsustainable this 

impact is in the aggregate, the impact on 

individual businesses could be even 

greater. 

For example, based on Dun & 

Bradstreet reports, one small 

manufacturer of non-standard PTACs 

and PTHPs is estimated to have sales of 

less than $5 million per year and 

currently ships approximately 12 

different non-standard equipment 

platforms. DOE estimates that the 

company would have to spend 

approximately $3 million to meet any 

efficiency level (including baseline) 

using R–410A refrigerants. A $3 million 

equipment development expense 

translates into more than 60 percent of 

annual revenues or about 35 years worth 

of equipment development budget for 

this manufacturer, assuming it spends 

the industry average of 1.6 percent of 

revenues on research and development. 

DOE estimates that on average, small 

manufacturers of non-standard PTACs 

and PTHPs require 25 years worth of 

equipment development budget to reach 

any efficiency level above baseline 

(which in itself will require about 14 

years worth of equipment development 

budget). Because small businesses lack 

the scale to afford the required 

investments for R–410A conversion, 

certification requirements, and the 

equipment development required for 

energy conservation standards, adopting 

an efficiency standard above baseline is 

likely to cause some small businesses to 

exit the market. This situation suggests 

that the non-standard industry would 

reduce the number of equipment 

families and capacities even at baseline 

efficiency levels to keep equipment 

development expenses within 

manageable limits. 

Table IV.6 describes DOE estimates 

regarding the average equipment 

development cost per unit by 

manufacturing scale and equipment 

lifetime. Manufacturing scale was 

roughly defined as small vs. large 

businesses whereas equipment lifetime 

defines the number of years that a 

specific equipment platform will stay in 

production without major changes or 


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58800 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 

revisions. In the standard PTAC and 

PTHP industry, the impact on the major 

manufacturers is relatively minor, 

regardless of whether they are small 

businesses or not, due to the scale at 

which they manufacture and because 

they only have one equipment platform 

to upgrade. However, in the nonstandard industry the impact of scale 

and the number of equipment platforms 

is quite evident. The only large business 

operating in the non-standard industry 

segment offers fewer equipment 

platforms than any of its small business 

competitors, yet operates at a higher 

overall production volume than most of 

them. As a result, the per-unit 

conversion costs for the large business 

are significantly lower than those of its 

smaller competitors. 

TABLE IV.6—IMPACT OF MANUFACTURING SCALE ON PER UNIT EQUIPMENT DEVELOPMENT COST

Per unit equipment development cost by industry segment versus 

equipment lifetime (years) 

5 7 10 20 

Standard PTAC and PTHP ............... Small Business ................................. $6 $4 $3 $1 

Large Business Average .................. 7 5 3 2 

Non-Standard PTAC and PTHP ....... Small Business Average .................. 136 97 68 34 

Large Business ................................ 45 32 22 11 

The current wide scope of equipment 

families offered by the non-standard 

industry (over 100 equipment families 

from six manufacturers with thousands 

of SKUs) is thus likely to shrink 

dramatically in response to amended 

energy conservation standards by DOE. 

In particular, higher capacity units will 

be vulnerable for elimination since 

cabinet constraints may make required 

improvements to units infeasible to 

implement. Equipment manufacturers 

would be expected to cut their least 

popular equipment classes first, 

potentially eliminating multiple extant 

equipment platforms from the market 

altogether. However, cutting equipment 

classes by itself is difficult, since every 

equipment class (and its resultant 

enhancement and diversification of the 

revenue stream) adds some necessary 

manufacturing scale to the 

manufacturer. Once enough equipment 

classes are removed from its equipment 

offering, the manufacturer may lack the 

scale to operate. 

A likely result of these market 

dynamics is that some manufacturers of 

non-standard PTACs and PTHPs will 

exit the market or consolidate with 

other small business manufacturers to 

meet even baseline efficiency 

requirements. At least in the initial 

years after the implementation date of 

the energy conservation standard, DOE 

estimates that most non-standard PTAC 

and PTHP equipment manufacturers 

will reduce their scope of equipment 

platforms by 50 percent or more in order 

to bring the required equipment 

development expenses down to more 

sustainable levels, which will be likely 

to affect consumer choices in the near 

term. 

Whereas current equipment buyers 

benefit from being able to source nonstandard equipment families from 

multiple manufacturers, the number of 

manufacturers for a specific type of nonstandard PTAC or PTHP is likely to 

shrink as manufacturers cut back the 

equipment families they offer as a result 

of the R–410A conversion, certification 

requirements, and efficiency standards. 

Limited monopolistic or oligopolistic 

market conditions may result—limited 

only because consumers always have 

the option of modifying their building to 

allow the use of alternative cooling and 

heating equipment. Manufacturers also 

expect consumers to prolong the life of 

existing units via repairs and 

remanufacturing—and reduce demand 

for replacement units—if compliance 

with energy conservation standards 

results in higher replacement costs or 

the complete unavailability of 

replacement units. 

2. PTAC and PTHP Labeling 

In the NOPR, DOE stated that it 

believes that a label on PTAC and PTHP 

equipment that identifies the equipment 

class would be useful in enforcing both 

the energy conservation standards as 

well as the building codes and would 

assist States and other interested parties 

in determining which application 

correlates to a given PTAC or PTHP 

(based upon size). DOE invited public 

comment on the type of information and 

other requirements or factors, including 

format, it should consider in developing 

a proposed labeling rule for PTACs and 

PTHPs. 

AHRI commented that it continues to 

support the ASHRAE Standard 90.1– 

1999 labeling requirements and believes 

that a label on the equipment 

identifying the equipment class would 

be useful. AHRI stated that it does not 

support a label similar to the 

EnergyGuide label used on consumer 

products and that such a label will do 

nothing to help commercial customers 

in making purchasing decisions. It 

asserted that product literature such as 

fact sheets and the AHRI Certified 

Directory are more effective in 

providing customers with energy 

efficiency information they need before 

purchasing PTACs and PTHPs. (AHRI, 

No. 23 at p. 7) 

Carrier stated that the inclusion of an 

energy use information label for 

customers of PTAC and PTHP 

equipment would have little or no value 

since the purchasing entity will rely on 

the advice of the contractor or literature, 

not on ‘‘labels’’. The nameplates also 

provide an avenue for the performance 

information as necessary to confirm that 

they received what was requested. 

(Carrier, No. 16 at p. 6) 

ACEEE and NRDC also commented 

that with regard to non-standard 

equipment, the path to a loophole-free 

standard requires adoption of labeling, 

code, and/or equivalent measures to 

prevent installation of non-standard 

PTAC and PTHP equipment in new 

construction. (ACEEE and NRDC, No. 26 

at p. 3) 

In developing the final rule, DOE 

considered the information identified by 

interested parties on the types of energy 

use or efficiency information 

commercial customers and owners of 

PTACs and PTHPs would find useful in 

making purchasing decisions. Before 

DOE can establish labeling rules, it must 

first ascertain whether the criteria 

outlined in the NOPR are met. 73 FR 

18888–89. DOE will work with the 

Federal Trade Commission and other 

interested parties to determine the types 

of information and the forms (e.g., 

labels, fact sheets, or directories) that 

would be most useful for commercial 

customers and owners of PTACs and 

PTHPs. DOE continues to believe that a 

label on PTAC and PTHP equipment 

identifying the equipment class and 

efficiency level would be useful for 

enforcement of both the energy 

conservation standards as well as the 

building codes and would assist States 

and other interested parties in 

determining which application 

correlates to a given PTAC or PTHP 


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(based upon size) because it would help 

commercial customers identify the 

efficiency associated with the PTAC and 

PTHP equipment being placed into 

commercial buildings. As DOE stated in 

the NOPR, DOE anticipates proposing 

labeling requirements for PTAC and 

PTHP equipment in a separate 

rulemaking and is not incorporating a 

labeling requirement as part of today’s 

final rule. 73 FR 18889. 

V. Analytical Results and Conclusions 

A. Trial Standard Levels 

In the NOPR, DOE examined seven 

TSLs for standard size and non-standard 

size PTACs and PTHPs at the 

representative cooling capacities. 73 FR 

18889. Each TSL represented a set of 

efficiency levels that describe a possible 

amended energy conservation standard 

for each equipment class. For the final 

rule, DOE did not consider TSL 7 for 

standard size equipment (see section 

IV.C) because DOE determined that TSL 

7 represented an efficiency level that 

potentially could not be attained in the 

full range of cooling capacities for 

standard size equipment utilizing R– 

410A. In addition, DOE analyzed a new 

TSL for standard size PTACs and 

PTHPs—TSL A—which is adopted in 

today’s final rule. TSL A combines the 

efficiency levels in TSL 3 and TSL 1 for 

standard size PTACs at the 

representative cooling capacities and 

the efficiency levels in TSL 5 and TSL 

3 for standard size PTHPs at the 

representative cooling capacities. DOE’s 

inclusion of TSL A recognizes the 

challenge manufacturers encounter 

when increasing the efficiency of larger 

cooling capacity equipment. Table V.1 

presents the TSLs analyzed for standard 

size PTACs and PTHPs in today’s final 

rule and the efficiency levels within 

each TSL for each class and size of 

equipment analyzed. 

TABLE V.1—STANDARD SIZE PTACS AND PTHPS BASELINE EFFICIENCY LEVELS AND TSLS

Equipment class (cooling capacity) Efficiency metric 

Baseline 

(ASHRAE 

standard 

90.1–1999) 

TSL 1 TSL 2 TSL 3 TSL A TSL 4 TSL 5 TSL 6 

(Max-Tech) 

Standard Size PTAC, 9,000 Btu/h .... EER .................. 10.6 10.9 10.9 11.1 11.1 10.9 11.3 11.5 

Standard Size PTAC, 12,000 Btu/h .. EER .................. 9.9 10.2 10.2 10.4 10.2 10.2 10.6 10.8 

Standard Size PTHP, 9,000 Btu/h .... EER ..................

COP ..................

10.4 

3.0 

10.9 

3.1 

11.1 

3.2 

11.1 

3.2 

11.3 

3.3 

11.3 

3.3 

11.3 

3.3 

11.5 

3.3 

Standard Size PTHP, 12,000 Btu/h .. EER ..................

COP ..................

9.7 

2.9 

10.2 

3.0 

10.4 

3.1 

10.4 

3.1 

10.4 

3.1 

10.6 

3.1 

10.6 

3.1 

10.8 

3.1 

Table V.2 presents the TSLs analyzed 

for non-standard size PTACs and PTHPs 

in today’s final rule and the efficiency 

levels within each TSL for each class 

and size of equipment analyzed. 

TABLE V.2—NON-STANDARD SIZE PTACS AND PTHPS BASELINE EFFICIENCY LEVELS AND TSLS

Equipment class (cooling capacity) Efficiency metric 

Baseline 

(ASHRAE 

standard 

90.1–1999) 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

(Max-Tech) 

Non-Standard Size PTAC, 11,000 Btu/h .......... EER .......................... 8.6 9.4 9.4 9.7 9.4 10.0 

Non-Standard Size PTHP, 11,000 Btu/h .......... EER .......................... 8.5 

2.6 

9.4 

2.8 

9.7 

2.8 

9.7 

2.8 

10.0 

2.9 

10.0 

2.9 

As stated in the engineering analysis 

(Chapter 5 of the final rule TSD), current 

Federal energy conservation standards 

and the efficiency levels specified by 

ASHRAE Standard 90.1–1999 for PTACs 

and PTHPs are a function of the 

equipment’s cooling capacity. Both the 

Federal energy conservation standards 

and the efficiency standards in ASHRAE 

Standard 90.1–1999 are based on 

equations that calculate the efficiency 

levels for PTACs and PTHPs with a 

cooling capacity greater than or equal to 

7,000 Btu/h and less than or equal to 

15,000 Btu/h for each equipment class 

(see Table II.1). For the NOPR, DOE 

derived the proposed standards (i.e., 

efficiency level as a function of cooling 

capacity) by plotting the representative 

cooling capacities and the 

corresponding efficiency levels for each 

TSL. DOE then calculated the equation 

of the line passing through the EER 

values for 9,000 Btu/h and 12,000 

Btu/h for standard size PTACs and 

PTHPs. Chapter 9 of the NOPR TSD 

describes in detail how DOE determined 

the energy-efficiency equations for each 

TSL. 

For the final rule, DOE used the 

energy-efficiency equations derived 

from the NOPR for TSLs 1, 2, 3, 4, 5, 

and 6 to extend the results from the 

representative cooling capacities to the 

entire range of cooling capacities of 

standard size PTACs and PTHPs. For 

TSL A, DOE calculated a new slope of 

the energy-efficiency equations using 

the methodology from the NOPR. 

Specifically, DOE calculated the 

equation of the line passing through the 

EER values for 9,000 Btu/h and 12,000 

Btu/h for standard size PTACs and 

PTHPs. Table V.3 and Table V.4 identify 

the energy-efficiency equations for each 

TSL for standard size PTACs and 

PTHPs. 

TABLE V.3—ENERGY-EFFICIENCY EQUATIONS (EER AS A FUNCTION OF COOLING CAPACITY) BY TSL FOR STANDARD SIZE

PTACS

Standard size ** PTACs Energy-efficiency equation * 

Baseline ASHRAE Standard 90.1–1999 .................................................................................................... EER = 12.5 ¥ (0.213 × Cap†/1000) 


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TABLE V.3—ENERGY-EFFICIENCY EQUATIONS (EER AS A FUNCTION OF COOLING CAPACITY) BY TSL FOR STANDARD SIZE

PTACS—Continued 

Standard size ** PTACs Energy-efficiency equation * 

TSL 1 .......................................................................................................................................................... EER = 13.0 ¥ (0.233 × Cap †/1000) 

TSL 2 .......................................................................................................................................................... EER = 13.0 ¥ (0.233 × Cap †/1000) 

TSL 3 .......................................................................................................................................................... EER = 13.2 ¥ (0.233 × Cap †/1000) 

TSL A .......................................................................................................................................................... EER = 13.8 ¥ (0.300 × Cap †/1000) 

TSL 4 .......................................................................................................................................................... EER = 13.0 ¥ (0.233 × Cap †/1000) 

TSL 5 .......................................................................................................................................................... EER = 13.4 ¥ (0.233 × Cap †/1000) 

TSL 6 .......................................................................................................................................................... EER = 13.6 ¥ (0.233 × Cap †/1000) 

* For equipment rated according to the DOE test procedure, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled 

products and evaporatively cooled products, and at 85 °F entering water temperature for water-cooled products. 

** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions having an external wall opening greater than or equal to 16 

inches high or greater than or equal to 42 inches wide, and a cross-sectional area greater than or equal to 670 square inches. † Cap means cooling capacity in Btu/h at 95 °F outdoor dry-bulb temperature. 

TABLE V.4—ENERGY-EFFICIENCY EQUATIONS (EER AS A FUNCTION OF COOLING CAPACITY) BY TSL FOR STANDARD SIZE

PTHPS

Standard size ** PTHPs Energy-efficiency equation * 

Baseline ASHRAE Standard 90.1–1999 .................................................................................................... EER = 12.3 ¥ (0.213 × Cap†/1000) 

COP = 3.2 ¥ (0.026 × Cap †/1000) 

TSL 1 .......................................................................................................................................................... EER = 13.0 ¥ (0.233 × Cap †/1000) 

COP = 3.6 ¥ (0.046 × Cap †/1000) 

TSL 2 .......................................................................................................................................................... EER = 13.2 ¥ (0.233 × Cap †/1000) 

COP = 3.6 ¥ (0.044 × Cap †/1000) 

TSL 3 .......................................................................................................................................................... EER = 13.2 ¥ (0.233 × Cap †/1000) 

COP = 3.6 ¥ (0.044 × Cap †/1000) 

TSL A .......................................................................................................................................................... EER = 14.0 ¥ (0.300 × Cap †/1000) 

COP = 3.7 ¥ (0.052 × Cap †/1000) 

TSL 4 .......................................................................................................................................................... EER = 13.4 ¥ (0.233 × Cap †/1000) 

COP = 3.7 ¥ (0.053 × Cap †/1000) 

TSL 5 .......................................................................................................................................................... EER = 13.4 ¥ (0.233 × Cap †/1000) 

COP = 3.7 ¥ (0.053 × Cap †/1000) 

TSL 6 .......................................................................................................................................................... EER = 13.6 ¥ (0.233 × Cap †/1000) 

COP = 3.8 ¥ (0.053 × Cap †/1000) 

* For equipment rated according to the DOE test procedure, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled 

and evaporatively cooled products, and at 85 °F entering water temperature for water-cooled products. All COP values must be rated at 47 °F 

outdoor dry-bulb temperature for air-cooled products, and at 70 °F entering water temperature for water-source heat pumps. 

** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions having an external wall opening greater than or equal to 16 

inches high or greater than or equal to 42 inches wide, and a cross-sectional area greater than or equal to 670 square inches. † Cap means cooling capacity in Btu/h at 95 °F outdoor dry-bulb temperature. 

For non-standard size PTACs and 

PTHPs, DOE used the ASHRAE 

Standard 90.1–1999 equation slope and 

the representative cooling capacity (i.e., 

11,000 Btu/h cooling capacity) to 

determine the energy-efficiency 

equations corresponding to each TSL in 

the NOPR. Chapter 9 of the NOPR TSD 

details how DOE determined the energyefficiency equations for each TSL. For 

the final rule, DOE used the energyefficiency equations presented in the 

NOPR for TSLs 1 through 5 to extend 

the results from the representative 

cooling capacities to the entire range of 

cooling capacities of non-standard size 

PTACs and PTHPs. Table V.5 and Table 

V.6 identify the energy-efficiency 

equations for each TSL for non-standard 

size PTAC and PTHP. 

TABLE V.5—ENERGY-EFFICIENCY EQUATIONS (EER AS A FUNCTION OF COOLING CAPACITY) BY TSL FOR NON-STANDARD

SIZE PTACS

Non-standard size ** PTACs Energy-efficiency equation * 

Baseline ASHRAE Standard 90.1¥1999 ................................................................................................... EER = 10.9 ¥ (0.213 × Cap†/1000) 

TSL 1 .......................................................................................................................................................... EER = 11.7 ¥ (0.213 × Cap †/1000) 

TSL 2 .......................................................................................................................................................... EER = 11.7 ¥ (0.213 × Cap †/1000) 

TSL 3 .......................................................................................................................................................... EER = 12.0 ¥ (0.213 × Cap †/1000) 

TSL 4 .......................................................................................................................................................... EER = 11.7 ¥ (0.213 × Cap †/1000) 

TSL 5 .......................................................................................................................................................... EER = 12.3 ¥ (0.213 × Cap †/1000) 

* For equipment rated according to the DOE test procedure, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled 

and evaporatively cooled products, and at 85 °F entering water temperature for water-cooled products. 

** Non-standard size refers to PTAC or PTHP equipment with existing wall sleeve dimensions having an external wall opening of less than 16 

inches high or less than 42 inches wide, and a cross-sectional area less than 670 square inches. † Cap means cooling capacity in Btu/h at 95 °F outdoor dry-bulb temperature. 


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TABLE V.6—ENERGY-EFFICIENCY EQUATIONS (EER AS A FUNCTION OF COOLING CAPACITY) BY TSL FOR NON-STANDARD

SIZE PTHPS

Non-standard size ** PTHPs Energy-efficiency equation * 

Baseline ASHRAE Standard 90.1–1999 .................................................................................................... EER = 10.8¥(0.213 × Cap †/1000) 

COP = 2.9¥(0.026 × Cap †/1000) 

TSL 1 .......................................................................................................................................................... EER = 11.7¥(0.213 × Cap †/1000) 

COP = 3.1¥(0.026 × Cap †/1000) 

TSL 2 .......................................................................................................................................................... EER = 12.0¥(0.213 × Cap †/1000) 

COP = 3.1¥(0.026 × Cap †/1000) 

TSL 3 .......................................................................................................................................................... EER = 12.0¥(0.213 × Cap †/1000) 

COP = 3.1¥(0.026 × Cap †/1000) 

TSL 4 .......................................................................................................................................................... EER = 12.3¥(0.213 × Cap †/1000) 

COP = 3.1¥(0.026 × Cap †/1000) 

TSL 5 .......................................................................................................................................................... EER = 12.3¥(0.213 × Cap †/1000) 

COP = 3.1¥(0.026 × Cap †/1000) 

* For equipment rated according to the DOE test procedure, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled 

and evaporatively cooled products, and at 85 °F entering water temperature for water-cooled products. All COP values must be rated at 47 °F 

outdoor dry-bulb temperature for air-cooled products, and at 70 °F entering water temperature for water-source heat pumps. 

** Non-standard size refers to PTAC or PTHP equipment with existing wall sleeve dimensions having an eternal wall opening of less than 16 

inches high or less than 42 inches wide, and a cross-sectional area less than 670 square inches. † Cap means cooling capacity in Btu/h at 95 °F outdoor dry-bulb temperature. 

For PTACs and PTHPs with a cooling 

capacity of less than 7,000 Btu/h, DOE 

determined the EERs using a cooling 

capacity of 7,000 Btu/h in the energyefficiency equations. For PTACs and 

PTHPs with a cooling capacity greater 

than 15,000 Btu/h cooling capacity, 

DOE determined the EERs using a 

cooling capacity of 15,000 Btu/h in the 

energy-efficiency equations. This is the 

same method established in the Energy 

Policy Act of 1992 and provided in 

ASHRAE Standard 90.1–1999 for 

calculating the EER and COP of 

equipment with cooling capacities less 

than 7,000 Btu/h and greater than 

15,000 Btu/h. 

B. Significance of Energy Savings 

To estimate the energy savings 

through 2042 due to amended 

standards, DOE compared the energy 

consumption of packaged terminal 

equipment under the base case 

(standards at the levels in ASHRAE 

Standard 90.1–1999) to energy 

consumption of this equipment under 

each standards case (i.e., each TSL, or 

set of amended standards, that DOE has 

considered). Table V.7 and Table V.8 

summarize DOE’s NES estimates, which 

are based on the AEO2008 energy price 

forecast, for each TSL. Chapter 11 of the 

TSD describes these estimates in more 

detail. The tables provide both 

undiscounted and discounted values of 

energy savings from 2012 through 2042. 

Discounted energy savings at rates of 7 

percent and 3 percent represent a policy 

perspective where energy savings 

farther in the future are less significant 

than energy savings closer to the 

present. Each TSL that is more stringent 

than the corresponding level in 

ASHRAE Standard 90.1–1999 results in 

additional energy savings, ranging from 

0.015 quads to 0.068 quads for TSLs 1 

through 6 for standard size PTAC and 

PTHP equipment classes, and from 

0.004 to 0.009 quads for TSLs 1 through 

5 for non-standard size PTAC and PTHP 

equipment classes. 

TABLE V.7—SUMMARY OF CUMULATIVE NATIONAL ENERGY SAVINGS FOR STANDARD SIZE PTACS AND PTHPS

[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 ................................................................................................................................................... 0.015 0.007 0.003 

2 ................................................................................................................................................... 0.024 0.012 0.006 

3 ................................................................................................................................................... 0.031 0.016 0.007 

A ................................................................................................................................................... 0.032 0.016 0.007 

4 ................................................................................................................................................... 0.033 0.017 0.008 

5 ................................................................................................................................................... 0.049 0.025 0.011 

6 ................................................................................................................................................... 0.068 0.035 0.015 

TABLE V.8—SUMMARY OF CUMULATIVE NATIONAL ENERGY SAVINGS FOR NON-STANDARD SIZE PTACS AND PTHPS

[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 ................................................................................................................................................... 0.004 0.002 0.001 

2 ................................................................................................................................................... 0.004 0.002 0.001 

3 ................................................................................................................................................... 0.005 0.003 0.001 

4 ................................................................................................................................................... 0.006 0.003 0.001 


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TABLE V.8—SUMMARY OF CUMULATIVE NATIONAL ENERGY SAVINGS FOR NON-STANDARD SIZE PTACS AND PTHPS— 

Continued 

[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 

5 ................................................................................................................................................... 0.009 0.004 0.002 

Several commenters noted the 

potential for equipment switching 

where TSLs resulted in higher cooling 

efficiency requirements for PTHP and 

PTAC of the same cooling capacity. 

Higher cooling efficiency requirements 

would result in an increase in the price 

differential of minimum efficiency 

PTHP and PTAC equipment, causing 

some PTHP customers to shift to a 

PTAC with electric resistance heat. 

From the perspective of assessing the 

energy savings achieved by a standard at 

a defined TSL, the primary concern 

from this anticipated equipment 

switching is the loss in energy savings 

that could result if some fraction of the 

PTHP market switches to the use of 

PTAC with electric resistance heat. 

While DOE recognizes that some PTHP 

customers might also switch to the use 

of fossil fuel (e.g. hydronic) heating, the 

relatively small fraction of the existing 

PTAC customers who currently use 

hydronic heat for the spaces served by 

PTAC (estimated at less than 1%), and 

the difficulty of retrofitting hydronic 

heating into buildings that do not use it 

suggests that the total fraction of the 

market that would opt for PTAC with 

hydronic heating is small. The majority 

of the total packaged terminal 

equipment market (PTAC and PTHP) 

currently uses PTAC with electric 

resistance heat, which supports the 

possibility that some purchasers would 

choose to switch from PTHPs to PTACs. 

DOE did not have the information 

with which to assess the elasticity of the 

PTHP market with regards to this 

switching between PTHP and PTAC. To 

assess the significance of a shift from 

PTHP to PTAC purchases, DOE 

calculated the total fraction of the heat 

pump market that would need to shift 

to the purchase of PTAC equipment to 

negate the energy savings from 

increasing the PTHP cooling efficiency 

above that of the PTAC equipment. Two 

TSLs were first examined, TSL 2, and 

TSL 4. For standard size PTAC and 

PTHP equipment, TSL 2 has the same 

EER requirements for PTAC as TSL 1 

but has a 0.2 EER increase for PTHP 

equipment as compared with TSL 1. For 

TSL 2, DOE calculated that a shift of 2.0 

percent of the heat pump market to the 

use of PTAC with electric resistance 

would be sufficient to offset the energy 

savings difference between TSL 1 and 

TSL 2. If PTAC and PTHP standards 

were set at TSL 2, the purchase price 

differential between the two would 

increase on the order of $11, which 

would represent an increase of 

approximately 9.4 percent increase in 

the purchase price differential between 

PTAC and PTHP over TSL 1. This 

increase in the purchase price 

differential results from the increased 

PTHP efficiency at TSL 2. At TSL 1, the 

average annual payback in 2012 for a 

PTHP over a PTAC was calculated at 

approximately 2.10 years. At TSL 2, the 

average annual payback for a PTHP over 

a PTAC was 2.18 years. The average PBP 

for purchase of a PTHP over a PTAC 

increased 3.7 percent between TSL 1 

and TSL 2. 

Similarly, for TSL 4, DOE calculated 

that a shift of 3.8 percent of the heat 

pump market to the use of PTAC with 

electric resistance would offset the 

energy savings difference between TSL 

1 and TSL 4. If PTAC and PTHP 

standards were set at TSL 4, the 

purchase price differential between the 

two would increase on the order of $22, 

or an 18.8 percent increase in the 

purchase price differential compared to 

that at TSL 1. This increase in price 

reflects the higher efficiency of the 

PTHP equipment at TSL 2 and TSL 4. 

At TSL 4, the average annual payback 

for purchase of a PTHP over a PTAC 

was 2.29 years. The average PBP for 

purchase of a PTHP over a PTAC 

increased approximately 9.2 percent 

between TSL 1 and TSL 4. 

DOE also examined TSL A in light of 

potential equipment switching. In the 

case of TSL A, there is no comparable 

TSL considered by DOE that had a 

PTAC cooling efficiency level identical 

to TSL A but with PTHP cooling 

efficiencies at the same efficiency level. 

However, the nominal difference 

between PTHP and PTAC EER levels at 

TSL A, 0.2 EER, is identical to the 

nominal difference in EER levels at TSL 

2 for all capacities. The difference in 

equipment price between a PTHP and 

PTAC at TSL A is $127 for a 9,000 

Btu/h unit and $129 for a 12,000 

Btu/h unit, which is virtually identical 

to the price differential at TSL 2, and 

represents a 9.2 percent increase in 

differential purchase price compared 

with TSL 1. DOE examined the energy 

savings at TSL A and TSL 1 for standard 

size PTAC and PTHP equipment only, 

and determined that under TSL A, it 

would take approximately 4.0 percent of 

standard size PTHP users to switch to a 

PTAC to negate the energy savings for 

TSL A over TSL 1. At TSL A, the 

estimated PBP for purchase of a PTHP 

over a PTAC under average use 

conditions was estimated at 2.15 years. 

Given the very small increase in 

differential purchase price between 

PTAC and PTHP at TSL A compared 

with standards set at identical efficiency 

levels (TSL 1) and the minimal 

difference in payback period at TSL A 

compared to TSL 1, DOE concludes that 

it is unlikely that an efficiency Standard 

set at TSL A would result in a 

significant number of standard size 

PTHP customers opting to instead 

purchase PTAC equipment with electric 

resistance heat. 

C. Economic Justification 

1. Economic Impact on Commercial 

Consumers 

a. Life-Cycle Costs and Payback Period 

Commercial consumers will be 

affected by the standards because they 

will experience higher purchase prices 

and lower operating costs. Generally, 

these impacts are best captured by 

changes in life-cycle costs and payback 

period. To determine these impacts, 

DOE calculated the LCC and PBP for the 

standard levels considered in this 

proceeding. DOE’s LCC and PBP 

analyses provided five key outputs for 

each TSL, which are reported in Table 

V.9 through Table V.14. The first three 

outputs in each table are the proportion 

of PTAC or PTHP purchases in which 

the purchase of a design that complies 

with the TSL would create a net lifecycle cost, no impact, or a net life-cycle 

cost savings for the consumer. The 

fourth output is the average net lifecycle savings from purchasing a 

complying design compared with 

purchasing baseline equipment. 


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The fifth output is the average PBP for 

the consumer purchasing a design that 

complies with the TSL compared with 

purchasing baseline equipment. The 

PBP is the number of years it would take 

for the customer to recover, as a result 

of energy savings, the increased costs of 

higher-efficiency equipment based on 

the operating cost savings from the first 

year of ownership. The PBP is an 

economic benefit-cost measure that uses 

benefits and costs without discounting. 

TSD Chapter 8 details the LCC and PBP 

analyses. 

TABLE V.9—SUMMARY LCC AND PBP RESULTS FOR STANDARD SIZE PTAC WITH A COOLING CAPACITY OF

9,000 BTU/H

Trial standard level * 

1 2 3 A 4 5 6 

EER ...................................................................................... 10.9 10.9 11.1 11.1 10.9 11.3 11.5 

PTAC with Net LCC Increase (%) ....................................... 15 15 30 30 15 46 62 

PTAC with No Change in LCC (%) ..................................... 77 77 56 56 77 37 18 

PTAC with Net LCC Savings (%) ........................................ 7 7 14 14 7 17 21 

Mean LCC Savings (2007$) ................................................ (1 ) (1 ) (3 ) (3 ) (1 ) (6 ) (10 ) 

Mean Payback Period (years) ............................................. 13.0 13.0 13.7 13.7 13.0 14.5 15.2 

* Numbers in parentheses indicate negative LCC savings, i.e., an increase in LCC. Detailed percentage changes may not sum to 100% due to 

rounding. 

TABLE V.10—SUMMARY LCC AND PBP RESULTS FOR STANDARD SIZE PTHP WITH A COOLING CAPACITY OF

9,000 BTU/H

Trial standard level * 

1 2 3 A 4 5 6 

EER ...................................................................................... 10 .9 11 .1 11 .1 11 .3 11 .3 11 .3 11 .5 

PTHP with Net LCC Increase (%) ....................................... 7 10 10 13 13 13 24 

PTHP with No Change in LCC (%) ..................................... 78 57 57 37 37 37 18 

PTHP with Net LCC Savings (%) ........................................ 16 33 33 50 50 50 58 

Mean LCC Savings (2007$) ................................................ 11 20 20 28 28 28 24 

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

* Numbers in parentheses indicate negative LCC savings, i.e., an increase in LCC. Detailed percentage changes may not sum to 100% due to 

rounding. 

TABLE V.11—SUMMARY LCC AND PBP RESULTS FOR STANDARD SIZE PTAC WITH A COOLING CAPACITY OF

12,000 BTU/H

Trial standard level * 

1 2 3 A 4 5 6 

EER ...................................................................................... 10.2 10.2 10.4 10.2 10.2 10.6 10.8 

PTAC with Net LCC Increase (%) ....................................... 16 16 31 16 16 48 65 

PTAC with No Change in LCC (%) ..................................... 77 77 56 77 77 36 18 

PTAC with Net LCC Savings (%) ........................................ 7 7 13 7 7 16 17 

Mean LCC Savings * (2007$) .............................................. (2 ) (2 ) (5 ) (2 ) (2 ) (10 ) (15 ) 

Mean PBP (years) ............................................................... 13.1 13.1 14.0 13.1 13.1 14.9 15.9 

* Numbers in parentheses indicate negative savings, i.e., an increase in LCC. Detailed percentage changes may not sum to 100% due to 

rounding. 

TABLE V.12—SUMMARY LCC AND PBP RESULTS FOR STANDARD SIZE PTHP WITH A COOLING CAPACITY OF

12,000 BTU/H

Trial standard level * 

1 2 3 A 4 5 6 

EER ...................................................................................... 10 .2 10 .4 10 .4 10 .4 10 .6 10 .6 10 .8 

PTHP with Net LCC Increase (%) ....................................... 7 10 10 10 21 21 35 

PTHP with No Change in LCC (%) ..................................... 77 57 57 57 37 37 18 

PTHP with Net LCC Savings (%) ........................................ 16 33 33 33 42 42 47 

Mean LCC Savings (2007$) ................................................ 13 24 24 24 20 20 14 

Mean PBP (years) ............................................................... 5 .1 4 .6 4 .6 4 .6 5 .5 5 .5 6 .4 

* Numbers in parentheses indicate negative savings, i.e., an increase in LCC. Detailed percentage changes may not sum to 100% due to 

rounding. 


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TABLE V.13—SUMMARY LCC AND PBP RESULTS FOR NON-STANDARD SIZE PTACS WITH A COOLING CAPACITY OF

11,000 BTU/H

Trial standard level * 

1 2 3 4 5 

EER .............................................................................................................................. 9 .4 9 .4 9 .7 9 .4 10 .0 

PTAC with Net LCC Increase (%) ............................................................................... 6 6 14 6 25 

PTAC with No Change in LCC (%) ............................................................................. 73 73 47 73 23 

PTAC with Net LCC Savings (%) ................................................................................ 22 22 39 22 52 

Mean LCC Savings (2007$) ........................................................................................ 26 26 30 26 31 

Mean PBP (years) ....................................................................................................... 4 .4 4 .4 5 .1 4 .4 5 .9 

* Numbers in parentheses indicate negative savings, i.e., an increase in LCC. Detailed percentage changes may not sum to 100% due to 

rounding. 

TABLE V.14—SUMMARY LCC AND PBP RESULTS FOR NON-STANDARD SIZE PTHPS WITH A COOLING CAPACITY OF

11,000 BTU/H

Trial standard level * 

1 2 3 4 5 

EER .............................................................................................................................. 9 .4 9 .7 9 .7 10 .0 10 .0 

PTHP with Net LCC Increase (%) ............................................................................... 1 3 3 5 5 

PTHP with No Change in LCC (%) ............................................................................. 73 47 47 23 23 

PTAC with Net LCC Savings (%) ................................................................................ 27 50 50 72 72 

Mean LCC Savings (2007$) ........................................................................................ 62 66 66 80 80 

Mean PBP (years) ....................................................................................................... 2 .2 2 .8 2 .8 3 .0 3 .0 

* Numbers in parentheses indicate negative savings, i.e., an increase in LCC. Detailed percentage changes may not sum to 100% due to 

rounding. 

For PTACs and PTHPs with a cooling 

capacity of less than 7,000 Btu/h, DOE 

established the energy conservation 

standards using a cooling capacity of 

7,000 Btu/h in the efficiency-capacity 

equation (see section VI.A). The LCC 

and PBP impacts for equipment in this 

category will be similar to the impacts 

for the 9,000 Btu/h units because the 

MSP and usage characteristics are in a 

similar range. Similarly, for PTACs and 

PTHPs with a cooling capacity greater 

than 15,000 Btu/h, DOE established the 

energy conservation standards using a 

cooling capacity of 15,000 Btu/h in the 

efficiency-capacity equation. Further, 

for PTACs and PTHPs with a cooling 

capacity greater than 15,000 Btu/h, DOE 

established that the impacts will be 

similar for units with a cooling capacity 

of 12,000 Btu/h. Section V.A of today’s 

final rule provides more details on how 

DOE developed the energy-efficiency 

equations based on the analysis results 

for the representative cooling capacities. 

b. Commercial Consumer Subgroup 

Analysis 

DOE estimated commercial consumer 

subgroup impacts by determining the 

LCC impacts at each TSL on small 

businesses, such as small independent 

hotels and motels. Table V.15 shows the 

mean LCC savings from the final energy 

conservation standards; Table V.16 

shows the mean payback period (in 

years) for this subgroup of commercial 

consumers. DOE’s analysis using the 

LCC spreadsheet model indicated that 

the LCC and PBP impacts on the small 

independent hotels and motels were 

similar to the corresponding impacts on 

the larger population of the commercial 

consumers. Chapter 12 of the TSD 

explains DOE’s method for conducting 

the consumer subgroup analysis and 

presents the detailed results of that 

analysis. 

TABLE V.15—MEAN LIFE-CYCLE COST SAVINGS FOR PTAC OR PTHP EQUIPMENT PURCHASED BY LCC SUBGROUPS

(2007$) 

Equipment class (cooling capacity) Trial standard level 

Standard Size TSL 1 TSL 2 TSL 3 TSL A TSL 4 TSL 5 TSL 6 

Standard Size PTAC (9,000 Btu/h) ................................................................. (2 ) (2 ) (5 ) (5 ) (2 ) (9 ) (13 ) 

Standard Size PTHP (9,000 Btu/h) ................................................................. 8 16 16 22 22 22 17 

Standard Size PTAC (12,000 Btu/h) ............................................................... (4 ) (4 ) (7 ) (4 ) (4 ) (13 ) (19 ) 

Standard Size PTHP (12,000 Btu/h) ............................................................... 10 18 18 18 13 13 7 

Non-Standard Size TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

Non-Standard Size PTAC ................................................................................ 22 22 24 22 23 

Non-Standard Size PTHP ................................................................................ 54 56 56 68 68 

* Numbers in parentheses indicate negative savings. 


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TABLE V.16—MEAN PAYBACK PERIOD FOR PTAC OR PTHP EQUIPMENT PURCHASED BY LCC SUBGROUPS (YEARS) 

Equipment class (cooling capacity) Trial standard level 

Standard Size TSL 1 TSL 2 TSL 3 TSL A TSL 4 TSL 5 TSL 6 

Standard Size PTAC (9,000 Btu/h) ............................................................................... 13.0 13.0 13.6 13.6 13.0 14.4 15.1 

Standard Size PTHP (9,000 Btu/h) ............................................................................... 5.0 4.5 4.5 4.4 4.4 4.4 5.1 

Standard Size PTAC (12,000 Btu/h) ............................................................................. 13.1 13.1 13.9 13.1 13.1 14.8 15.8 

Standard Size PTHP (12,000 Btu/h) ............................................................................. 5.1 4.6 4.6 4.6 5.5 5.5 6.3 

Non-Standard Size TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

Non-Standard Size PTAC .............................................................................................. 4.4 4.4 5.1 4.4 5.9 

Non-Standard Size PTHP .............................................................................................. 2.2 2.8 2.8 2.9 2.9 

2. Economic Impact on Manufacturers 

DOE described the qualitative 

economic impacts of today’s standard 

on manufacturers in the NOPR. 73 FR 

18893–99. This analysis is described in 

greater detail in Chapter 13 of the TSD. 

As part of its NOPR analysis, DOE 

analyzed two distinct markup scenarios: 

(1) The flat markup scenario, and (2) the 

partial cost recovery markup scenario. 

73 FR 18886. The flat markup scenario 

can also be characterized as the 

‘‘preservation of gross margin 

percentage’’ scenario. Under this 

scenario, DOE applied, across all TSLs, 

a single uniform ‘‘gross margin 

percentage’’ markup that DOE believes 

represents the current markup for 

manufacturers in the PTAC and PTHP 

industry. This flat markup scenario 

implies that, as production costs 

increase with efficiency, the absolute 

dollar markup will also increase. DOE 

calculated that the non-production cost 

markup, which consists of SG&A 

expenses, R&D expenses, interest, and 

profit, is 1.29. This markup is consistent 

with the one DOE used in its 

engineering and GRIM analyses for the 

base case. 

The implicit assumption behind the 

‘‘partial cost recovery’’ scenario is that 

the industry can pass-through only part 

of its regulatory-driven increases in 

production costs to consumers in the 

form of higher prices. DOE implemented 

this markup scenario in the GRIM by 

setting the non-production cost markups 

at each TSL to yield an increase in MSP 

equal to half the increase in production 

cost. 

Together, these two markup scenarios 

characterize the markup conditions 

described by manufacturers, and reflect 

the range of market responses 

manufacturers expect as a result of the 

R–22 phaseout and the amended energy 

conservation standards (See Chapter 13 

of the TSD for additional details of the 

markup scenarios.). For this final rule, 

DOE also examined both of these 

scenarios. 

a. Industry Cash-Flow Analysis Results 

Using the two different markup 

scenarios described above, DOE 

estimated the impact of amended 

standards for PTACs and PTHPs on the 

INPV of the package terminal equipment 

industry. See 73 FR 18886–87 and 

18893–94. The impact of new standards 

on INPV consists of the difference 

between the INPV in the base case and 

the INPV in the standards case. INPV is 

the primary metric used in the MIA, and 

represents one measure of the fair value 

of the industry in today’s dollars. DOE 

calculated the INPV by summing all of 

the net cash flows, discounted at the 

industry’s cost of capital or discount 

rate. 

Table V.17 through Table V.20 show 

the estimated changes in INPV for 

manufacturers of standard size packaged 

terminal equipment and non-standard 

size packaged terminal equipment, 

respectively, that would result from the 

TSLs DOE considered for this final rule. 

The tables also present the equipment 

conversion expenses and capital 

investments that the industry would 

incur at each TSL. Equipment 

conversion expenses include 

engineering, prototyping, testing, and 

marketing expenses incurred by a 

manufacturer as it prepares to comply 

with a standard. Capital investments are 

the one-time outlays for equipment and 

buildings required for the industry to 

comply (i.e., conversion capital 

expenditures). 

TABLE V.17—MANUFACTURER IMPACT ANALYSIS RESULTS, INCLUDING INPV ESTIMATES, FOR STANDARD SIZE PTACS

AND PTHPS UNDER THE FLAT MARKUP SCENARIO

R–410A full cost recovery with amended energy standards full recovery of increased cost 

Units Base 

case 

Trial standard level 

1 2 3 A 4 5 6 

INPV .......................... (2007$ millions) ........ 427 424 421 424 419 419 426 423 

Change in INPV ........ (2007$ millions) ........ ................ ¥3 ¥6 ¥3 ¥8 ¥8 ¥1 ¥4 

(%) ............................ ................ ¥0 .8 ¥1 .4 ¥0 .8 ¥1 .9 ¥1 .9 ¥0 .2 ¥0 .9 

Amended Energy 

Conservation 

Standards Equipment Conversion 

Expenses.

(2007$ millions) ........ ................ 4 .5 7 .4 6 .3 9 .1 10 .6 7 .2 13 .5 

Amended Energy 

Conservation 

Standards Capital 

Conversion Expenses.

(2007$ millions) ........ ................ 3 .5 5 .7 4 .9 8 .2 8 .2 5 .6 10 .4 


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TABLE V.17—MANUFACTURER IMPACT ANALYSIS RESULTS, INCLUDING INPV ESTIMATES, FOR STANDARD SIZE PTACS

AND PTHPS UNDER THE FLAT MARKUP SCENARIO—Continued 

R–410A full cost recovery with amended energy standards full recovery of increased cost 

Units Base 

case 

Trial standard level 

1 2 3 A 4 5 6 

Total Energy Conservation Standards 

Investment Required.

(2007$ millions) ........ ................ 8 .0 13 .2 11 .2 17 .3 18 .7 12 .8 23 .9 

TABLE V.18—MANUFACTURER IMPACT ANALYSIS RESULTS, INCLUDING INPV ESTIMATES, FOR STANDARD SIZE PTACS

AND PTHPS UNDER THE PARTIAL COST RECOVERY MARKUP SCENARIO

R–410A base case full cost recovery with amended energy standards partial cost recovery 

Units Base 

case 

Trial standard level 

1 2 3 A 4 5 6 

INPV ........................... (2007$ millions) ......... 427 399 382 367 366 359 325 263 

Change in INPV ......... (2007$ millions) ......... .............. ¥28 ¥45 ¥60 ¥61 ¥68 ¥103 ¥164 

(%) ............................. .............. ¥6 .6 ¥10 .7 ¥14 .0 ¥14 .3 ¥16 .0 ¥24 .0 ¥38 .3 

Amended Energy Conservation Standards 

Equipment Conversion Expenses.

(2007$ millions) ......... .............. 4 .5 7 .4 6 .3 9 .1 10 .6 7 .2 13 .5 

Amended Energy Conservation Standards 

Capital Conversion 

Expenses.

(2007$ millions) ......... .............. 3 .5 5 .7 4 .9 8 .2 8 .2 5 .6 10 .4 

Total Energy Conservation Standards 

Investment Required.

(2007$ millions) ......... .............. 8 .0 13 .2 11 .2 17 .3 18 .7 12 .8 23 .9 

TABLE V.19—MANUFACTURER IMPACT ANALYSIS RESULTS, INCLUDING INPV ESTIMATES, FOR NON-STANDARD SIZE

PTACS AND PTHPS UNDER THE FLAT MARKUP SCENARIO

R–410A full cost recovery with amended energy standards full recovery of increased cost 

Units Base 

case 

Trial standard level 

1 2 3 4 5 

INPV ............................................... (2007$ millions) ............................. 30 14 13 13 9 11 

Change in INPV ............................. (2007$ millions) ............................. .............. ¥16 ¥17 ¥17 ¥21 ¥20 

(%) ................................................. .............. ¥53 .6 ¥57 .6 ¥56 .3 ¥68 .5 ¥64 .8 

Amended Energy Conservation 

Standards Equipment Conversion Expenses.

(2007$ millions) ............................. .............. 20 .5 21 .0 21 .0 23 .8 23 .8 

Amended Energy Conservation 

Standards Capital Conversion 

Expenses.

(2007$ millions) ............................. .............. 1 .3 2 .3 2 .0 3 .6 2 .6 

Total Energy Conservation Standards Investment Required.(2007$ millions) ............................. .............. 21 .8 23 .3 23 .0 27 .3 26 .4 

TABLE V.20—MANUFACTURER IMPACT ANALYSIS RESULTS, INCLUDING INPV ESTIMATES, FOR NON-STANDARD SIZE

PTACS AND PTHPS UNDER THE PARTIAL COST RECOVERY MARKUP SCENARIO

R–410A base case full cost recovery with amended energy standards partial cost recovery 

Units Base 

case 

Trial standard level 

1 2 3 4 5 

INPV ............................................... (2007$ millions) ............................. 30 13 11 10 7 6 

Change in INPV ............................. (2007$ millions) ............................. .............. ¥17 ¥19 ¥20 ¥23 ¥24 

(%) ................................................. .............. ¥57 .8 ¥63 .8 ¥65 .4 ¥78 .0 ¥81 .2 

Amended Energy Conservation 

Standards Equipment Conversion Expenses.

(2007$ millions) ............................. .............. 20 .5 21 .0 21 .0 23 .8 23 .8 


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TABLE V.20—MANUFACTURER IMPACT ANALYSIS RESULTS, INCLUDING INPV ESTIMATES, FOR NON-STANDARD SIZE

PTACS AND PTHPS UNDER THE PARTIAL COST RECOVERY MARKUP SCENARIO—Continued 

R–410A base case full cost recovery with amended energy standards partial cost recovery 

Units Base 

case 

Trial standard level 

1 2 3 4 5 

Amended Energy Conservation 

Standards Capital Conversion 

Expenses.

(2007$ millions) ............................. .............. 1 .3 2 .3 2 .0 3 .6 2 .6 

Total Energy Conservation Standards Investment Required.(2007$ millions) ............................. .............. 21 .8 23 .3 23 .0 27 .3 26 .4 

The NOPR provides a discussion of 

the estimated impact of amended PTAC 

and PTHP standards on INPV for each 

equipment class. 73 FR 18893–97. This 

qualitative discussion on the estimated 

impacts of amended PTAC and PTHP 

standards in INPV for each equipment 

class for the final rule can be found in 

Chapter 13 of the TSD. 

b. Impacts on Employment 

As discussed in the NOPR, DOE 

expects no significant, discernable 

direct employment impacts on both 

standard size and non-standard size 

PTAC and PTHP manufacturers under 

today’s standards compared to the base 

case, or under any of the TSLs 

considered for today’s rule. 73 FR 

18898. Today’s notice estimates the 

impacts on U.S. production workers in 

the standard size and non-standard size 

PTAC and PTHP industry impacted by 

the final rule. The estimated impacts are 

shown in Table V.21. For the standard 

size PTAC and PTHP industry, DOE 

does not expect negative direct 

employment impacts because the labor 

content of each unit produced is 

expected to be slightly higher and the 

total number of units produced is 

expected to be the same. Furthermore, 

based on interviews with domestic 

manufacturers, DOE expects the 

proportion of units produced 

domestically to remain unchanged. 

Therefore, DOE presents a scenario 

where employment increases as a 

function of increasing production costs. 

For the non-standard size PTAC and 

PTHP industry, DOE reports a range of 

possible domestic employment impacts. 

Assuming shipment levels and product 

availability remain at the levels 

experienced in the current market, DOE 

expects a slight increase in domestic 

employment as characterized by the 

high-bound scenario. However, if either 

shipments drop or if manufacturers 

respond to higher labor requirements by 

shifting production to lower-labor-cost 

countries, DOE expects that there could 

be reductions in total domestic 

employment as characterized by the 

low-bound scenario. Further support for 

these conclusions is set forth in Chapter 

13 of the final rule TSD. 

TABLE V.21—CHANGE IN TOTAL NUMBER OF DOMESTIC PRODUCTION EMPLOYEES IN 2012 IN THE STANDARD SIZE AND

NON-STANDARD SIZE PTAC AND PTHP MANUFACTURING INDUSTRY * 

Standard size PTAC and PTHP manufacturing industry 

TSL 1 TSL 2 TSL 3 TSL A TSL 4 TSL 5 TSL 6 

Change in Total Number of Domestic 

Production Employees in 2012 ............ 1 2 3 3 3 6 9 

Non-standard size PTAC and PTHP manufacturing industry 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

Change in Total Number of Domestic Production Employees in 2012 .. (106)—1 (106)—1 (107)—1 (107)—1 (108)—2 

* Numbers in parentheses indicate a loss in domestic employment. 

3. National Net Present Value and Net 

National Employment 

The NPV analysis estimates the 

cumulative benefits or costs to the 

Nation that would result from particular 

standard levels. While the NES analysis 

estimates the energy savings from each 

standard level DOE considers, relative 

to the base case, the NPV analysis 

estimates the national economic impacts 

of each such level relative to the base 

case. Table V.22 and Table V.23 provide 

an overview of the NPV results for 

PTACs and PTHPs, respectively, using 

both a 7-percent and a 3-percent real 

discount rate. See TSD Chapter 11 for 

more detailed NPV results. 

TABLE V.22—SUMMARY OF CUMULATIVE NET PRESENT VALUE FOR STANDARD SIZE PTACS AND PTHPS

Trial standard level 

PTAC NPV * 

(million 2007$) 

PTHP NPV * 

(million 2007$) 

PTAC and PTHP 

NPV * (million 2007$) 

7% Discount 

rate 

3% Discount 

rate 

7% Discount 

rate 

3% Discount 

rate 

7% Discount 

rate 

3% Discount 

rate 

1 ................................................... ($3) ($1) $4 $18 $1 $17 

2 ................................................... (3) (1) 12 44 8 43 


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58810 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 

TABLE V.22—SUMMARY OF CUMULATIVE NET PRESENT VALUE FOR STANDARD SIZE PTACS AND PTHPS—Continued 

Trial standard level 

PTAC NPV * 

(million 2007$) 

PTHP NPV * 

(million 2007$) 

PTAC and PTHP 

NPV * (million 2007$) 

7% Discount 

rate 

3% Discount 

rate 

7% Discount 

rate 

3% Discount 

rate 

7% Discount 

rate 

3% Discount 

rate 

3 ................................................... (9) (6) 12 44 2 38 

A ................................................... (5) (3) 15 57 10 54 

4 ................................................... (3) (1) 10 50 6 49 

5 ................................................... (20) (20) 10 50 (11) 31 

6 ................................................... (38) (43) (3) 34 (41) (10) 

* Numbers in parentheses indicate negative NPV, i.e., a net cost. Detail may not appear to sum to total due to rounding. 

TABLE V.23—SUMMARY OF CUMULATIVE NET PRESENT VALUE FOR NON-STANDARD SIZE PTACS AND PTHPS

Trial standard level 

PTAC NPV * 

(million 2007$) 

PTHP NPV * 

(million 2007$) 

PTAC and PTHP 

NPV* (million 2007$) 

7% Discount 

rate 

3% Discount 

rate 

7% Discount 

rate 

3% Discount 

rate 

7% Discount 

rate 

3% Discount 

rate 

1 ................................................... $2 $6 $3 $8 $5 $14 

2 ................................................... 2 6 4 10 6 16 

3 ................................................... 3 8 4 10 7 19 

4 ................................................... 2 6 6 17 8 23 

5 ................................................... 4 11 6 17 10 29 

* Numbers in parentheses indicate negative NPV, i.e., a net cost. Detail may not appear to sum to total due to rounding. 

Using a 3-percent discount rate 

increases the present value of future 

equipment purchase costs and operating 

cost savings. Because annual operating 

cost savings in later years grow at a 

faster rate than annual equipment 

purchase costs, using a 3-percent 

discount rate increases the NPV at most 

TSLs. (See TSD Chapter 11.) 

DOE also estimated the national 

employment impacts that would result 

from each TSL. As discussed in the 

NOPR, 73 FR 18887, 18899–900, 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. 

As Table V.24 and Table V.25 illustrate, 

DOE estimates net indirect employment 

impacts—those changes of employment 

in the larger economy (other than in the 

manufacturing sector being regulated)— 

from PTAC and PTHP energy 

conservation standards to be positive 

but very small relative to total national 

employment, primarily due to the small 

net monetary savings from PTAC and 

PTHP standards available for transfer to 

other sectors, relative to the economy as 

a whole. This increase would likely be 

sufficient to fully offset any adverse 

impacts on employment that might 

occur in the packaged terminal 

equipment industry. For details on the 

employment impact analysis methods 

and results, see TSD Chapter 15. 

TABLE V.24—NET NATIONAL CHANGE

IN INDIRECT EMPLOYMENT, JOBS IN

2042, STANDARD SIZE PTACS AND

PTHPS

Trial standard level 

Net national 

change in jobs 

(number of 

jobs) 

PTACs PTHPs 

1 ........................................ 14 27 

2 ........................................ 14 56 

3 ........................................ 31 56 

A ....................................... 20 71 

4 ........................................ 14 82 

5 ........................................ 56 82 

6 ........................................ 86 104 

TABLE V.25—NET NATIONAL CHANGE

IN INDIRECT EMPLOYMENT, JOBS IN

2042, NON-STANDARD SIZE PTACS

AND PTHPS

Trial standard level 

Net national 

change in jobs 

(number of 

jobs) 

PTACs PTHPs 

1 ........................................ 3 5 

2 ........................................ 3 6 

3 ........................................ 6 6 

4 ........................................ 3 11 

5 ........................................ 9 11 

4. Impact on Utility or Performance of 

Equipment 

DOE believes that the standards it is 

adopting today will not lessen the 

utility or performance of any PTAC or 

PTHP because of the steps DOE has 

taken to establish product classes and 

evaluate design options and the impact 

of potential standard levels, as indicated 

in section V.B.4 of the NOPR. 73 FR 

18900. DOE stated in the NOPR, it was 

concerned about the potential 

misclassification of a portion of the nonstandard size market if the delineations 

within ASHRAE Standard 90.1–1999 

were adopted by DOE. 73 FR 18865. 

DOE has mitigated non-standard 

manufacturers’ concerns by adopting 

the delineations within Addendum t to 

ASHRAE Standard 90.1–2007 for 

distinguishing various sleeve size 

equipment. 

5. Impact of Any Lessening of 

Competition 

As discussed in the NOPR, 73 FR 

18865, 18900, and in section III.D.5 of 

this notice, DOE considered any 

lessening of competition likely to result 

from standards. The Attorney General 

determines the impact of any such 

lessening of competition. 

In its comment on the NOPR, DOJ 

expressed concerns about whether the 

proposed standards would adversely 

affect competition. In particular, DOJ 

stated its belief that the efficiency levels 

for non-standard size PTACs and PTHPs 

in the NOPR may create a risk that is too 


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Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 58811 

strict for the manufacturers to satisfy 

given the state of the technology. DOJ 

further commented that non-standard 

customers could face the choice of 

incurring capital expenditures to alter 

the size of the wall opening to 

accommodate standard size PTACs and 

PTHPs if non-standard size units 

become unavailable. DOJ also stated its 

concerns regarding the efficiency levels 

for standard size PTHPs proposed in the 

NOPR, arguing the proposed levels 

would be too stringent for the 

manufacturers to achieve. (DOJ, No. 21 

at p. 1–2) The Attorney General’s 

response is reprinted at the end of 

today’s rulemaking. 

6. Need of the Nation To Conserve 

Energy 

An improvement in the energy 

efficiency of PTACs and PTHPs, where 

economically justified, is likely to 

improve the security of the Nation’s 

energy system by reducing overall 

demand for energy, and thus, reducing 

the Nation’s reliance on foreign sources 

of energy. Reduced demand is also 

likely to improve the reliability of the 

electricity system, particularly during 

peak-load periods. As a measure of this 

reduced demand, DOE expects the 

amended standards covered under this 

rulemaking to eliminate the need for 

construction of between approximately 

40 megawatts and 196 megawatts of new 

power by 2042. 

Enhanced energy efficiency also 

produces environmental benefits. The 

expected energy savings from higher 

standards for the products covered by 

this rulemaking will reduce the 

emissions of air pollutants and 

greenhouse gases associated with energy 

production and building use of fossil 

fuels. Table V.26 and Table V.27 show 

cumulative CO2, NOX, and Hg emissions 

reductions for standard size and nonstandard size PTACs and PTHPs by TSL 

over the rulemaking period. The 

expected energy savings from amended 

standards will reduce the emissions of 

greenhouse gases associated with energy 

production, and may reduce the cost of 

maintaining nationwide emissions 

standards and constraints. 

TABLE V.26—SUMMARY OF EMISSIONS REDUCTIONS FOR STANDARD SIZE PTACS AND PTHPS (CUMULATIVE

REDUCTIONS FOR EQUIPMENT SOLD FROM 2012 TO 2042) 

Trial standard levels 

TSL 1 TSL 2 TSL 3 TSL A TSL 4 TSL 5 TSL 6 

Emissions Reductions for PTACs * 

CO2 (Mt) ........... 0.20 ................. 0.20 ................. 0.45 ................. 0.29 ................. 0.20 ................. 0.79 ................. 1.22. 

NOX (kt) ............ 0.01 to 0.31 ..... 0.01 to 0.31 ..... 0.03 to 0.69 ..... 0.02 to 0.45 ..... 0.01 to 0.31 ..... 0.05 to 1.23 ..... 0.08 to 1.88. 

Hg (t) ................. 0 to 0.007 ........ 0 to 0.007 ........ 0 to 0.016 ........ 0 to 0.010 ........ 0 to 0.007 ........ 0 to 0.028 ........ 0 to 0.043. 

Emissions Reductions for PTHPs * 

CO2 (Mt) ........... 0.29 ................. 0.61 ................. 0.61 ................. 0.77 ................. 0.88 ................. 0.88 ................. 1.12. 

NOX (kt) ............ 0.03 to 0.63 ..... 0.05 to 1.33 ..... 0.05 to 1.33 ..... 0.07 to 1.68 ..... 0.08 to 1.94 ..... 0.08 to 1.94 ..... 0.10 to 2.46. 

Hg (t) ................. 0 to 0.010 ........ 0 to 0.021 ........ 0 to 0.021 ........ 0 to 0.027 ........ 0 to 0.031 ........ 0 to 0.031 ........ 0 to 0.039. 

Emissions Reductions for PTACs and PTHPs * 

CO2 (Mt) ........... 0.49 ................. 0.81 ................. 1.05 ................. 1.06 ................. 1.09 ................. 1.68 ................. 2.34. 

NOX (kt) ............ 0.04 to 0.94 ..... 0.07 to 1.64 ..... 0.08 to 2.02 ..... 0.09 to 2.13 ..... 0.09 to 2.25 ..... 0.13 to 3.17 ..... 0.18 to 4.34. 

Hg (t) ................. 0 to 0.017 ........ 0 to 0.028 ........ 0 to 0.037 ........ 0 to 0.037 ........ 0 to 0.038 ........ 0 to 0.059 ........ 0 to 0.082. 

* Negative values indicate emission increases. Detail may not appear to sum to total due to rounding. 

TABLE V.27—SUMMARY OF EMISSIONS REDUCTIONS FOR NON-STANDARD SIZE PTACS AND PTHPS (CUMULATIVE

REDUCTIONS FOR EQUIPMENT SOLD FROM 2012 TO 2042) 

Trial standard levels 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

Emissions Reductions for PTACs * 

CO2 (Mt) .................... 0.06 ........................... 0.06 ........................... 0.10 ........................... 0.06 ........................... 0.16. 

NOX (kt) ..................... 0.004 to 0.10 ............. 0.004 to 0.10 ............. 0.006 to 0.16 ............. 0.004 to 0.10 ............. 0.010 to 0.24. 

Hg (t) ......................... 0 to 0.002 .................. 0 to 0.002 .................. 0 to 0.004 .................. 0 to 0.002 .................. 0 to 0.005. 

Emissions Reductions for PTHPs * 

CO2 (Mt) .................... 0.06 ........................... 0.08 ........................... 0.08 ........................... 0.14 ........................... 0.14. 

NOX (kt) ..................... 0.005 to 0.13 ............. 0.007 to 0.18 ............. 0.007 to 0.18 ............. 0.012 to 0.30 ............. 0.012 to 0.30. 

Hg (t) ......................... 0 to 0.002 .................. 0 to 0.003 .................. 0 to 0.003 .................. 0 to 0.005 .................. 0 to 0.005. 

Emissions Reductions for PTACs and PTHPs * 

CO2 (Mt) .................... 0.12 ........................... 0.14 ........................... 0.18 ........................... 0.20 ........................... 0.29. 

NOX (kt) ..................... 0.009 to 0.23 ............. 0.011 to 0.28 ............. 0.014 to 0.34 ............. 0.016 to 0.40 ............. 0.022 to 0.55. 

Hg (t) ......................... 0 to 0.004 .................. 0 to 0.005 .................. 0 to 0.006 .................. 0 to 0.007 .................. 0 to 0.010. 

* Negative values indicate emission increases. Detail may not appear to sum to total due to rounding. 


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58812 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 

16See http://www.epa.gov/cleanairinterstaterule/. 

17Case No. 05–1244, 2008 WL 2698180 at *1 (DC 

Cir. July 11, 2008). 

18 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. 73 FR 21528 (April 22, 2008). 

The estimated cumulative CO2, NOX, 

and Hg emissions reductions for the 

amended energy conservation standards 

range up to a maximum of 2.34 Mt for 

CO2, 0.04 to 4.34 kt for NOX, and 0 to 

0.08 t for Hg for standard size PTACs 

and PTHPs over the period from 2012 to 

2042. In the Environmental Assessment 

(Chapter 16 of the FR TSD), DOE reports 

estimated annual changes in CO2, NOX, 

and Hg emissions attributable to each 

TSL. As discussion in section IV.J of 

this final rule, 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 

on March 10, 2005.16 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,17 in 

which the court vacated the CAIR. 531 

F.3d 896 (D.C. Cir. 2008). 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 

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 

that DOE is amending today, the 

standards might have produced an 

environmental-related 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 insignificant and 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. 63 FR 57356, 57359 (Oct. 27, 

1998).18 DOE notes that the SIP Call rule 

may provide a similar, although smaller 

in extent, regional cap and may limit 

actual reduction in NOX emissions from 

revised standards occurring in States 

participating in the SIP Call rule. 

However, the possibility that the SIP 

Call rule may have the same effect as 

CAIR is highly uncertain. Therefore, 

DOE established a range of NOX

reductions due to the standards being 

amended in today’s final rule. DOE’s 

low estimate was based on the emission 

rate of the cleanest new natural gas 

combined-cycle power plant available 

for electricity generated based on the 

assumption that energy conservation 

standards would result in only the 

cleanest available fossil-fueled 

generation being displaced. DOE used 

the emission rate, specified in 0.0341t of 

NOX emitted per TWh of electricity 

generated, associated with an advanced 

natural gas combined-cycle power plant, 

as specified by NEMS–BT. To estimate 

the reduction in NOX emissions, DOE 

multiplied this emission rate by the 

reduction in electricity generation due 

to the amended energy conservation 

standards considered. DOE’s high 

estimate of 0.843 t of NOX per TWh was 

based on the use of a nationwide NOX

emission rate for all electrical 

generation. Use of such an emission rate 

assumes that future energy conservation 

standards would result in displaced 

electrical generation mix that is 

equivalent to today’s mix of power 

plants (i.e., future power plants 

displaced are no cleaner than what are 

being used currently to generate 

electricity). In addition, under the high 

estimate assumption, energy 

conservation standards would have 

little to no effect on the generation mix. 

Based on AEO2008 for a recent year 

(2006) in which no regulatory or nonregulatory measures were in effect to 

limit NOX emissions, DOE multiplied 

this emission rate by the reduction in 

electricity generation due to the 

standards considered. The range in NOX

emission changes calculated under 

using the low and high estimate 

scenarios are shown in Table V.26 and 

Table V.27 by TSL. The range of total 

NOX emission reductions is from 0.04 to 

4.34 tons for the range of TSLs 

considered. These changes in NOX

emissions are extremely small, with a 

range between 0.0001 and 0.009 percent 

of the national base case emissions 

forecast by NEMS–BT, depending on the 

TSL. 

As noted above in section IV.J, with 

regard to Hg emissions, DOE is able to 

report an estimate of the physical 

quantity changes in these emissions 

associated with an energy conservation 

standard. As opposed to using the 

NEMS–BT model, DOE established a 

range of Hg rates to estimate the Hg 

emissions that could be reduced from 

standards. DOE’s low estimate was 

based on the assumption that future 

standards would displace electrical 

generation from natural gas-fired power 

plants resulting in an effective emission 

rate of zero. The low-end emission rate 

is zero because virtually all Hg emitted 

from electricity generation is from coalfired power plants. Based on an 

emission rate of zero, no emissions 

would be reduced from energy 

conservation standards. DOE’s high 

estimate was based on the use of a 

nationwide mercury emission rate from 

AEO2008. Because power plant 

emission rates are a function of local 

regulation, scrubbers, and the mercury 

content of coal, it is extremely difficult 

to come up with a precise high-end 

emission rate. Therefore, DOE believes 

the most reasonable estimate is based on 

the assumption that all displaced coal 

generation would have been emitting at 

the average emission rate for coal 

generation as specified by AEO2008. As 

noted previously, because virtually all 

mercury emitted from electricity 

generation is from coal-fired power 

plants, DOE based the emission rate on 

the tons of mercury emitted per TWh of 

coal-generated electricity. Based on the 

emission rate for a recent year (2006), 

DOE derived a high-end emission rate of 

0.0255 tons per TWh. To estimate the 

reduction in mercury emissions, DOE 

multiplied the emission rate by the 

reduction in coal-generated electricity 

due to the standards considered as 

determined in the utility impact 

analysis. The estimated changes in Hg 


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Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 58813 

19 70 FR 28606 (May 18, 2005). 

20No. 05–1097, 2008 WL 341338, at * (DC Cir. 

Feb. 9, 2008), 

21 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 carbon-dioxide 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 the estimates 

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 CO2 reductions likely 

to result from standards finalized in this 

rulemaking. According to IPCC, the mean social 

cost of carbon (SCC) reported in studies published 

in peer-reviewed journals was $43 per ton of 

carbon. This translates into about $12 per ton of 

carbon dioxide. The literature review (Tol 2005) 

from which this mean was derived did not report 

the year in which these dollars were denominated. 

However, we understand this estimate was 

denominated in 1995 dollars. Updating that 

estimate to 2007 dollars yields a SCC of $15 per ton 

of carbon dioxide. 

22 In contrast, most of the estimates of costs and 

benefits of increasing the efficiency of PTACs and 

PTHPs include only economic values of impacts 

that would be experienced in the U.S. For example, 

in determining impacts on manufacturers, DOE 

generally does not consider impacts that occur 

solely outside of the United States. 

23EarthJustice, ACEEE, and the Natural Resource 

Defense Council noted that the analysis of the 

America’s Climate Security Bill of 2007, used a 

value of $17 per ton of CO2 with a 7.4 percent 

annual growth rate. EarthJustice also cited a study 

by the United Kingdom’s Department for 

Environment, Food, and Rural Affairs, which 

recommended valuing carbon emissions at just over 

$25 per ton of CO2. 

24Climate Change 2007—Impacts, Adaption and 

Vulnerability Contribution of Working Group II to 

the Fourth Assessment Report of the IPCC, 17. 

Available at http://www.ipcc-wg2.org (last accessed 

Aug. 7, 2008). 

emissions are shown in Table V.26 and 

Table V.27 for both the standard and 

non-standard size PTAC and PTHP 

equipment for the period from 2012 to 

2042. The range of total Hg emission 

reductions is from 0 to 0.082 tons for the 

range of TSLs considered. These 

changes in Hg emissions are extremely 

small, with a range between 0 and 0.016 

percent of the national base case 

emissions forecast by NEMS–BT, 

depending on the TSL. 

The NEMS–BT model used for today’s 

rulemaking could not be used to 

estimate Hg emission reductions due to 

standards as it assumed that Hg 

emissions would be subject to EPA’s 

Clean Air Mercury Rule 19 (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 

have resulted in no physical effect on 

these emissions, but might have resulted 

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 the Hg emissions from energy 

conservation 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, 20 in 

which the D.C. Circuit, among other 

actions, vacated the CAMR referenced 

above. In light of this development and 

because the NEMS–BT model could not 

be used to directly calculate the Hg 

emission reductions, DOE used the 

current Hg emission rates as discussed 

above to calculate the reductions in Hg 

emissions in Table V.26 and Table V.27. 

In the NOPR, DOE stated that it was 

considering taking into account a 

monetary benefit of CO2 emission 

reductions associated with this 

rulemaking. To put the potential 

monetary benefits from reduced CO2

emissions into a form that is likely to be 

most useful to decisionmakers and 

stakeholders, DOE used the same 

methods used to calculate the net 

present value of consumer cost savings: 

The estimated year-by-year reductions 

in CO2 emissions were converted into 

monetary values and these resulting 

annual values were then discounted 

over the life of the affected appliances 

to the present using both 3 percent and 

7 percent discount rates. 

In the NOPR, DOE proposed to use 

the range $0 to $14 per ton. These 

estimates were based on an assumption 

of no benefit to an average benefit value 

reported by the IPCC.21 It is important 

to note that the IPCC estimate used as 

the upper bound value was derived 

from an estimate of the mean value of 

worldwide impacts from potential 

climate impacts caused by CO2

emissions, and not just the effects likely 

to occur within the United States. As 

DOE considers a monetary value for CO2

emission reductions, the value should 

be restricted to a representation of those 

costs/benefits likely to be experienced 

in the United States. As DOE also 

explained in the NOPR, it expects that 

such values would be lower than 

comparable global values, however, 

there currently are no consensus 

estimates for the U.S. benefits likely to 

result from CO2 emission reductions. 

However, DOE believes it is appropriate 

to use U.S. benefit values, where 

available, and not world benefit values, 

in its analysis.22 Because U.S. specific 

estimates are not available, and DOE did 

not receive any additional information 

that would help serve to narrow the 

proposed range as a representative range 

for domestic U.S. benefits, DOE believes 

it is appropriate to use the global mean 

value as an appropriate upper bound 

U.S. value for purposes of sensitivity 

analysis. 

DOE received several comments in 

response to the proposed estimated 

value of CO2 emissions reductions. 

EarthJustice questioned both the upper 

and lower bounds of DOE’s range of 

estimated CO2 values, both of which 

EarthJustice argued were too low. 

EarthJustice also stated that it would be 

inappropriate to limit the consideration 

to the value of CO2 to a domestic value. 

EarthJustice and the joint comment from 

ACEE and the Natural Resource Defense 

Council recommended that DOE 

consider relying on the estimate used in 

DOE’s analysis of the America’s Climate 

Security Bill of 2007 (S. 2191).23 AHRI 

commented that DOE should not rely on 

the IPCC study or values under the 

European Union ‘‘cap and trade’’ 

program, but instead should consider a 

monetary value for CO2 only once a U.S. 

‘‘cap and trade’’ program has been 

established, stressing that DOE should 

consider only the domestic value of CO2

emissions. 

Given the uncertainty surrounding 

estimates of the SCC, relying on any 

single study may be inadvisable since 

its estimate of the SCC will depend on 

many assumptions made by its authors. 

The Working Group II’s contribution to 

the Fourth Assessment Report of the 

IPCC notes that: 

The large ranges of SCC are due in the large 

part to differences in assumptions regarding 

climate sensitivity, response lags, the 

treatment of risk and equity, economic and 

non-economic impacts, the inclusion of 

potentially catastrophic losses, and discount 

rates.24

Because of this uncertainty, DOE relied 

on Tol (2005), which was presented in 

the IPCC’s Fourth Assessment Report, 

and was a comprehensive meta-analysis 

of estimates for the value of SCC. 

Commenters did not provide a rationale 

for why it would be more accurate or 

reliable for DOE to use values based on 

the limited number of studies they 

cited. As a result, DOE continues to rely 

on the Tol study reported by the IPCC 

as the basis for its analysis. 

DOE continues to believe that the 

most appropriate monetary values for 

consideration in the development of 

efficiency standards are those drawn 

from studies that attempt to estimate the 

present value of the marginal economic 

benefits likely to result from reducing 

greenhouse gas emissions, rather than 

estimates that are based on the market 


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58814 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 

value of emission allowances under 

existing cap and trade programs or 

estimates that are based on the cost of 

reducing emissions—both of which are 

largely determined by policy decisions 

that set the timing and extent of 

emission reductions and do not 

necessarily reflect the benefit of 

reductions. DOE also believes that the 

studies it relies upon generally should 

be studies that were the subject of a peer 

review process and were published in 

reputable journals. 

In today’s final rule, DOE is 

essentially relying on the range of 

values proposed in the NOPR, which 

was based on the values presented in 

Tol (2005), as proposed. However, DOE 

notes that in the proposed rule, DOE 

mistakenly assumed that the values 

presented in Tol (2005) were in 2000 

dollars. In actuality, the values in Tol 

(2005) were indicated to be 

approximately 1995 values in 1995 

dollars. Had DOE, at the NOPR stage, 

applied the correct dollar year of the 

values presented in Tol (2005), DOE 

would have proposed the range of $0 to 

$15 in the NOPR. Additionally, DOE has 

applied an annual growth rate of 2.4% 

to the value of SCC, as suggested by the 

IPCC Working Group II (2007, p. 822), 

based on estimated increases in 

damages from future emissions reported 

in published studies. As a result, for 

today’s final rule, DOE is assigning a 

range for the SCC of $0 to $20 ($2007) 

per ton of CO2 emissions. 

EarthJustice questioned the use of the 

median estimated social cost of CO2 as 

an upper bound of the range. However, 

the upper bound of the range used by 

DOE is based on Tol (2005), which 

reviewed 103 estimates of the SCC from 

28 published studies, and concluded 

that when only peer-reviewed studies 

published in recognized journals are 

considered, ‘‘that climate change 

impacts may be very uncertain but [it] 

is unlikely that the marginal damage 

costs of carbon dioxide emissions 

exceed $50 per ton carbon [comparable 

to a 2007 value of $20 per ton carbon 

dioxide when expressed in 2007 U.S. 

dollars with a 2.4% growth rate.]’’ 

EarthJustice also questioned the use of 

$0 as the lower bound of DOE’s 

estimated range. In setting a lower 

bound, DOE agrees with the IPCC 

Working Group II (2007) report that 

‘‘significant warming across the globe 

and the locations of significant observed 

changes in many systems consistent 

with warming is very unlikely to be due 

solely to natural variability of 

temperatures or natural variability of the 

systems’’ (pp. 9), and thus tentatively 

concludes that a global value of zero for 

reducing emissions cannot be justified. 

However, DOE also believes that it is 

reasonable to allow for the possibility 

that the U.S. portion of the global cost 

of carbon dioxide emissions may be 

quite low. In fact, some of the studies 

looked at in Tol (2005) reported 

negative values for the SCC. As stated in 

the NOPR, DOE is using U.S. benefit 

values, and not world benefit values, in 

its analysis and, further, DOE believes 

that U.S. domestic values will be lower 

than the global values. Additionally, the 

statutory criteria in EPCA do not require 

consideration of global effects. 

Therefore, DOE is using a lower bound 

of $0 per ton of CO2 emissions in 

estimating the potential benefits of 

today’s final rule. 

The resulting estimates of the 

potential range of net present value 

benefits associated with the reduction of 

CO2 emissions are reflected in Table 

V.28. 

TABLE V.28—ESTIMATES OF SAVINGS FROM CO2 EMISSIONS REDUCTIONS UNDER PTAC AND PTHP TRIAL STANDARD

LEVELS AT 7% DISCOUNT RATE AND 3% DISCOUNT RATE

Estimated 

cumulative CO2

(Mt) emission 

reductions 

Value of estimated CO2

emission reductions (million 

2007$) at 7% discount rate 

Value of estimated CO2

emission reductions (million 

2007$) at 3% discount rate 

Standard Size TSL: 

1 ............................................................................................ 0.49 $0 to $4.8 ........................... $0 to $9.0. 

2 ............................................................................................ 0.81 $0 to $8.0 ........................... $0 to $14.9. 

3 ............................................................................................ 1.05 $0 to $10.4 ......................... $0 to $19.4. 

A ........................................................................................... 1.06 $0 to $10.5 ......................... $0 to $19.5. 

4 ............................................................................................ 1.09 $0 to $10.8 ......................... $0 to $20.0. 

5 ............................................................................................ 1.68 $0 to $16.5 ......................... $0 to $30.9. 

6 ............................................................................................ 2.34 $0 to $22.9 ......................... $0 to $43.0. 

Non-Standard Size TSL: 

1 ............................................................................................ 0.12 $0 to $1.2 ........................... $0 to $2.2. 

2 ............................................................................................ 0.14 $0 to $1.4 ........................... $0 to $2.7. 

3 ............................................................................................ 0.18 $0 to $1.8 ........................... $0 to $3.4. 

4 ............................................................................................ 0.20 $0 to $2.0 ........................... $0 to $3.7. 

5 ............................................................................................ 0.29 $0 to $2.9 ........................... $0 to $5.4. 

DOE also investigated the potential 

monetary impact resulting from the 

impact of today’s energy conservation 

standards on SO2, NOX, and Hg 

emissions. As previously stated, DOE’s 

initial analysis assumed the presence of 

nationwide emission caps on SO2 and 

Hg, and caps on NOX emissions in the 

28 States covered by the CAIR caps. In 

the presence of these caps, DOE 

concluded that no physical reductions 

in power sector emissions would occur, 

but that the lower generation 

requirements associated with energy 

conservation standards could 

potentially put downward pressure on 

the prices of emissions allowances in 

cap-and-trade markets. Estimating this 

effect is very difficult because of the 

factors such as credit banking, which 

can change the trajectory of prices. DOE 

has further concluded that the effect 

from energy conservation standards on 

SO2 allowance prices is likely to be 

negligible, based upon runs of the 

NEMS–BT model. See Chapter 16 

(Environmental Assessment) of the FR 

TSD for further details. 

As discussed earlier, with respect to 

NOX the CAIR rule has been vacated by 

the courts, so projected annual NOX

allowances from NEMS–BT are no 

longer relevant. In DOE’s subsequent 

analysis, NOX emissions are not 

controlled by a nationwide regulatory 

system. For the range of NOX reduction 

estimates (and Hg reduction estimates), 

DOE estimated the national monetized 

benefits of emissions reductions from 

today’s rule based on environmental 

damage estimates from the literature. 

Available estimates suggest a very wide 


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Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 58815 

25 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. 

26Trasande, L., et al., ‘‘Applying Cost Analyses to 

Drive Policy that Protects Children’’ 1076 ANN. 

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

27Ted 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. 

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 25 or 

a range of $432 per ton to $4,441 per ton 

in 2007 dollars. 

DOE has already conducted research 

for today’s final rule and determined 

that the basic science linking mercury 

emissions from power plants to impacts 

on humans is considered highly 

uncertain. However, DOE identified 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 in American children that results 

from exposure to mercury of U.S. power 

plant origin ($1.3 billion per year in 

year 2000$), which works out to $32.6 

million per ton emitted per year 

(2007$).26 The low-end 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.27 The resulting estimates of 

the potential range of the present value 

benefits associated with the national 

reduction of NOX and national 

reductions in Hg emissions are reflected 

in Table V.29 and Table V.30. 

TABLE V.29—ESTIMATES OF SAVINGS FROM REDUCTIONS OF NOX AND HG UNDER PTAC AND PTHP TRIAL STANDARD

LEVELS AT A 7% DISCOUNT RATE

Estimated cumulative 

NOX (kt) emission reductions * 

Value of estimated NOX

emission reductions 

(thousand 2007$) 

Estimated cumulative Hg 

(tons) emission 

reductions* 

Value of estimated Hg 

emission reductions 

(thousand 2007$) 

Standard Size TSL: 

1 ......................................... 0.04 to 0.94 ..................... $4 to $1,091 .................... 0 to 0.017 ........................ $0 to $182. 

2 ......................................... 0.07 to 1.64 ..................... $7 to $1,892 .................... 0 to 0.028 ........................ $0 to $299. 

3 ......................................... 0.08 to 2.02 ..................... $9 to $2,335 .................... 0 to 0.037 ........................ $0 to $392. 

A ........................................ 0.09 to 2.13 ..................... $10 to $2,462 .................. 0 to 0.037 ........................ $0 to $393. 

4 ......................................... 0.09 to 2.25 ..................... $10 to $2,599 .................. 0 to 0.038 ........................ $0 to $403. 

5 ......................................... 0.13 to 3.17 ..................... $14 to $3,658 .................. 0 to 0.059 ........................ $0 to $624. 

6 ......................................... 0.18 to 4.34 ..................... $20 to $5,014 .................. 0 to 0.082 ........................ $0 to $871. 

Non-Standard Size TSL: 

1 ......................................... 0.01 to 0.23 ..................... $1 to $263 ....................... 0 to 0.004 ........................ $0 to $45. 

2 ......................................... 0.01 to 0.28 ..................... $1 to $319 ....................... 0 to 0.005 ........................ $0 to $54. 

3 ......................................... 0.01 to 0.34 ..................... $2 to $390 ....................... 0 to 0.006 ........................ $0 to $69. 

4 ......................................... 0.02 to 0.40 ..................... $2 to $463 ....................... 0 to 0.007 ........................ $0 to $75. 

5 ......................................... 0.02 to 0.55 ..................... $2 to $631 ....................... 0 to 0.010 ........................ $0 to $110. 

* Values in Table V.32 may not appear to sum to the cumulative values in Table V.26 due to rounding. 

TABLE V.30—ESTIMATES OF SAVINGS FROM REDUCTIONS OF NOX AND HG UNDER PTAC AND PTHP TRIAL STANDARD

LEVELS AT A 3% DISCOUNT RATE

Estimated cumulative 

NOX (kt) emission 

reductions * 

Value of estimated NOX

emission reductions 

(thousand 2007$) 

Estimated cumulative Hg 

(tons) emission 

reductions * 

Value of estimated Hg 

emission reductions 

(thousand 2007$) 

Standard Size TSL: 

1 ......................................... 0.04 to 0.94 ..................... $9 to $2,250 .................... 0 to 0.017 ........................ $0 to $331. 

2 ......................................... 0.07 to 1.64 ..................... $15 to $3,903 .................. 0 to 0.028 ........................ $0 to $544. 

3 ......................................... 0.08 to 2.02 ..................... $19 to $4,815 .................. 0 to 0.037 ........................ $0 to $712 

A ........................................ 0.09 to 2.13 ..................... $20 to $5,079 .................. 0 to 0.037 ........................ $0 to $714. 

4 ......................................... 0.09 to 2.25 ..................... $21 to $5,362 .................. 0 to 0.038 ........................ $0 to $732. 

5 ......................................... 0.13 to 3.17 ..................... $30 to $7,545 .................. 0 to 0.059 ........................ $0 to $1,135. 

6 ......................................... 0.18 to 4.34 ..................... $41 to $10,341 ................ 0 to 0.082 ........................ $0 to $1,582. 

Non-Standard Size TSL: 

1 ......................................... 0.01 to 0.23 ..................... $2 to $542 ....................... 0 to 0.004 ........................ $0 to $83. 

2 ......................................... 0.01 to 0.28 ..................... $3 to $659 ....................... 0 to 0.005 ........................ $0 to $98. 

3 ......................................... 0.01 to 0.34 ..................... $3 to $805 ....................... 0 to 0.006 ........................ $0 to $125. 

4 ......................................... 0.02 to 0.40 ..................... $4 to $954 ....................... 0 to 0.007 ........................ $0 to $136. 

5 ......................................... 0.02 to 0.55 ..................... $5 to $1,301 .................... 0 to 0.010 ........................ $0 to $200. 

* Values in Table V.33 may not appear to sum to the cumulative values in Table V.26 due to rounding. 


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58816 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 

7. Other Factors 

In developing today’s standards, the 

Secretary took into consideration: (1) 

The impacts of setting different 

amended standards for PTACs and 

PTHPs; (2) the potential that amended 

standards could cause equipment 

switching (i.e., purchase of PTACs 

instead of PTHPs) and the effects of any 

such switching; (3) the uncertainties 

associated with the impending phaseout 

in 2010 of R–22 refrigerant; and (4) the 

impact of amended standards on the 

manufacturers of and market for nonstandard size packaged terminal 

equipment (e.g., impacts on small 

businesses). To address the impact of 

setting different amended energy 

conservation standards for PTACs and 

PTHPs and the potential that amended 

energy conservation standards could 

cause equipment switching, DOE 

conducted a sensitivity analysis. The 

results of the sensitivity analysis are 

shown in section V.B. DOE discusses 

the uncertainties associated with the 

impending refrigerant phaseout in 2010 

of R–22 refrigerant and the impact of 

amended energy conservation standards 

on the non-standard size industry in the 

conclusion section below. 

D. Conclusion 

EPCA contains criteria for prescribing 

new or amended energy conservation 

standards. For commercial HVAC and 

water heating equipment such as PTACs 

and PTHPs, DOE must adopt as national 

standards the levels in amendments to 

ASHRAE Standard 90.1 unless DOE 

determines, ‘‘supported by clear and 

convincing evidence,’’ that standards 

more stringent than those levels ‘‘would 

result in significant additional 

conservation of energy and [be] 

technologically feasible and 

economically justified.’’ (42 U.S.C. 

6313(a)(6)(A)(ii)(II)) Any more stringent 

standard must be designed to achieve 

the maximum improvement in energy 

efficiency and be technologically 

feasible and economically justified. (42 

U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(A)) 

Moreover, in determining whether an 

energy conservation standard is 

economically justified, DOE must weigh 

all seven factors specified in EPCA, and 

set forth above, to determine whether 

the benefits of the standard exceed its 

costs. (42 U.S.C. 6316(a); 42 U.S.C. 

6295(o)(2)(B)(i)) 

In this rulemaking, DOE has evaluated 

whether standards more stringent than 

the efficiency levels in ASHRAE 

Standard 90.1–1999 for PTACs and 

PTHPs are justified under the above 

criteria. As stated in sections III.B.1 and 

C, DOE determined, based on clear and 

convincing evidence, that all of the 

more stringent standard levels 

considered in this rulemaking are 

technologically feasible and would save 

significant additional amounts of 

energy. To determine if these more 

stringent TSLs are economically 

justified, DOE compared the maximum 

technologically feasible levels with the 

base case, and determined whether 

those levels are economically justified. 

Upon finding the maximum 

technologically feasible levels not to be 

justified, DOE analyzed the next lower 

TSL to determine whether that level was 

economically justified. DOE repeated 

this procedure until it identified a TSL 

that was economically justified. 

In the NOPR, DOE weighed the 

benefits and burdens for standard size 

and non-standard size PTACs and 

PTHPs through TSL 1 through 7. In 

response to both the uniqueness of the 

two separate industries and comments 

from interested parties on the potential 

impacts of standards on the standard 

size and non-standard size equipment, 

DOE weighed the benefits and burdens 

separately in today’s final rule. 

In addition to the quantitative results, 

DOE also considered other factors that 

might affect economic justification. DOE 

took into consideration the EPAmandated refrigerant phaseout and its 

effect on PTAC and PTHP equipment 

efficiency, which concern both standard 

size and non-standard size PTACs and 

PTHPs. In addition, DOE considered the 

uniqueness of the PTAC and PTHP 

industry with its substantial number of 

manufacturers of non-standard size 

equipment. In particular, DOE 

considered the declining shipments of 

non-standard size equipment, the small 

size segment of the industry (both 

relative to the rest of the PTAC and 

PTHP industry and in absolute terms), 

and the small businesses that could be 

affected by amended energy 

conservation standards. 

1. Standard Size PTACs and PTHPs 

Table V.31 summarizes DOE’s 

quantitative analysis results for each 

TSL it considered for standard size 

PTACs and PTHPs in this final rule. 

This table presents the results or, in 

some cases a range of results, for each 

TSL, and will aid the reader in the 

discussion of costs and benefits of each 

TSL. The range of values for industry 

impacts represents the results for the 

different markup scenarios that DOE 

used to estimate manufacturer impacts. 

TABLE V.31—SUMMARY OF RESULTS FOR STANDARD SIZE PTACS AND PTHPS BASED UPON THE AEO2008 ENERGY

PRICE FORECAST * 

TSL 1 TSL 2 TSL 3 TSL A TSL 4 TSL 5 TSL 6 

Primary energy saved 

(quads) ..................... 0.015 0.024 0.031 0.032 0.033 0.049 0.068 

7% Discount rate 

(Standard Size) 0.003 0.006 0.007 0.007 0.008 0.011 0.015 

3% Discount rate 

(Standard Size) 0.007 0.012 0.016 0.016 0.017 0.025 0.035 

Generation capacity reduction (GW) (Standard Size) ** ................ (0.040) (0.062) (0.086) (0.082) (0.082) (0.139) (0.196) 

NPV (2007$ million) 

(Standard Size): 

7% Discount rate .. 1 8 2 10 6 (11) (41) 

3% Discount rate .. 17 43 38 54 49 31 (10) 

Industry impacts 

(Standard Size): 

Industry NPV 

(2007$ million) ... (3)–(28) (6)–(45) (3)–(60) (8)–(61) (8)–(68) (1)–(103) (4)–(164) 

Industry NPV (% 

Change) ............. (0.8)–(7) (1)–(11) (0.8)–(14) (2)–(14) (2)–(16) (0.2)–(24) (0.9)–(38) 


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Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 58817 

TABLE V.31—SUMMARY OF RESULTS FOR STANDARD SIZE PTACS AND PTHPS BASED UPON THE AEO2008 ENERGY

PRICE FORECAST *—Continued 

TSL 1 TSL 2 TSL 3 TSL A TSL 4 TSL 5 TSL 6 

Cumulative emissions 

impacts (Standard 

Size) †: 

CO2 (Mt) ................ (0.49) (0.81) (1.05) (1.06) (1.09) (1.68) (2.34) 

NOX (kt) ................ (0.04)–(0.94) (0.07)–(1.64) (0.08)–(2.02) (0.09)–(2.13) (0.09)–(2.25) (0.13)–(3.17) (0.18)–(4.34) 

Hg (t) ..................... 0–(0.017) 0–(0.028) 0–(0.037) 0–(0.037) 0–(0.038) 0–(0.059) 0–(0.082) 

Employment Impacts 

(Standard Size): 

Indirect Employment Impacts ..... 41 70 87 91 96 138 190 

Direct, Domestic 

Employment Impacts .................. 1 2 3 3 3 6 9 

Mean LCC savings 

(2007$) (Standard 

Size) *: 

Standard Size 

PTAC, 9,000 

Btu/h .................. (1) (1) (3) (3) (1) (6) (10) 

Standard Size 

PTHP, 9,000 

Btu/h .................. 11 20 20 28 28 28 24 

Standard Size 

PTAC, 12,000 

Btu/h .................. (2) (2) (5) (2) (2) (10) (15) 

Standard Size 

PTHP, 12,000 

Btu/h .................. 13 24 24 24 20 20 14 

Mean PBP (years) 

(Standard Size): 

Standard Size 

PTAC, 9,000 

Btu/h .................. 13.0 13.0 13.7 13.7 13.0 14.5 15.2 

Standard Size 

PTHP, 9,000 

Btu/h .................. 5.1 4.5 4.5 4.4 4.4 4.4 5.1 

Standard Size 

PTAC, 12,000 

Btu/h .................. 13.1 13.1 14.0 13.1 13.1 14.9 15.9 

Standard Size 

PTHP, 12,000 

Btu/h .................. 5.1 4.6 4.6 4.6 5.5 5.5 6.4 

LCC Results (Standard 

Size): 

Standard Size 

PTAC, 9,000 

Btu/h.

Net Cost (%) .. 15% 15% 30% 30% 15% 46% 62% 

No Impact (%) 77% 77% 56% 56% 77% 37% 18% 

Net Benefit 

(%) .............. 7% 7% 14% 14% 7% 17% 21% 

Standard Size 

PTHP, 9,000 

Btu/h.

Net Cost (%) .. 7% 10% 10% 13% 13% 13% 24% 

No Impact (%) 78% 57% 57% 37% 37% 37% 18% 

Net Benefit 

(%) .............. 16% 33% 33% 50% 50% 50% 58% 

Standard Size 

PTAC, 12,000 

Btu/h.

Net Cost (%) .. 16% 16% 31% 16% 16% 48% 65% 

No Impact (%) 77% 77% 56% 77% 77% 36% 18% 

Net Benefit 

(%) .............. 7% 7% 13% 7% 7% 16% 17% 

Standard Size 

PTHP, 12,000 

Btu/h.

Net Cost (%) .. 7% 10% 10% 10% 21% 21% 35% 

No Impact (%) 77% 57% 57% 57% 37% 37% 18% 


pwalker on PROD1PC71 with RULES3
58818 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 

TABLE V.31—SUMMARY OF RESULTS FOR STANDARD SIZE PTACS AND PTHPS BASED UPON THE AEO2008 ENERGY

PRICE FORECAST *—Continued 

TSL 1 TSL 2 TSL 3 TSL A TSL 4 TSL 5 TSL 6 

Net Benefit 

(%) .............. 16% 33% 33% 33% 42% 42% 47% 

* 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 AEO 2008 Reference Case. 

† CO2 emissions impacts are physical reductions from all sources. NOX and Hg emissions impacts are physical reductions at power plants. 

First, DOE considered TSL 6, the maxtech efficiency level for standard size 

PTACs and PTHPs. TSL 6 would likely 

save 0.068 quads of energy through 2042 

for standard size PTACs and PTHPs, an 

amount DOE considers significant. 

Discounted at seven percent, the 

projected energy savings through 2042 

would be 0.015 quads. For the Nation as 

a whole, DOE projects that TSL 6 would 

result in a net decrease of $41 million 

in NPV for standard size PTACs and 

PTHPs, using a discount rate of seven 

percent and a net decrease of $10 

million for standard size PTACs and 

PTHPs, using a discount rate of three 

percent. The emissions reductions at 

TSL 6 for standard size PTACs and 

PTHPs are 2.34 Mt of CO2, between 0.18 

kt and 4.34 kt of NOX, and between zero 

and 0.082 t of Hg. Total generating 

capacity needed in 2042 is estimated to 

decrease compared to the reference case 

by 0.196 gigawatts (GW) under TSL 6. 

At TSL 6, DOE projects that the 

average PTAC customer will experience 

an increase in LCC for all standard size 

equipment classes. Purchasers of 

standard size PTACs are projected to 

lose on average ¥$12 (2007$) over the 

life of the product, and purchasers of 

standard size PTHPs would save on 

average $20 (2007$). DOE estimates LCC 

increases for 63 percent of customers in 

the Nation who purchase a standard size 

PTAC, and for 29 percent of customers 

in the Nation who purchase a standard 

size PTHP. The mean payback period of 

each standard size PTAC equipment 

class at TSL 6 is projected to be 

substantially longer than the mean 

lifetime of the equipment. 

The projected change in the standard 

size industry value (INPV) ranges from 

a decrease of $4 million to a decrease of 

$164 million, in 2007$. For standard 

size PTACs and PTHPs, the impacts are 

driven primarily by the assumptions 

regarding the ability to pass on larger 

increases in MPCs to the customer. 

Currently, there are equipment lines 

being manufactured with efficiency 

levels above TSL 6 utilizing R–22 

refrigerant. Using the degradations 

estimated in the engineering analysis, 

DOE believes standard size equipment 

could be produced at TSL 6 in the lower 

range of cooling capacities. DOE 

believes manufacturers would not be 

able to manufacture standard size 

PTACs and PTHPs at TSL 6 at the high 

range of the cooling capacities (e.g., 

15,000 Btu/h) within a given equipment 

class (i.e., standard size PTACs with a 

cooling capacity greater than or equal to 

7,000 Btu/h and less than or equal to 

15,000 Btu/h). DOE has not initially 

been able to identify technologies and 

design approaches for R–410A units to 

meet these higher levels in the absence 

of the availability of high efficiency 

compressors spanning the full range of 

cooling capacities. At TSL 6, DOE 

recognizes the risk of very large negative 

impacts if manufacturers’ expectations 

about reduced profit margins are 

realized. In particular, if the high end of 

the range of impacts is reached as DOE 

expects, TSL 6 could result in a net loss 

of 38.3 percent in INPV to the standard 

size PTAC and PTHP industry. 

After carefully considering the 

analysis and weighing the benefits and 

burdens of TSL 6, the Secretary has 

concluded that at TSL 6, even if 

manufacturers could overcome the 

barriers to produce R–410 equipment in 

the full range of cooling capacities by 

the effective date of an amended energy 

conservation standard, the benefits of 

energy savings and emissions 

reductions would be outweighed by the 

potential multi-million dollar negative 

net economic cost to the Nation, the 

economic burden on consumers, and the 

large capital conversion costs that could 

result in a reduction in INPV for 

manufacturers. 

Next, DOE considered TSL 5. Primary 

energy savings is estimated at 0.049 

quads of energy through 2042 for 

standard size PTACs and PTHPs, which 

DOE considers significant. Discounted 

at seven percent, the energy savings 

through 2042 would be 0.011 quads. For 

the Nation as a whole, DOE projects that 

TSL 5 would result in a net decrease of 

$11 million in NPV for standard size 

PTACs and PTHPs, using a discount rate 

of seven percent and an increase of $31 

million for standard size PTACs and 

PTHPs, using a discount rate of three 

percent. The emissions reductions are 

projected to be 1.68 Mt of CO2, between 

0.013 kt and 3.17 kt of NOX and 

between 0 and 0.082 t of Hg. Total 

generating capacity needed in 2042 

under TSL 5 is estimated to decrease by 

0.139 GW for standard size PTACs and 

PTHPs. 

At TSL 5, DOE found the impacts of 

amended energy conservation standards 

on customers of PTACs would likely 

differ significantly from their impacts 

on PTHP customers. While only 16 

percent of customers of standard size 

PTHPs would likely have an LCC 

increase at TSL 5, 47 percent of 

customers of standard size PTACs 

would experience an LCC increase at 

this TSL. A customer for a standard size 

PTAC, on average, would experience an 

increase in LCC of $8, while the 

customer for a standard size PTHP, on 

average, would experience a decrease in 

LCC of $25. At TSL 5, DOE projects that 

the average PTAC customer for a 

standard size PTAC will experience an 

increase in LCC in each equipment 

class. In addition, the mean payback 

period of each standard size PTAC 

equipment class at TSL 5 is projected to 

be substantially longer than the mean 

lifetime. 

At TSL 5, the projected change in 

INPV ranges between losses of $1 

million and $103 million. For 

manufacturers of standard size 

equipment alone, DOE estimated a 

decrease in the INPV to range from 0.2 

percent to 24.0 percent. The magnitude 

of projected impacts is still largely 

determined, however, by the 

manufacturers’ ability to pass on larger 

increases in MPC to the customer. Thus, 

the potential INPV decrease of $103 

million assumes that DOE’s projections 

of partial cost recovery as described in 

Chapter 13 of the TSD remain valid. In 

addition, at TSL 5 the impending 

refrigerant phaseout could also have a 

significant impact on manufacturers. 

Currently, both standard size PTACs 

and PTHPs using R–22 refrigerant are 

available on the market at and above 

TSL 5 efficiency levels. However, at the 

performance degradations that DOE 

estimated in the engineering analysis for 

R–410A equipment, manufacturers 

would be unable to produce R–410A 

equipment at these levels unless high 


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efficiency R–410A compressors become 

available. The absence of such 

compressors would likely mean that the 

negative financial impacts of TSL 5 

would be greater than characterized by 

DOE’s MIA analysis. Even though the 

ability of manufacturers to produce 

equipment utilizing R–410A is greater at 

TSL 5 than at TSL 6, DOE anticipates 

that manufacturers would not be able to 

produce standard size PTACs and 

PTHPs at TSL 5 in the full range of 

capacities available today due to the 

physical size constraints imposed by the 

wall sleeve dimensions. 

While DOE recognizes the increased 

economic benefits to the nation that 

could result from TSL 5 for standard 

size PTACs and PTHPs, DOE concludes 

that the benefits of a Federal standard at 

TSL 5 would still be outweighed by the 

economic burden that would be placed 

upon PTAC customers. In addition, DOE 

believes at TSL 5, the benefits of energy 

savings and emissions impacts would be 

outweighed by the large impacts on 

standard size manufacturers’ INPV. 

Finally, DOE is concerned that standard 

size manufacturers may be unable to 

offer the full capacity range of 

equipment utilizing R–410A by the 

effective date of the amended energy 

conservation standards. 

Next, DOE considered TSL 4. For TSL 

4, DOE combined the efficiency levels 

in TSL 1 for PTACs and the efficiency 

levels in TSL 5 for PTHPs. This 

combination of efficiency levels serves 

to maximize LCC savings, while 

recognizing the differences in LCC 

results for standard size PTACs and 

PTHPs. DOE projects that TSL 4 for 

standard size PTACs and PTHPs would 

save 0.033 quads of energy through 

2042, an amount DOE considers 

significant. Discounted at seven percent, 

the projected energy savings through 

2042 would be 0.008 quads. For the 

Nation as a whole, DOE projects that 

TSL 4 would result in net savings in 

NPV of $6 million for standard size 

PTACs and PTHPs, using a discount rate 

of seven percent, and $49 million for 

standard size PTACs and PTHPs, using 

a discount rate of three percent. The 

estimated emissions reductions are 1.09 

Mt of CO2, between 0.09 kt and 2.25 kt 

of NOX, and between 0 and 0.038 t of 

Hg. Total generating capacity needed in 

2042 under TSL 4 would likely decrease 

by 0.082 GW. 

At TSL 4, DOE projects that the 

average PTAC or PTHP customer would 

experience LCC savings. Purchasers of 

standard size PTACs, on average, have 

LCC increase of $2 (2007$) over the life 

of the product and purchasers of PTHPs 

would save on average $25 (2007$). 

DOE estimates an LCC increase for 15 

percent of customers in the Nation who 

purchase a standard size PTAC, and for 

16 percent of customers in the Nation 

who purchase a standard size PTHP. For 

standard size PTACs and PTHPs, the 

remainder of customers would 

experience either a decrease or no 

change in LCC. DOE also projects that 

the mean payback period of each 

standard size PTAC equipment class at 

TSL 4 would be substantially longer 

than the mean lifetime of the 

equipment. 

The projected change in INPV ranges 

between a loss of $8 million and a loss 

of $68 million for the standard size 

PTAC and PTHP industry. Just as with 

TSLs 5 and 6, the projected impacts 

continue to be driven primarily by the 

manufacturers’ ability to pass on 

increases in MPCs to the customer. The 

loss of $68 million assumes DOE’s 

projections of partial cost recovery as 

described in Chapter 13 of the TSD. TSL 

4 requires the production of standard 

size PTACs at the efficiency levels in 

TSL 1 and standard size PTHPs at 

efficiency levels at TSL 5. For the larger 

cooling capacity range (e.g., 15,000 Btu/ 

h) of standard size PTACs with cooling 

capacities greater than or equal to 7,000 

Btu/h and less than or equal to 15,000 

Btu/h, DOE believes manufacturers 

would not be able to produce equipment 

in a given equipment class at the EER 

required by the TSL 4 energy-efficiency 

equation. Specifically, DOE is 

concerned that standard size 

manufacturers would be forced to 

eliminate larger cooling capacity 

equipment due to the stringency of the 

standard in the higher cooling capacity 

regions. 

While DOE recognizes the increased 

economic benefits to the nation that 

could result from TSL 4 for standard 

size PTACs and PTHPs, DOE concludes 

that the benefits of a Federal standard at 

TSL 4 would still be outweighed by the 

economic burden that would be placed 

upon PTAC customers. In addition, DOE 

believes at TSL 4, the benefits of energy 

savings and emissions impacts would be 

outweighed by the large impacts on 

standard size manufacturers’ INPV. 

Finally, DOE is concerned that standard 

size manufacturers may be unable to 

offer the full capacity range of 

equipment utilizing R–410A by the 

effective date of the amended energy 

conservation standards. 

Next, DOE considered TSL A. TSL A 

is a modified version of TSL 3 and TSL 

4 DOE used for the final rule. To 

generate the efficiency analyzed in TSL 

A for standard size equipment, DOE 

further investigated the slope of the 

energy-efficiency equation as discussed 

in section IV.C. DOE adjusted the slope 

of the energy-efficiency equation to 

make the curve steeper. In other words, 

DOE adjusted the energy-efficiency to 

require more stringent efficiency levels 

for lower cooling capacities, where 

manufacturers have more physical space 

inside the box sleeve to make efficiency 

improvements, while lessening the 

stringency for higher cooling capacities, 

where manufacturers are already using 

most of the physical space inside the 

box sleeve for capacity increases, 

leaving little room for efficiency 

improvements. For TSL A, DOE 

combined the efficiency levels in TSL 3 

and TSL 1 for standard size PTACs 

depending on cooling capacity. For TSL 

A, DOE combined the efficiency levels 

in TSL 5 and TSL 3 for standard size 

PTHPs depending on cooling capacity. 

This combination of efficiency levels 

serves to maximize LCC savings, while 

recognizing the differences in LCC 

results for standard size PTACs and 

PTHPs and the differences in the energy 

efficiency potentials between the 

various cooling capacities of standard 

size equipment. (See Chapter 9 of the 

TSD for further explanation and a 

graphical representation of the energyefficiency equations.) 

DOE projects that TSL A for standard 

size PTACs and PTHPs would save 

0.032 quads of energy through 2042, an 

amount DOE considers significant. 

Discounted at seven percent, the 

projected energy savings through 2042 

would be 0.007 quads. For the Nation as 

a whole, DOE projects that TSL A would 

result in net savings in NPV of $10 

million for standard size PTACs and 

PTHPs, using a discount rate of seven 

percent, and $54 million for standard 

size PTACs and PTHPs, using a 

discount rate of three percent. The 

estimated emissions reductions are 1.06 

Mt of CO2, between 0.09 kt and 2.13 kt 

of NOX, and between 0 and 0.037 t of 

Hg. Total generating capacity needed in 

2042 under TSL A would likely 

decrease by 0.082 GW. 

At TSL A, DOE projects that the 

average PTAC or PTHP customer would 

experience LCC savings. Purchasers of 

standard size PTACs, on average, would 

experience an LCC increase of $3 

(2007$) over the life of the product 

while purchasers of PTHPs would save 

on average $26 (2007$). DOE estimates 

LCC savings for 24 percent of customers 

in the Nation who purchase a standard 

size PTAC, and for 12 percent of 

customers in the Nation who purchase 

a standard size PTHP. For standard size 

PTACs and PTHPs, the remainder of 

customers would experience either a 

decrease or no change in LCC. DOE also 

projects that the mean payback period of 

each standard size PTAC equipment 


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class at TSL A would be substantially 

longer than the mean lifetime of the 

equipment. 

The projected change in INPV ranges 

between losses of $8 million and $61 

million for the standard size PTAC and 

PTHP industry at TSL A. Just as with 

TSL 4, the projected impacts continue to 

be driven primarily by the 

manufacturers’ ability to pass on 

increases in MPCs to the customer. 

However, TSL A requires efficiency 

levels for standard size PTHPs to be 0.2 

EER higher than the efficiency levels for 

PTACs. DOE believes bringing these 

efficiency levels closer together will 

ultimately aid manufacturers in using 

one equipment platform to design their 

standard size PTAC and PTHP 

equipment offerings. The loss of $61 

million assumes the continued validity 

of DOE’s projections of partial cost 

recovery as described in Chapter 13 of 

the TSD. For the larger cooling capacity 

range (e.g., 15,000 Btu/h), DOE believes 

manufacturers could produce 

equipment at the EER required by the 

TSL A energy-efficiency equation 

utilizing R–410A. Specifically, DOE 

believes manufacturers would not be 

forced to eliminate larger cooling 

capacity equipment since DOE modified 

the slope of the energy-efficiency 

equation at TSL A to accommodate the 

additional concerns regarding the 

physical constraints at larger cooling 

capacities. 

After considering the analysis and 

weighing the benefits and the burdens, 

DOE concludes that the benefits of a 

TSL A standard outweigh the burdens. 

In particular, the Secretary concludes 

that TSL A saves a significant amount 

of energy and is technologically feasible 

and economically justified in the full 

range of cooling capacities for R–410A 

standard size PTACs and PTHPs. 

Therefore, DOE adopts the energy 

conservation standards for standard size 

PTACs and PTHPs at TSL A, as 

described by the energy-efficiency 

equations. Table V.32 sets out the 

energy conservation standards for 

standard size PTACs and PTHPs in the 

full range of cooling capacities that DOE 

is adopting. 

TABLE V.32—FINAL ENERGY CONSERVATION STANDARDS FOR STANDARD SIZE PTACS AND PTHPS

Equipment class 

Final energy conservation standards * 

Equipment Category Cooling capacity 

PTAC .......................................... Standard Size ** ......................... <7,000 ........................................

7,000–15,000 ..............................

>15,000 ......................................

EER = 11.7 

EER = 13.8 ¥ (0.300 × Cap †) 

EER = 9.3 

PTHP .......................................... Standard Size ** ......................... <7,000 ........................................ EER = 11.9 

COP = 3.3 

7,000–15,000 .............................. EER = 14.0 ¥ (0.300 × Cap †) 

COP = 3.7 ¥ (0.052 × Cap †) 

>15,000 ...................................... EER = 9.5 

COP = 2.9 

* For equipment rated according to the DOE test procedure (ARI Standard 310/380–2004), all energy efficiency ratio (EER) values must be 

rated at 95 °F outdoor dry-bulb temperature for air-cooled equipment and evaporatively-cooled equipment and at 85 °F entering water temperature for water cooled equipment. All coefficient of performance (COP) values must be rated at 47 °F outdoor dry-bulb temperature for air-cooled 

equipment. 

** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions having an external wall opening greater than or equal to 16 

inches high or greater than or equal to 42 inches wide, and a cross-sectional area greater than or equal to 670 square inches. † Cap means cooling capacity in thousand British thermal units per hour (Btu/h) at 95 °F outdoor dry-bulb temperature. 

2. Non-Standard Size PTACs and PTHPs 

Table V.33 summarizes DOE’s 

quantitative analysis results for each 

TSL it considered for non-standard size 

PTACs and PTHPs in this final rule. 

This table presents the results or, in 

some cases a range of results, for each 

TSL, and will aid the reader in the 

discussion of costs and benefits of each 

TSL. The range of values for industry 

impacts represents the results for the 

different markup scenarios that DOE 

used to estimate manufacturer impacts. 

TABLE V.33—SUMMARY OF RESULTS FOR NON-STANDARD SIZE PTACS AND PTHPS BASED UPON THE AEO2008 

ENERGY PRICE FORECAST * 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

Primary energy saved (quads) ............................................ 0.004 0.004 0.005 0.006 0.009 

7% Discount rate (Non-Standard Size) ........................ 0.001 0.001 0.001 0.001 0.002 

3% Discount rate (Non-Standard Size) ........................ 0.002 0.002 0.003 0.003 0.004 

Generation capacity reduction (GW) (Standard Size) ** ..... (0.009) (0.010) (0.013) (0.014) (0.021) 

NPV (2007$million) (Non-Standard Size): 

7% Discount rate .......................................................... 5 6 7 8 10 

3% Discount rate .......................................................... 14 16 19 23 29 

Industry Impacts (Non-Standard Size): 

Industry NPV (2007$ million) ........................................ (16)–(17) (17)–(19) (17)–(20) (21)–(23) (20)–(24) 

Industry NPV (% Change) ............................................ (54)–(58) (58)–(64) (56)–(65) (69)–(78) (65)–(81) 

Cumulative Emissions Impacts (Non-Standard Size): †

CO2 (Mt) ........................................................................ (0.12) (0.14) (0.18) (0.20) (0.29) 

NOX (kt) ........................................................................ (0.01)–(0.23) (0.01)–(0.28) (0.01)–(0.34) (0.02)–(0.40) (0.02)–(0.55) 

Hg (t) ............................................................................. 0–(0.004) 0–(0.005) 0–(0.006) 0–(0.007) 0–(0.010) 

Employment Impacts (Non-Standard Size): 

Indirect Employment Impacts ....................................... 8 9 12 14 20 

Direct, Domestic Employment Impacts ........................ (106)–1 (106)–1 (107)–1 (107)–1 (108)–2 

Mean LCC Savings (2007$) (Non-Standard Size): *


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TABLE V.33—SUMMARY OF RESULTS FOR NON-STANDARD SIZE PTACS AND PTHPS BASED UPON THE AEO2008 

ENERGY PRICE FORECAST *—Continued 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

Non-Standard Size PTAC, 11,000 Btu/h ...................... 26 26 30 26 31 

Non-Standard Size PTHP, 11,000 Btu/h ...................... 62 66 66 80 80 

Mean PBP (years) (Standard Size): 

Non-Standard Size PTAC, 11,000 Btu/h ...................... 4.4 4.4 5.1 4.4 5.9 

Non-Standard Size PTHP, 11,000 Btu/h ...................... 2.2 2.8 2.8 3.0 3.0 

LCC Results (Non-Standard Size) 

Non-Standard Size PTAC, 11,000 Btu/h: 

Net Cost (%) ................................................................. 6 6 14 6 25 

No Impact (%) ............................................................... 73 73 47 73 23 

Net Benefit (%) ............................................................. 22 22 39 22 52 

Non-Standard Size PTHP, 11,000 Btu/h: 

Net Cost (%) ................................................................. 1 3 3 5 5 

No Impact (%) ............................................................... 73 47 47 23 23 

Net Benefit (%) ............................................................. 27 50 50 72 72 

* Parentheses indicate negative values. For LCCs, a negative value means an increase in LCC by the amount indicated. 

** Change in installed generation capacity by the year 2042 based on AEO2008 Reference Case. 

† CO2 emissions impacts are physical reductions from all sources. NOX and Hg emissions impacts are physical reductions at power plants. 

First, DOE considered TSL 5, the maxtech efficiency level for non-standard 

size PTACs and PTHPs. TSL 5 would 

likely save 0.009 quads of energy 

through 2042 for non-standard size 

PTACs and PTHPs, an amount DOE 

considers significant. Discounted at 

seven percent, the projected energy 

savings through 2042 would be 0.002 

quads. For the Nation as a whole, DOE 

projects that TSL 5 would result in a net 

increase of $10 million in NPV for nonstandard size PTACs and PTHPs, using 

a discount rate of seven percent, and 

$29 million for non-standard size 

PTACs and PTHPs, using a discount rate 

of three percent. The emissions 

reductions at TSL 5 for non-standard 

size PTACs and PTHPs are 0.29 Mt of 

CO2, between 0.02 and 0.55 kt of NOX, 

and between 0.0 and 0.01 t of Hg. Total 

generating capacity needed in 2042 is 

estimated to decrease compared to the 

reference case by 0.021 GW under TSL 

5 for non-standard size equipment. 

At TSL 5, DOE projects that the 

average PTAC customer will experience 

a decrease in LCC for all non-standard 

size equipment classes. Purchasers of 

non-standard size PTACs are projected 

to save on average $31 (2007$) over the 

life of the product and purchasers of 

non-standard size PTHPs would save on 

average $80 (2007$). DOE estimates LCC 

increases for 25 percent of customers in 

the Nation that purchase a non-standard 

size PTAC, and for 5 percent of 

customers in the Nation that purchase a 

non-standard size PTHP. 

The projected change in the nonstandard size industry value (INPV) 

ranges from a decrease of $20 million to 

a decrease of $24 million, in 2007$. For 

non-standard size PTACs and PTHPs, 

the impacts are driven primarily by the 

assumptions regarding the ability to 

pass on larger increases in MPCs to the 

customer. Currently, there are very few 

equipment lines being manufactured 

that have efficiency levels at or above 

TSL 5 utilizing R–22 refrigerant. Using 

the degradations estimated in the 

engineering analysis, DOE believes nonstandard size equipment could be 

produced at TSL 5 in the lower range of 

cooling capacities. DOE believes 

manufacturers would not be able to 

manufacture non-standard size PTACs 

and PTHPs at TSL 5 at the high range 

of cooling capacities (e.g., 15,000 Btu/h) 

within a given equipment class for nonstandard size PTACs and PTHPs with 

cooling capacities greater than or equal 

to 7,000 Btu/h and less than or equal to 

15,000 Btu/h. In addition, DOE believes 

many small manufacturers of nonstandard size equipment would be 

unable to recover the large investments 

needed to change over all of their 

existing equipment lines to the 

efficiency levels required by TSL 5. If 

some small non-standard manufacturers 

cannot invest the product and capital 

conversion costs necessary to comply 

with TSL 5, they would be forced to 

abandon their equipment lines and exit 

the business. Others could be forced to 

reduce their equipment offerings in 

order to reduce the magnitude of the 

investments required to meet TSL 5 

efficiency levels for non-standard 

equipment. 

After carefully considering the 

analysis and weighing the benefits and 

burdens of TSL 5, the Secretary has 

reached the following conclusion: At 

TSL 5, even if manufacturers overcome 

the barriers to produce R–410 

equipment in the full range of cooling 

capacities by the effective date of an 

amended energy conservation standard, 

the benefits of energy savings and 

emissions reductions would be 

outweighed by the potential multimillion dollar negative economic 

burden on manufacturers, the risks of 

small, non-standard manufacturers 

exiting from the market, and the 

reduction of equipment lines resulting 

from decreased equipment offerings. 

Next, DOE considered TSL 4. For TSL 

4, DOE combined the efficiency levels 

in TSL 1 for non-standard size PTACs 

and the efficiency levels in TSL 5 for 

non-standard size PTHPs. This 

combination of efficiency levels serves 

to maximize LCC savings, while 

recognizing the differences in LCC 

results for non-standard size PTACs and 

PTHPs. DOE projects that TSL 4 for nonstandard size PTACs and PTHPs would 

save 0.006 quads of energy through 

2042, an amount DOE considers 

significant. Discounted at seven percent, 

the projected energy savings through 

2042 would be 0.001 quads. For the 

Nation as a whole, DOE projects that 

TSL 4 would result in net savings in 

NPV of $8 million for non-standard size 

PTACs and PTHPs, using a discount rate 

of seven percent, and $23 million for 

non-standard size PTACs and PTHPs, 

using a discount rate of three percent. 

The estimated emissions reductions are 

0.20 Mt of CO2, between 0.02 kt and 

0.40 kt of NOX, and between 0 and 0.007 

t of Hg. Total generating capacity 

needed in 2042 under TSL 4 would 

likely decrease by 0.014 GW. 

At TSL 4, DOE projects that the 

average PTAC or PTHP customer would 

experience LCC savings. Purchasers of 


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non-standard size PTACs, on average, 

would experience an LCC decrease of 

$26 (2007$) over the life of the product 

and purchasers of non-standard size 

PTHPs would save on average $80 

(2007$). DOE estimates an LCC increase 

for 6 percent of customers in the Nation 

who purchase a non-standard size 

PTAC, and for 5 percent of customers in 

the Nation who purchase a nonstandard size PTHP. The remaining 

customers of non-standard size PTACs 

and PTHPs would experience either a 

decrease or no change in LCC. 

The projected change in INPV ranges 

between losses of $21 million and $23 

million for the non-standard size PTAC 

and PTHP industry. Just as with TSL 5, 

the projected impacts continue to be 

driven primarily by the manufacturers’ 

ability to pass on increases in MPCs to 

the customer. The loss of $23 million 

assumes that DOE’s projections of 

partial cost recovery as described in 

Chapter 13 of the TSD remain valid. 

TSL 4 requires the production of nonstandard size PTACs at the efficiency 

levels in TSL 1 and non-standard size 

PTHPs at efficiency levels at TSL 5. 

Thus, TSL 4 requires the production of 

non-standard size PTHPs using R–410A 

that would have efficiencies equivalent 

to the ‘‘max tech’’ efficiency levels with 

R–410A applying the degradations 

estimated in the engineering analysis in 

the absence of a high efficiency 

compressor. For the larger cooling 

capacity range (i.e., 15,000 Btu/h) 

within a given equipment class of nonstandard size PTACs and PTHPs with a 

cooling capacity greater than or equal to 

7,000 Btu/h and less than or equal to 

15,000 Btu/h, DOE believes 

manufacturers would not be able to 

produce equipment at the efficiency 

levels provided by the TSL 4 energyefficiency equations. At larger cooling 

capacities for non-standard equipment, 

manufacturers do not have the 

additional space within the box sleeve 

to add heat exchanger area to increase 

the efficiency of the equipment. 

Specifically, DOE believes non-standard 

manufacturers would eliminate 

equipment due to the stringency of the 

standard—and the costs associated with 

attaining them—at higher cooling 

capacity regions. In addition, DOE 

believes many small manufacturers of 

non-standard size equipment would be 

unable to recover the large investments 

needed to change over all of their 

existing equipment lines to the 

efficiency levels required by TSL 4. If 

some of these manufacturers cannot 

invest the product and capital 

conversion costs necessary to comply 

with TSL 4, they would be forced to 

abandon their equipment lines and exit 

the business. Others could be forced to 

reduce their equipment offerings in 

order to reduce the magnitude of the 

investments required to meet the TSL 4 

efficiency levels, which will affect their 

ability to offer R–410A-compatible 

equipment in the full range of capacities 

currently being offered by the time the 

new standard would become effective. 

Based on the reasons stated earlier, 

while DOE recognizes the increased 

economic benefits to the nation that 

could result from TSL 4 for nonstandard size PTACs and PTHPs, DOE 

concludes that the benefits of a Federal 

standard at TSL 4 would still be 

outweighed by the economic burden 

that would be placed upon nonstandard size PTAC and PTHP 

manufacturers. 

Next, DOE considered TSL 3. TSL 3 

includes the same efficiency levels for 

non-standard PTACs as non-standard 

PTHPs. DOE projects that TSL 3 for nonstandard size PTACs and PTHPs would 

save 0.005 quads of energy through 

2042, an amount DOE considers 

significant. Discounted at seven percent, 

the projected energy savings through 

2042 would be 0.001 quads. For the 

Nation as a whole, DOE projects that 

TSL 3 would result in net savings in 

NPV of $7 million for non-standard size 

PTACs and PTHPs, using a discount rate 

of seven percent, and $19 million for 

non-standard size PTACs and PTHPs, 

using a discount rate of three percent. 

The estimated emissions reductions are 

0.18 Mt of CO2, between 0.01 and 0.34 

kt of NOX, and between 0 and 0.006 t 

of Hg. Total generating capacity needed 

in 2042 under TSL 3 for non-standard 

size PTACs and PTHPs would likely 

decrease by 0.013 GW. 

At TSL 3, DOE projects that the 

average PTAC or PTHP customer would 

experience LCC savings. Purchasers of 

non-standard size PTACs, on average, 

would experience a decrease in LCC of 

$30 (2007$) over the life of the product 

and purchasers of non-standard size 

PTHPs would save on average $66 

(2007$). DOE estimates an LCC increase 

for 14 percent of customers in the 

Nation that purchase a non-standard 

size PTAC, and for 3 percent of 

customers in the Nation that purchase a 

non-standard size PTHP. The remaining 

customers would experience either a 

decrease or no change in LCC. 

The projected change in INPV ranges 

between a loss of $17 million and a loss 

of $20 million for the non-standard size 

PTAC and PTHP industry. Just as with 

TSL 5, the projected impacts continue to 

be driven primarily by the 

manufacturers’ ability to pass on 

increases in MPCs to the customer. The 

loss of $20 million assumes the 

continued validity of DOE’s projections 

of partial cost recovery as described in 

Chapter 13 of the TSD. Even at TSL 3, 

DOE is concerned about the 

manufacturers’ ability to produce and 

offer equipment in the full range of 

cooling capacities that would fit the 

wide variety of wall sleeves that 

currently exist. For the larger cooling 

capacity range (i.e., 15,000 Btu/h) 

within a given equipment class of nonstandard size PTACs and PTHPs with a 

cooling capacity greater than or equal to 

7,000 Btu/h and less than or equal to 

15,000 Btu/h, DOE believes 

manufacturers would not be able to 

produce equipment at the efficiency 

levels provided by the TSL 3 energyefficiency equations. Specifically, DOE 

believes non-standard manufacturers 

would eliminate equipment due to the 

stringency of the standard at higher 

cooling capacity regions. In addition, 

TSL 3 requires a $23 million investment 

by the industry in order to transform all 

of the existing equipment lines available 

in the current non-standard market to 

TSL 3 efficiency levels. DOE believes 

many small non-standard manufacturers 

would not be able to recover these 

investments needed to change over all 

of their existing equipment lines to the 

efficiency levels required by TSL 3. If 

some small non-standard manufacturers 

cannot invest the product and capital 

conversion costs necessary to comply 

with TSL 3, they would be forced to 

abandon their equipment lines and exit 

the business. Others could be forced to 

reduce their equipment offerings in 

order to reduce the magnitude of the 

investments required to meet TSL 3 

efficiency levels for non-standard 

equipment. 

While DOE recognizes the increased 

economic benefits to the nation and the 

energy savings that could result from 

TSL 3 for non-standard size PTACs and 

PTHPs, DOE concludes that, based on 

the above, the benefits of an amended 

energy conservation standard at TSL 3 

would be outweighed by the economic 

burden that would be placed upon nonstandard size PTAC and PTHP 

manufacturers. 

Next, DOE considered TSL 2. TSL 2 

requires different efficiency levels for 

non-standard size PTACs and nonstandard PTHPs at the same cooling 

capacity. DOE projects that TSL 2 for 

non-standard size PTACs and PTHPs 

would save 0.004 quads of energy 

through 2042, an amount DOE considers 

significant. Discounted at seven percent, 

the projected energy savings through 

2042 would be 0.001 quads. For the 

Nation as a whole, DOE projects that 

TSL 2 would result in net savings in 


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NPV of $6 million for non-standard size 

PTACs and PTHPs, using a discount rate 

of seven percent, and $16 million for 

non-standard size PTACs and PTHPs, 

using a discount rate of three percent. 

The estimated emissions reductions are 

0.14 Mt of CO2, between 0.01 kt and 

0.28 kt of NOX, and between 0 and 0.005 

t of Hg. Total generating capacity 

needed in 2042 under TSL 2 for nonstandard size PTACs and PTHPs would 

likely decrease by 0.010 GW. 

At TSL 2, DOE projects that the 

average PTAC or PTHP customer would 

experience LCC savings. Purchasers of 

non-standard size PTACs, on average, 

would have an LCC decrease of $26 

(2007$) over the life of the product and 

purchasers of non-standard size PTHPs 

would save on average $66 (2007$). 

DOE estimates an LCC increase for 6 

percent of customers in the Nation that 

purchase a non-standard size PTAC and 

for 3 percent of customers in the Nation 

that purchase a non-standard size PTHP. 

The remaining customers of nonstandard size PTACs and PTHPs would 

experience either a decrease or no 

change in LCC. 

The projected change in INPV ranges 

between a loss of $17 million and a loss 

of $19 million for the non-standard size 

PTAC and PTHP industry. Just as with 

other TSLs, the projected impacts 

continue to be driven primarily by the 

manufacturers’ ability to pass on 

increases in MPCs to the customer. The 

loss of $19 million assumes DOE’s 

projections of partial cost recovery as 

described in Chapter 13 of the TSD 

remain valid. Since TSL 2 requires nonstandard size manufacturers to be 

produced at the efficiency levels in TSL 

3, DOE is concerned about the 

manufacturer’s ability to produce and 

offer equipment in the full range of 

cooling capacities to fit the wide variety 

of wall sleeves that currently exist for 

non-standard size PTHPs. 

For the larger cooling capacity range 

(i.e., 15,000 Btu/h) within a given 

equipment class of non-standard size 

PTACs and PTHPs with a cooling 

capacity greater than or equal to 7,000 

Btu/h and less than or equal to 15,000 

Btu/h, DOE believes manufacturers 

would be unable to produce equipment 

at the efficiency levels provided by the 

TSL 2 energy-efficiency equations. 

Specifically, DOE believes non-standard 

manufacturers would eliminate 

equipment due to the costs required to 

satisfy this level at higher cooling 

capacity regions. In addition, TSL 2 

requires a 23.3 million dollar 

investment in order to transform all of 

the existing equipment lines available in 

the current non-standard market to TSL 

2 efficiency levels. The investment 

required at TSL 2 is larger than at TSL 

3 because manufacturers could be 

forced to design separate equipment 

platforms for non-standard size PTACs 

and non-standard size PTHPs because of 

the differences in efficiency level 

requirements. DOE believes many small 

manufacturers of non-standard size 

equipment would be unable to recover 

these investments needed to change 

over all of their existing equipment lines 

to the efficiency levels required by TSL 

2. If some small, non-standard 

manufacturers cannot invest the product 

and capital conversion costs necessary 

to comply with TSL 2, they would be 

forced to abandon their equipment lines 

and exit the business. Others could be 

forced to reduce their equipment 

offerings in order to reduce the 

magnitude of the investments required 

to meet TSL 2 efficiency levels for nonstandard equipment. 

While DOE recognizes the increased 

economic benefits to the nation and the 

energy savings that could result from 

TSL 2 for non-standard size PTACs and 

PTHPs, DOE concludes, based on the 

reasons stated above, that the benefits of 

an amended energy conservation 

standard at TSL 2 would be outweighed 

by the economic burden that would be 

placed upon non-standard size PTAC 

and PTHP manufacturers. 

Last, DOE considered TSL 1. TSL 1 

requires the same efficiency levels for 

non-standard size PTACs and nonstandard PTHPs at the same cooling 

capacity. DOE projects that TSL 1 for 

non-standard size PTACs and PTHPs 

would save 0.004 quads of energy 

through 2042, an amount DOE considers 

significant. Discounted at seven percent, 

the projected energy savings through 

2042 would be 0.001 quads. For the 

Nation as a whole, DOE projects that 

TSL 1 would result in net savings in 

NPV of $5 million for non-standard size 

PTACs and PTHPs, using a discount rate 

of seven percent, and $14 million for 

non-standard size PTACs and PTHPs, 

using a discount rate of three percent. 

The estimated emissions reductions are 

0.12 Mt of CO2, between 0.01 kt and 

0.23 kt of NOX, and between 0 and 0.004 

t of Hg. Total generating capacity 

needed in 2042 under TSL 1 for nonstandard size PTACs and PTHPs would 

likely decrease by 0.009 GW. 

At TSL 1, DOE projects that the 

average PTAC or PTHP customer would 

experience an LCC savings. Purchasers 

of non-standard size PTACs, on average 

would experience an LCC decrease of 

$26 (2007$) over the life of the product 

and purchasers of non-standard size 

PTHPs would save on average $62 

(2007$). DOE estimates LCC increase for 

6 percent of customers in the Nation 

that purchase a non-standard size 

PTAC, and for 1 percent of customers in 

the Nation that purchase a non-standard 

size PTHP. The remaining customers of 

non-standard size equipment would 

experience either a decrease or no 

change in LCC. 

The projected change in INPV ranges 

between losses of $16 million and $17 

million for the non-standard size PTAC 

and PTHP industry. Just as with other 

TSLs, the projected impacts continue to 

be driven primarily by the 

manufacturers’ ability to pass on 

increases in MPCs to the customer. The 

loss of $17 million assumes DOE’s 

projections of partial cost recovery as 

described in Chapter 13 of the TSD 

remain valid. Even at TSL 1, DOE 

estimates manufacturers of nonstandard PTACs and PTHPs would 

experience over a 50 percent reduction 

in INPV as a result of amended energy 

conservation standards. TSL 1 requires 

a 22 million dollar investment by the 

industry in order to transform all of the 

existing equipment lines available in the 

current non-standard market to TSL 1 

efficiency levels. DOE believes many 

small manufacturers of non-standard 

equipment would be unable to recover 

these investments needed to change 

over all of their existing equipment lines 

to the efficiency levels required by TSL 

1. If some small non-standard 

manufacturers cannot invest the product 

and capital conversion costs necessary 

to comply with TSL 1, they would be 

forced to abandon their equipment lines 

and exit the business. Others could be 

forced to reduce their equipment 

offerings in order to reduce the 

magnitude of the investments required 

to meet TSL 1 efficiency levels for nonstandard equipment. 

While DOE recognizes the increased 

economic benefits to the nation and the 

energy savings that could result from 

TSL 1 for non-standard size PTACs and 

PTHPs, DOE concludes that the benefits 

of an amended energy conservation 

standard at TSL 1 would still be 

outweighed by the economic burden 

that would be placed upon nonstandard size PTAC and PTHP 

manufacturers. DOE is especially 

concerned about the large investments 

required for non-standard size 

manufacturers to transform their entire 

equipment offerings to TSL 1 efficiency 

levels and with the likelihood that small 

non-standard size manufacturers would 

exit the market, causing some existing 

non-standard size PTACs and PTHPs to 

become unavailable to consumers. 

After considering the analysis and 

weighing the benefits and the burdens, 

DOE concludes that the benefits of a 

standard at the efficiency levels 


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58824 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 

specified by ASHRAE Standard 90.1– 

1999 outweigh the burdens. 

Therefore based on the discussion 

above, DOE concludes that the 

efficiency levels beyond those in 

ASHRAE Standard 90.1–1999 are not 

economically justified and is adopting 

the efficiency level in ASHRAE 

Standard 90.1–1999. Table V.34 

demonstrates the amended energy 

conservation standards for standard size 

PTACs and PTHPs in the full range of 

cooling capacities. 

TABLE V.34—FINAL ENERGY CONSERVATION STANDARDS FOR NON-STANDARD SIZE PTACS AND PTHPS

Equipment class 

Final energy conservation standards * 

Equipment Category Cooling capacity 

PTAC .......................................... Non-Standard Size ** .................. <7,000 ........................................ EER = 9.4 

7,000–15,000 .............................. EER = 10.9 ¥ (0.213 × Cap †) 

>15,000 ...................................... EER = 7.7 

<7,000 ........................................ EER = 9.3 

COP = 2.7 

PTHP .......................................... Non-Standard Size ** .................. 7,000–15,000 .............................. EER = 10.8 ¥ (0.213 × Cap †) 

COP = 2.9 ¥ (0.026 × Cap †) 

>15,000 ...................................... EER = 7.6 

COP = 2.5 

* For equipment rated according to the DOE test procedure (ARI Standard 310/380–2004), all energy efficiency ratio (EER) values must be 

rated at 95 °F outdoor dry-bulb temperature for air-cooled equipment and evaporatively cooled equipment and at 85 °F entering water temperature for water cooled equipment. All coefficient of performance (COP) values must be rated at 47 °F outdoor dry-bulb temperature for air-cooled 

equipment. 

** Non-standard size refers to PTAC or PTHP equipment with existing wall sleeve dimensions having an external wall opening of less than 16 

inches high or less than 42 inches wide, and a cross-sectional area less than 670 square inches. † Cap means cooling capacity in thousand British thermal units per hour (Btu/h) at 95 °F outdoor dry-bulb temperature. 

VI. Procedural Issues and Regulatory 

Review 

A. Review Under Executive Order 12866 

Section 1(b)(1) of Executive Order 

12866, ‘‘Regulatory Planning and 

Review,’’ 58 FR 51735 (October 4, 1993), 

requires each agency to identify in 

writing the market failure or other 

problem that it intends to address that 

warrants agency action such as today’s 

final rule, and to assess the significance 

of that problem in evaluating whether 

any new regulation is warranted. 

DOE’s analysis suggests that much of 

the hospitality industry segment using 

PTAC and PTHP equipment tends to be 

small hotels or motels. DOE believes 

that these small hotels and motels tend 

to be individually owned and operated 

and lack corporate direction in terms of 

energy policy. The transaction costs for 

these smaller owners or operators to 

research, purchase, and install optimum 

efficiency equipment are too high to 

make such action commonplace. DOE 

believes that there is a lack of 

information and/or information 

processing capability about energy 

efficiency opportunities in the PTAC 

and PTHP market available to hotel or 

motel owners. Unlike residential 

heating and air conditioning products, 

PTACs and PTHPs are not included in 

energy labeling programs such as the 

Federal Trade Commission’s energy 

labeling program. Furthermore, the 

energy use of PTACs and PTHPs 

depends on the climate and equipment 

usage and, as such, is not readily 

available for the owners or operators to 

decide whether improving the energy 

efficiency of PTAC and PTHP 

equipment is cost effective. 

PTACs and PTHPs are not purchased 

in the same manner as other regulated 

appliances that are sold in retail stores 

(e.g., room air conditioners). When 

purchased by the end user, PTACs and 

PTHPs are more likely to be purchased 

through contractors and builders that 

perform the installation. (See Chapter 8 

of the final rule TSD) The AHRI 

Certified Directory includes PTACs and 

PTHPs, and provides the energy 

efficiency and capacity information on 

PTACs and PTHPs produced by 

participating manufacturers. 

To the extent that a lack of 

information may exist, DOE could 

expect the energy efficiency for PTACs 

and PTHPs to be more or less randomly 

distributed across key variables such as 

energy prices and usage levels. DOE 

found that energy efficiency and energy 

cost savings are not the primary drivers 

of the hotel and motel business. Instead, 

hotel and motel operators work on a 

fixed budget and are concerned 

primarily with providing clean and 

comfortable rooms to the customers to 

ensure customer satisfaction. If 

consumer satisfaction decreases, hotel 

or motel owners may incur increased 

transaction costs, thus preventing access 

to capital to finance energy efficiency 

investment. 

A related issue is the problem of 

asymmetric information (one party to a 

transaction has more and better 

information than the other) and/or high 

transactions costs (costs of gathering 

information and effecting exchanges of 

goods and services) among PTAC and 

PTHP equipment customers. In the case 

of PTACs and PTHPs, in many cases, 

the party responsible for the equipment 

purchase may not be the one who pays 

the operating cost. For example, PTAC 

and PTHP equipment are also used in 

nursing homes (i.e., assisted living) and 

medical office buildings. In these 

settings, the builder or complex owner 

often makes decisions about PTACs and 

PTHPs without input from tenants and 

typically does not offer tenants the 

option to upgrade that equipment. 

Furthermore, DOE believes that the 

tenant typically pays the utility bills. If 

there were no transactions costs, it 

would be in the builder or complex 

owners’ interest to install equipment 

that the tenants would choose on their 

own. For example, a tenant who 

knowingly faces higher utility bills from 

low-efficiency equipment would expect 

to pay less in rent, thereby shifting the 

higher utility cost back to the complex 

owner. However, this information is not 

without a cost. It may not be in the 

tenant’s interest to take the time to 

develop it or, in the case of the complex 

owner who installs less efficient 

equipment, to convey that information 

to the tenant. 

To the extent that asymmetric 

information and/or high transaction 

costs are problems, one would expect to 

find certain outcomes regarding PTAC 

and PTHP efficiency. For example, all 

things being equal, one would not 

expect to see higher rents for office 

complexes with high-efficiency 


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equipment. Alternatively, one would 

expect higher energy efficiency in rental 

units where the rent includes utilities, 

compared with those where the tenant 

pays the utility bills separately. DOE did 

not receive any data that would enable 

it to conduct tests of market failure in 

response to the NOPR. 

In addition, this rulemaking is likely 

to yield certain ‘‘external’’ benefits 

resulting from improved energy 

efficiency of PTACs and PTHPs that are 

not captured by the users of such 

equipment. These benefits include 

externalities related to environmental 

and energy security that are not 

reflected in energy prices, such as 

reduced emissions of greenhouse gases. 

Regarding environmental externalities, 

the emissions reductions in today’s final 

rule are projected to be 1.06 million 

metric tons (Mt) of CO2, between 0.09 

kilotons and 2.13 kilotons (kt) of NOX, 

and between 0 and 0.037 tons of Hg. 

Because today’s regulatory action is a 

significant regulatory action under 

section 3(f)(1) of Executive Order 12866, 

section 6(a)(3) of the Executive Order 

requires DOE to prepare and submit for 

review to OMB’s Office of Information 

and Regulatory Affairs (OIRA) an 

assessment of the costs and benefits of 

today’s rule. Accordingly, DOE 

presented to OIRA for review the draft 

final rule and other documents prepared 

for this rulemaking, including a 

regulatory impact analysis (RIA). These 

documents are included in the 

rulemaking record and are available for 

public review in the Resource Room of 

DOE’s 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 NOPR contained a summary of 

the RIA, which evaluated the extent to 

which major alternatives to standards 

for PTACs and PTHPs could achieve 

significant energy savings at reasonable 

cost, compared with the effectiveness of 

the proposed rule. 73 FR 18907–10. The 

complete RIA (Regulatory Impact 

Analysis for Proposed Energy 

Conservation Standards for Packaged 

Terminal Air Conditioners and Heat 

Pumps), is contained in the TSD 

prepared for today’s rule. 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 

amended standards. 

As explained in the NOPR, DOE 

determined that none of the alternatives 

that it examined would save as much 

energy or have an NPV as high as the 

proposed standards. That same 

conclusion applies to the amended 

standards in today’s rule. In addition, 

several of the alternatives would require 

new enabling legislation, because 

authority to conduct those alternatives 

currently does not exist. The RIA report 

in the TSD provides additional detail on 

the regulatory alternatives. 

B. Review Under the Regulatory 

Flexibility Act 

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, 

and a final regulatory flexibility analysis 

(FRFA) for any such rule that an agency 

adopts as a final rule, unless the agency 

certifies that the rule, if promulgated, 

will not have a significant economic 

impact on a substantial number of small 

entities. A regulatory flexibility analysis 

examines the impact of the rule on 

small entities and considers alternative 

ways of reducing negative impacts. 

Also, 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 packaged terminal equipment 

manufacturing industry, are 

manufacturing enterprises with 750 

employees or fewer. DOE used the small 

business size standards published on 

March 11, 2008, as amended, by the 

SBA to determine whether any small 

entities would be required to comply 

with the rule. 61 FR 3286 and codified 

at 13 CFR part 121. The size standards 

are listed by North American Industry 

Classification System (NAICS) code and 

industry description. PTAC and PTHP 

manufacturing is classified under 

NAICS 333415, which sets a threshold 

of 750 employees or less for an entity to 

be considered as a small business under 

the ‘‘Air-Conditioning and Warm Air 

Heating Equipment and Commercial 

and Industrial Refrigeration Equipment 

Manufacturer’’ category. 

For the NOPR, DOE identified and 

interviewed two manufacturers of 

PTACs and PTHPs that are small 

businesses affected by this rulemaking. 

73 FR 18910. DOE reviewed the 

proposed rule under the provisions of 

the Regulatory Flexibility Act and the 

procedures and policies published on 

February 19, 2003. Id. On the basis of 

this review, DOE determined that it 

could not certify that the proposed 

standards (TSL4), if promulgated, would 

have no significant economic impact on 

a substantial number of small entities. 

Id. DOE made this determination 

because of the potential impacts of the 

proposed standard levels on PTAC and 

PTHP manufacturers generally, 

including small businesses. Id. 

Because of these potential impacts on 

small manufacturers, DOE prepared an 

IRFA during the NOPR stage of this 

rulemaking. DOE provided the IRFA in 

its entirety in the NOPR, 73 FR 18910– 

12, and also transmitted a copy to the 

Chief Counsel for Advocacy of the SBA 

for review. Chapter 13 of the TSD 

contains more information about the 

impact of this rulemaking on 

manufacturers. 

The IRFA divided potential impacts 

on small businesses into two broad 

categories: (1) Impacts associated with 

standard size PTAC and PTHP 

manufacturers; and (2) impacts 

associated with non-standard size PTAC 

and PTHP manufacturers. The PTAC 

and PTHP industry is characterized by 

both domestic and international 

manufacturers. Standard size PTACs 

and PTHPs are primarily manufactured 

outside of the U.S. with the exception 

of one domestic PTAC and PTHP 

manufacturer. Non-standard size PTACs 

and PTHPs are primarily manufactured 

domestically by a handful of 

manufacturers. Consolidation within the 

PTAC and PTHP industry has reduced 

the number of parent companies that 

manufacture similar equipment under 

different affiliates and labels. 

DOE has prepared a FRFA for this 

rulemaking, which is presented in the 

following discussion. Comments 

received in response to the IRFA 

regarding the impacts on small 

businesses in the non-standard industry 

are summarized in section IV.K.2. In 

addition, DOE further reviewed the nonstandard size industry, in particular, the 

market for small businesses, and 

presented its finding in section IV.K.2. 

The FRFA below is written in 

accordance with the requirements of the 

Regulatory Flexibility Act, and 

addresses the comments received from 

interested parties in response to the 

IRFA. 

1. Reasons for the Final Rule 

Part A–1 of Title III of EPCA 

addresses the energy efficiency of 

certain types of commercial and 


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industrial equipment. (42 U.S.C. 6311– 

6317) It contains specific mandatory 

energy conservation standards for 

commercial PTACs and PTHPs. (42 

U.S.C. 6313(a)(3)) EPACT 1992, Public 

Law 102–486, also amended EPCA with 

respect to PTACs and PTHPs, providing 

definitions in section 122(a), test 

procedures in section 122(b), labeling 

provisions in section 122(c), and the 

authority to require information and 

reports from manufacturers in section 

122(e). DOE publishes today’s final rule 

pursuant to Part A–1. The PTAC and 

PTHP test procedures appear at 10 CFR 

431.96. 

EPCA established Federal energy 

conservation standards that generally 

correspond to the levels in ASHRAE 

Standard 90.1, as in effect on October 

24, 1992 (ASHRAE Standard 90.1– 

1989), for each type of covered 

equipment listed in section 342(a) of 

EPCA, including PTACs and PTHPs. (42 

U.S.C. 6313(a)) For each type of 

equipment, EPCA directed that if 

ASHRAE Standard 90.1 is amended, 

DOE must adopt an amended standard 

at the new level in ASHRAE Standard 

90.1, unless clear and convincing 

evidence supports a determination that 

adoption of a more stringent level as a 

national standard would produce 

significant additional energy savings 

and be technologically feasible and 

economically justified. (42 U.S.C. 

6313(a)(6)(A)(ii)(II)) In accordance with 

these statutory criteria, DOE is 

amending the energy conservation 

standards for PTACs and PTHPs by 

raising the efficiency levels for this 

equipment above the efficiency levels 

specified by ASHRAE Standard 90.1– 

1999 for standard size PTACs and 

PTHPs and adopting the efficiency 

levels in ASHRAE Standard 90.1–1999 

for non-standard size PTACs and 

PTHPs. 

2. Objectives of, and Legal Basis for, the 

Rule 

To determine whether economic 

justification exists, DOE reviews 

comments received and conducts 

analysis to determine whether the 

economic benefits of the amended 

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) (see section II.B 

of this preamble). (42 U.S.C. 6316(a)) 

Further information concerning the 

background of this rulemaking is 

provided in Chapter 1 of the TSD. 

3. Description and Estimated Number of 

Small Entities Regulated 

Through market research, interviews 

with manufacturers of all sizes, 

discussions with industry trade groups, 

and comments from interested parties 

on the IRFA, DOE identified six small 

manufacturers in the PTAC and PTHP 

industry. These six manufacturers can 

be further sub-categorized by their 

manufacturing scale: (1) One small 

business competes successfully making 

standard-size PTACs and PTHPs in high 

volumes; (2) the remaining five small 

businesses make PTACs and PTHPs at 

much lower volumes. While three of 

these five low-volume small businesses 

make PTACs and PTHPs that fit into 

standard-size sleeves, the customization 

options offered by these manufacturers 

suggests that these units have more in 

common with the non-standard size 

equipment that these manufacturers also 

offer than with the high-volume 

standard size PTAC and PTHP 

equipment on the market. DOE found 

one small manufacturer of standard size 

PTACs and PTHPs manufactures 

equipment outside the U.S. DOE found 

the five small manufacturers produce 

equipment domestically. None of the six 

firms are divisions of larger owned 

companies. 

4. Description and Estimate of 

Compliance Requirements 

Potential impacts on all 

manufacturers of PTACs and PTHPs 

vary by TSL. Margins for all businesses 

could be impacted negatively by the 

adoption of any TSL, since all 

manufacturers have expressed an 

inability to pass on cost increases to 

retailers and consumers. The six small 

domestic businesses under discussion 

differ from their competitors in that they 

are much smaller entities than their 

competitors in the standard PTAC and 

PTHP industry. Any rule affecting 

products manufactured by these small 

businesses will affect them 

disproportionately because of their size 

and their focus on non-standard PTAC 

and PTHP equipment. However, due to 

the low number of competitors that 

agreed to be interviewed, DOE was not 

able to characterize the small business 

industry segment with a separate cashflow analysis due to concerns about 

maintaining confidentiality. 

For all other TSLs concerning PTAC 

and PTHP equipment (which are not 

being considered in today’s rule), the 

impact on small, focused business 

entities will be proportionately greater 

than for their competitors since these 

businesses lack the scale to afford 

significant R&D expenses and capital 

expansion budgets. The exact extent is 

hard to gauge since manufacturers did 

not respond to all proposed investment 

requirements by TSL during interviews. 

However, research associated with other 

small entities in prior rulemakings 

suggests that many costs associated with 

complying with rulemakings are 

typically fixed, regardless of production 

volume. Thus, given their focus and 

scale, any appliance rulemaking could 

affect these six small businesses 

disproportionately compared to their 

larger and more diversified competitors. 

5. Significant Issues Raised by Public 

Comments 

DOE summarized comments from 

interested parties in section IV.K.1. 

6. Steps DOE Has Taken To Minimize 

the Economic Impact on Small, NonStandard Size PTAC and PTHP 

Manufacturers 

In consideration of the benefits and 

burdens of standards, including the 

burdens posed to small manufacturers, 

DOE concluded that the efficiency 

levels in ASHRAE Standard 90.1–1999 

are the highest levels that can be 

justified for non-standard size PTAC 

and PTHP equipment. DOE discusses 

the potential impacts on small, nonstandard manufacturers from higher 

TSLs in section IV.K.1. Since DOE has 

adopted the efficiency levels in 

ASHRAE Standard 90.1–1999, DOE 

believes it has taken the necessary steps 

to minimize the economic impact on 

small, non-standard size PTAC and 

PTHP manufacturers. 

C. Review Under the Paperwork 

Reduction Act 

DOE stated in the NOPR that this 

rulemaking would impose no new 

information and recordkeeping 

requirements, and that OMB clearance 

is not required under the Paperwork 

Reduction Act (44 U.S.C. 3501 et seq.). 

73 FR 18912. DOE received no 

comments on this in response to the 

NOPR and, as with the proposed rule, 

today’s rule imposes no information and 

recordkeeping requirements. DOE takes 

no further action in this rulemaking 

with respect to the Paperwork 

Reduction Act. 

D. Review Under the National 

Environmental Policy Act 

DOE prepared an environmental 

assessment of the impacts of today’s 

standards, which it published as a 

chapter within the TSD for the final 

rule. DOE found the environmental 

effects associated with today’s various 

standards levels for PTACs and PTHPs 

to be not significant, and therefore it is 

issuing a Finding of No Significant 

Impact (FONSI) pursuant to the 

National Environmental Policy Act of 

1969 (42 U.S.C. 4321 et seq.), the 

regulations of the Council on 


pwalker on PROD1PC71 with RULES3
Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 58827 

Environmental Quality (40 CFR parts 

1500–1508), and DOE’s regulations for 

compliance with the National 

Environmental Policy Act (10 CFR part 

1021). The FONSI is available in the 

docket for this rulemaking. 

E. Review Under Executive Order 13132 

DOE reviewed this rule pursuant to 

Executive Order 13132, Federalism, 64 

FR 43255 (August 4, 1999), which 

imposes certain requirements on 

agencies formulating and implementing 

policies or regulations that preempt 

State law or that have federalism 

implications. In accordance with DOE’s 

statement of policy describing the 

intergovernmental consultation process 

that it will follow in the development of 

regulations that have federalism 

implications, 65 FR 13735 (March 14, 

2000), DOE examined the proposed rule 

and determined that the rule 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. 73 FR 18912. DOE 

received no comments on this issue in 

response to the NOPR, and its 

conclusions on this issue are the same 

for the final rule as they were for the 

proposed rule. DOE takes no further 

action in today’s final rule with respect 

to 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 whether 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, the final regulations meet the 

relevant standards of Executive Order 

12988. 

G. Review Under the Unfunded 

Mandates Reform Act of 1995 

As described in the NOPR, title II of 

the Unfunded Mandates Reform Act of 

1995 (Pub. L. 104–4) (UMRA) imposes 

requirements on Federal agencies when 

their regulatory actions will have certain 

types of impacts on State, local, and 

Tribal governments and the private 

sector. 73 FR 18912–13. DOE concluded 

that, because this rule would contain 

neither an intergovernmental mandate 

nor a mandate that may result in 

expenditure of $100 million or more in 

any year, the requirements of UMRA do 

not apply to the rule. Id. DOE received 

no comments concerning the UMRA in 

response to the NOPR, and its 

conclusions on this issue are the same 

for the final rule as for the proposed 

rule. DOE takes no further action in 

today’s final rule with respect to the 

UMRA. 

H. Review Under the Treasury and 

General Government Appropriations 

Act of 1999 

DOE determined that, for this 

rulemaking, it need not prepare a 

Family Policymaking Assessment under 

Section 654 of the Treasury and General 

Government Appropriations Act, 1999 

(Pub. L. 105–277). 73 FR 18913. DOE 

received no comments concerning 

Section 654 in response to the NOPR, 

and thus takes no further action in 

today’s final rule with respect to this 

provision. 

I. Review Under Executive Order 12630 

DOE determined, under Executive 

Order 12630, Governmental Actions and 

Interference with Constitutionally 

Protected Property Rights, 53 FR 8859 

(March 18, 1988), that today’s rule 

would not result in any takings which 

might require compensation under the 

Fifth Amendment to the U.S. 

Constitution. 73 FR 18913. DOE 

received no comments concerning 

Executive Order 12630 in response to 

the NOPR, and thus takes no further 

action in today’s final rule with respect 

to this Executive Order. 

J. Review Under the Treasury and 

General Government Appropriations 

Act of 2001 

Section 515 of the Treasury and 

General Government Appropriations 

Act, 2001 (44 U.S.C. 3516 note) provides 

for agencies to review most 

disseminations of information to the 

public under guidelines established by 

each agency pursuant to general 

guidelines issued by OMB. 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 final rule under the 

OMB and DOE guidelines and 

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 at 28355 

(May 22, 2001), requires Federal 

agencies to prepare and submit to the 

OIRA a Statement of Energy Effects for 

any significant energy action. DOE 

determined that the proposed rule was 

not a significant energy action within 

the meaning of Executive Order 13211. 

73 FR 18913. Accordingly, it did not 

prepare a Statement of Energy Effects on 

the proposed rule. DOE received no 

comments on this issue in response to 

the NOPR. As with the proposed rule, 

DOE has concluded that today’s final 

rule is not a significant energy action 

within the meaning of Executive Order 

13211, and has not prepared a 

Statement of Energy Effects on the rule. 

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, issued its Final 

Information Quality Bulletin for Peer 

Review (the Bulletin). 70 FR 2664 

(January 14, 2005). The purpose of the 

Bulletin is to enhance the quality and 

credibility of the Government’s 

scientific information. The Bulletin 

establishes that certain scientific 

information shall be peer reviewed by 

qualified specialists before it is 

disseminated by the federal government, 

and, as indicated in the NOPR, this 

includes influential scientific 

information related to agency regulatory 

actions, such as the analyses in this 

rulemaking. 73 FR 18913. 

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 


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58828 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 

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 the 

following web site: http://www.eere.

energy.gov/buildings/appliance_

standards/peer_review.html. DOE on 

June 28–29, 2005. 

M. Congressional Notification 

As required by 5 U.S.C. 801, DOE will 

submit to Congress a report regarding 

the issuance of today’s final rule prior 

to the effective date set forth at the 

outset of this notice. The report will 

state that it has been determined that 

the rule is a ‘‘major rule’’ as defined by 

5 U.S.C. 804(2). DOE also will submit 

the supporting analyses to the 

Comptroller General in the U.S. 

Government Accountability Office 

(GAO) and make them available to 

Congress. 

VII. Approval of the Office of the 

Secretary 

The Secretary of Energy has approved 

publication of today’s final rule. 

List of Subjects in 10 CFR Part 431 

Administrative practice and 

procedure, Confidential business 

information, Energy conservation. 

Issued in Washington, DC, on September 

29, 2008. 

John F. Mizroch, 

Acting Assistant Secretary, Energy Efficiency 

and Renewable Energy. 

■ For the reasons set forth in the 

preamble, chapter II of title 10, Code of 

Federal Regulations, part 431 is 

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 431.92 is amended by 

adding in alphabetical order new 

definitions for ‘‘Non-standard size,’’ and 

‘‘Standard size’’ to read as follows: 

§ 431.92 Definitions concerned 

commercial air conditioners and heat 

pumps. 

* * * * * 

Non-standard size means a packaged 

terminal air conditioner or packaged 

terminal heat pump with existing wall 

sleeve dimensions having an external 

wall opening of less than 16 inches high 

or less than 42 inches wide, and a crosssectional area less than 670 square 

inches. 

* * * * * 

Standard size means a packaged 

terminal air conditioner or packaged 

terminal heat pump with wall sleeve 

dimensions having an external wall 

opening of greater than or equal to 16 

inches high or greater than or equal to 

42 inches wide, and a cross-sectional 

area greater than or equal to 670 square 

inches. 

* * * * * 

■ 3. Section 431.97 is amended by 

revising paragraph (a), including Tables 

1 and 2, and by adding a new paragraph 

(c) to read as follows: 

§ 431.97 Energy efficiency standards and 

their effective dates. 

(a) All small or large commercial 

package air conditioning and heating 

equipment manufactured on or after 

January 1, 1994 (except for large 

commercial package air-conditioning 

and heating equipment, for which the 

effective date is January 1, 1995), and 

before January 1, 2010, in the case of the 

air-cooled equipment covered by the 

standards in paragraph (b), must meet 

the applicable minimum energy 

efficiency standard level(s) set forth in 

Tables 1 and 2 of this section. Each 

standard size packaged terminal air 

conditioner or packaged terminal heat 

pump manufactured on or after January 

1, 1994, and before September 30, 2012, 

must meet the applicable minimum 

energy efficiency standard level(s) set 

forth in Tables 1 and 2 of this section. 

Each non-standard size packaged 

terminal air conditioner or packaged 

terminal heat pump manufactured on or 

after January 1, 1994, and before 

September 30, 2010, must meet the 

applicable minimum energy efficiency 

standard level(s) set forth in Tables 1 

and 2 of this section. 

TABLE 1 TO § 431.97—MINIMUM COOLING EFFICIENCY LEVELS

Product Category Cooling capacity Sub-category 

Efficiency level 1

Products 

manufactured until 

October 29, 2003 

Products manufactured 

on and after 

October 29, 2003 

Small Commercial 

Packaged Air Conditioning and Heating Equipment.

Air Cooled, 3 Phase <65,000 Btu/h ........... Split System .............

Single Package ........

SEER = 10.0 ............

SEER = 9.7 ..............

SEER = 10.0. 

SEER = 9.7. 

Air Cooled ................. ≥65,000 Btu/h and 

<135,000 Btu/h.

All .............................. EER = 8.9 ................. EER = 8.9. 

Water Cooled, Evaporatively Cooled, 

and Water-Source.

<17,000 Btu/h ........... AC .............................

HP .............................

EER = 9.3 .................

EER = 9.3 .................

EER = 12.1. 

EER = 11.2. 

≥17,000 Btu/h and 

<65,000 Btu/h.

AC .............................

HP .............................

EER = 9.3 .................

EER = 9.3 .................

EER = 12.1. 

EER = 12.0. 

≥65,000 Btu/h and 

<135,000 Btu/h.

AC .............................

HP .............................

EER = 10.5 ...............

EER = 10.5 ...............

EER = 11.5.2

EER = 12.0. 

Large Commercial 

Packaged Air Conditioning and Heating Equipment.

Air Cooled ................. ≥135,000 Btu/h and 

<240,000 Btu/h.

All .............................. EER = 8.5 ................. EER = 8.5. 

Water-Cooled and 

Evaporatively 

Cooled.

≥135,000 Btu/h and 

<240,000 Btu/h.

All .............................. EER = 9.6 ................. EER = 9.6.3


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Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 58829 

TABLE 1 TO § 431.97—MINIMUM COOLING EFFICIENCY LEVELS—Continued 

Product Category Cooling capacity Sub-category 

Efficiency level 1

Products 

manufactured until 

October 29, 2003 

Products manufactured 

on and after 

October 29, 2003 

Packaged Terminal 

Air Conditioners 

and Heat Pumps.

All .............................. <7,000 Btu/h ............. All .............................. EER = 8.88 ............... EER = 8.88.

≥7,000 Btu/h and 

≤15,000 Btu/h.

................................... EER = 10.0¥(0.16 × 

capacity [in kBtu/h 

at 95 °F outdoor 

dry-bulb temperature]).

EER = 10.0¥(0.16 × 

capacity [in kBtu/h at 

95 °F outdoor drybulb temperature]). 

>15,000 Btu/h ........... ................................... EER = 7.6 ................. EER = 7.6. 

1For equipment rated according to the ARI standards, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled products and evaporatively cooled products and at 85 °F entering water temperature for water-cooled products. For water-source heat pumps rated 

according to the ISO standard, EER must be rated at 30 °C (86 °F) entering water temperature. 2 Deduct 0.2 from the required EER for units with heating sections other than electric resistance heat. 

3Effective 10/29/2004, the minimum value became EER = 11.0. 

TABLE 2 TO § 431.97—MINIMUM HEATING EFFICIENCY LEVELS

Product Category Cooling capacity Sub-category 

Efficiency level 1

Products 

manufactured until 

October 29, 2003 

Products manufactured on and after 

October 29, 2003 

Small Commercial 

Packaged Air Conditioning and Heating 

Equipment.

Air Cooled, 3 Phase <65,000 Btu/h ........... Split System ..............

Single Package .........

HSPF = 6.8 ...............

HSPF = 6.6 ...............

HSPF = 6.8. 

HSPF = 6.6. 

Water-Source ............ <135,000 Btu/h ......... Split System and Single Package.COP = 3.8 ................. COP = 4.2. 

Air Cooled ................. ≥65,000 Btu/h and 

<135,000 Btu/h.

All .............................. COP = 3.0 ................. COP = 3.0. 

Large Commercial 

Packaged Air Conditioning and Heating 

Equipment.

Air Cooled ................. ≥135,000 Btu/h and 

<240,000 Btu/h.

Split System and Single Package.COP = 2.9 ................. COP = 2.9. 

Packaged Terminal 

Heat Pumps.

All .............................. All .............................. All .............................. COP = 1.3 + (0.16 × 

the applicable minimum cooling EER 

prescribed in Table 

1—Minimum Cooling Efficiency Levels).

COP = 1.3 + (0.16 × 

the applicable minimum cooling EER 

prescribed in Table 

1—Minimum Cooling Efficiency Levels). 

1For units tested by ARI standards, all COP values must be rated at 47 °F outdoor dry-bulb temperature for air-cooled products, and at 70 °F 

entering water temperature for water-source heat pumps. For heat pumps tested by the ISO Standard 13256–1, the COP values must be obtained at the rating point with 20 °C (68 °F) entering water temperature. 

* * * * * 

(c) Each standard size packaged 

terminal air conditioner or packaged 

terminal heat pump manufactured on or 

after September 30, 2012 and each nonstandard size packaged terminal air 

conditioner or packaged terminal heat 

pump manufactured on or after 

September 30, 2010, shall have an 

Energy Efficiency Ratio and Coefficient 

of Performance no less than: 

Equipment class 

Energy conservation standards * 

Equipment Category Cooling capacity (British thermal 

units per hour [Btu/h]) 

PTAC .............................................. Standard Size ............................... <7,000 ...........................................

7,000–15,000 ................................

>15,000 .........................................

EER = 11.7 

EER = 13.8¥(0.300 × Cap**) 

EER = 9.3 

Non-Standard Size ........................ <7,000 ...........................................

7,000–15,000 ................................

>15,000 .........................................

EER = 9.4 

EER = 10.9¥(0.213 × Cap**) 

EER = 7.7 


pwalker on PROD1PC71 with RULES3
58830 Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 / Rules and Regulations 

Equipment class 

Energy conservation standards * 

Equipment Category Cooling capacity (British thermal 

units per hour [Btu/h]) 

PTHP .............................................. Standard Size ............................... <7,000 ...........................................

7,000–15,000 ................................

>15,000 .........................................

EER = 11.9 

COP = 3.3 

EER = 14.0¥(0.300 × Cap**) 

COP = 3.7¥(0.052 × Cap**) 

EER = 9.5 

COP = 2.9 

Non-Standard Size ........................ <7,000 ...........................................

7,000–15,000 ................................

>15,000 .........................................

EER = 9.3 

COP = 2.7 

EER = 10.8¥(0.213 × Cap**) 

COP = 2.9¥(0.026 × Cap**) 

EER = 7.6 

COP = 2.5 

* For equipment rated according to the DOE test procedure, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled 

products and evaporatively-cooled products and at 85 °F entering water temperature for water cooled products. All COP values must be rated at 

47 °F outdoor dry-bulb temperature for air-cooled products, and at 70 °F entering water temperature for water-source heat pumps. 

** Cap means cooling capacity in thousand British thermal units per hour (Btu/h) at 95 °F outdoor dry-bulb temperature. 

* * * * * 

APPENDIX 

[The following letter from the Department 

of Justice will not appear in the Code of 

Federal Regulations.] 

DEPARTMENT OF JUSTICE, 

Antitrust Division, 

Main Justice Building, 

950 Pennsylvania Avenue, NW., 

Washington, DC 20530–0001, (202) 

514–2401/(202) 616–2645(f), 

antitrust@justice.usdoj.gov, http:// 

www.usdoj.gov. 

June 6, 2008 

Warren Belmar, Deputy General Counsel for 

Energy Policy, Department of Energy, 

Washington, DC 20585. 

Dear Deputy General Counsel Belmar: 

I am responding to your April 3, 2008 letter 

seeking the views of the Attorney General 

about the potential impact on competition of 

two proposed energy conservation standards 

for packaged terminal air conditioners 

(‘‘PTACs’’) and packaged terminal heat 

pumps (‘‘PTHPs’’). Your request was 

submitted pursuant to Section 

325(o)(2)(B)(i)(V) of the Energy Policy and 

Conservation Act, as amended, (‘‘EPCA’’), 42 

U.S.C. 6295(o)(B)(i)(V), which requires the 

Attorney General to make a determination of 

the impact of any lessening of competition 

that is likely to result from the imposition of 

proposed energy conservation standards. The 

Attorney General’s responsibility for 

responding to requests from other 

departments about the effect of a program on 

competition has been delegated to the 

Assistant Attorney General for the Antitrust 

Division in 28 CFR 0.40(g). 

In conducting its analysis the Antitrust 

Division examines whether a proposed 

standard may lessen competition, for 

example, by placing certain manufacturers of 

a product at an unjustified competitive 

disadvantage compared to other 

manufacturers, or by inducing avoidable 

inefficiencies in production or distribution of 

particular products. In addition to harming 

consumers directly through higher prices, 

these effects could undercut the ultimate 

goals of the legislation. 

We have reviewed the proposed standards 

and the supplementary information 

submitted to the Attorney General, including 

the transcript of the May 1 public meeting on 

the proposed standards. We have 

additionally conducted interviews with 

members of the industry. 

What we have heard raises legitimate 

issues about whether the proposed standards 

may adversely affect competition. The 

proposed standard for non-standard PTACs 

and PTHPs may create a risk that is too strict 

for the manufacturers to satisfy, given the 

state of technology. 

Customers that own older buildings with 

non-standard wall openings for air 

conditioning and heating units could face the 

choice of incurring capital expenditures to 

alter the size of the wall openings so that 

they could use standard sized units, or of not 

being able to replace their nonstandard sized 

units with units that are appropriately sized 

and meet the proposed energy conservation 

standards. Similarly, we have heard that the 

proposed standards for standard sized PTHPs 

may be too strict for manufacturers to satisfy. 

Since there are few manufacturers of 

standard PTHPs and of nonstandard PTACs 

and PTHPs, if some manufacturers cannot 

meet the proposed standards, consumers will 

have fewer competitive alternatives and may 

pay higher prices. 

The Department of Justice is not in a 

position to judge whether manufacturers will 

be able to meet the proposed standards—we 

urge, however, the Department of Energy to 

take into account these possible impacts on 

competition in determining its final energy 

efficiency standard for PTACs and PTHPs. 

Sincerely, 

Deborah A. Garza, 

Acting Assistant Attorney General. 

[FR Doc. E8–23312 Filed 10–6–08; 8:45 am] 

BILLING CODE 6450–01–P 


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