[Federal Register Volume 62, Number 185 (Wednesday, September 24, 1997)]
[Rules and Regulations]
[Pages 50122-50150]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-24978]
[[Page 50121]]
_______________________________________________________________________
Part III
Department of Energy
_______________________________________________________________________
Office of Energy Efficiency and Renewable Energy
_______________________________________________________________________
10 CFR Part 430
Energy Conservation Program for Consumer Products; Conservation
Standards for Room Air Conditioners; Final Rule
Federal Register / Vol. 62, No. 185 / Wednesday, September 24, 1997 /
Rules and Regulations
[[Page 50122]]
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DEPARTMENT OF ENERGY
Office of Energy Efficiency and Renewable Energy
10 CFR Part 430
[Docket Numbers EE-RM-90-201 and EE-RM-93-801-RAC]
RIN 1904-AA38
Energy Conservation Program for Consumer Products: Final Rule
Regarding Energy Conservation Standards for Room Air Conditioners
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy (DOE).
ACTION: Final Rule.
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SUMMARY: The Department of Energy (DOE or Department) has determined
that revised energy conservation standards for room air conditioners
will result in a significant conservation of energy, are
technologically feasible, and are economically justified. On this
basis, the Department is today amending the existing energy
conservation standards for room air conditioners. The Department
projects the standards to save 0.64 quad of energy through 2030, which
is likely to result in a cumulative reduction of emissions of
approximately 95,000 tons of nitrogen dioxide and 54 million tons of
carbon dioxide.
EFFECTIVE DATE: The effective date of the standards is October 1, 2000.
ADDRESSES: A copy of the Technical Support Document (TSD) for this
product may be read at the DOE Freedom of Information Reading Room,
U.S. Department of Energy, Forrestal Building, Room 1E-190, 1000
Independence Avenue, SW., Washington, DC 20585, (202) 586-3142, between
the hours of 9:00 a.m. and 4:00 p.m., Monday through Friday, except
Federal holidays. Copies of the TSD may be obtained from: U.S.
Department of Energy, Office of Energy Efficiency and Renewable Energy,
Forrestal Building, Mail Station EE-43, 1000 Independence Avenue, SW.,
Washington, DC 20585. (202) 586-9127.
FOR FURTHER INFORMATION CONTACT:
Kathi Epping, U.S. Department of Energy, Office of Energy Efficiency
and Renewable Energy, Forrestal Building, Mail Station EE-43, 1000
Independence Avenue, SW., Washington, DC 20585, (202) 586-7425
Eugene Margolis, Esq., U.S. Department of Energy, Office of General
Counsel, Forrestal Building, Mail Station GC-72, 1000 Independence
Avenue, SW., Washington, D.C. 20585, (202) 586-9507.
SUPPLEMENTARY INFORMATION:
I. Introduction
a. Authority
b. Background
II. Summary of Final Rule
III. Discussion of Comments
a. Room Air Conditioner Comments
1. Classes
2. Design Options
3. Engineering Simulation Model
4. Proposed Efficiency Standards
5. Other Comments
6. Other Comments Regarding FR Notice of January 29, 1997
b. General Analytical Comments
IV. Analysis of Room Air Conditioner Standards
a. Efficiency Levels Analyzed
b. Significance of Energy Savings
c. Economic Justification
1. Economic Impact on Manufacturers and Consumers
2. Life-cycle Cost and Net Present Value
3. Energy Savings
4. Lessening of Utility or Performance of Products
5. Impact of Lessening of Competition
6. Need of the Nation to Save Energy
7. Other Factors
d. Payback Period
e. Conclusion
V. Procedural Issues and Regulatory Review
a. Review Under the National Environmental Policy Act
b. Review Under Executive Order 12866, ``Regulatory Planning and
Review''
c. Review Under the Regulatory Flexibility Act
d. Review Under the Paperwork Reduction Act
e. Review Under Executive Order 12988, ``Civil Justice Reform''
f. ``Takings'' Assessment Review
g. Federalism Review
h. Review Under the Unfunded Mandates Reform Act
i. Review Under Small Business Regulatory Enforcement Fairness
Act of 1996
I. Introduction
a. Authority
Part B of Title III of the Energy Policy and Conservation Act, Pub.
L. 94-163, as amended by the National Energy Conservation Policy Act
(NECPA), Pub. L. 95-619, the National Appliance Energy Conservation Act
(NAECA), Pub. L. 100-12, the National Appliance Energy Conservation
Amendments of 1988 (NAECA 1988), Pub. L. 100-357, and the Energy Policy
Act of 1992 (EPAct), Pub. L. 102-486,1 created the Energy
Conservation Program for Consumer Products other than Automobiles. The
consumer products subject to this program are called ``covered
products.'' The covered products specified by statute include room air
conditioners. EPCA, section 322, 42 U.S.C. 6292.
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\1\ The Energy Policy and Conservation Act, as amended by the
National Energy Conservation Policy Act, the National Appliance
Energy Conservation Act, the National Appliance Energy Conservation
Amendments of 1988, and the Energy Policy Act of 1992, is referred
to in this notice as the ``EPCA.'' Part B of Title III is codified
at 42 U.S.C. 6291 et seq.
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For room air conditioners, EPCA prescribes an initial Federal
energy conservation standard effective in 1990 and specifies that the
Department shall publish a final rule no later than January 1, 1992, to
determine if the 1990 standards should be amended. A second review must
be completed within five years after publication of this final rule.
EPCA, section 325(c), 42 U.S.C. 6295(c). Any new or amended standard is
required to be designed so as to achieve the maximum improvement in
energy efficiency that is technologically feasible and economically
justified. EPCA, 325(o)(2)(A), 42 U.S.C. 6295(o)(2)(A). The Secretary
may not prescribe any amended standard which increases the maximum
allowable energy use or decreases the minimum required energy
efficiency of a covered product. EPCA, section 325(o)(1), 42 U.S.C.
6295(o)(1).
Section 325(o)(2)(B) provides that DOE, in determining whether a
standard is economically justified, must determine whether the benefits
of the standard exceed its burdens, based, to the greatest extent
practicable, on a weighing of the following seven factors:
(1) The economic impact of the standard on the manufacturers and on
the consumers of the products subject to such standard;
(2) The savings in operating costs throughout the estimated average
life of the covered product in the type (or class) compared to any
increase in the price of, in the initial charges for, or maintenance
expenses of, the covered products which are likely to result from the
imposition of the standard;
(3) The total projected amount of energy savings likely to result
directly from the imposition of the standard;
(4) Any lessening of the utility or the performance of the covered
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 considers relevant.
In addition, section 325(o)(2)(B)(iii) establishes a rebuttable
presumption of economic justification in instances where the Secretary
determines that
[[Page 50123]]
``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 savings during the first year that the
consumer will receive as a result of the standard, as calculated under
the applicable test procedure.''
b. Background
The purpose of this rulemaking is to review the energy conservation
standards for room air conditioners. In 1990, DOE published an advance
notice of proposed rulemaking with regard to standards for nine covered
products, including room air conditioners. 55 FR 39624 (September 28,
1990) (hereinafter referred to as the September 1990 advance notice).
The September 1990 advance notice presented the product classes that
DOE planned to analyze and provided a detailed discussion of the
analytical methodology and models that the Department expected to use.
On March 4, 1994, DOE published a notice of proposed rulemaking
(NOPR) concerning eight products, including room air conditioners. 59
FR 10464 (March 4, 1994) (hereinafter referred to as the Proposed
Rule). The standards the Department proposed for room air conditioners
are shown in the following table:
Table 1-1.--Proposed Standards Levels for Room Air Conditioners
------------------------------------------------------------------------
Energy efficiency ratio
---------------------------------------
Product class Current standards Standards proposed
(effective January in 1994 Proposed
1, 1990) Rule
------------------------------------------------------------------------
1. Without reverse cycle, with
louvered sides, and less than
6,000 Btu/h.................... 8.0 11.1
2. Without reverse cycle, with
louvered sides, and 6,000 to
7,999 Btu/h.................... 8.5 10.3
3. Without reverse cycle, with
louvered sides, and 8,000 to
13,999 Btu/h................... 9.0 11.0
4. Without reverse cycle, with
louvered sides, and 14,000 to
19,999 Btu/h................... 8.8 11.1
5. Without reverse cycle, with
louvered sides, and 20,000 Btu/
h or more...................... 8.2 9.6
6. Without reverse cycle,
without louvered sides, and
less than 6,000 Btu/h.......... 8.0 10.7
7. Without reverse cycle,
without louvered sides, and
6,000 to 7,999 Btu/h........... 8.5 9.9
8. Without reverse cycle,
without louvered sides, and
8,000 to 13,999 Btu/h.......... 8.5 10.7
9. Without reverse cycle,
without louvered sides, and
14,000 to 19,999 Btu/h......... 8.5 10.8
10. Without reverse cycle,
without louvered sides, and
20,000 Btu/h or more........... 8.2 9.3
11. With reverse cycle and with
louvered sides................. 8.5 10.8
12. With reverse cycle and
without louvered sides......... 8.0 10.4
------------------------------------------------------------------------
DOE received over 8,000 comments during the comment period on the
1994 Proposed Rule and from participants at public hearings held in
Washington, DC on April 5-7 and June 7-8, 1994. Most of the comments
related to other products; twelve of the comments dealt specifically
with room air conditioners.
After reviewing the comments on the proposed standards for room air
conditioners, the Department concluded that a number of significant
issues were raised which required additional analysis. In 1995, the
Department revised the analyses regarding room air conditioners to
account for the comments and data received during the public comment
period. (This revised analysis became the basis for the 1996 Draft
Report.)
A moratorium was placed on publication of proposed or final rules
for appliance efficiency standards as part of the FY 1996
appropriations legislation. Pub. L. 104-134. That moratorium expired on
September 30, 1996.
In 1995 and 1996, the Department conducted a review of its process
for developing appliance energy efficiency standards. This review
resulted in the publication of a final rule, entitled ``Procedures for
Consideration of New or Revised Energy Conservation Standards for
Consumer Products'' (hereinafter referred to as the Process Rule). 61
FR 36973 (July 15, 1996). Although the new procedures in the Process
Rule do not apply to this rulemaking, 61 FR at 36980, DOE has employed
an approach consistent with the new procedures in completing work on
this rule. In keeping with the new process, and based on comments
received in response to the Proposed Rule, DOE distributed for comment
a Draft Report on the Potential Impact of Alternative Energy Efficiency
Levels for Room Air Conditioners (hereinafter referred to as Draft
Report). The Draft Report contained DOE's revised analysis, begun in
1995, examining five alternative efficiency levels. The Draft Report
was distributed to a mailing list that included all of the commenters
on the proposed rule on room air conditioners on May 5, 1996. (EE-RM-
93-801-RAC 2 No. 1 and No. 2.) The letter invited comment on
the Draft Report by no later than July 1, 1996.
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\2\ EE-RM-90-201 refers to the docket for the September 1990
advance notice and the 1994 Proposed Rule. Docket No. EE-RM-93-801-
RAC contains the 1996 Draft Report, comments to the 1996 Draft
Report, comments to the 1997 reopening notice, and the supplemental
analysis.
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Between the beginning of June and the end of November 1996, DOE
received six comments on the Draft Report and related issues. DOE
officials also held meetings on September 26 with representatives of
the Association of Home Appliance Manufacturers (AHAM) and interested
manufacturers and on September 27 with the American Council For an
Energy Efficient Economy (ACEEE), the Alliance to Save Energy, the
Natural Resources Defense Council (NRDC), and State energy officials
from California, Florida, and Oregon. (EE-RM-93-801-RAC No. 11 and No.
12.)
On the basis of these comments, DOE prepared a TSD which comprises
the Draft Report and a supplemental analysis conducted on a candidate
standard level not included in the Draft Report. The supplemental
analysis focused on a set of efficiency levels for the same 9 classes
analyzed in the proposed rule. (EE-RM-93-801-RAC No. 13.)
In a Federal Register (FR) Notice dated January 29, 1997, the
Department reopened the comment period for room air conditioners for 15
days. This notice announced the availability of the supplemental
analysis and gave indication of the standard levels the Department was
inclined to promulgate in the final rule. The Department received 4
comments in response to this notice.
II. Summary of Final Rule
The standards set forth in today's rule are projected to save
approximately 0.64 quad of energy through 2030. Although
[[Page 50124]]
the standards in the Proposed Rule were projected to save 2.2 quads,
DOE has concluded, based on public comment and further analysis, that
the proposed standards are not economically justified. The standard
levels set forth in today's rule are significantly less costly than
those standards in the proposed rule. The following table presents the
standards established in today's rule:
------------------------------------------------------------------------
Energy efficiency ratio, effective as
of
Product class ---------------------------------------
January 1, 1990 October 1, 2000
------------------------------------------------------------------------
1. Without reverse cycle, with
louvered sides, and less than
6,000 Btu/h.................... 8.0 9.7
2. Without reverse cycle, with
louvered sides, and 6,000 to
7,999 Btu/h.................... 8.5 9.7
3. Without reverse cycle, with
louvered sides, and 8,000 to
13,999 Btu/h................... 9.0 9.8
4. Without reverse cycle, with
louvered sides, and 14,000 to
19,999 Btu/h................... 8.8 9.7
5. Without reverse cycle, with
louvered sides, and 20,000 Btu/
h or more...................... 8.2 8.5
6. Without reverse cycle,
without louvered sides, and
less than 6,000 Btu/h.......... 8.0 9.0
7. Without reverse cycle,
without louvered sides, and
6,000 to 7,999 Btu/h........... 8.5 9.0
8. Without reverse cycle,
without louvered sides, and
8,000 to 13,999 Btu/h.......... 8.5 8.5
9. Without reverse cycle,
without louvered sides, and
14,000 to 19,999 Btu/h......... 8.5 8.5
10. Without reverse cycle,
without louvered sides, and
20,000 Btu/h or more........... 8.2 8.5
11. With reverse cycle, with
louvered sides, and less than
20,000 Btu/h................... 8.5 9.0
12. With reverse cycle, without
louvered sides, and less than
14,000 Btu/h................... 8.0 8.5
13. With reverse cycle, with
louvered sides, and 20,000 Btu/
h or more...................... 8.5 8.5
14. With reverse cycle, without
louvered sides, and 14,000 Btu/
h or more...................... 8.0 8.0
15. Casement-Only............... ( \1\ ) 8.7
16. Casement-Slider............. ( \1\ ) 9.5
------------------------------------------------------------------------
\1\ Casement-only and casement-slider room air conditioners are not
separate product classes under standards effective January 1, 1990.
These units are subject to the applicable standards in classes 1
through 14 based on unit capacity and the presence or absence of
louvered sides and a reverse cycle.
III. Discussion of Comments
a. Room Air Conditioner Comments.
This section addresses comments to the 1994 Proposed Rule, the 1996
Draft Report, and the 1997 reopening notice. The ``RAC'' notation
signifies that the following comment is from Docket No. EE-RM-93-801-
RAC which contains comments to the 1996 Draft Report and the 1997
reopening notice. All other comments are from Docket No. EE-RM-90-201
which contains comments from the 1994 Proposed Rule. Note that the
Draft Report addressed many of the comments to the 1994 Proposed Rule.
1. Classes
In the 1994 Proposed Rule, the Department proposed fourteen classes
of room air conditioners. These product classes consisted of five
categories; units with side louvers, units without side louvers, units
with reversing valve and with side louvers, units with reversing valve
and without side louvers, and casement-type units. There were five
class divisions by capacity within each of the two categories without
reversing valves. Casement-type units were divided into the following
two classes: casement only units and casement-slider units.
Units with louvered sides and without reversing valves. The
California Energy Commission (CEC) proposed a reduction in product
classes from twelve to four, eliminating the class divisions based on
capacity. They stated that the profusion of classes makes comparison of
models difficult since the label-reading consumer does not compare all
the models available. In addition, disincentives could be created that
discourage manufacturers from making efficiency improvements to models
near capacity breakpoints because design changes can push the capacity
into the next category which has a higher or lower standard level.
(CEC, No. 539 at 2-3.) Fedders Corporation (Fedders) proposed that the
three smallest capacity classes for units with side louvers and without
reversing valve be consolidated into a single class. It called for this
consolidation due to the disparity in cost and dehumidifying capability
that would arise from having significantly different efficiency
standards promulgated for these three classes. (Fedders, April 7, 1994,
Transcript at 120-122.) AHAM proposed that the Department retain the
current five capacity class divisions for units with side louvers and
without reversing valves. (AHAM, No. 1 at 2.)
In the 1994 Proposed Rule, DOE explained that performance and
installation constraints necessitate class divisions by capacity.
Manufacturers limit their production of cabinets to three or four
sizes. Units of similar capacity tend to be designed for the same
cabinet size. The space and configuration limitations imposed by the
cabinet tend to produce units with similar efficiencies. Because
efficiency is essentially a function of cabinet size, and thus
capacity, class divisions by capacity are warranted. In the Final Rule,
the minimum efficiency standards for each of the four classes with
louvered sides and capacities less than 20,000 Btu/h all have nearly
the same efficiency value (efficiencies range from 9.7 to 9.8 EER),
reducing the concern about inappropriate incentives to change product
capacity to take advantage of capacity based standards. The Department
agrees with AHAM that the current 5 capacity-based classes should be
retained.
Units without louvered sides and without reversing valves. AHAM,
Frigidaire Company (Frigidaire), and Sanyo Electric Company (Sanyo)
proposed that classes without louvered sides and without reversing
valve be consolidated into two classes: units with capacities of less
than 8,000 Btu/h and units with capacities greater than or equal to
8000 Btu/h. (AHAM, No. 1 at 2; Frigidaire, No. 544 at 5; Sanyo, No. 771
at 3.) AHAM states that the capacity classes established for units with
side louvers and without reverse cycle are not particularly applicable
to the other types of classes. (AHAM, RAC No. 4 at 1.) In support of
making this recommendation, AHAM stated that since the 1990 minimum
efficiency standards became effective, models without louvered sides
have been produced only in the 6,000 to 7,999 Btu/h capacity class or
the 8,000 to 13,999 Btu/h class. The sizes of existing sleeves and the
efficiency standards have constrained capacities to these two classes.
(AHAM, No. 1 at 20.) In its comments to the 1996 Draft report, AHAM
again urged the Department to reduce the number of classes from five
[[Page 50125]]
to two for these units. (AHAM, RAC No. 4 at Attachment 1 pg. 1.)
As discussed with respect to classes with louvered sides and
without reversing valves, class divisions by capacity are warranted for
units without louvered sides because of the effect that economic and
installation constraints have on capacity and efficiency. Although
manufacturers currently do not produce units in two of the existing
five capacity classes, the Department has decided not to consolidate
these classes into those units with capacities less than and greater
than 8,000 Btu/h. However, the new standards for the two classes of
units less than 8,000 Btu/h are the same (9.0 EER) and the new
standards for the three classes of units with capacities of 8,000 Btu/h
or more are the same (8.5 EER.) In the future, manufacturers might
produce units in classes where none are currently being produced. For
example, models are now being produced in the less than 6000 Btu/h
class where models were not being manufactured previously. Therefore,
the Department will retain all five of the existing classes for units
without louvers and without reverse cycle.
Units with reversing valves. AHAM and Sanyo proposed that units
with reversing valves be consolidated into a single class if the
efficiency standard specified for them is a single fixed EER difference
below all other cooling-only classes (i.e., classes without reversing
valve.) A fixed EER difference of 0.5 EER was proposed. (AHAM, No. 1 at
2; Sanyo, No. 771 at 3.) This recommendation essentially creates as
many classes for units with reversing valves as there are for units
without reversing valves. Both Whirlpool Corporation (Whirlpool) and
Fedders agreed with this recommendation. (Whirlpool, April 7, 1994,
Transcript at 106; Fedders, April 7, 1994, Transcript at 136.) In a
April 23, 1996 joint letter to AHAM, ACEEE and NRDC agreed with the
fixed 0.5 EER difference between reverse-cycle classes and their
corresponding ``cool-only'' classes. (ACEEE/NRDC, RAC No. 3 at 4.) In
addition, during a meeting with ACEEE, Alliance to Save Energy,
California Energy Commission, Florida Energy Office, Oregon Department
of Energy, and NRDC, a recommendation was made to refer to reverse
cycle products as ``heat pump air conditioners'' in the future. (RAC
No. 10 at 2.) AHAM responded that these systems are not designed to be
sophisticated heat pumps but rather to modify a room air conditioner by
adding a reverse cycle to ``make it function as a heat pump within the
confines of a relatively small enclosure.'' (AHAM, RAC No. 6 at 3.)
The Department has determined its current class structure for units
without reversing valves (two product classes: one for units with
louvered sides and another for units without louvered sides) is not
adequate. Therefore, the Department is adding two classes for units
with reverse cycle to accommodate the concerns expressed in public
comments. The two additional classes are class 13--units with reverse
cycle, with louvers, and with a capacity of 20,000 Btu/h or more--and
class 14--units with reverse cycle, without louvers, and capacity of
14,000 Btu/h or more.
Casement-Type Units. In the 1994 Proposed Rule, the Department
proposed additional classes for casement-slider and casement-only room
air conditioners because of the unique utility they offer to the
consumer. Casement-type units offer a performance-related feature
(fitting into casement windows) which other room air conditioners
cannot provide. AHAM and Frigidaire supported the Department's proposal
to establish separate classes for casement only and casement/slider
units. In addition, AHAM stated that because of the limited number of
models available and the narrow range of capacities, class divisions by
capacity are not necessary for these unit types. (AHAM, No. 1 at 21-22;
Frigidaire, No. 544 at 6.) In their comments to the Draft Report, ACEEE
and NRDC recommended that casement-only units be combined in the same
category as casement-slider units due to the fact that there is only
one casement-only unit on the market. ACEEE and NRDC are also concerned
that a loophole may be created because lower-priced casement units may
be used in applications that do not require the special dimensions
required by casement-only units. They commented that adjustable side
panels can be used to enclose the space created when a window is wider
than the air conditioner. (ACEEE/NRDC, RAC No. 5 at 4.)
The Department believes that the size limitations imposed on
casement-type units are more significant than those faced by typical
units which are designed for double-hung windows. Since this
performance-related feature justifies a lower efficiency standard,
separate classes will be established for casement-slider and casement-
only units. The Department agrees with AHAM that class divisions by
capacity are not necessary because of the narrow range of capacities in
which models are currently available. According to AHAM's Directory of
Certified Room Air Conditioners, casement-slider units range in
capacity from 5,000 to 11,000 Btu/h, while there is currently only one
casement-only unit, which has a capacity of 6,200 Btu/h. The Department
believes that there is utility added by having a casement-only as well
as a casement-slider class. In addition, the Department believes that
the dimensions of casement units are restrictive enough to prevent a
loophole.
Ductless Split Systems. Fedders proposed that ductless split system
air conditioners be regulated under room air conditioner efficiency
standards as it believes that they are directly competing against room
air conditioners for market share. (Fedders, April 7, 1994, Transcript
at 123.) The NRDC agreed with the Fedders recommendation. (NRDC, No. 55
at 28)
The Department's efficiency standards for split system-type central
air conditioners also apply to ductless split systems. The Department
makes no distinction between split systems which deliver conditioned
air with or without ducts. Thus, because split systems are covered
under standards for central air conditioners, ductless split system air
conditioners will not be established as an additional class for room
air conditioners.
2. Design Options
Commenters provided detailed comments on several of the design
options that were analyzed by the Department for the proposed
rulemaking.
Rotary compressors. Compressor efficiency was the design option
that drew the greatest amount of comment. AHAM, Amana Refrigeration,
Inc. (Amana), Frigidaire, Fedders, Sanyo, Matsushita Electric
Corporation (Matsushita), Whirlpool, and Tecumseh Corporation
(Tecumseh) all provided comments stating that rotary compressors cannot
attain the 11.5 to 12.0 EER efficiency levels assumed in the
Department's analysis. They stated that the maximum efficiency of
currently available rotary compressors falls in the 10.7 to 10.9 EER
range. Compressor manufacturers stated that only minor efficiency
improvements are expected within the next three to five years. The
combined effect of these efficiency improvements would yield only a
11.1 to 11.3 EER rotary compressor. And although efficiency increases
of this magnitude may be theoretically achievable, they would require
the development of high-efficiency motors which are currently not
available, use of higher-grade materials in the rotary compressor
[[Page 50126]]
mechanism, and new compressor production methods and equipment. Both
AHAM and Amana additionally commented that physical samples of new
compressors need to be available to room air conditioner manufacturers
at least 36 months prior to the effective date of the standards to
provide adequate time for development, reliability and field testing.
(AHAM, No. 1 at 7; Amana, Inc., No. 347 at 1; Frigidaire, No. 544 at 2;
Fedders, April 7, 1994, Transcript at 121-122; Sanyo, No. 771 at 7-9;
Matsushita, April 7, 1994, Transcript at 88-90; Tecumseh, April 7,1994,
Transcript at 97-99; Whirlpool, April 7, 1994, Transcript at 102-103.)
ACEEE commented that compressor efficiencies have been improving in
recent years and are still below the theoretical limit. It stated that
according to trade press articles, rotary and reciprocating compressors
with efficiencies exceeding 11.0 EER are already available and further
increases in efficiency are being developed. It argues that if 11.5 to
12.0 EER compressors are not realized, other technologies could be used
to attain the Department's proposed efficiency levels. (ACEEE, No. 557
at 21.) ACEEE and NRDC commented that slightly more efficient
compressors which are likely to become available soon should be used in
the analyses in future rulemakings. (ACEEE/NRDC, RAC No. 5 at 1.)
The Department rejects AHAM's suggestion that design options must
be available 36 months prior to the effective date of the standards.
However, the prediction in the 1994 Proposed Rule that 11.5 to 12.0 EER
compressors would be available by the year new efficiency standards
would become effective was based on development plans of a compressor
manufacturer to produce 11.6 to 12.0 EER compressors. Subsequently,
those development plans were canceled. Because rotary compressor
manufacturers state that they cannot produce compressors with
efficiency levels approaching the 11.5 to 12.0 EER range, the
Department, in the Draft Report, analyzed only rotary compressors which
are currently on the market. Depending on their capacity, the most
efficient rotary compressors range in efficiency from 10.7 to 11.1 EER.
In its comments to the 1996 Draft Report, AHAM stated that the revised
report addressed its concerns. (AHAM, RAC No. 4 at Attachment 1, pg 2.)
Scroll compressors. Only AHAM provided comments regarding scroll
compressors. It stated that scroll compressors are currently not
available in capacities less than 18,000 Btu/h and that efficiencies
are either no more or slightly more efficient than rotary compressors.
In addition, scroll compressor application heights are typically three
to five inches greater than comparable rotary compressors, therefore
requiring a larger chassis. Copeland Corporation (Copeland), a scroll
compressor manufacturer, was cited by AHAM as having announced plans to
develop a new, smaller scroll design optimized in the 14,000 to 24,000
Btu/h capacity range. AHAM stated this design could be expanded
effectively into room air conditioner applications with more reasonable
cost premiums and with efficiencies possibly in the 11.5 to 12.0 EER
range, but because it is not possible to make these compressors
available to manufacturers 36 months prior to the effective date of new
standards, they should not be considered by the Department for this
rulemaking. (AHAM, No. 1 at 8.) Again, ACEEE and NRDC in their joint
comments to the Draft Report stated that slightly more efficient
compressors which are likely to become available soon should be used in
the analyses in future rulemakings. (ACEEE/NRDC, RAC No. 5 at 1.)
Again, the Department rejects AHAM's suggestion that design options
must be available 36 months prior to the effective date of the
standards. Although Copeland Corporation is currently investigating
this more efficient compressor technology in the 14,000 to 24,000 Btu/h
capacity range, they could not commit to produce it. Because there was
not sufficient evidence this technology would be available by the
effective date of the standards, only Scroll compressors which are
currently on the market were considered for the Department's Final Rule
analysis. For compressors which would be suitable for room air
conditioner applications, Copeland's scroll compressors currently range
in efficiency from 10.8 to 11.1 EER. The lowest capacity scroll
compressor offered by Copeland is 16,500 Btu/h. Thus, scroll
compressors were only considered for room air conditioners with
capacities of at least 16,000 Btu/h. The information DOE received from
compressor manufacturers showed that scroll compressor heights are only
1-2 inches greater than comparable rotary compressors. Moreover,
because this design option was not contained in any of the standard
levels the Department found to be economically justified, the
Department does not consider this height differential to be an issue.
AHAM commented that it was satisfied with the treatment of this issue
in the Draft Report. (AHAM, RAC No. 4 at Attachment 1 pg. 2.)
Reciprocating compressors. The Department's analysis of an advanced
reciprocating compressor design called the inertia compressor received
comments by AHAM, Frigidaire, and Bristol Compressors (Bristol.) All
three commented that inertia compressors with efficiencies in the range
of 11.5 to 12.0 EER are expected to be available within the next couple
of years but only in capacities exceeding 18,000 Btu/h. Inertia
compressors are significantly heavier, larger, and noisier than the
rotary compressors that are currently used in room air conditioner
applications. Larger chassis sizes would be required to accommodate the
increased weight and size of the inertia compressor. In addition, sound
blankets would be necessary to muffle the increased noise levels. Thus,
cost premiums and the accompanying application costs make inertia
compressors difficult to cost justify for room air conditioners. (AHAM,
No. 1 at 8-9; Frigidaire, No. 544 at 2; Bristol, June 7, 1994,
Transcript at 355-362.)
Although the Department recognizes that advanced reciprocating
compressors are heavier and larger than existing rotary compressors, no
information was provided as to how great the application costs for
enlarging and bracing the chassis would be for incorporating them into
room air conditioner units. Thus, only the cost of the compressor
itself, with its accompanying sound blanket, was explicitly included in
the Department's Final Rule analysis. For those instances where the
advanced reciprocating compressor exceeded the weight of the rotary
compressor by a significant amount (over 30 percent), an increase in
chassis size was assumed to be necessary for incorporating the larger
and heavier compressor. Therefore, a design option which resulted in a
chassis size increase (i.e., increased evaporator and condenser face
areas) always preceded the incorporation of an advanced reciprocating
compressor. The added costs for increasing the chassis were assumed to
cover the expense of incorporating the reciprocating compressor. For
compressors which would be suitable for room air conditioner
applications, Bristol's inertia compressors currently range in
efficiency from 11.2 to 11.8 EER. The lowest capacity inertia
compressor offered by Bristol is 18,000 Btu/h. Thus, inertia
compressors were considered only for room air conditioners with
capacities of at least 18,000 Btu/h. In its comments to the 1996 Draft
Report, AHAM indicated that this approach
[[Page 50127]]
addressed its concerns. (AHAM, RAC No. 4 at Attachment 1 pg 2.)
Fan motor efficiency. Only AHAM provided comments with regard to
improvements in fan motor efficiency. It stated that permanent split
capacitor (PSC) fan motors are already used in 98 percent of room air
conditioners. The efficiency of PSC fan motors fall in the range of 50
percent to 70 percent with larger motors being more efficient. AHAM
admitted that some modest gains may be achieved with PSC fan motors in
specific applications. With regard to electronically commutated motors
(ECM), otherwise known as brushless permanent magnet motors (BPM), AHAM
stated that they cost 2.5 to 3 times more than standard PSC motors. In
addition, they weigh approximately twice that of a standard PSC motor.
ECM efficiencies range from 68 percent to 78 percent. ECMs are
currently not available with the double ended shaft required for room
air conditioner applications because controls block one end of the
motor. AHAM believes that ECMs with double ended shafts are not likely
to be made available in the foreseeable future. Even if ECMs were
manufactured with double ended shafts, AHAM claimed that manufacturers
would need physical samples 24 months before the effective date of
standards. (AHAM, No. 1 at 10 and RAC No. 4 at 5.)
The Department recognizes that most room air conditioner designs
already incorporate permanent split capacitor fan motors. But for two
of the product classes analyzed, the representative baseline units used
inefficient shaded pole motors. Thus, for these two classes,
significant efficiency gains were achieved by replacing the shaded pole
motors with more efficient permanent split capacitor motors. For all
other classes, the representative baseline units already incorporate
permanent split capacitor motors. Further fan motor efficiency
increases were assumed to be achieved only through the use of ECMs.
Although current ECM controls are situated at one end of the motor, the
Department believes that there is no reason why they cannot be moved to
another location on the motor. Thus, it is assumed that ECMs can be
manufactured with double ended shafts. Although the Department
recognizes that ECMs weigh approximately twice as much as standard
permanent split capacitor motors, no information was provided about the
application costs for bracing the chassis to incorporate them into room
air conditioner units. Thus, only the cost of the ECM itself was
explicitly taken into account in the Department's Final Rule analysis.
However, because the analysis showed that ECMs were not an advantageous
design option, any cost increases due to increased ECM weight need not
be considered further. In its comments to the 1996 Draft Report, AHAM
indicated that the analysis, which assumes a fan motor efficiency of 30
percent for shaded pole and 50 percent for permanent split capacitor
(PSC) when changing from a shaded pole to a PSC, addresses its concern.
(AHAM, RAC No. 4 at Attachment 1, pg. 2.)
Variable speed compressors. AHAM stated that variable speed
compressors are not currently used in room air conditioner applications
and should not be considered a technically viable design option. AHAM
commented that the cost premium is 30 percent to 50 percent above
comparable single-speed compressors. Although variable speed
compressors are available off-shore in capacities and sizes suitable
for use in room air conditioners, improvements in efficiency cannot be
measured with the Department's current test procedure. AHAM commented
that the Department's current single condition test procedure
adequately matches consumer usage patterns for room air conditioners.
(AHAM, No. 1 at 12.) AHAM does not believe variable speed compressors
are ``capable of being assembled into room air conditioners by the
effective date'' and should not be considered a viable design option.
(AHAM, RAC No. 4 at 5.)
Although the Department recognizes that the current test procedure
is not adequate for determining the benefits due to variable speed
compressors, they are still analyzed as a design option for room air
conditioners. As done for the Proposed Rule's analysis, efficiency
gains are established based on estimates from central air conditioning
applications. The efficiency improvement, because it is primarily a
result of reduced cycling (i.e., reduced on and off operation), is
reported in terms of the seasonal energy efficiency ratio (SEER). A
minimum efficiency standard cannot be based on its inclusion because
the current test procedure does not recognize a SEER rating as an
appropriate measure of efficiency. In addition, variable speed
compressors were not included in any of the efficiency levels DOE
determined to be economically justified.
Heat exchanger design options. A number of comments were received
regarding design changes to improve heat exchanger (evaporator and
condenser) performance. These improvements can be put into two
categories: designs for increasing the heat exchanger surface area and
designs for increasing the heat transfer coefficients. The heat
transfer surface area can be increased by any of the following methods:
increasing the frontal area of the coil by increasing the height or
width; adding a subcooler to the condenser coil; increasing the depth
of the coil by adding vertical tube rows; or increasing the fin
density. The heat transfer coefficients can be increased by using an
enhanced fin design or grooved (rifled) refrigerant tubing.
With regard to heat exchanger improvements, manufacturers expressed
great concern over design options that would require an increase in
chassis size, namely, increases in heat exchanger size. AHAM claimed
that tooling for a new chassis size can range in cost from $1.5 to $5.0
million per manufacturer. In addition, it stated that there are limits
to the efficiency that can be achieved through increases in coil size
without causing problems with latent cooling capacity (i.e.,
dehumidification.) It also stated that if standards require larger
chassis sizes, there will be loss of utility in terms of portability
and availability of larger capacities that can fit into smaller
windows. In addition, availability of very large capacities would be
reduced. (AHAM, No. 1 at 11-12.) AHAM also stated that an increase in
coil size could affect compressor reliability. It stated that if room
air conditioner efficiency is increased by enlarging the coil, the
compressor capacity must be reduced to maintain the capacity of the
system. But because the unit now has more refrigerant as a result of
enlarging the coil, it is more likely that the smaller compressor's
maximum charge limitation would be reached. The closer the refrigerant
charge comes to the compressor's charge limit, the more likely that
compressor failure would occur. (AHAM, Transcript, April 7, 1994, at
66.) Amana stated that its current coil designs are already optimized.
(Amana, Inc., No. 347 at 1.) Sanyo stated that increasing the condenser
surface area is not feasible as the chassis enclosure is already too
crowded. (Sanyo, No. 771 at 9.)
AHAM and several manufacturers commented that the Department's
proposed efficiency standards would require increases in chassis size
for all room air conditioner product classes because some design
options that the Department assumed would be available, primarily 11.5
to 12.0 EER compressors, would not exist by the time the proposed
standards became effective. AHAM stated that even a small increase in
the efficiency standard will cause some models to move to a larger
chassis size. According to AHAM,
[[Page 50128]]
92 percent of total production would need to move to a larger chassis
size to meet the standards proposed in the 1994 Proposed Rule. AHAM
further commented that because chassis sizes vary widely among
manufacturers, new standards will have significant competitive effects.
(AHAM, No. 1 at 1, 14-18.) Amana, Whirlpool and Frigidaire all provided
comments reinforcing AHAM's comments. Amana stated that to meet the
Department's proposed standards it would need to redesign nine of
thirteen basic models into a larger chassis. These manufacturers
further commented that the higher prices resulting from chassis size
increases place an unfair burden on low income consumers. (Amana, No.
347 at 1; Whirlpool, No. 391A. at 1; Frigidaire, No. 544. at 3.)
AHAM provided the Department with a graph which shows the
percentage of production which would be required to change chassis size
at each EER. (AHAM No. 1 at 14.) In its comments to the Draft Report,
AHAM states that ``more stringent standards [than the standards
proposed by AHAM] will cause a significant number of chassis size
changes with step function-like cost implications to manufacturers and
raise utility, marketing and competitive issues.'' (AHAM, RAC No. 6 at
1.) AHAM stated the baseline model method of analysis does not
realistically represent the impact on cost of increasing the chassis
size. AHAM believes the Department should weight the cost of a larger
chassis by the proportion of models needing a larger chassis to achieve
specific efficiency levels. (AHAM, RAC No. 4 at 3.) In their most
recent comments, ACEEE and NRDC state this approach is reasonable, but
they believe the life cycle cost minimums, resulting when costs of
chassis size increases are prorated, should be used to select
standards. Referring to the graph provided by AHAM, ACEEE and NRDC
state that the proportion of models requiring a larger chassis size at
9.8 EER is ``scarcely different'' than the proportion required by 9.5
EER and that only at EER levels above 9.8 EER do a significant
proportion of models need a larger chassis. Furthermore, they state
``to consider chassis size as an independent decision-making factor
would overemphasize chassis size in making a final decision.'' (ACEEE/
NRDC, RAC No. 5 at 2.)
The impact of increased heat exchanger size on dehumidification was
assessed with the engineering computer simulation model. The simulation
model not only estimates the efficiency increase that results from
adding more coil area but also its effect on latent heat removal. For
all the room air conditioners which were modeled, the heat exchanger
increases which were analyzed resulted in latent heat ratios of at
least 25 percent. The latent heat ratio is the latent heat rate removal
of the air conditioner divided by its total cooling capacity. AHAM
considers 25 percent to be the minimum acceptable latent heat ratio.
With regard to the issue of compressor reliability, although the
Department recognizes that an increase in coil size coupled with a
decrease in compressor capacity could affect the reliability of the
compressor, manufacturer data were not provided as to the maximum
charge limit of room air conditioner compressors. The Department's
analysis of larger coil sizes assumed that the compressor capacity
would not have to be reduced when analyzing larger coil sizes. Thus,
with regard to how the Department conducted its analysis, it is
unlikely that compressor reliability would be negatively impacted.
Moreover, increasing evaporator/condenser coil area was not contained
in any of the standard levels DOE found to be economically justified.
With regard to the issue that some manufacturers may be
competitively disadvantaged by being required to increase chassis size,
the Department carefully considered the information provided by AHAM
which indicates that the proposed standards in the 1994 Proposed Rule
would require 92 percent of manufacturers to increase chassis size.
Both the Department and AHAM recognize that any change in efficiency
standard will require some manufacturers to increase chassis size. The
Department has attempted to reduce the number of chassis size changes
as much as possible while still achieving the goal of promulgating
standards which maximize energy efficiency consistent with economic
justification. The standards set forth would require an increased
chassis size for a substantially smaller subset--approximately 25
percent--of products.
The Department considered AHAM's recalculations of life-cycle cost
minimums which prorated the cost of chassis size increases. (AHAM, RAC
No. 9 at Attachment 3A.) DOE has selected standard levels corresponding
to the minimum life cycle costs when chassis size cost is prorated for
the classes for which AHAM provided this information (i.e., classes 1
through 5).
AHAM commented that manufacturers will make adjustments to the
number of tube rows and the density of fins in order to optimize heat
exchanger performance. Because heat exchangers are, in general, already
optimized, however, adjusting either the tube rows or the fin density
is not a significant factor in increasing system efficiency. (AHAM, No.
1 at 9.) Sanyo stated that adding tube rows or fin material causes
increased air flow restrictions and requires design changes to fan and
fan motors. If motor speeds are increased to obtain high airflow,
unacceptable noise levels result. (Sanyo, No. 771 at 9.)
The Department agrees with AHAM and Sanyo that the number of tube
rows and the fin density are already optimized to yield the greatest
heat exchanger performance. In using the engineering computer
simulation model, increases in either tube row density or fin density
provided negligible increases in system performance. In its comments to
the 1996 Draft Report, AHAM indicated that because the simulation model
shows negligible increases in system performance by increasing the fin
density and number of tube rows, AHAM is no longer concerned about this
matter. (AHAM, RAC No. 4 at Attachment 1 pg. 2.)
AHAM stated that enhanced fins are already used in 64 percent of
the evaporators produced by manufacturers and 99 percent of the
condensers. AHAM also commented that good projections for the
efficiency improvement due to enhanced fins are not available. AHAM
further commented that the increased use of enhanced fins in
evaporators is likely to be limited because in some cases condensate
drainage is a limiting factor. AHAM believes that additional
significant improvements in fin design are not expected in the
foreseeable future. (AHAM, No. 1 at 10.) Sanyo stated that many models
already employ enhanced fins. (Sanyo, No. 771 at 9.)
The Department recognizes that most room air conditioner designs
incorporate enhanced fins. Consequently, most of the representative
baseline units for the product classes analyzed by the Department
already include enhanced (i.e., slit-type) fins. For those baseline
units where enhanced fins could be added, efficiency improvements were
based on information provided by room air conditioner and heat
exchanger manufacturers. Publicly available research information was
used to check the reasonableness of the data supplied by manufacturers.
The manufacturer information also included data on how densely enhanced
fins could be packed until condensate drainage became a problem. In
accordance with this manufacturer data, the Department's
[[Page 50129]]
analysis limited enhanced fin densities before condensate drainage
became a problem. In its comments to the 1996 Draft Report, AHAM
indicated that this approach addressed its concerns. (AHAM, RAC No. 4
at Attachment 1 pg. 2.)
AHAM stated that grooved refrigerant tubes are already used in 97
percent of the evaporators produced by manufacturers and 86 percent of
the condensers. AHAM also commented that good projections for the
efficiency improvement due to grooved tubes are not available. AHAM
does not expect additional significant improvements in tube design in
the foreseeable future. (AHAM, No. 1 at 10.) Sanyo stated that many
models already employ grooved tubes. (Sanyo, No. 771 at 9.)
As with enhanced fins, the Department recognizes that most room air
conditioner designs already incorporate grooved refrigerant tubing.
However, for many of the representative baseline units that were
selected (with consultation from AHAM) for the Proposed Rule's
analysis, grooved tubing was not incorporated into the design. For the
Department's Proposed Rule analysis, manufacturer test data was used to
determine the efficiency improvements due to grooved tubing. However,
publicly available research data indicated the manufacturer test data
overstated the possible improvement. In addition, the analysis
conducted for the Proposed Rule did not account for the increase in
refrigerant-side pressure drop due to the grooved tubing. Thus, for the
Department's analysis for the Final Rule, efficiency and pressure drop
estimates were based on research data published by the American Society
of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE.) In
its comments to the 1996 Draft Report, AHAM commented that this
approach addressed its concern. (AHAM, RAC No. 4 at Attachment 1 pg.
2.)
In their comments to the Draft Report, ACEEE and NRDC state that
the report seems to ignore a new heat exchanger technology by Modine
Technology that can achieve ``at least a 0.75 increase in EER'' without
changing chassis size. (ACEEE/NRDC, RAC No. 5 at 1.) The advocates
recommend that new technologies such as this one be considered in
future rulemakings. The Oregon Department of Energy also stated its
belief that most manufacturers were in contact with Modine Technology.
(RAC No. 10 at 2.)
The efficiency improvement made possible by the new heat exchanger
technology to which the energy efficiency advocates referred is based
on theoretical calculations. Modine Technology's new heat exchanger has
shown improvements in central air conditioners; however, it has not
been tested in room air conditioners. The Department does intend to
analyze this technology in future rulemakings.
AHAM, Amana, Frigidaire, Fedders, and Sanyo all provided comments
with regard to subcoolers. Test data was provided indicating that the
efficiency improvement due to subcoolers is significantly lower than
that estimated by the Department in the 1994 Proposed Rule. AHAM
presented data indicating that, on average, the actual efficiency and
capacity improvements are 44 percent and 67 percent, respectively, of
that projected by the Department's simulation model. Also, according to
the AHAM, four out of seven room air conditioner manufacturers do not
currently use subcoolers and five of the seven manufacturers would need
to make major tooling changes on all or some of their chassis. (AHAM,
No. 1 at 6-7; Amana, No. 347 at 2; Frigidaire, No. 544 at 2-3; Fedders,
No. 693 at 2-6; Sanyo, No. 771 at 9.)
Based on comments, the Department used manufacturer test data to
calibrate the subcooler efficiency increases that were estimated by the
simulation model. For each room air conditioner model simulated, the
temperature of the condensate into which the subcooler is immersed was
adjusted until the simulated efficiency increase matched that indicated
by the manufacturer test data. Depending on the capacity of the unit,
the manufacturer test data demonstrates unit efficiency increases of
between 1.4 percent to 3.0 percent, as compared to approximately 6
percent increases found in the analysis for the Proposed Rule. The
simulation model was adjusted based on this test data. AHAM indicated
that this approach addressed its earlier concern. (AHAM, RAC No. 4 at
Attachment 1 pg. 2.) In addition, DOE used manufacturer cost
information provided by AHAM to calculate the economic impact of
incorporating a subcooler as one of the room air conditioner design
options.
Design options already in use. Many manufacturers claimed that they
already use many of the design options that are being considered by the
Department for increasing energy efficiency. (AHAM, April 7, 1994,
Transcript at 51-52; Amana, No. 347 at 1; Frigidaire, No. 544 at 4;
Fedders, No. 693 at 1; Sanyo, No. 771 at 8.) Both Amana and Frigidaire
stated that they already use high efficiency rotary compressors,
grooved tubes, enhanced fins and permanent capacitor fan motors. Amana
stated that the only design options available for increasing efficiency
are more efficient compressors, larger coil sizes, larger chassis
sizes, and the addition of a liquid line subcooler. (Amana, No. 347 at
1; Frigidaire, No. 544 at 4.)
The design options which are considered in the analysis are based
on the characteristics of the representative baseline units. The
baseline models used in this analysis were selected through
consultation with AHAM. If a baseline unit does not include particular
design options, then those options are analyzed as measures to improve
the efficiency of the unit. Although some of these design options are
already commonly used, they may not all be used simultaneously. For
example, some of the baseline units used more efficient compressors to
achieve a certain efficiency rating, while many of the units on the
market used less efficient compressors but improved heat exchanger
design options to achieve the same level of efficiency.
3. Engineering Simulation Model
The Department received several comments regarding the engineering
computer simulation model that it used in its analysis of efficiency
improvements for room air conditioners. Comments were provided
primarily by AHAM and can be categorized into three areas: (1) the
accuracy of the simulation model; (2) the method in which the modeling
analysis was conducted; and (3) the selection of baseline models for
room air conditioners without louvered sides.
In comparing simulation results from the Department's computer
simulation model to test data gathered from four room air conditioner
models, AHAM demonstrated that there is a marked tendency for the
simulation model to overestimate system efficiency. It concluded that
the simulation model has the potential for making errors of 5 percent
or more, especially when extended well beyond the point where actual
correlative test data exists. (AHAM, No. 1 at 3.) Frigidaire and Sanyo
reinforced the AHAM's comments when they presented data demonstrating
that the simulation model estimated higher benefits for design options
than are realized in practice. (Frigidaire, No. 544 at 4; Sanyo, No.
771 at 10-12.)
The simulation model was extensively reviewed by the room air
conditioner industry. For the 1994 Proposed Rule, simulation results
were calibrated to manufacturer test data for all of the representative
baseline units modeled. The Department recognizes that when simulation
results are calibrated to a single manufacturer's test
[[Page 50130]]
data, it is possible that the model will yield errors of 5 percent or
more when used to simulate the performance of other manufacturers'
units. Where test data is not available, the Department expects to
continue to use the simulation model to estimate the efficiency
increases resulting from the incorporation of design options. When
manufacturer test data is provided, as in the case of subcoolers, the
Department will use it to adjust the simulation model.
AHAM commented that several errors were made in the simulation
modeling. The first pertains to compressor modeling and the fact that
actual compressor performance data was used only in the modeling of
baseline equipment. The Department derived performance data for more
efficient compressors by multiplying the motor input values from the
baseline compressor data by the ratio of the baseline and high-
efficiency compressor nominal energy efficiency ratios (EER.) This type
of analysis shows overall room air conditioner efficiency improvement
equal to 89 percent of the nominal compressor EER improvement. Limited
test data shows that the overall room air conditioner efficiency
increase is about 75 percent of the nominal compressor EER improvement.
AHAM advocated using actual compressor performance data for the
analysis of more efficient compressors but to limit maximum system
efficiency improvements to 75 percent of the nominal compressor EER
increase. It also stated that when deriving compressor coefficients for
input to the simulation model, the Department must use compressor
performance data that spans the entire range of evaporating and
condensing temperatures under which the compressor might operate.
Otherwise, incorrect input coefficients could be generated. (AHAM, No.
1 at 3-6 and AHAM, RAC No. 4 at Attachment 1 pg 1.)
The Department agrees with AHAM that actual compressor performance
data should be used to model the performance of compressors. Nominal
compressor performance is based on ratings at standardized temperature
conditions, and actual compressor performance may be significantly
different at actual room air conditioner operating conditions. Using
the nominal efficiency to compare the performance between two
compressors only provides the efficiency difference at the standardized
conditions. Using actual compressor performance data to model
compressor operation captures the effect that different operating
conditions have on room air conditioner performance. Thus, actual
compressor performance data, spanning the entire range of evaporating
and condensing temperatures in which the compressor might operate, was
used to model the performance of all the compressors analyzed for the
Final Rule. The Department disagrees with AHAM that system efficiency
improvements should be limited to 75 percent of the nominal compressor
EER increase. The basis for using compressor performance data is to
more accurately assess the system improvement due to more efficient
compressors. Placing a ceiling on the efficiency improvement eliminates
the possibility of gaining system EER increases due to more favorable
compressor operating conditions. As it turned out, most of the
compressors modeled as design options in the Final Rule analysis
yielded system efficiency increases that were equal to or less than 75
percent of the nominal compressor EER increase. Only one of the
compressors analyzed yielded a system efficiency increase significantly
above the AHAM's suggested 75 percent ceiling. This compressor was used
at standard level 5, which was found to be not economically justified.
According to AHAM, another error in the simulation modeling
concerns the use of superheat. It noted that the Department incorrectly
specified the input for superheat from manufacturer test data by using
the difference between the mid-evaporator temperature and a temperature
on the suction line. It claimed that the Department should have
adjusted the superheat input to the simulation model until the
difference between the averages of the simulated evaporator inlet and
outlet temperatures and the simulated suction line inlet and outlet
temperatures were equal to the test value. (AHAM, No. 1 at 5.)
The Department's method for specifying the superheat was in
accordance with recommendations made by AHAM in 1990. These
recommendations included making modifications to the simulation model
in order to account for the presence of an accumulator. The
modifications were based on treating the inlet to the accumulator as
the inlet to the compressor shell for rotary compressors. In order to
account for superheating occurring within the accumulator, the
simulation model was modified to include provisions to account for the
temperature and pressure increases that occur within the accumulator.
The location on the suction line where the temperature was measured was
at the accumulator inlet (i.e., the suction line outlet). The superheat
in the simulation model is defined as the difference between the
compressor shell inlet's refrigerant and saturation temperatures;
therefore, knowing that the suction line temperature was measured at
the accumulator inlet provided confidence in using it to specify the
superheat. Because the test data did not provide the accumulator
inlet's saturation temperature, the mid-evaporator temperature was used
as a close approximation of the evaporator saturation temperature,
which is also a close approximation for the compressor shell inlet
saturation temperature. Therefore, the Department believes it
appropriate to use the difference between the mid-evaporator and
accumulator inlet temperatures to specify the superheat. AHAM indicated
in its comments to the Draft Report that this method addresses its
concerns. (AHAM, RAC No. 4 at Attachment 1, pg. 1.)
In estimating room air conditioner efficiency increases resulting
from more efficient fan motors, AHAM commented that it was
inappropriate to use combined fan and fan motor efficiencies as input
to the simulation model. Rather than using efficiencies, it advocated
using fan motor power as an input as it asserts that room air
conditioner efficiencies will be overestimated by using fan and fan
motor efficiencies. (AHAM, No. 1 at 5.)
The simulation model was originally developed to model the
performance of central air conditioners. Manufacturers generally agreed
to this approach. However, some adjustments had to be made to model a
different air delivery system. For room air conditioners, the
evaporator and condenser fans are both driven by a single fan motor, as
opposed to central air conditioners, in which each fan is driven by its
own fan motor. For the room air conditioner model, the Department
decided to describe the air delivery system with combined fan and fan
motor efficiencies in order to account for the impact of evaporator and
condenser air-side pressure drop on fan motor power use. This modeling
scheme also assumed that the evaporator fan accounted for 40 percent of
the total fan motor power while the condenser fan accounted for the
remaining 60 percent. AHAM was in agreement with modeling the room air
conditioner's air delivery system by using a ``40/60 split'' on the fan
motor power. But due to this modeling scheme, only 60 percent of the
fan motor heat loss was added to the condenser air stream. All of the
heat loss from the fan motor should be added to the condenser air
stream as the motor resides in the outdoor section of the room air
conditioner. The Department
[[Page 50131]]
decided to change the simulation model in order to account for the fan
motor's full heat loss. In the Department's analysis for the 1994
Proposed Rule, simulation results were calibrated to test data for all
the baseline models. Because accounting for the full heat loss slightly
lowers the system efficiency, minor adjustments had to be made to the
power and capacity correction factors contained in the input files in
order to recalibrate the simulation results to the baseline model test
data. In AHAM's comments to the 1996 Draft Report, AHAM indicated that
this method addressed its concerns. (AHAM, RAC No. 4 at Attachment 1,
pg 1.)
AHAM claimed the simulation modeling analysis used incorrect power
consumption penalties to account for reversing valves and for no
louvers. With regard to reversing valves, AHAM noted that the TSD for
the 1994 Proposed Rule reports two different power consumption
penalties: 3 percent and 4 percent. AHAM noted that the Department's
simulation analysis actually calculates a power reduction value of 2.5
percent. AHAM recommended using a penalty of five percent when modeling
reverse cycle units with the simulation model. With regard to the power
consumption penalty used for units without louvered sides, AHAM claimed
that the value of 4 percent used in the Department's simulation
analysis does not account for the reduced airflow across the condenser
coil due to the non-louvered sides. Although it proposed no alternative
power penalty to account for non-louvered sides, it stated that the
condenser face area being modeled should be decreased because outdoor
air is drawn through the back of the unit rather than through louvered
sides, and thus less condenser area is available for heat exchange.
(AHAM, April 7, 1994, Transcript at 62-65.)
For the 1994 Proposed Rule, power consumption penalties to account
for reversing valves and to account for no louvers were applied only to
the compressor's power consumption. Because the power penalty is
assessed only to the compressor, the overall power increase for the
entire room air conditioner is always slightly smaller than the
reported power penalty value. The TSD for the Proposed Rule did
mistakenly report two different penalties for reversing valves. The
value that was actually used was 3 percent. The power penalty used to
account for non-louvered sides was 4 percent. A 5 percent power penalty
was used for the Final Rule to account for products with a reversing
valve. Because an alternative power penalty value was not proposed for
non-louvered sides, the Department retained the use of a 4 percent
power penalty. This 4 percent power penalty was assumed to account for
any degradation in performance due to drawing outdoor air directly
through the condenser coil. Thus, the modeled condenser face area was
not reduced.
In its comments to the 1996 Draft Report, AHAM states that although
the Draft Report indicates that power consumption penalties were used
in the simulation model, it appears (referencing Table 1.6 of the Draft
Report) that baseline data for actual models were used, and that these
results are not consistent with actual practice. (AHAM, RAC No. 4 at
2.) The Department did use the power consumption penalties in the
simulation model for the Draft Report. Table 1.6 of the Draft Report is
intended to show that the results produced by the simulation model are
close to the actual test data.
Both AHAM and Sanyo asserted that the Department selected baseline
models for ``through-the-wall'' units (units without louvered sides)
with efficiencies that were not representative of the class. They both
stated that baseline models were derived from models with louvered
sides, and thus, the analysis conducted for these products is
meaningless. Sanyo stressed that the largest capacity size within the
smallest enclosure for the particular product class of interest should
be selected as a representative baseline model. (AHAM, No. 1 at 19;
Sanyo, No. 771 at 6-10.)
In the analysis for the 1994 Proposed Rule, representative baseline
models for non-louvered and reversing valve classes were derived from
the baseline models that were selected for louvered classes. The
Department agrees with AHAM and Sanyo in that actual baseline units
should be used to represent the non-louvered and reversing valve
classes. Thus, the Department based its analysis of non-louvered and
reversing valve classes on modeling of actual baseline units. With
regard to non-louvered classes, manufacturer data were available only
for two of the existing five capacity classes; 6,000 to 7,999 Btu/h and
8,000 to 13,999 Btu/h. Thus, analyses were conducted only for the two
classes where manufacturer data were available. Manufacturer data were
also available for selecting representative baseline units for
reversing valve classes, with and without louvered sides, and
engineering analyses were conducted for both these classes.
Based on its recommended changes for improving the performance of
the engineering simulation model, AHAM re-ran the model for the five
capacity classes with louvered sides and without a reversing valve. For
all five classes, the efficiency levels determined by AHAM's simulation
analysis were significantly lower than the Department's proposed
efficiency standards. (AHAM, No. 1 at 26.) Using the version of the
simulation model that the Department used for its Proposed Rule
analysis, Sanyo conducted a simulation analysis for classes without
louvered sides. With its analysis, it also concluded that efficiency
gains were significantly below those that the Department demonstrated
were possible for classes without louvered sides. (Sanyo, No. 771.)
Like AHAM, Fedders also performed an efficiency analysis for the five
capacity classes with louvered sides and without a reversing valve. But
instead of using the Department's simulation model, it used test data
(and interpolated estimates based on test data) to project efficiency
increases. Fedders' results were similar to AHAM's in that the
efficiency levels that were calculated were significantly lower than
the Department's proposed standards for all five classes. (Fedders, No.
693 at Sec. 1, 1-6.)
Based on the comments received, DOE made a number of adjustments to
the simulation model, as described above, and changed the method in
which certain design options were analyzed. After these adjustments,
the Department's simulation results were close to those reported by
AHAM. For the five capacity classes being compared, these were the only
two classes for which DOE and AHAM had efficiency results that differed
by greater than 1 percent--the 6,000 to 7,999 Btu/h class and the
14,000 to 19,999 Btu/h class.
In the case of the 6000 to 7999 Btu/h class, the discrepancy
(approximately 3 percent) between AHAM's simulation results and the
Department's simulation results for the Final Rule can be attributed to
an error in the earlier simulation model. This error, which was present
in the simulation model that AHAM used and that the Department used in
its analysis for the Proposed Rule, was corrected for the Department's
Final Rule analysis. Thus, correcting this error in the version of the
simulation model used by the AHAM would yield a predicted efficiency
that would be closer to that estimated by the Department for the Final
Rule. The error related acceptable difference between the calculated
condenser exiting temperatures from the two subroutines--because the
acceptable difference was too low, the model
[[Page 50132]]
converged at solutions that produced condenser heat transfer
coefficients which were too small.
In the case of the 14,000 to 19,999 Btu/h class, the discrepancy
(approximately 3.5 percent) was primarily attributable to AHAM's method
of estimating efficiency improvements due to an additional design
option (condenser grooved tubes) that was analyzed by the Department
but not by AHAM. If the Department had not considered this design
option, the discrepancy would only be 0.6 percent.
In AHAM's comments to the 1996 Draft Report, AHAM stated that it
was ``satisfied with the efficiency analyses of models with side
louvers and without reverse cycle up to the application of the BPM fan
motor and the variable speed compressor'' and that after correcting for
the errors described in the preceding paragraphs, ``the correlations
would all be within an acceptable 1%''. (AHAM, RAC No. 4 at 2.)
With regard to Fedders' estimates, the Department's revised
efficiency estimates were still significantly different: discrepancies,
on average, were over 3.5 percent. Unfortunately, Fedders did not
provide detailed information on how it arrived at its estimates. Given
the close agreement with the results reported by AHAM, the Department
is comfortable with its revised simulation results.
In its comments to the Draft Report, AHAM stated that the ``fine
tuning of the simulation model has led to reasonably good
correlations'' for models with side louvers and with a reverse cycle.
However, AHAM stated that although the simulation model was calibrated
to baseline data for actual models without louvers and actual models
with a reverse cycle, ``the simulated effect of the applied design
options is not consistent with actual practice.'' AHAM also stated that
considerable time and effort would be required to ``get the same level
of correlation that was achieved for models with louvers and without a
reverse cycle.'' AHAM also states that the wide variability of results
when comparing simulation model efficiency results to AHAM's results
shows that there is a ``significant problem'' in simulating models with
reverse cycle. (AHAM, RAC No. 4 at 2-4.) In addition, with regard to
units with a reverse cycle, AHAM stated that ``poor correlation with
these units is most likely due to the unusual restrictions in the
refrigeration circuit due to the reversing valve and compromises made
to balance both the heating and the cooling of the unit.'' (AHAM, RAC
No. 4 at 4.) ACEEE and NRDC recommended in their joint comments that
``problems with the simulation models can be dealt with by examining
the efficiencies of units now on the market, in order to sanity check
the simulation model results.'' (ACEEE/NRDC, RAC No. 5 at 3.)
The Department agrees that its computer model may not accurately
simulate actual performance for models without louvers (classes 6-10)
or models with a reverse cycle (classes 11 and 12). Consequently, the
Department has relied more heavily on the comments in selecting
standards levels. For classes with a reverse cycle, the Department
chose standard levels which took into consideration the comments by
both the manufacturers and energy efficiency advocates. With regard to
the recommendation made by ACEEE and NRDC, the Department consulted the
AHAM directory when making decisions on the efficiency standards to set
forth in this rule.
4. Proposed Efficiency Standards
Support for proposed standards. Southern California Edison Company
(SCEC), ACEEE, Central Hudson Gas & Electric Corporation (CHGEC), and
Alabama Power Company (APC) all generally supported the Department's
proposed standards. ACEEE stated that the standards proposed in the
1994 Proposed Rule are supported due to the availability of products
with high efficiency levels in the marketplace. ACEEE stated that
according to AHAM's 1993 and 1994 directories, units with louvered
sides and without a reversing valve are available with efficiencies
exceeding 11.0 EER in the 6000 to 7999 Btu/h and 8000 to 13,999 Btu/h
product classes. In the 14,000-19,999 Btu/h product class, models are
available with efficiencies of 10.5 EER. The ACEEE asserted that even
if the Department underestimated the extra first cost of the proposed
standards by a factor of two, they would still be cost effective.
(ACEEE, No. 557 at 20-22.) CHGEC stated that for its service area, the
proposed standards would save approximately 103 kWh per unit for a
typical 8000 Btu/h size. (CHGEC, No. 601 at 1.) SCEC and APC generally
supported the rulemaking proposals. (SCEC, No. 14 at 1; APC, No. 696 at
20.)
Although the Department recognizes the comments supporting the
proposed standards, lower efficiency standards are being promulgated in
this Final Rule. Revisions made to both the engineering simulation
model and the method in which certain design options were analyzed,
based on public comment, resulted in lower efficiency standards being
selected for all product classes.
Proposed standard level 6. In addition to receiving comments in
support of the proposed standards, the NRDC commented that the
Department did not provide justifiable reasons for rejecting even the
higher efficiency standards in the 1994 Proposed Rule. NRDC's argument
included: (1) the Department's rejection of the higher standards
(described as standard level six in the 1994 Proposed Rule) based on
the standard level's long payback is legally unacceptable; (2) though
short-term return on equity is reduced by standard level six, the long-
term return is not significantly reduced; and (3) manufacturer cost
impacts are premised on the continuation of current practices for
utility rate design under which residential peak kilowatt-hours do not
carry a price premium. (NRDC, April 5, 1994, Transcript at 115-116.)
There are significant differences between the candidate standard
levels selected for the proposed rule and those levels selected for the
final rule. These differences are a result of revisions made to the
engineering analysis.
In response to NRDC's specific comments, the Department recognizes
that in determining whether a standard is economically justified, the
Secretary cannot consider the failure to meet the rebuttable
presumption criterion. EPCA, section 325(o)(2)(B)(iii), 42 U.S.C.
6295(o)(2)(B)(iii). However, the Department does consider energy cost
savings relative to incremental first cost. EPCA, section
325(o)(2)(B)(I)(II), 42 U.S.C. 6295(o)(2)(B)(I)(II). The Department
also considers both short run and long run return on equity as
important factors in determining the rule's impact on manufacturers. In
addition, the Department strives to fairly assess consumer cost
impacts, including sensitivity analysis of high and low State energy
prices.
Adverse effects of standards. The Department received several
comments regarding the adverse affects of promulgating the proposed
standards. The greatest concern of manufacturers, that heat exchanger
coils and cabinets would need to be expanded, at significant expense,
in order to meet the Department's proposed standards, was discussed
previously under comments pertaining to design options requiring
increased chassis sizes. Other manufacturer concerns included: (1) The
disparity in the proposed efficiency levels for class 1 (less than
6,000 Btu/h, with louvers and without a reversing valve) and class 2
(6,000-7,999 Btu/h, with louvers and without a reversing valve); (2)
the effect of higher efficiency
[[Page 50133]]
standards on the replacement market for ``through-the-wall'' units
(i.e., units without louvered sides) ; (3) the effect higher standards
would have on sales of units with reversing valves; (4) the impact on
the dehumidification capability of low capacity units; and (5) the
impact on low-income consumers.
The proposed standard of 11.1 EER for class 1 units was
significantly greater than the proposed standard of 10.3 EER for class
2 units. Both AHAM and Frigidaire claimed that this disparity in the
efficiency levels will result in significantly higher consumer costs
for class 1 units. They asserted that this disparity will eventually
eliminate class 1 units from the marketplace because consumers would
purchase less expensive class 2 units. They stated that eliminating low
cost class 1 units would adversely effect low income consumers. With
regard to energy consumption, for applications where class 1 units are
more suitable, they stated that class 2 units might run less to provide
the same amount of cooling, but their overall power consumption would
be higher because they would operate at a lower efficiency. For units
of equal efficiency providing cooling to environments with the same
sensible and latent loads, limited manufacturer test data indicated
that a class 2 unit (6,000 Btu/h capacity) consumes 6 percent more
power than a class 1 unit (5,000 Btu/h capacity.) In addition, both
AHAM and Frigidaire claimed that to offset humidity effects, class 2
units would probably be run with a lower thermostat setting resulting
in increased run times and increased energy use. Both commenters urged
the Department to set standard levels for class 1 units that are no
greater than the standards that are set for class 2 units. (AHAM, No. 1
at 18-19; Frigidaire, No. 544 at 6-9.)
ACEEE also noted the disparity in the proposed efficiency levels
for class 1 and class 2 units. It noted that class 3 units (8,000 to
13,999 Btu/h) have a significantly higher efficiency standard than
class 2 units. ACEEE commented that promulgating a significantly lower
standard for class 2 units would likely result in manufacturers
concentrating a greater fraction of shipments in this size range,
leading to lower than expected energy savings from the proposed
standards. The ACEEE urged the Department to raise the standard for
class 2 units to 11.0 or 11.1 EER. ACEEE claimed this level is
``technically feasible according to the Department's analysis,'' citing
that the top-rated model in the market in this capacity range has an
11.0 EER. ACEEE believed that because the DOE life-cycle cost analysis
showed only a slight increase in life-cycle cost going from an EER of
10.25 to 10.74 for this capacity range, a ``small additional step to an
EER of 11.0--11.1 should not have much of an impact on LCC either.'' It
also urged the Department to raise the standard for the 6000 to 7999
Btu/h product class without side louvers to the same levels being
proposed for the less than 6000 Btu/h and 8000 to 13,999 Btu/h product
classes. (ACEEE, No. 557 at 22.)
The Department disagrees that ACEEE's extrapolation of the life-
cycle cost analysis of the 1994 Proposed rule indicates that an
increase to 11.0--11.1 EER should have little impact on life-cycle
cost. Moreover, the reanalysis provided in the Draft Report resulted in
efficiency levels for classes 1 and 2 being approximately the same.
AHAM indicated in its comments to the Draft Report that these results
addressed its concerns. (AHAM, RAC No. 4 at Attachment 1, pg 3.) In
addition, for the final rule, the Department has selected standards for
class 1 and class 2 that are equal. ACEEE and NRDC also support these
standard levels. (ACEEE/NRDC, RAC No. 14 at 3.)
AHAM, manufacturers, and real estate organizations commented that
the proposed efficiency standards would obsolete the replacement market
for ``through-the-wall'' units (i.e., units without louvered sides.)
Because of the unavailability of 11.5 to 12.0 EER compressors, chassis
sizes would need to be increased to meet the proposed efficiency
standards. But because of the overall size restrictions due to
``through-the-wall'' sleeves already in service, chassis sizes cannot
be increased without obsoleting the existing sleeves. If existing wall
openings are expanded to accommodate larger units, retrofit costs are
estimated to be between $250 and $500. These commenters argue that the
proposed standards would force the discontinuation of higher capacity
systems as only smaller capacity units would be able to fit into
existing sleeve openings. (AHAM, No. 1 at 19; Given & Spindler
Companies (G&S), No. 302 at 1-2; Frigidaire, No. 544. at 5; Institute
of Real Estate Management (IREM), No. 553 at 7; Sanyo, No. 771 at 3-6;
Friedrich Air Conditioning Co. (Friedrich), April 7, 1994, Transcript
at 77-80.) Both IREM and G&S requested that the Department exempt
``through-the-wall'' units because of the undue burden upon owners who
will be forced to make retrofit changes without any financial
compensation. (G&S, No. 302 at 1-2; IREM, No. 553 at 7.) Sanyo stated
that the efficiency levels proposed in the 1994 Proposed Rule would
force higher capacity units to be discontinued. (Sanyo, No. 771 at 3.)
The AHAM presented data demonstrating that existing models meeting the
current efficiency standards already employ all available design
options. The AHAM stated that any increase in efficiency can only be
accomplished by increasing chassis size or by further decreasing
cooling capacity. (AHAM, No. 1 at 20.) Frigidaire stated that above
8,000 Btu/h, any increase in the current standard ``will result in a
lower BTUH capacity, thus reducing the utility of this product
category.'' Frigidaire notes that in order ``to comply with the 1990
Energy Standards, we were forced to reduce the capacity in this product
class from 13,500 BTU to 10,700 BTU.'' (Frigidaire, No. 544 at 5.) In
its comments to the 1996 Draft Report, AHAM reiterated the industry's
struggle to achieve the current standards in the largest capacity
models which has resulted in the reduction of the maximum capacity
available. (AHAM, RAC No. 4 at 4.) Both the National Apartment
Association (NAA) and the National Multi Housing Council (NMHC)
requested that the Department adopt an efficiency standard for units
without louvered sides that takes into consideration the adverse impact
upon the multi-family housing industry. (G&S, No. 302 at 2; IREM, No.
553 at 7.) Because the multi-family housing industry predominantly uses
air conditioner units without louvered sides, NAA and NMHC are
concerned about the impact of increased cabinet size (due to higher
efficiency standards) on these ``through-the-wall'' units.
The ACEEE opposed exempting ``through-the-wall'' units from more
stringent standards. It stated that such an exemption would create a
loophole that could result in a significant reduction in energy
savings. It believed that manufacturers should be able to produce these
units using the same or similar components used in louvered-type units.
Through gains in economy of scale, costs with maintaining different
product lines for models with and without side louvers could be
avoided. (ACEEE, No. 557 at 23.) ACEEE and NRDC are particularly
concerned about loopholes if standards are not increased for units
below 14,000 Btu/h. (ACEEE/NRDC, RAC No. 5 at 3.) In February 1997,
ACEEE and NRDC urged the Department to raise the standard for class 8
(units without louvers, without a reverse cycle, and 8,000--13,999 Btu/
h) to 8.7 EER in an effort to reduce the likelihood of a loophole. In
addition, they stated that according to the data provided by AHAM
(AHAM, RAC No. 9 at Attachment 1), the 1994 sales weighted average for
this class is 8.73
[[Page 50134]]
EER. (ACEEE/NRDC, RAC No. 14 at 3.) AHAM stated that these concerns are
based ``on the incorrect view that these products are essentially the
same except for the presence of side louvers.'' AHAM states that the
elimination of side louvers causes extensive changes that result in ``a
significant loss of efficiency for the same capacity.'' (AHAM, RAC No.
6 at 2.) Furthermore, AHAM stated that increasing the standard for
class 8 would eliminate higher capacity units, causing harm to building
owners and consumers, and would ``violate NAECA's safe harbor rule in
Section 325(n)(4).'' (AHAM, RAC No. 16 at 4.)
In its comments to the 1994 Proposed Rule NRDC was concerned that
the practice of using small sleeves may amount to a permanent
constraint on how far energy efficiency can be increased. It suggested
that the Department analyze what fraction of the market cannot accept
design options that increase sleeve size. Then the Department should
determine the economic impact of replacing design options that do
require increased size with other less cost-effective options for that
fraction of the market that cannot adapt. NRDC also suggested that the
Department consider adopting a second tier of efficiency standards
which would be available for states to adopt voluntarily through
building codes. This way, room air conditioners could be designed to
the optimum level for the new construction market without imposing
unreasonable costs on the replacement market. (NRDC, No. 55 at 27.)
The Department agrees with manufacturers and real estate
organizations that added retrofit costs would be necessary for units
which require larger sleeves and, as a result, larger wall openings.
Thus, for units without louvered sides, an additional installation cost
of $375 is assumed for design options which require a larger chassis
(i.e., for increased evaporator and condenser face areas.) The
Department was not provided with the necessary information to determine
the percentage of existing sleeves which could not accept larger
chassis sizes. Thus, the added retrofit cost of $375 was assumed to
apply to all units requiring a chassis size change. In addition, since
the percentage of units being used in new construction is believed to
be small, all units were assumed to incur the added retrofit cost,
regardless of application. The Department examined the 1997 AHAM
Directory. It indicates that for higher capacity models (9,000 Btu/h or
more), only one manufacturer currently produces units which could meet
the advocates recommendation of 8.7 EER, despite the fact that this
value is the 1994 shipment weighted average for this class. The
Department agrees that there is reason to believe that increasing
standards for units without louvers and without reverse cycle may
result in eliminating higher capacity units from the market. Thus, the
Department will not increase standards for ``through-the-wall'' units
of 8,000 Btu/h capacity or more in today's rule. These standard levels
minimize or eliminate the need to increase chassis size. Consequently,
the Department does not believe the multifamily housing industry will
be negatively impacted.
As for the advocates concern over possible loopholes, the
Department intends to monitor market trends for these classes and will
consider these trends during its next review of room air conditioner
standards. Regarding NRDC's suggestion that the Department adopt a
second tier standard for states to adopt voluntarily through building
codes, in accordance with the legislation, a recommendation for a
second tier standard for adoption through voluntary building codes must
be done separately from manufacturing standards. However, because the
``through-the-wall'' units account for only about one-tenth of air
conditioner energy use and because only a fraction of these units are
in new construction, the Department does not believe this measure is
warranted.
In their comments to the 1994 Proposed Rule, AHAM and Whirlpool
also expressed that, as a result of setting standards too high for
units with a reversing valve, more electric resistance heat models will
be sold because of their significantly lower cost. They stated that
this will result in an overall increase in energy consumption. (AHAM,
No. 1 at 21; Whirlpool, April 7, 1994, Transcript at 103-105.) The
standards for units with a reverse cycle set forth in today's rule are
significantly lower than those standards proposed in the 1994 Proposed
Rule, so this concern should be mitigated.
Fedders claimed that energy consumption due to reduced
dehumidification is adversely affected by the standard levels proposed
in the 1994 Proposed Rule for class 1 through class 3. Fedders
presented calculations demonstrating that units meeting the proposed
standard levels will consume more energy than units meeting existing
efficiency standards. Fedders stated that units meeting the proposed
standard levels will need to operate longer in order to dehumidify as
effectively as units meeting the existing standards. (Fedders, No. 693
at 1-5, Sec. 2.)
Fedders' claims of longer run times for more efficient units are
based on its estimates of the dehumidification capability of existing
minimum efficiency units and those which comply with the Proposed
Rule's proposed efficiency standards. Fedders' dehumidification data
for units at the proposed efficiency levels were based on historical
test data which were extrapolated to the proposed levels. The
Department's engineering simulation model indicated that the proposed
efficiency standards did not significantly reduce the dehumidification
capability of the units which were modeled. The Department has
questions about Fedders' assumptions used to calculate room air
conditioner run times. For example, although Fedders acknowledges that
sizing recommendations for room air conditioners are dependent on such
things as building construction, window types and insulation levels,
its cooling load calculations are based on a single room size and a
single set of initial indoor room conditions. Most importantly, because
the standards promulgated in this final rule are significantly lower
than those proposed in the 1994 Proposed Rule, the dehumidification
capabilities should no longer be in question.
One of the country's largest retailers, the Sears, Roebuck and
Company (Sears), asserted that the standards proposed in the 1994
Proposed Rule impose disproportionate hardships on low income consumers
as most room air conditioner consumers have lower than average incomes.
Whirlpool substantiates this claim by presenting data on the income
distribution of typical room air conditioner purchasers. (Sears, April
7, 1994, Transcript at 115; Whirlpool, No. 391A at 1-2.)
The standards set forth in the final rule will have substantially
less impact on purchase price than those standards proposed in the 1994
Proposed Rule and will have shorter payback periods. For example, class
1 has an approximate first cost increase of $10, and a payback period
of approximately 2 years, satisfying the rebuttable presumption
criteria for economical justification. The Department does not believe
the standards set forth today will have a substantial negative impact
on low income consumers.
Efficiency Standards Recommendations. Several commenters concerned
about adverse effects of promulgating the efficiency standards proposed
in the 1994 Proposed Rule recommended to DOE alternative levels
[[Page 50135]]
at which to set the standards for room air conditioners. For classes
with louvered sides and without a reversing valve, Frigidaire
recommended the following efficiency standards: 9.0 EER for the less
than 6000 Btu/h class, 9.5 EER for the 6000 to 7999 Btu/h class, 9.5
EER for the 8000 to 13,999 Btu/h class, 9.5 EER for the 14,000 to
19,999 Btu/h class, and 8.5 EER for the greater than 20,000 Btu/h
class. (Frigidaire, No. 544 at 10.) In its comments to the 1994
Proposed Rule, Fedders called for consolidating the three smallest
capacity classes into a single class and setting the efficiency
standard at 10.0 EER. For the two largest capacity classes, Fedders
agreed with the Department's proposed standards (11.1 and 9.8 EER).
(Fedders, April 7, 1994, Transcript at 120-122.) The CEC recommended a
single efficiency standard for all classes with louvered sides and
without a reversing valve. It recommended setting the efficiency
standard based on the level which the Department proposed (11.0) for
the most popular class (i.e., the 8000 to 13,999 Btu/h class.) (CEC,
No. 539 at 2,3.)
For classes without louvered sides and without a reversing valve,
AHAM, Frigidaire, and Sanyo recommended that the current five capacity
classes be consolidated into two classes: units less than 8000 Btu/h
and units greater than or equal to 8000 Btu/h. For the less than 8000
Btu/h class, AHAM, Frigidaire, and Sanyo all recommended setting the
efficiency standard at 9.0 EER. For the greater than or equal to 8000
Btu/h class, they all recommended setting the standard at 8.5 EER. AHAM
presented data demonstrating that existing models meeting the current
efficiency standards already employ all available design options. They
stated that any increase in efficiency can only be accomplished by
increasing chassis size or by further decreasing cooling capacity.
(AHAM, No. 1 at 20; AHAM RAC No. 4 at 1-2; Frigidaire, No. 544 at 5;
Sanyo, No. 771 at 3.) Friedrich recommended that units without louvered
sides be exempt from efficiency regulation. (Friedrich, April 7, 1994,
Transcript at 84.) The CEC recommended a single efficiency standard for
all classes without louvered sides and without a reversing valve. The
Commission recommended setting the efficiency standard based on the
level which the Department proposed (10.7 EER) for the most popular
class (i.e., the 8000 to 13,999 Btu/h class). (CEC, No. 539 at 2,3.)
For classes with a reversing valve, AHAM stated that the efficiency
of a reverse cycle unit in the cooling mode is theoretically less than
the efficiency for a cooling-only model due to the additional pressure
drop caused by the reversing valve and inefficiencies created by the
refrigerant charge being adjusted for an acceptable balance between
cooling and heating performance. AHAM presented data demonstrating that
the average reduction in efficiency due to a reversing valve is 0.42
EER. In order to cover the majority of reverse cycle units, AHAM
recommended setting a standard for reverse cycle units which is 0.5 EER
less than the standard for a comparable cool-only model with or without
louvered sides. (AHAM, No. 1 at 20, 21.) Both Sanyo and Whirlpool also
recommended setting the same type of standard. (Sanyo, No. 771 at 3;
Whirlpool, April 7, 1994, Transcript at 103-105.) The CEC proposed
maintaining the current classification for units with a reversing
valve; one class for units with louvered sides and another class for
units without louvered sides. The CEC agreed the efficiency levels
proposed by the Department for reverse cycle units. (CEC, No. 539 at
2,3.)
On April 23, 1996, ACEEE and NRDC sent a letter to AHAM with the
following table of proposed standard levels (ACEEE/NRDC, RAC No. 3 at
3.):
------------------------------------------------------------------------
Class Standard level
------------------------------------------------------------------------
Units without reverse cycle and with louvered
sides:
Capacity less than 20,000 Btu/h.......... 10.0 EER.
Capacity 20,000 Btu/h and more........... 9.0 EER.
Units without reverse cycle and without 9.0 EER.
louvered sides.
Slider/casement and casement-only units...... 9.0 EER.
Units with reverse cycle, all capacities..... 0.5 EER less than the
standard for comparable
cool-only model.
------------------------------------------------------------------------
In its comments to the 1996 Draft report, AHAM proposed the
following standards (AHAM, RAC No. 6 at 2):
------------------------------------------------------------------------
Class Standard level
------------------------------------------------------------------------
Units without reverse cycle and with louvered
sides:
Capacity less than 20,000 Btu/h.......... 9.5 EER.
Capacity 20,000 Btu/h and more........... 8.5 EER.
Units without reverse cycle and without
louvered sides:
Capacity less than 8,000 Btu/h........... 9.0 EER.
Capacity 8,000 Btu/h or more............. 8.5 EER.
Units with reverse cycle, with louvers....... 8.5 EER. ***
Units with reverse cycle, without louvers.... 8.0 ERR.***
Casement-only................................ 8.7 EER.
Casement-slider.............................. 9.5 EER.
------------------------------------------------------------------------
*** AHAM would prefer to set the standard for reverse cycle units 0.5
EER less than the standard for its ``cool-only'' counterpart. This
recommendation results in ten classes for reverse cycle units. Because
DOE did not support ten classes for reverse cycle units, AHAM stated
that the standard should be set in reference to the highest capacity
class. For example, if the standard for models without reverse cycle,
without louvers, 20,000 Btu/h or more were set at 8.5 EER, then the
standard for units with reverse cycle, without louvers, 20,000 Btu/h
or more should be set at 8.0 EER. (AHAM, RAC No. 6 at 2-3.)
Following the meetings in late September 1996, ACEEE modified its
recommendation to the following standards (ACEEE/NRDC, RAC No. 5 at 4-
5)
[[Page 50136]]
------------------------------------------------------------------------
Class Standard
------------------------------------------------------------------------
Without reverse cycle and with louvered sides 9.7 EER.
less than 6,000 Btu/h.
Without reverse cycle and with louvered sides 9.7 EER.
6,000 to 7,999 Btu/h.
Without reverse cycle and with louvered sides 9.8 EER.
8,000 to 13,999 Btu/h.
Without reverse cycle and with louvered sides 9.7 EER.
14,000 to 19,999 Btu/h.
Without reverse cycle and with louvered sides 8.5 EER.
20,000 or more Btu/h.
Without reverse cycle and without louvered 9.0 EER.
sides less than 14,000 Btu/h.
Without reverse cycle and without louvered 8.5 EER.
sides 14,000 or more Btu/h.
With reverse cycle and with louvered sides... 9.0 EER.
With reverse cycle, without louvered sides... 8.5 EER.
Casement (Casement-only and Casement-slider). 9.5 EER.
------------------------------------------------------------------------
For classes without louvered sides, ACEEE and NRDC stated in their
November 1996 comments that they were willing to accept 8.5 EER for
capacities of 14,000 Btu/h or more. However, ACEEE and NRDC emphasized
their recommendation of 9.0 EER for the 8,000--13,999 Btu/h capacity
class, stating that: this EER is the minimum life cycle cost point
according to the Draft Report; the 1994 sales weighted average of 8.73
EER approaches this recommendation; and 20 percent of 1996 models in
this class meet or exceed this level according to the March 1996 AHAM
Directory. They were concerned that AHAM's 8.5 EER recommendation could
``create a loophole in that units without louvered sides at 8.5 EER
would cost manufacturers less than units with louvered sides at 9.5 EER
($240 vs. $263 according to the DOE draft analysis).'' (ACEEE/NRDC, RAC
No. 5 at 3.) In its comments to the Draft Report, AHAM states that
there is a significant cost and energy efficiency differential between
models with and without side louvers. (AHAM, RAC No. 6 at 2.) In
February 1997, ACEEE and NRDC urged the Department to raise the
standard for class 8 to at least 8.7 EER. (ACEEE/NRDC, RAC No. 14 at
3.)
As discussed earlier, although manufacturers currently do not
produce units in two of the existing five capacity classes, the
Department has retained the five capacity-based classes. The Department
conducted analyses only for the two classes for which manufacturer data
were available (the 6,000 to 7,999 Btu/h and the 8,000 to 13,999 Btu/h
classes.) In this Final Rule, the Department has applied the same
efficiency standard (9.0 EER) to the 6,000 to 7,999 Btu/h class and the
less than 6,000 Btu/h class. The efficiency standard for the 8,000 to
13,999 Btu/h class (8.5 EER) is also applied to the 14,000 to 19,999
Btu/h class and the 20,000 Btu/h or more class. According to 1997 AHAM
Directory, the highest capacity ``through-the-wall'' unit currently
manufactured has a capacity of 12,500 Btu/h, and only one manufacturer
currently makes units at a capacity of 9,000 Btu/h or higher which meet
the 8.7 EER standard proposed by ACEEE/NRDC. On this basis, the
Department has determined that raising this standard is likely to
result in higher capacity models being withdrawn from the market to the
disbenefit of consumers.
With regard to the comment that units without louvered sides at 8.5
EER would cost manufacturers less than units with louvered sides at 9.5
EER, ACEEE and NRDC appear to refer to the values found in tables 1.12
and 1.16 in the Draft Report. The two units being compared have
different capacities; therefore a direct cost comparison is not
appropriate. However, the Department shares the general concern about
the possibility that differences in standard levels for different
classes may cause shifts in product use and sales, and as stated
previously, the Department intends to monitor market trends for these
classes. If it appears that products without louvers are used in lieu
of units with louvers because of differences in energy efficiency
standards, the Department will consider the need to set comparable
standards during its next review of room air conditioner standards.
In their comments to the Draft Report, ACEEE and NRDC recommend a
9.0 EER for reverse cycle units with louvers and an 8.5 EER for reverse
cycle units without louvers. They stated that these levels are well
below the minimum life-cycle cost point of the Draft Report.
Furthermore, they state that a third of the 1996 reverse cycle units
with louvers and 80 percent of the 1996 reverse cycle units without
louvers meet these levels. The advocates also note that the only
reverse cycle unit in the 1996 AHAM directory above 20,000 Btu/h has a
9.0 EER. (ACEEE/NRDC, RAC No. 5 at 3.) In addition, they are concerned
about ``loopholes'' which may result if the standards are not raised.
(RAC, No. 12 at 1.) AHAM counters that a loophole would not be created
because the cost of building a unit with a reverse valve is ``quite
significant.'' (AHAM, RAC No. 6 at 3.) The energy advocates also state
that the Department's analysis appears to only evaluate cooling energy
savings and not heating energy savings. (ACEEE/NRDC, RAC No. 5 at 2.)
In response to comments, DOE has split classes 11 and 12. AHAM,
NRDC, and ACEEE all recommended setting the standards for reverse cycle
units at 0.5 EER less than their cool-only counterparts. (ACEEE/NRDC,
RAC No. 3 and AHAM, No. 1 at 21.) For units with reverse cycle and
louvered sides, the energy efficiency advocates believe an EER of 9.0
is acceptable. (ACEEE/NRDC, RAC No. 5 at 5.) AHAM also finds this level
to be acceptable for units with capacities less than 20,000 Btu/h.
However, for units at 20,000 Btu/h or more, AHAM argues that the
standard should not be higher than the standard for its ``cool-only''
counterpart. (AHAM, RAC No. 6 at 3.) The Department agrees. By
splitting class 11 at 20,000 Btu/h, the Department can raise the
standard for most of the units with reverse cycle and with louvers to
9.0 EER, without raising the standard for units of capacities of 20,000
Btu/h or more above the 8.5 EER of its cool-only counterpart.
Similarly, the Department has split class 12 and set the standard
for units less than 14,000 Btu/h at 8.5 EER while keeping the standard
for units of 14,000 Btu/h or more at 8.0 EER. This split is largely
consistent with the recommendations of ACEEE, NRDC, and AHAM for a 0.5
EER differential between reverse cycle units and their ``cool-only''
counterparts for units without louvers, with the exception of units in
the 8,000-13,999 Btu/h capacity range for which there is no
differential. According to the 1997 AHAM directory, only one model with
reverse cycle and without louvers in this capacity range does not meet
an 8.5 EER. In response to the advocates question as to why the
Department's analysis only evaluates cooling energy savings and not
heating energy savings, the Department does not evaluate heating
savings because the test procedure is unable to account for the heating
energy savings.
[[Page 50137]]
In their February 1997 comments to the notice reopening the comment
period, ACEEE/NRDC stated that establishing separate classes with
weaker standards for higher capacity units with a reverse cycle is
unnecessary because all currently existing models at these capacity
levels meet their recommended standards, without splitting the classes.
(ACEEE/NRDC. RAC No. 14 at 3.) Although all currently existing models
with louvers and with a reverse cycle at 20,000 Btu/h or more meet a
9.0 EER, the Department does not believe new models entering the market
should be required to meet a standard higher than the standard for a
unit without a reverse cycle. In addition, the Department recognizes
that no models currently exist with a reverse cycle and without louvers
at 14,000 Btu/h or more; however, the Department believes that it
should allow manufacturers the opportunity to design units without
louvers and with a reverse cycle at higher capacities, and the evidence
indicates that manufacturers could not meet a standard greater than 8.0
EER at capacities of 14,000 Btu/h or more. Furthermore, in April 1996,
the advocates supported AHAM's recommendation to make the standard for
reverse cycle units 0.5 EER less than the standard for its cool-only
counterpart. (ACEEE/NRDC, RAC No. 3 at 3.) This recommendation would
create 10 classes for reverse cycle room air conditioners. Thus, the
Department questions why the advocates suggest that promoting only four
classes for reverse cycle units is superfluous.
AHAM stated that casement-type units are already using all
available design options and are limited in size because of their
applications. (AHAM, No. 1 at 22.) In its comments to the Draft Report,
AHAM recommended efficiency standards of 9.5 EER for slider/casement
units and 8.7 EER for casement-only units. (AHAM, RAC No. 6 at 2.) In
its comments to the 1994 Proposed Rule, Frigidaire recommended a
standard of 9.0 EER for slider/casement units. (Frigidaire, No. 544 at
6.) Because the 1994 Proposed Rule did not propose standards for
casement-type units, ACEEE, CEC, NRDC, and the New York State Energy
Office (NYSEO) urged the Department to collect the necessary data in
order to perform an analysis and set efficiency standards for these
units. ACEEE and NRDC stated that if data is not available to perform
an analysis, standards should be set for casement-type units that are
equivalent to those for typical room air conditioners. NRDC added that
the Department is prohibited under NAECA from reducing the stringency
of energy efficiency standards. The CEC asked the Department to clarify
whether States may adopt efficiency standards for casement-type classes
without preemption or whether another standard level applies to these
products until the Department adopts a separate level. (ACEEE, No. 557
at 23; CEC, No. 539 at 3; NRDC, April 5, 1994, Transcript at 116-117;
NYSEO, June 8, 1994, Transcript at 18-19.) The Department considers
casement-type units to be air conditioners. Therefore, these units are
subject to the currently applicable standards based on unit capacity
and the presence or absence of louvered sides and a reverse cycle.
In their February 1997 comments, ACEEE and NRDC stated that a
special class set aside for one casement-only model in existence is not
necessary. They are concerned that a casement-only unit at an 8.7 EER
will be less expensive to produce than a ``standard'' unit at 9.7 EER.
They believe this cost disparity would cause manufacturers to
capitalize on this niche class. (ACEEE/NRDC, RAC No. 14 at 2.) AHAM
counters that casement units are expensive relative to their capacity
and that there would be no economic incentive to exploit this class.
Furthermore, casement-only units add a unique utility not provided by
casement-slider units. (AHAM, RAC No. 16 at 3.) In addition, in
February 1997, Friedrich provided information regarding the relative
costs of casement room air conditioners as compared to ``standard''
models with side louvers and without a reverse valve. This information
shows that casement-only and casement-slider room air conditioners are
significantly more expensive than units that do not meet the size
constraints of casement room air conditioners. (RAC No. 18.) Therefore,
the Department has found no economical advantage to using casement-type
units at lower energy efficiency ratings for standard room air
conditioner applications. Thus, the Department has selected separate
classes for casement room air conditioners. DOE has selected the
efficiency standard recommended by AHAM, ACEEE, and NRDC for casement-
slider units (9.5 EER) (AHAM, RAC No. 6 at 2 and ACEEE/NRDC, RAC No. 5
at 5) and the standard recommended by AHAM for casement-only units (8.7
EER). (AHAM, RAC No. 6 at 2.) However, due to the energy efficiency
advocates' concern about the possibility of ``loopholes,'' the
Department will monitor market trends for these classes. If it appears
that casement units are used in lieu of ``standard'' units because of
differences in energy efficiency standards, the Department will
consider the need to set comparable standards during its next review of
room air conditioner standards.
AHAM stated that its recommended standards would result in
meaningful energy savings but would alleviate the economic burden on
manufacturers. AHAM states that in light of the economic burden of
chassis size increases, the cumulative burden of other rulemakings, and
the relatively modest energy use of room air conditioners that ``more
stringent standards than that proposed by industry would be
unreasonable and unjustified.'' (AHAM, RAC No. 6 at 1.)
The standards established in today's rule are similar to the
standards recommended by AHAM. The Department selected slightly higher
standards for the first four classes. AHAM's primary concern was the
cost of increasing chassis size. Because the standard levels the
Department has selected for the first five classes are based on the
life cycle cost minimums when the cost of increasing chassis size is
prorated, the Department believes the cost impact is reduced.
5. Other Comments
Effective date of standards. Commenting on the 1994 Proposed Rule,
Fedders proposed accelerating the effective date from January 1st to
August 1st. It claimed this would prevent manufacturers from producing
large quantities of less efficient units during the months of August
through December. (Fedders, April 7, 1994, Transcript at 123-124.)
AHAM urged the Department to set an effective date of October 1,
2000, in order to coordinate with manufacturing cycles. AHAM stated
that production begins in August or September and runs through June or
July. AHAM stated that an arbitrary effective date of 3 years from the
date of the rule, and likely in the middle of a manufacturing season,
would cause severe economic hardships on manufacturers which are not
accounted for in the manufacturing impact analysis. (AHAM, RAC No. 16
at 3.)
The Department agrees, due to the unique seasonal nature of room
air conditioners, the effective date should be coordinated with
manufacturing cycles. Thus, this rule will take effect on October
1,2000.
Units consuming less than 500 watts. Commenting on the 1994
Proposed Rule, Fedders recommended that room
[[Page 50138]]
air conditioners consuming less than 500 watts be exempted from
regulation. In support of this recommendation, it stated that a 3000
Btu/h capacity unit at an efficiency of 8.0 EER consumes 375 watts
compared to a 5000 Btu/h capacity unit at 11.1 EER that consumes 450
watts. Fedders argued that this exemption would encourage development
of units that are smaller and consume less energy and resources.
(Fedders, April 7, 1994, Transcript at 122-123.) AHAM, Frigidaire,
NRDC, and the ACEEE all opposed the Fedders' recommendation. AHAM
disagreed with Fedders' claim that as many as two-thirds of the rooms
in which 5000 Btu/h capacity units are installed could be adequately
cooled with units as small as 3000 Btu/h. AHAM saw no reason that
smaller units should be given an advantage by being exempted from a
standard and ``strenuously disagreed with Fedders' proposed exemption
for models of less than 500 watts.'' (AHAM, No. 1 at 23 and AHAM, RAC
No. 4 at Attachment 1, pg 4.) Frigidaire stated that the recommendation
by Fedders is counterproductive to saving energy as, under it, low
capacity units of low efficiency will be introduced into the
marketplace. (Frigidaire, No. 544 at 11.) The NRDC agreed with the
motivation behind Fedders' suggestion but did not agree with the
specifics of the recommendation as it would allow the creation of a new
market driven entirely by low first cost. NRDC suggested that the
Department consider a lower standard for a product class below 4000
Btu/h in capacity based on comparable criteria to the standard set for
the below 6000 Btu/h class. (NRDC, No. 55 at 28.) The ACEEE opposed the
Fedders' recommendation as it believes it could lead to widespread use
of inefficient smaller capacity units. (ACEEE, No. 557 at 22.)
The Department agrees with both AHAM and ACEEE that room air
conditioners which consume less than 500 watts should not be exempt
from efficiency regulation. The Department recognizes that small
capacity units may draw less power than larger capacity systems. But
the Department does not agree with Fedders' claims that, for units in
the less than 6000 Btu/h class, small capacity units will consume less
energy than more efficient, larger capacity systems. In creating a
separate product class for units with capacities below 6000 Btu/h, the
Department has recognized that small capacity units are used
differently than units in larger capacity classes. Applications for
small capacity units tend to be for small rooms where the cooling load
is relatively low. To further differentiate the less than 6000 Btu/h
class by capacity would require field tests demonstrating that there
are applications which are suitable specifically for units with
extremely small capacities. Such field data has not been presented.
Phase out of HCFC-22. With concern that the phase out 4
of HCFC-22 (the refrigerant used by all room air conditioners) might be
accelerated, AHAM recommended, in its comments to the 1994 Proposed
Rule, that the Department promulgate a second tier of standard levels
for HCFC-free room air conditioners. AHAM stated that some replacement
refrigerants show a drop in efficiency of 10 percent. AHAM proposed
that the second tier be set initially at 10 percent less than the
efficiency standards for room air conditioners using HCFC-22. AHAM
proposed that second tier of standards would be effective upon the
phase-out date of HCFC-22 and would not be available if the HCFC-22
phase out date is not accelerated. (AHAM, No. 1 at 22,23.) Because
compressor testing indicates that alternative refrigerant blends will
decrease efficiency, Matsushita commented that any efficiency standards
promulgated for room air conditioners should apply only to units
charged with HCFC-22. (Matsushita, April 7, 1994, Transcript at 91-92.)
Frigidaire urged the Department to consider possible energy penalties
for HCFC-22 alternative refrigerants. (Frigidaire, No. 544 at 11.) NRDC
did not support creating less stringent standards for room air
conditioners using alternative refrigerants. NRDC believed that units
with new refrigerant alternatives can attain the same efficiency level
as units using HCFC-22. NRDC suggested that the Department collaborate
with the Environmental Protection Agency on decisions regarding the
phase out of HCFCs. Because the Department must promulgate another
rulemaking before a phaseout would occur, NRDC stated that the phase
out date of HCFC-22 is not within the period of applicability for room
air conditioner efficiency standards. It urged that the Department
should not plan around a phase out requirement that does not exist.
(NRDC, No. 55 at 27,28.) ACEEE stated that alternative refrigerants,
such as AZ-20, have been demonstrated to increase room air conditioner
efficiency as compared to HCFC-22. (ACEEE, No. 557 at 21.)
---------------------------------------------------------------------------
\4\ The EPA's final rule accelerating the phaseout of ozone-
depleting substances bans the production and consumption of virgin
HCFC-22 unless it is used as feedstock or in equipment manufactured
before January 1, 2010. The final rule also bans the production and
consumption of HCFC-22 on January 1, 2020, except for limited
exemptions specified by statute. 60 FR 24970 (Wednesday May 10,
1995).
---------------------------------------------------------------------------
In 1996, Fedders stated it has concern over replacement
refrigerants. Fedders commented that the Montreal Protocol may require
phase-out sooner than the current phaseout date of 2010. Fedders stated
that the industry will be required to do extensive retooling if the new
standards cannot be met with replacement refrigerants. Furthermore,
Fedders stated that the U.S. is ``dangerously close to the legal caps
of HCFC chemicals.'' Fedders was concerned ``the EPA will impose
restrictions on production, thereby necessitating implementation of
replacement refrigerants quickly.'' Therefore, Fedders recommended
maintaining the current energy efficiency regulations until the issues
related to refrigerant charges are ``resolved and implemented into
commerce.'' (Fedders, RAC No. 7 and RAC No. 8.)
In its comments to the 1996 Draft Report, AHAM stated that the
issue of replacement refrigerants is a far more serious problem than
the Department acknowledges. It states that because of the size
restrictions of room air conditioners and because the compressor and
condenser are located in a window, the potential adverse effects of
high pressure refrigerants are higher, and low pressure alternates
demonstrate efficiency penalties. (AHAM, RAC No. 4 at 5.) In February
1997, AHAM requested that the Department make a provision for
compliance problems which may result from the transition to HCFC-free
refrigerants.
In their comments to the Draft Report, ACEEE and NRDC stated that
because the standard set forth in today's rule will cover the 2000-2005
time period, alternative refrigerants will likely be an issue for the
next statutorily required standard review but not this review. In
addition, the advocates state that it is unlikely for replacement
refrigerants to result in an energy penalty and may result in a slight
energy efficiency increase. (ACEEE/NRDC, RAC No. At 3.)
The Department agrees that the phase out date of 2010 for HCFC-22
is far enough in the future that no adjustment to these standards is
necessary. Replacements for HCFC-22 are being developed. Concerned over
the impact that the phase out of HCFC-22 would have on the unitary air
conditioner and heat pump industry, the Air Conditioning and
Refrigeration Institute initiated the Alternative Refrigerant
[[Page 50139]]
Evaluation Program (AREP). AREP has identified several HCFC-22
alternatives. Two of the more promising replacements include a low-
glide ternary blend consisting of HFC-32, HFC-125 and HFC-134a
refrigerants, and an azeotrope consisting of H.C.-32 and H.C.-125
refrigerants. A detailed discussion of replacement refrigerants can be
found on page 1.18 of the TSD.
Although two of the more promising alternatives demonstrate slight
disadvantages compared to R-22, the Department expects that the
performance characteristics of the available alternative refrigerant
blends will improve as more experience is gained with their use in
different formulations. The Department does not anticipate a problem
with degradation of performance of refrigerants related to the HCFC-22
phaseout. The EPA states that it does not intend to accelerate the
HCFC-22 phaseout. (RAC No. 19.) The Department recognizes the
possibility that the phaseout date could be accelerated or the
availability of HCFC-22 could diminish. DOE will continue to monitor
the situation and take appropriate actions.
Based on this information, the Department declines to establish a
two tier system that takes into account a possible degradation in
system performance using replacement refrigerants.
Exemption of refrigerant-gas free units. Fedders stated that in
order to promote the research and development of alternative air
conditioning systems, the Department should exempt refrigerant-gas free
room air conditioners from efficiency regulation. (Fedders, April 7,
1994, Transcript at 123.)
The Department will not exempt refrigerant-gas free room air
conditioners from efficiency regulation because the energy conservation
policies underlying the EPCA do not support such an exemption.
Installation Costs. A few commenters opposed the proposed standard
because of increased installation costs. (G&S No. 302 at 2; Amana, No.
347 at 2; Southwestern Public Service Co No. 495 at 5; Whirlpool, No.
391A at 4; CHGEC, No. 601 at 1; and AHAM No. 1 for some classes.)
The Department analyzed the net consumer benefit from the
imposition of the standards, estimating costs, including installation
costs, and benefits to the utility customer, and concluded that the
benefits outweighed the increased costs.
6. Other comments regarding FR Notice of January 29, 1997
Southern Company Services, Inc. stated that these standards appear
reasonable and economically justified. (Southern Gas, RAC No. 15 at 1.)
ACEEE and NRDC stated that the standards the Department indicated it
was inclined to select for the final rule were generally reasonable,
and they strongly supported those standards for the first five classes.
For the remaining classes, they suggested a few changes which were
addressed under ``Efficiency Standards Recommendations.'' (ACEEE/NRDC,
RAC No. 14 at 3.) AHAM stated that under two critical conditions, the
majority of their members accepted the standard levels the Department
indicated it was inclined to select in the January 29 notice. These
conditions concerned non-HCFC refrigerants and the effective date of
the standards, discussed in the previous section. (AHAM, RAC No. 16 at
1) Glenn Schleede of Energy Market & Policy Analysis, Inc. (EM&PA)
stated that the economic analysis is based on outdated and invalid
assumptions about potential energy costs. Mr. Schleede's comments dealt
specifically with: overestimating national energy cost savings; using
total residential electricity cost per kilowatt-hour to calculate
national and consumer energy savings; the utility impact model; and the
variables and assumptions used in the model. Mr. Schleede believes all
calculations of life cycle costs, payback periods, and consumer energy
cost savings in the TSD are based on unrealistically high estimates of
future energy (particularly electricity) prices. He also believes the
Department has not ``taken into account the interests of real
consumers.'' (EM&PA, RAC No. 17.)
In the analyses for the Draft Report, the Department utilized EIA
forecasts that have not yet addressed the possible price effects of the
electric utility regulatory reforms and industry restructuring that are
anticipated. Due to this and other uncertainties in electricity price
forecasts, the Department conducts sensitivity analyses to bound the
possible ranges of impacts. The Department intends to increase the use
of sensitivity analyses and scenario analyses in future rulemakings. 61
FR at 36987 (to be codified at 10 CFR Part 430, Subpart C, Appendix A,
section 11(e)(1)). The Department will continue to examine how to
better account for these changes in the future.
Various cases of Net Present Value (NPV) and life-cycle cost
sensitivity to changes in energy price and equipment price were
analyzed. These sensitivity analyses are discussed in section IV.c.2.,
``Life-cycle Cost and Net Present Value,'' of today's rule. These
sensitivity analyses included the effect of using the lowest state
energy prices on life-cycle cost and the use of energy price
projections provided by the Gas Research Institute to calculate NPV and
energy savings.
As a complement to energy price sensitivities, the Department
calculated the cost of conserved energy (CCE) for its appliance energy-
efficiency standards under consideration. The CCE is the increase in
purchase price amortized over the lifetime of the appliance. The
advantage of the CCE approach is that it does not require assumptions
about future energy prices, because it uses only the purchase expense
of the efficiency measure and the expected energy savings. The consumer
will benefit whenever the cost of conserved energy is less than the
energy price paid by the consumer for that end use. The CCE's
calculated for the standards set forth in today's rule are all less
than the energy prices projected by either the EIA or GRI. See
Supplemental tables 4.10-4.18 in the TSD.
For consumer impacts such as payback and changes in life cycle
cost, which are measured at the effective date of the standard, the
Department believes both fixed and variable costs should be included
because these costs are currently reflected in consumer utility bills
based on cost-of-service rates. It is not anticipated that the
reductions in energy demand resulting from energy efficiency standards
for room air conditioners are likely to have any significant effect on
consumer electricity rates (or prices).
In estimating the national net present value of the cost savings
resulting from more stringent efficiency standards, it may be
appropriate to distinguish between the expected cost impacts on
individual consumers and the cost impacts on the nation as a whole. To
determine whether there is a significant difference between consumer
and national cost impacts, it would be necessary to distinguish between
the long run fixed and variable costs of serving residential
electricity demand. For example, if electricity demand is reduced,
utilities will be able to cut back immediately on the fuel used to
generate electricity and, over the long run, should also be able to
reduce their power generating, transmission and possibly even their
distribution capacity. However, reduced demand is unlikely to affect
the cost to a utility of billing and servicing individual
[[Page 50140]]
customers. Furthermore, because virtually all consumer electricity
rates are still based on average costs and do not reflect the
variations in these costs that occur hourly, it is also possible that
improving the efficiency of particular appliances will result in
significant reductions in the high costs of meeting peak demand or, in
other cases, may simply reduce utility base loads (resulting in much
lower cost savings). Unfortunately, the Department does not have
adequate information upon which to distinguish accurately between
consumer cost savings and the cost reductions likely to be experienced
by utilities or the nation as a whole. In the absence of such
information, the Department believes that its use of retail prices as
the basis for calculating the net present value of projected cost
savings to the nation (national benefits) is a reasonable approach.
In addition to the impact of energy savings in today's world, there
is much speculation as to the impact of electric utility restructuring
on future electric rates. However, with federal and state regulations
being very undefined, the Department believes it would be pointless to
attempt to reflect unknown future electric rate structures in today's
analyses. In future rulemakings, the Department will consider such
impacts as they become evident. The Department concludes from the
information set forth above that it is properly calculating consumer
energy cost savings and national net present value.
With regard to the variables and assumptions used in the models,
the assumptions regarding discount rates have been discussed
extensively, and DOE used the discount rates it determined to be most
appropriate. For future rulemakings, the Department always seeks and
welcomes the most current information regarding its models and will
continue to improve them.
b. General Analytical Comments
This section discusses the general analytical issues raised by the
comments to the 1994 Proposed Rule.
The Engineering Analysis identified design options for improvements
in efficiency along with the associated costs to manufacturers for each
class of product. For each design option, these costs constitute the
increased per-unit cost to manufacturers to achieve the indicated
energy efficiency levels. Manufacturer, wholesaler, and retailer
markups will result in a consumer purchase price higher than the
manufacturer cost.
In the analysis which supported the Draft Report, the Department
used a computer model that simulates a hypothetical company to assess
the likely impacts of standards on manufacturers and to determine the
effects of standards on the industry at large. This model, the
Manufacturer Analysis Model (MAM), is described in the TSD. (See TSD,
Appendix C.) It provides a broad array of outputs, including shipments,
price, revenue, net income, and short- and long-run returns on equity.
An ``Output Table'' lists values for all these outputs for the base
case and for each of the five standard levels analyzed. It also gives a
range for each of these estimates. The base case represents the
forecasts of outputs with a range of energy efficiencies which are
expected if there are no new or amended standards. A ``Sensitivity
Chart'' (TSD, Appendix C) shows how returns on equity would be affected
by a change in any one of the nine control variables of the model. The
Manufacturer Analysis Model consists of 13 modules. The module which
estimates the impact of standards on total industry net present value
is version 1.2 of the Government Regulatory Impact Model (GRIM), dated
March 1, 1993, which was developed by the Arthur D. Little Consulting
Company (ADL) under contract to AHAM, the Gas Appliance Manufacturers
Association (GAMA), and the Air-Conditioning and Refrigeration
Institute (ARI). (See TSD, Appendix C for more details.)
Arthur D. Little, Inc. (ADL) submitted comments on the 1994
Proposed Rule on behalf of AHAM, the Air-Conditioning and Refrigeration
Institute (ARI), and the Gas Appliance Manufacturers Association
(GAMA.) ADL and others criticized the methodology and analytical models
used to assess standards. These comments raised concerns about the
determination of the impact of standards on manufacturers, particularly
the way the Department used the GRIM developed by industry, and the
failure to consider the impact of multiple DOE and other agency
regulations. Other analytical issues raised included the determination
of consumer paybacks from energy savings, expected life of the product,
economic assumptions, the use of prototypical firms, and other
assumptions and variables used in the simulation model. (ADL, No. 665
at 1, 8-10, 14-19; AHAM, Transcript April 7, 1994, at 173.) Amana
commented that historical models are difficult to construct and that
prices fluctuate, and therefore, the Department should not ``place too
much stock in computer models.'' Basing its statement on the consumer
price index (CPI), producer price index (PPI), and average energy use
trends, Amana also stated that there is no evidence to suggest that
capital cost increases due to efficiency improvements are passed on to
the consumer. (Amana, No. 347 at 2-3.)
In implementing the Process Rule, the Department is now undertaking
a review of the manufacturing impact analysis model and methodologies.
In developing its new methodology, the Department will take into
account the comments received concerning its methodology. However,
while DOE is committed to working with the interested public to improve
these analytical tools, DOE believes the analytical approach used in
conjunction with the Draft Report is a reasonable basis for assessing
manufacturer impact.
The Department recognizes that the manufacturers disagreed with the
analytical method used in the 1994 Proposed Rule and the Draft Report
regarding impacts on manufacturers. However, the Department assumes
that the standards recommended by AHAM would not have adverse impacts
on the industry or the individual manufacturers. The standards the
Department sets forth in today's rule are quite similar to those
recommended by AHAM. The Department has selected slightly higher (0.2-
0.3 EER) standards than those standards proposed by AHAM for the
classes 1 through 4. AHAM's primary concern was the impact of the cost
of chassis size increases on manufacturers. The Department took into
consideration a graph provided by AHAM which shows the percent of
production requiring a chassis size change at each EER level. In
selecting the standard levels for classes 1 through 4, the Department,
in an effort to mitigate the identified cost impact on manufacturers,
was careful to avoid any significant increase in the percentage of
production requiring a chassis size change.
ACEEE recommended that DOE compile the best available data on two
key variables: markup from manufacturer to the consumer and changes in
purchase patterns in response to efficiency-induced price increases.
This data should be used for the current analysis in both the
Government Regulatory Impact Model (GRIM) and the Manufacturer Impact
Model (MIM.) Over the long term, ACEEE suggested that DOE work with
industry to co-fund a study on consumer purchase behavior in response
to efficiency-induced price increases that would help improve the
[[Page 50141]]
usefulness of both GRIM and MIM. (ACEEE, No. 557 at 5.)
DOE has decided to integrate the GRIM with the MIM which has
resulted in the development of a new model entitled the Lawrence
Berkeley Laboratory Manufacturer Analysis Model (LBL-MAM.) The
Department will continue in its efforts to collect the best available
data on markups to use in its analytical tools. With regard to consumer
response to efficiency-induced price increases, the Department's
consumer analysis contains, for each covered product, values that
represent the likely response. These values were originally estimated
by analyses of data concerning product purchases during the 1970's and
have been updated. The Department continues attempting to update its
assumptions where updates are warranted and welcomes ACEEE's
suggestions. DOE will explore the feasibility of a cooperative study on
empirically-verifiable updates on price elasticity.
IV. Analysis of Room Air Conditioner Standards
Revised standards for room air conditioners shall be designed to
achieve the maximum improvement in energy efficiency that is
technologically feasible and economically justified. These and related
statutory criteria are addressed below.
a. Efficiency Levels Analyzed
The Department examined a range of standard levels for room air
conditioners. Table 4-1 presents the five efficiency levels selected
for analysis in the Draft Report, as well as the supplemental
efficiency level. Level 5 corresponds to the highest efficiency level,
max tech, considered in the engineering analysis. The Final TSD
contains the information analyzed in the Draft Report and the
supplemental analysis.
After analyzing the comments received concerning the Draft Report,
the Department decided to analyze an additional standard level, defined
as the supplemental level. The Department calculated the energy
savings, net present value, life-cycle cost, life-cycle cost
sensitivity to energy prices, payback period, and environmental
emissions reduction for this supplemental standard level. These tables
can be found in the Supplemental section of the TSD.
Table 4-1.--Standard Levels Analyzed for Room Air Conditioners
----------------------------------------------------------------------------------------------------------------
Suppl.
Product class Level 1 Level 2 level Level 3 Level 4 Level 5
----------------------------------------------------------------------------------------------------------------
Without reverse cycle, with
louvered sides, and less than
6,000 Btu/h...................... 9.32 9.71 9.7 10.00 10.38 11.74
Without reverse cycle, with
louvered sides, and 6,000 to
7,999 Btu/h...................... 9.38 9.66 9.7 9.91 10.33 11.67
Without reverse cycle, with
louvered sides, and 8,000 to
13,999 Btu/h..................... 9.71 9.85 9.8 10.11 10.97 12.39
Without louvered sides, with
reverse cycle, and 14,000 to
19,999 Btu/h..................... 9.70 9.98 9.7 10.15 10.15 12.77
Without reverse cycle, with
louvered sides, and 20,000 Btu/h
or more.......................... 8.39 8.39 8.5 8.51 8.88 11.14
Without reverse cycle, without
louvered sides, and less than
6,000 Btu/h...................... 9.10 9.10 9.0 9.23 9.23 11.52
Without reverse cycle, without
louvered sides, and 6,000 to
7,999 Btu/h...................... 9.10 9.10 9.0 9.23 9.23 11.52
Without reverse cycle, without
louvered sides, and 8,000 to
13,999 Btu/h..................... 8.80 9.05 8.5 9.12 9.12 11.08
Without reverse cycle, without
louvered sides, and 14,000 to
19,999 Btu/h..................... 8.80 9.05 8.5 9.12 9.12 11.08
Without reverse cycle, without
louvered sides, and 20,000 Btu/h
or more.......................... 8.80 9.05 8.5 9.12 9.12 11.08
With reverse cycle and with
louvered sides................... 9.05 9.05 9.0 9.27 9.27 11.16
With reverse cycle and without
louvered sides................... 8.72 8.72 8.5 8.86 8.86 10.87
----------------------------------------------------------------------------------------------------------------
Rather than presenting the results for all classes of room air
conditioners in today's rule, the Department selected a class of room
air conditioners as being representative, or typical, of the product
and is presenting the results only for that class. The results for the
other classes can be found in the TSD in the same sections as those
referenced for the representative class. The representative class for
room air conditioners is units with side louvers, without a reverse
cycle, and with a capacity of 8,000-13,999 Btu per hour. This class of
room air conditioners has the largest sales volume. For this
representative class, trial standard level 1 accomplishes efficiency
improvements from the baseline by increasing the compressor EER to
10.8; level 2 adds a subcooler; level 3 adds evaporator and condenser
grooved tubing; level 4 increases the evaporator and condenser coil
area; and level 5 adds a variable-speed compressor and brushless
permanent magnet fan motor. Similar design options are used to achieve
the above efficiencies for the other classes and are found tabulated in
Section 1.5 of the TSD. The supplemental level was not based on any
specific configuration of design options, but rather it resulted from
consideration of the comments DOE received regarding the Draft Report.
The analysis used in the Draft Report became the basis for the TSD.
Consequently, calculations in the TSD and today's rule are based on
those energy price forecasts from the 1995 Annual Energy Outlook (AEO)
of the Energy Information Administration (EIA) , the current forecast
at the time of the analysis, unless otherwise noted. (DOE/EIA-
0383(95)). Supplemental calculations were performed where the
Department determined it would be appropriate to reflect the most
current prices.
The Department believes that all the standard levels it examined
are technologically feasible. The only questions which were raised by
commenters about technological feasibility pertained to Brushless
Permanent Magnetic (BPM) fan motors and variable speed compressors.
These
[[Page 50142]]
design options were only considered at the most stringent standard
levels.
b. Significance of Savings
Under section 325(o)(3)(B) of EPCA, the Department is prohibited
from adopting a standard for a product if that standard would not
result in ``significant'' energy savings. The Department forecasted
energy consumption by the use of the LBL-REM. (See Appendix B of the
TSD.) To estimate the energy savings by the year 2030 due to revised
standards, the energy consumption of new room air conditioners under
the base case is compared to the energy consumption of those sold under
the candidate standard levels. For the candidate energy conservation
standards, the Lawrence Berkeley Laboratory-Residential Energy Model
projects that over the period 1999-2030, the following energy savings
would result for all classes of the product:
Level 1--0.36 Quad
Level 2--0.52 Quad
Supplemental Level--0.49 Quad
Level 3--0.69 Quad
Level 4--0.96 Quad
Level 5--0.72 Quad
The preceding values of energy savings use AEO 1995 energy price
forecasts; however, calculating the energy savings for the supplemental
level using AEO 1997 produces an energy savings of 0.64
Quad.5
---------------------------------------------------------------------------
\5\ AEO 1995 projected higher energy prices in the future as
compared to AEO 1997. Consequently, using AEO 1995 projections, a
larger percentage of consumers are projected to purchase higher
efficiency room air conditioners in the absence of standards (in the
base case), as compared to the base case using AEO 1997 projections.
This relative difference results in a larger projected energy
savings between the base case and the standards case using AEO 1997
projections as compared to AEO 1995 projections.
---------------------------------------------------------------------------
While the term ``significant'' is not defined in EPCA, the U.S.
Court of Appeals for the District of Columbia Circuit concluded that
Congress intended the word ``significant'' to mean ``non-trivial.''
Natural Resources Defense Council v. Herrington. 768 F.2d 1355, 1373
(D.C.Cir. 1985). Thus, for this rulemaking, DOE concludes that each
standard level considered results in significant energy savings.
c. Economic Justification
Section 325(o)(2)(B) of EPCA provides seven factors to be
evaluated, to the greatest extent practicable, in determining whether a
conservation standard is economically justified.
1. Economic Impact on Manufacturers and Consumers
The engineering analysis identified improvements in efficiency
along with the associated costs to manufacturers for each efficiency
level for each class of product. For each design option, these
associated costs constitute the increased per-unit cost to
manufacturers to achieve the indicated energy efficiency levels.
Manufacturer, wholesaler, and retailer markups will result in a
consumer purchase price higher than the manufacturer cost.
To assess the likely impacts of standards on manufacturers and to
determine the effects of standards on different-sized firms, the
Department used a computer model that simulates hypothetical firms in
the industry under consideration. This model, the Manufacturer Analysis
Model (MAM), is explained in the TSD. (See TSD, Appendix C.)
For consumers, measures of economic impact are the changes in
purchase price, annual energy expense, and installation costs. The
purchase price, installation cost, and cumulative annual energy
expense, i.e., life-cycle cost, of each standard level are presented in
Chapter 3 of the TSD. Under section 325 of the EPCA, the life-cycle
cost analysis is a separate factor to be considered in determining
economic justification.
The per unit increased costs to manufacturers to meet the
efficiency of levels 1-5 for the representative class are $6.11, $8.37,
$13.17, $47.09, and $242.52, respectively. The increased per unit cost
for the supplemental level falls within the range of $6-$9 for the
representative class. See Tables 1.10-1.18 in the TSD.
The consumer price increases for the representative class are
estimated to be $11, $15, $23, $82, and $434 for standard levels 1-5,
respectively. The consumer price increase for the supplemental level is
estimated to be $13. See Tables 4.1-4.9 and Supplemental Tables 4.1-4.9
in the TSD.
The per-unit reduction in annual costs of operation (i.e., energy
expense) for the representative class are $2, $3, $4, $8, and $13 for
standard levels 1-5, respectively, and $2.5 for the supplemental level.
See Tables 4.1-4.9 and Supplemental Tables 4.1-4.9 in the TSD.
The Lawrence Berkeley Laboratory-Manufacturer Impact Model results
for all classes of room air conditioners show that revised standards
could cause a prototypical manufacturer to have some reductions in
short-run return on equity from the 10.9 percent return in the base
case. Standard levels 1 through 5 are projected to produce short-run
returns on equity of 10.7 percent, 10.6 percent, 10.5 percent, 8.8
percent, and 0.13 percent, respectively. The short-run return on equity
for the supplemental level is projected to be in the range of 10.5-10.7
percent. Revised standards have little or no effect on the prototypical
manufacturer's long-run return on equity. Standard levels 1 through 5
are projected to produce long-run returns on equity of 10.8 percent,
10.8 percent, 10.8 percent, 10.3 percent, and 7.2 percent,
respectively. For the supplemental level the long-run return on equity
would also be approximately 10.8 percent. See Tables 5.1 and 5.3 in the
TSD.
2. Life-cycle Cost and Net Present Value
One measure of the effect of proposed standards on consumers is the
change in life-cycle costs, including recurring operating expenses, the
purchase price, and the installation costs resulting from the new
standards. The change in life-cycle cost is quantified by the
difference in the life-cycle costs between the base case and candidate
standard case for each of the product classes analyzed. The life-cycle
cost is the sum of the purchase price and the cumulative operating
expense, including installation and maintenance expenditures,
discounted over the lifetime of the appliance. The life-cycle cost was
calculated for the range of efficiencies analyzed in the ``Engineering
Analysis'' section of the TSD, for each class, in the year standards
are imposed, using real consumer discount rates of six percent.
For the representative class, life-cycle costs at standard levels
1-3 as well as the supplemental level are less than the baseline unit.
Standard level 1 would reduce life-cycle costs for the average affected
consumer of $6.76 for the representative class of room air conditioner;
standard level 2 would reduce average life-cycle costs by $6.67,
standard level 3 by $8.48, and the supplemental level by $6.59; for
standard levels 4 and 5, the life-cycle costs are projected to increase
$19.4 and $328, respectively, compared to the base case. Of the five
candidate standard levels, a unit meeting standard level 3 would have
the lowest consumer life-cycle cost for the representative class. See
Figures 4.4, Tables 4.1-4.18, and Supplemental Tables 4.1-4.18 in the
TSD.
The Department's baseline method of analysis 6
calculated costs of increasing
[[Page 50143]]
chassis size at the standard level at which the baseline required a
chassis size change. This analysis produced the preceding values for
life-cycle cost. In addition, AHAM provided analysis in which the cost
of increasing chassis size was prorated at each standard level. Using
this method and the data provided by AHAM (AHAM, RAC No. 9 at
Attachment 3A), for classes 1-5, which make up 85 percent of the
shipments, the supplemental standard level has the lowest life-cycle
cost when prorating chassis size cost.
---------------------------------------------------------------------------
\6\ The engineering analysis is conducted on the basis of
selecting a representative ``baseline'' unit for each room air
conditioner product class. The selected ``baseline'' unit is an
actual room air conditioner model that has an EER close to the
existing minimum efficiency standard and a cooling capacity that is
representative of most units in the product class. The physical
characteristics of the ``baseline'' unit (e.g., compressor
efficiency and heat exchanger design) dictate which design options
can be considered to improve its efficiency and at what rate the
manufacturer cost will be increased. The selected ``baseline''
unit's physical make-up is known not to be representative of all
minimum efficiency equipment in its product classes. But because its
EER and capacity are representative, it is assumed that the design
options that are added to improve its efficiency will yield a
manufacturer cost vs. efficiency relationship that is representative
of all ``baseline'' units in the product class, irrespective of
physical design.
---------------------------------------------------------------------------
The Department examined the effect of different discount rates (2,
6, and 15 percent) on the life-cycle cost curves and generally found
little impact. See Figures 4.1-4.9 in the TSD. Life-cycle cost
sensitivity to changes in energy price and equipment price were
analyzed. See Figure 4.10, Table 4.19, and Supplemental Table 4.19 in
the TSD. This analysis shows that the life-cycle cost minimums remain
unchanged at high energy prices. For low State energy prices, any
increase in standard above the baseline, shows a life-cycle cost
increase; however, through standard level 3, this increase is less than
$3 (and approximately $1 for the standards in today's rule).
As previously addressed under Discussion of Comments, the
Department also calculated life cycle costs and paybacks using energy
prices calculated by the Gas Research Institute (GRI). (See the
Supplemental Sensitivity Analysis subsection of the TSD.) The life-
cycle minimums resulting from the GRI projections remain unchanged from
the analysis using the AEO price forecasts. The payback periods
increase slightly, using the GRI forecasts, but remain well within the
expected lifetime of the product.
The Net Present Value analysis, a measure of the net savings to
society, indicates that for all classes of room air conditioners,
standard level 1 would produce an NPV of $0.40 billion to consumers.
The corresponding net present values for standard levels 2-5 are $0.54
billion, $0.59 billion, $-0.26 billion, and $-10.9 billion,
respectively (based on AEO 1995 energy price projections). See Table
3.6 in the TSD. The NPV for the supplemental level is $0.51 billion
using AEO 1995, for basis of comparison. Using AEO 1997 data, the NPV
of the supplemental level is calculated to be $0.45 billion. See the
Supplemental Sensitivity Analysis subsection of the TSD.
A sensitivity analysis was also conducted for energy savings and
Net Present Value (NPV), using GRI forecasts for the following cases:
the GRI fuel price projection, low equipment price, high equipment
price, and high efficiency trend. (See the Supplemental Sensitivity
Analysis subsection of the TSD.) The results of this analysis show that
although the NPV and energy savings change in each scenario, both the
NPV and the energy savings remain positive, indicating an overall
benefit to the consumer and the nation.
3. Energy Savings
EPCA requires DOE to consider the total projected energy savings
that result from revised standards. The Department forecasted energy
consumption through the use of the LBL-REM. (See Appendix B of the TSD
for a detailed discussion of the LBL-REM.) The projected savings using
AEO 1997 is 0.64 Quad for the supplemental level. See Supplemental
Table 3.97 in the TSD. Also, see section IV.c. in today's rule for the
energy savings of the other efficiency levels.
4. Lessening of Utility or Performance of Products
In establishing classes of products and design options, the
Department tried to eliminate consideration of any design option that
would result in degradation of utility or performance. Thus, a separate
class with a different efficiency standard was created for a product
where the record indicated that the product included a utility or
performance-related feature that affected energy efficiency. For
example, the Department added classes for casement-only and casement-
slider room air conditioners. These room air conditioners offer the
unique utility of fitting into slider and casement windows. In this
way, the Department attempted to minimize the impact of amended
standards on the utility and performance of room air conditioners.
5. Impact of Lessening of Competition
The Energy Policy and Conservation Act directs the Department to
consider the impact of any lessening of competition that is likely to
result from the standards, as determined by the Attorney General.
In a letter dated September 16, 1994, the Department of Justice
(DOJ) expressed concern about the effects the standards proposed in the
1994 Proposed Rule might have on industry. DOJ stated that there was
evidence that some of the design options suggested in the 1994 Proposed
Rule were less effective and more costly than the TSD indicated and
that manufacturers may, among other things, need to redesign the
chassis of some classes to comply with the standard. DOJ concluded that
such redesigns could add to unit installation costs, make units larger
and more cumbersome to install, and otherwise depress demand.
Furthermore, DOJ noted evidence that at least one product, the five
thousand Btu/h unit, may cease to be manufactured if the standard
proposed in 1994 were adopted. DOJ was also concerned about the
availability and efficacy of some design options suggested in the TSD
for the Proposed Rule. DOJ concluded that the proposed standard could
have a substantial negative impact on demand and rates of return, and
could cause one or more firms to cease the manufacture and sale of some
of these products, thus lessening competition. (DOJ, No. 840 at 5.) The
September 16, 1994, letter is printed at the end of today's rule.
The Department of Justice comments were based on the standards
proposed in the 1994 Proposed Rule. The revised analysis contained in
the 1996 Draft Report and the supplemental analysis, and commented upon
by the public, addressed many of the concerns raised by DOJ. The
standards promulgated in today's final rule have been adjusted from the
proposed standards in order to mitigate the types of concerns raised by
DOJ. For example, the Final Rule sets the same standard level for class
1 as for class 2, addressing the concern that class 1 units would be
eliminated from the marketplace as a result of the revised standards.
The Department's revised analysis addressed concerns about the
installation costs and chassis size increases, and the standards in the
Final Rule reflect this revised analysis. The manufacturing impact
analysis shows no significant shifts in manufacturer rates of return
under the supplemental standards level. Thus, the Department of Energy
concludes that the concerns raised by the DOJ have been addressed, and
DOE does not expect competition to be negatively impacted by this final
rule.
6. Need of the Nation to Save Energy
Enhanced energy efficiency improves the Nation's energy security,
strengthens the economy, and reduces the environmental impacts of
energy production. In 1997, 3.4 percent of residential sector
electricity consumption (corresponding to 0.38
[[Page 50144]]
quad source energy) was accounted for on a national basis by room air
conditioners. The Department estimates that over 30 years the revised
standards will save approximately 0.64 quads of primary energy.
7. Other Factors
Decreasing future electricity demand by means of standards will
decrease air pollution. Standards will result in a decrease in nitrogen
dioxide (NOx) emissions. For standard levels 1-5, over the
years 2000 to 2030, the total estimated NOx emission
reduction would be 55,000 tons; 80,000 tons; 104,000 tons; 141,000
tons; and 60,000 tons, respectively. For the supplemental level the
reduction is estimated at 74,000 tons using the AEO 1995 energy prices
and 95,000 tons using AEO 1997 energy prices. See Tables 7.1-7.5 and
Supplemental Tables 7.6 and 7.7 in the TSD.
d. Payback Period
Another consequence of the standards will be the reduction of
carbon dioxide (CO2) emissions. For standard level 1, over
the years 2000 to 2030, the total estimated CO2 emission
reduction would be 30 million tons. For standard levels 2-5, the
reductions would be 44 million tons; 57 million tons; 79 million tons;
and 55 million tons, respectively. For the supplemental level the
reduction is estimated at 41 million tons using AEO 1995 energy prices
and 54 million tons using AEO 1997. See Tables 7.1--7.5 and
Supplemental Tables 7.6 and 7.7 in the TSD.
Energy associated with these standards would also reduce the costs
associated with SO2 compliance.7 See Tables 7.1--
7.5 and Supplemental Tables 7.6 and 7.7 in the TSD.
___________
7 Decreases in SO2 emissions will not occur
because the Clean Air Act places a ceiling on SO2
emissions that will be met under any regulatory regime. In the case
of SO2 therefore, the emissions reductions should be
interpreted as reduced costs to electricity generators for
controlling SO2. For all classes of room air
conditioners, over the years 2000 to 2030, the estimated need to
control SO2 is estimated to be reduced by 59,000 tons;
86,000 tons; 111,000 tons; 149,000 tons; and 43,000 tons, for
levels 1-5, respectively. For the supplemental level the reduction
is estimated at 79,000 tons. However, using AEO 1997, the reduction
is estimated at 100,000 tons. This reduced need to control
emissions will be reflected in lower costs of pollution control at
utilities or lower price allowances.
If the increase in initial price of an appliance due to a
conservation standard would repay itself to the consumer in energy
savings in less than three years, then it is presumed that such
standard is economically justified.8 EPCA, Section
325(o)(2)(B)(iii), 42 U.S.C. 6295(o)(2)(B)(iii). This presumption of
economic justification can be rebutted upon a proper showing. Failure
to qualify for this presumption shall not be taken into consideration
in determining whether a standard is economically justified. Id.
___________
8 For this calculation, the Department calculated cost-
of-operation based on the DOE test procedures. Therefore, the
consumer is assumed to be an ``average'' consumer as defined by the
DOE test procedures. Consumers who use the products less than the
test procedure assumes will experience a longer payback while those
who use them more than the test procedure assumes will have a
shorter payback.
Table 4.2 presents the payback periods 9 for the
efficiency levels analyzed for the representative class of the product.
For this representative class, none of the standard levels satisfy the
rebuttable presumption test. Standard level 4 meets the rebuttable
presumption criteria for classes 4 and 12. Standard level 3 meets the
rebuttable presumption criteria for classes 1, 4 and 12. The standards
set forth in today's rule meet the rebuttable presumption criteria for
classes 1, 2, 4, 8-10, and 12. Payback periods for all classes of room
air conditioners may be found in Tables 4.10--4.18 and Supplemental
Tables 4.10--4.18 in the TSD.
___________
9 These payback periods are weighted averages. They
compare the portion of the projected distributions of designs in
the base case that are less efficient than the standard level to
the design at the standard level. Designs with energy consumption
at or below the standard level are not affected by the standard and
are excluded from the calculation of impacts.
Table 4-2.--Payback Periods of Design Options (Years) for the
Representative Class of Room Air Conditioners
------------------------------------------------------------------------
Payback
Standard level period
------------------------------------------------------------------------
1............................................................ 3.8
2............................................................ 3.9
Supplemental................................................. 3.8
3............................................................ 4.2
4............................................................ 8.3
5............................................................ 27.2
------------------------------------------------------------------------
e. Conclusion
1. Additional Product Classes. The Department has added four new
product classes. First, the Department is adding two classes for
casement-type units because of the unique utility they offer the
consumer. The size limitations imposed on casement-type units are more
significant than the limitations of typical units designed for double-
hung windows, and the performance-related feature (fitting into
casement windows) justifies a lower efficiency standard. The two
additional product classes for casement units are casement-only units
and casement-slider units. In today's rule, definitions for these terms
are being added to Section 430.2 Subpart A of 42 U.S.C. 6291-6309. For
today's rule, the Department has selected the efficiency standard
recommended by AHAM, ACEEE, and NRDC for casement-slider units (9.5
EER) (AHAM, RAC No. 6 at 2 and ACEEE/NRDC, RAC No. 5 at 5) and the
standard recommended by AHAM for casement-only units (8.7 EER). (AHAM,
RAC No. 6 at 2.)
Second, the Department is splitting each of two classes for reverse
cycle units into two classes. Splitting of these two classes
accommodates the concerns expressed in public comments. The class of
units with a reverse cycle and louvered sides is split between
capacities of less than 20,000 Btu/h (class 11) and 20,000 Btu/h or
more (new class 13). The class of units with reverse cycle and without
louvered sides is split between capacities of less than 14,000 Btu/h
(class 12) and capacities of 14,000 Btu/h or more (new class 14).
2. Standards. Section 325(o)(2)(A) of the Act specifies that the
Department must establish standards that ``achieve the maximum
improvement in energy efficiency which the Secretary determines is
technologically feasible and economically justified.'' EPCA, section
325(o)(2)(A). Technologically feasible design options are
``technologies which can be incorporated in commercial products or in
working prototypes.'' 10 CFR part 430, Appendix A to Subpart C,
4(a)(4)(I).
[[Page 50145]]
A standard level is economically justified if the benefits exceed the
burdens. EPCA, section 325(o)(2)(B)(I).
A maximum technologically feasible (max tech) design option was
identified for each class of room air conditioners. The max tech levels
were derived by adding energy-conserving engineering design options to
the baseline units for each of the respective classes in order of
decreasing consumer payback. The max tech level includes higher
efficiency fan motors, which were added as one of the first design
options, and variable speed compressors, which were added as one of the
last design options because of their slower payback. A complete
discussion of each max tech level, and the design options included in
each, is found in the Engineering Analysis in the TSD, Chapter 3.
Table 5-1 presents the max tech performance levels for all classes
of the subject product:
Table 5-1.--Maximum Technologically Feasible Standard Levels for Room
Air Conditioners Expressed in Energy Efficiency Ratio
------------------------------------------------------------------------
Energy
Product class efficiency
ratio
------------------------------------------------------------------------
Without reverse cycle, with louvered sides, and less
than 6,000 Btu/h....................................... 11.7
Without reverse cycle, with louvered sides, and 6,000 to
7,999 Btu/h............................................ 11.7
Without reverse cycle, with louvered sides, and 8,000 to
13,999 Btu/h........................................... 12.4
Without reverse cycle, with louvered sides, and 14,000
to 19,999 Btu/h........................................ 12.8
Without reverse cycle, with louvered sides, and 20,000
Btu/h or more.......................................... 11.1
Without reverse cycle, without louvered sides, and less
than 6,000 Btu/h....................................... 11.5
Without reverse cycle, without louvered sides, and 6,000
to 7,999 Btu/h......................................... 11.5
Without reverse cycle, without louvered sides, and 8,000
to 13,999 Btu/h........................................ 11.1
Without reverse cycle, without louvered sides, and
14,000 to 19,000 Btu/h................................. 11.1
Without reverse cycle, without louvered sides, and
20,000 Btu/h or more................................... 11.1
With reverse cycle and with louvered sides.............. 11.2
With reverse cycle and without louvered sides........... 10.9
------------------------------------------------------------------------
Accordingly, the Department first considered the max tech level of
efficiency, i.e., standard level 5. Of the standard levels analyzed,
level 5 would save the most energy (4.1 quads between 1999 and 2030.)
However, because many consumers would not purchase room air
conditioners due to the high first cost associated with this standard
level, purchases of central air conditioners and heat pumps will
increase, resulting in a reduction of savings for room air
conditioners. After accounting for this offset, the net savings is 0.72
quad. Also, in order to meet this standard, the Department assumes that
all room air conditioners would incorporate larger and improved heat
transfer devices in addition to high efficiency, variable-speed fan
motors and compressors. However, at this standard level, the payback
period of 27 years for the representative class, and up to 107 years
for other classes, exceeds the 12.5-year life of the product. The life-
cycle cost increases are $328 for the representative class and up to
$911 for other classes. This level also drives the short-run
manufacturer return on equity from 10.9 percent to 0.13 percent. The
Department therefore concludes that the burdens of standard level 5 for
room air conditioners outweigh the benefits and that this standard
level is not economically justified, and thus the Department rejects
the standard level.
The next most stringent standard level is standard level 4. This
standard level is projected to save 1.34 quads of energy. However, many
consumers would not purchase room air conditioners due to the high
first cost associated with this standard level, resulting in increased
purchases of central air conditioners and heat pumps and a reduction of
savings for room air conditioners. After accounting for this offset,
the savings are 0.96 quad. For the representative class this level
produces a life-cycle cost increase of $19 compared to the base case.
Classes 4 and 12 meet the rebuttable presumption criteria. However, the
payback period for the representative class is 8.3 years, with payback
periods of up to 10.6 years for the other classes (80 percent of the
average product lifetime of 12.5 years). This level also reduces
manufacturer short-run return on equity from 10.9 percent to 8.8
percent, a reduction of nearly 20 percent. The Department therefore,
concludes that the burdens of standard level 4 for room air
conditioners outweigh the benefits and that this standard level is not
economically justified, and thus the Department rejects the standard
level.
The next most stringent standard level is standard level 3.
Standard level 3 is projected to save 0.79 quad of energy. After
accounting for the increased use of central air conditioners and heat
pumps, the savings become 0.69 quad. For the representative class, the
analysis shows this level produces a life-cycle cost decrease of $8.5
compared to the base case and a payback of 4.2 years. This standard
level meets the rebuttable presumption criteria for classes 1, 4 and
12. The manufacturer impact analysis for this level shows a
manufacturer short-run return on equity reduction from 10.9 percent to
10.5 percent. Although the feedback generated from the LBL-MAM
indicated acceptable manufacturer impact, the comments received from
manufacturers on the 1996 Draft Report indicated burdens to
manufacturers which were not identified by the model. The Department
believes these impacts must be considered. A class-specific approach
was taken to consider these impacts.
For classes 1 through 5, the manufacturers disagreed with the
Department's baseline method of analysis wherein, for each class, a
specific model was simulated for improvement up to and including a
chassis size change, when necessary for that model. AHAM commented that
this method does not adequately account for the cost of increasing
chassis size. AHAM believes the cost of increasing chassis size should
be prorated for each efficiency level analyzed, because at each
efficiency improvement, some models within each class would need to
undergo a chassis size change, even though the specific model being
analyzed did not necessarily need a chassis size change. AHAM provided
the Department with a graph depicting the percent of production
required to change chassis size at each standard level for each of the
first five classes. (AHAM, No, 1 at 14.) AHAM calculates that
efficiency level 3 would require 39 percent of production to move to a
larger chassis size. However, because the baseline method of analysis
does not prorate the cost at each level, the impact of 39 percent of
production requiring a
[[Page 50146]]
larger chassis is not considered by the model. (AHAM, No. 4 at 3.)
For classes 6 through 12, AHAM argues that because the engineering
simulation model was designed using units with louvered sides and
without a reversing valve, the simulation does not provide a good
simulation for units without louvers or units with a reversing valve.
AHAM commented that this inaccuracy understates the extreme differences
between the air flow patterns on the condenser side of units with and
without louvers, as well as the refrigeration circuit restrictions
caused by the reversing valve and concessions made to balance both
cooling and heating in one unit. As addressed in section III,
``Discussion of Comments,'' manufacturers emphasize that increasing the
standards could eliminate higher capacity models from the market due to
the impracticality of increasing the chassis size for these units.
(AHAM, RAC No. 4 at 3-4.)
For these reasons, the Department concludes the burdens of standard
level 3 outweigh the benefits and that the standard level is not
economically justified, and thus, the Department rejects this standard
level.
Based on the comments received regarding the 1996 Draft Report, the
Department next considered a supplemental efficiency level. The
comments the Department received in response to its 1996 Draft Report
contained recommended standards from AHAM and from ACEEE and NRDC.
These recommended standards fell in the range between efficiency levels
1, 2 and 3, depending on the product class.
For classes with louvered sides and without a reversing valve,
ACEEE and NRDC recommended 10.0 EER for the first four classes, while
AHAM recommended 9.5 EER for the first four classes. For class 5, all
three organizations supported an 8.5 EER. AHAM calculated the life
cycle costs when prorating the cost of increasing the chassis size for
each of the efficiency levels. The life cycle cost minimums fell in the
9.7-9.8 range for the first four classes and 8.5 EER for class 5. The
Department concluded that these life-cycle cost minimums should be
considered in the supplemental efficiency level.
For classes without louvered sides and without a reverse cycle, the
Department also received comments and recommendations for efficiency
standards. For most of these classes, both AHAM and the efficiency
advocates agreed upon standard levels. Consequently, these levels were
selected for the Department's supplemental efficiency level. For class
8, upon which AHAM and the efficiency advocates had differing
recommendations, the Department concluded, after analyzing the AHAM
Directory, that there is evidence that increasing standards for units
without louvers and without reverse cycle may result in eliminating
higher capacity units from the market. Thus, the Department chose 8.5
EER for this class.
For classes with a reverse cycle, the Department again took the
comments and recommendations it received into consideration in adding
and establishing efficiency levels to examine as part of the
supplemental efficiency level. In response to public comment, the
Department split the two classes for reverse cycle units in order to
address the concerns of AHAM, ACEEE, and NRDC.
After carefully considering the analysis, the Department is
amending the existing statutory standard for room air conditioners with
the supplemental standard level for room air conditioners. The
Department concludes that the supplemental standard level for room air
conditioners saves a significant amount of energy and is designed to be
technologically feasible and economically justified.
This level of efficiency will result in significant energy savings.
During the period 2000--2030, these savings are calculated to be 0.64
quad 10 of primary energy. In addition, the standard is
expected to have a positive effect on the environment by reducing the
emissions of NOX and CO2 by 95,000 tons and 54
million tons, respectively.
---------------------------------------------------------------------------
\10\ This value was calculated using AEO 1997 and factoring in
the offset from the increased use of central air conditioners and
heat pumps.
---------------------------------------------------------------------------
The technologies that are necessary to meet this standard are
presently available. The Department finds this level to be economically
justified. The consumer payback of this standard level is 3.8 years for
the representative class and no more than 5 years for any class. This
standard is at or close to the lowest life-cycle cost for all classes
and is expected to result in a reduction in life-cycle cost of
approximately $6.6 for the representative class and up to $23 for the
other classes. Additionally, the standard is expected to have a small
impact on the prototypical manufacturer's short run return on equity
and no impact on their long run return on equity, as calculated by the
Department. Furthermore, the efficiency levels are reasonably close to
the standards recommended by AHAM, which presumably reflect acceptable
manufacturer impacts. Although stakeholder consensus was not reached,
the public comments converged following the reanalysis, meetings with
stakeholders, and the notice reopening the comment period. The
efficiency levels selected for today's rule fall within the small range
of difference between the stakeholder recommendations. These efficiency
levels address the concerns raised by the Department of Justice with
regard to the standards in the 1994 Proposed Rule. In addition, since
this standard does not involve substantial redesign or retooling, the
Department expects that it will not have negative impacts on smaller
competitors. Moreover, for classes 1, 2, 4, 8-10, and 12 there is a
payback period of less than 3 years and thus a presumption of economic
justification. For these reasons, DOE concludes that these standard
levels are economically justified and thus promulgates them as
revisions to the existing standards.
V. Procedural Issues and Regulatory Review
a. Review Under the National Environmental Policy Act
In issuing the proposed rule, the Department prepared an
Environmental Assessment (EA) (DOE/EA-0819) that was published within
the Technical Support Document for the Proposed Rule. (DOE/EE-0009,
November 1993.) The environmental effects associated with various
standard levels were not found to be significant, and a Finding of No
Significant Impact (FONSI) was published. 59 FR 15868 (April 5, 1994).
In conducting the analysis for the final rule, the Department
evaluated several design options suggested in comments on the proposed
rule. As a result, the energy savings estimates and resulting
environmental effects in the final rule differ somewhat from those
presented in the proposed rule. For example, by the year 2030, the
reductions in nitrogen dioxide (NO2) and carbon dioxide
(CO2) emissions from the standard on room air conditioners
are expected to be 95,000 tons and 54,000,000 tons respectively. The
environmental effects expected from the final rule fall within ranges
of environmental impacts that DOE found in the FONSI not to be
significant.
b. Review Under Executive Order 12866, ``Regulatory Planning and
Review''
Today's regulatory action has been determined to be an
``economically significant regulatory action'' under Executive Order
12866, ``Regulatory Planning and Review.'' 58 FR 51735 (October 4,
1993.) Accordingly, today's action was subject to review under the
[[Page 50147]]
Executive Order by the Office of Information and Regulatory Affairs
(OIRA).
Pursuant to E.O. 12866, DOE prepared a draft regulatory analysis.
Six major alternatives were identified by DOE as representing feasible
policy alternatives for achieving consumer product energy efficiency.
Each alternative was evaluated in terms of its ability to achieve
significant energy savings at reasonable costs and has been compared to
the effectiveness of the rule. 59 FR 10464, 10525-6 (March 4, 1994.) No
new data has been received concerning this review, and no substantive
changes have been made to this action since the review of the draft by
OIRA. The non-regulatory alternatives analyzed in the draft Regulatory
Analysis were evaluated for the eight products in aggregate. None of
the alternatives analyzed saved as much energy as the standards in the
Proposed Rule. The Department believes that the non-regulatory
alternatives for each product would have energy savings proportional to
the savings for all eight products. Therefore, the Department concludes
that non-regulatory alternatives are not likely to meet or exceed the
energy savings expected from the standards set forth in today's rule.
c. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., requires an
assessment of the impact of regulations on small businesses unless an
agency certifies that the rule will not have a significant economic
impact on a substantial number of small businesses and other small
entities. To be considered a small business, a manufacturer of room
air-conditioners and its affiliates may employ a maximum of 750
employees. (Small Business Administration size standards, 61 FR 3280.)
In the notice of proposed rulemaking, DOE certified pursuant to section
605(b) of the Regulatory Flexibility Act that the proposed action would
not have a ``significant economic impact on a substantial number of
small entities,'' and, thus, a regulatory flexibility analysis was not
prepared.
The Department has not identified any firms that both manufacture
room air conditioners covered by EPCA, and have, together with their
affiliates, 750 or fewer employees. The Department estimates there are
approximately nine domestic firms and six foreign firms that
manufacture room air conditioners covered under EPCA, with three
domestic companies holding approximately 70 percent of U.S. room air
conditioner sales. Many room air conditioner manufacturers are
affiliated with larger U.S. or foreign firms which manufacture full
product lines of home appliances.
DOE's notice of proposed rulemaking elicited no public comments on
the economic impact of the proposed rule on small businesses. One
commenter did criticize the Manufacturer Impact Model (MIM) and claimed
that the model is inadequate for estimating the impact of standards on
small firms. The comment was not supported by any data to cause the
Department to conclude that this final rule would have a significant
impact on small businesses subject to the regulation.
Today's final rule contains less stringent room air conditioner
energy efficiency standards than the proposed rule. The final rule
establishes standards in a range from 8.0 to 9.8 EER, and it would add
four new product classes to accommodate room air conditioners with and
without side louvers and reverse cycle as well as casement room air
conditioners. These changes in the final rule will significantly reduce
any potential economic impact of the rule on small businesses.
Therefore, DOE certifies that this final rule will not have a
significant economic impact on a substantial number of small entities.
d. Review Under the Paperwork Reduction Act
No new information or record keeping requirements are imposed by
this rulemaking. Accordingly, no Office of Management and Budget
clearance is required under the Paperwork Reduction Act. 44 U.S.C. 3501
et seq.
e. Review Under Executive Order 12988, ``Civil Justice Reform''
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on
Executive agencies the general duty to adhere to the following
requirements: (1) Eliminate drafting errors and ambiguity; (2) write
regulations to minimize litigation; and (3) provide a clear legal
standard for affected conduct rather than a general standard and
promote simplification and burden reduction. With regard to the review
required by section 3(a), section 3(b) of Executive Order 12988
specifically requires that Executive agencies make every reasonable
effort to ensure that the regulation: (1) Clearly specifies the
preemptive effect, if any; (2) clearly specifies any effect on existing
Federal law or regulation; (3) provides a clear legal standard for
affected conduct while promoting simplification and burden reduction;
(4) specifies the retroactive effect, if any; (5) adequately defines
key terms; and (6) addresses other important issues affecting clarity
and general draftsmanship under any guidelines issued by the Attorney
General. Section 3(c) of Executive Order 12988 requires Executive
agencies to review regulations in light of applicable standards in
section 3(a) and section 3(b) to determine whether they are met or it
is unreasonable to meet one or more of them. DOE reviewed today's final
rule under the standards of section 3 of the Executive Order and
determined that, to the extent permitted by law, the final regulations
meet the relevant standards.
f. ``Takings'' Assessment Review
It has been determined pursuant to Executive Order 12630,
``Governmental Actions and Interference with Constitutionally Protected
Property Rights,'' 52 FR 8859 (March 18, 1988) that this regulation
would not result in any takings which might require compensation under
the Fifth Amendment to the United States Constitution.
g. Federalism Review
Executive Order 12612, ``Federalism,'' 52 FR 41685 (October 30,
1987) requires that regulations, rules, legislation, and any other
policy actions be reviewed for any substantial direct effect on States,
on the relationship between the Federal Government and the States, or
on the distribution of power and responsibilities among various levels
of government. If there are substantial direct effects, then Executive
Order 12612 requires preparation of a federalism assessment to be used
in all decisions involved in promulgating and implementing a regulation
or a rule.
The Department finds that this final rule will not have a
substantial direct effect on State governments. State regulations that
may have existed on the products that are the subject of today's rule
were preempted by the Federal standards established in EPCA. States can
petition the Department for exemption from such preemption based on
criteria set forth in EPCA. None has done so. Accordingly, the
Department finds that the preparation of a federalism assessment for
this rulemaking is not warranted.
h. Review Under the Unfunded Mandates Reform Act
With respect to a proposed regulatory action that may result in the
expenditure by the private sector of $100 million or more (adjusted
annually for inflation), section 202 of the
[[Page 50148]]
Unfunded Mandates Reform Act of 1995 (UMRA) requires a Federal agency
to publish estimates of the resulting costs, benefits and other effects
on the national economy. 2 U.S.C. 1532(a), (b). Section 202 of UMRA
authorizes an agency to respond to the content requirements of UMRA in
any other statement or analysis that accompanies the proposed rule. 2
U.S.C. 1532(c).
The content requirements of section 202(b) of UMRA relevant to a
private sector mandate substantially overlap the economic analysis
requirements that apply under section 325(o) of EPCA and Executive
Order 12866. The Supplementary Information section of the notice of
proposed rulemaking and ``Regulatory Impact Analysis'' section of the
TSD for the 1994 Proposed Rule responded to those requirements.
Under section 205 of UMRA, the Department is obligated to identify
and consider a reasonable number of regulatory alternatives before
promulgating a rule for which a written statement under section 202 is
required. DOE is required to select from those alternatives the most
cost-effective and least burdensome alternative that achieves the
objectives of the rule unless DOE publishes an explanation for doing
otherwise or the selection of such an alternative is inconsistent with
law. As required by section 325(o) of the Energy Policy and
Conservation Act (42 U.S.C. 6295(o)), this final rule establishes
energy conservation standards for room air conditioners that are
designed to achieve the maximum improvement in energy efficiency which
DOE has determined to be both technologically feasible and economically
justified. A full discussion of the alternatives considered by DOE is
presented in the ``Regulatory Impact Analysis'' section of the TSD for
the 1994 Proposed Rule.
i. Review Under the Small Business Regulatory Enforcement Fairness Act
of 1996
Consistent with Subtitle E of the Small Business Regulatory
Enforcement Fairness Act of 1996, 5 U.S.C. 801-808, DOE will submit to
Congress a report regarding the issuance of today's final rule before
the effective date set forth at the outset of this notice.
List of Subjects in 10 CFR Part 430
Administrative practice and procedure, Energy conservation,
Household appliances.
Issued in Washington, D.C., on September 12, 1997.
Joseph J. Romm,
Acting Assistant Secretary, Energy Efficiency and Renewable Energy.
For the reasons set forth in the preamble Part 430 of Chapter II of
Title 10, Code of Federal Regulations, is amended as set forth below.
Part 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS
1. The authority citation for Part 430 continues to read as
follows:
Authority: 42 U.S.C. 6291-6309.
2. Section 430.2 of Subpart A is amended by adding new definitions
for ``Casement-only room air conditioner'' and ``Casement-slider room
air conditioner'' in alphabetical order, to read as follows:
Subpart A--General Provisions
Sec. 430.2 Definitions.
* * * * *
Casement-only means a room air conditioner designed for mounting in
a casement window with an encased assembly with a width of 14.8 inches
or less and a height of 11.2 inches or less.
Casement-slider means a room air conditioner with an encased
assembly designed for mounting in a sliding or casement window with a
width of 15.5 inches or less.
* * * * *
3. Section 430.32 is amended by revising paragraph (b) to read as
follows:
Sec. 430.32 Energy conservation standards and effective dates.
* * * * *
(b) Room air conditioners.
------------------------------------------------------------------------
Energy efficiency ratio,
effective as of
Product class -------------------------------
Jan. 1, 1990 Oct. 1, 2000
------------------------------------------------------------------------
1. Without reverse cycle, with louvered
sides, and less than 6,000 Btu/h....... 8.0 9.7
2. Without reverse cycle, with louvered
sides, and 6,000 to 7,999 Btu/h........ 8.5 9.7
3. Without reverse cycle, with louvered
sides, and 8,000 to 13,999 Btu/h....... 9.0 9.8
4. Without reverse cycle, with louvered
sides, and 14,000 to 19,999 Btu/h...... 8.8 9.7
5. Without reverse cycle, with louvered
sides, and 20,000 Btu/h or more........ 8.2 8.5
6. Without reverse cycle, without
louvered sides, and less than 6,000 Btu/
h...................................... 8.0 9.0
7. Without reverse cycle, without
louvered sides, and 6,000 to 7,999 Btu/
h...................................... 8.5 9.0
8. Without reverse cycle, without
louvered sides, and 8,000 to 13,999 Btu/
h...................................... 8.5 8.5
9. Without reverse cycle, without
louvered sides, and 14,000 to 19,999
Btu/h.................................. 8.5 8.5
10. Without reverse cycle, without
louvered sides, and 20,000 Btu/h or
more................................... 8.2 8.5
11. With reverse cycle, with louvered
sides, and less than 20,000 Btu/h...... 8.5 9.0
12. With reverse cycle, without louvered
sides, and less than 14,000 Btu/h...... 8.0 8.5
13. With reverse cycle, with louvered
sides, and 20,000 Btu/h or more........ 8.5 8.5
14. With reverse cycle, without louvered
sides, and 14,000 Btu/h or more........ 8.0 8.0
15. Casement-Only....................... * 8.7
16. Casement-Slider..................... * 9.5
------------------------------------------------------------------------
* Casement-only and casement-slider room air conditioners are not
separate product classes under standards effective January 1, 1990.
These units are subject to the applicable standards in classes 1
through 14 based on unit capacity and the presence or absence of
louvered sides and a reverse cycle.
* * * * *
Note: The following letter will not appear in the Code of
Federal Regulations.
September 16, 1994
Honorable Christine A. Ervin
Assistant Secretary for Energy Efficiency and Renewable Energy
United States Department of Energy, Forrestal Building, 1000
Independence Ave., S. W., Washington, D.C. 20585
Dear Ms. Ervin:
By letter dated March 14, 1994, the Department of Energy
(``DOE'') transmitted to the Attorney General a Notice of Proposed
Rulemaking (59 FR 10464) addressing energy
[[Page 50149]]
standards for eight classes of household appliances. Those classes
are: room air conditioners, water heaters, direct heating equipment,
mobile home furnaces, kitchen ranges and ovens, pool heaters,
fluorescent lamp ballasts and television sets. Section 325 of the
Energy Policy and Conservation Act, as amended in 1992 (42 U.S.C.
6295) (``the Act''), requires the Attorney General to determine the
impact, if any, of any lessening of competition likely to result
from the proposed standards. This letter contains the competitive
impact determination of the Department of Justice (``Department'').
Summary
The evidence available to the Department does not indicate that
any significant lessening of competition is likely to result from
the imposition of the proposed standards for mobile home furnaces
and pool heaters contained in the Notice. For television sets,
fluorescent lamp ballasts and professional-style or high-end kitchen
ranges it is the Department's judgement based on the available
evidence that significant anticompetitive effects are likely to
occur. For electric water heaters the evidence indicates that a
significant anticompetitive effect could take place if sufficient
time is not permitted firms to develop, produce and market products
complying with the new standard. For microwave ovens, oil-fired
water heaters, room air conditioners, and direct heating equipment
the evidence indicates that anticompetitive effects could result;
the Department is unable on the basis of the available evidence to
determine whether such effects are likely. Finally, the evidence
indicates that the cumulative effects of these and other regulatory
standards could be to lessen competition in certain markets for
household appliances.
In preparing these comments the Department has considered the
Notice, the Technical Support Document (TSD) prepared by Lawrence
Berkeley Laboratory, written comments and oral comments collected by
the department in the time allowed and without the benefit of
compulsory process.
Discussion
Adoption of standards requiring greater energy efficiency in
household appliances could affect competition in a number of ways.
First, by raising the cost of appliances and reducing design and
feature choices, standards may lower demand. If standards impose
costs on manufacturers that can not be passed to consumers they can
lower manufacturers' rates of return. Either one or both of these
effects could cause manufacturers to exit the market with the effect
of lessening competition and raising prices. Second, imposition of
standards may lessen or discourage competition in the design and
development of new product features or technologies; such
competition benefits consumers and the economy.
The record in this proceeding raises many factual issues
relating, among other things, to the technical feasibility of
certain standards, their economic impact on manufacturers and
consumers and consumer reaction to the changes in products that they
might require. In numerous instances, industry representatives and
technical consultants retained by them have challenged assumptions
and conclusions in the Notice and TSD. The Department is not in a
position to resolve many of these contested issues on the basis of
the available record. Accordingly, in some instances, the Department
is unable to reach a conclusion about the impact of the proposed
standards on competition.
Fluorescent Lamp Ballasts
One technical issue that has been raised is whether the proposed
standards for fluorescent lamp ballasts are attainable with
currently available technology. Numerous ballast manufacturers
assert that in many instances they are not. The Department concludes
that the doubts raised about the technical feasibility of the
standards are serious and affect a substantial number of ballast
classes. Thus, if the proposed standards were adopted some or all
manufacturers would likely have to cease the production of many
products and competition in the sale of those products would cease
or diminish.
Television Sets and Related Technologies
1. The weight of available evidence is that adoption of the
proposed standard for television sets could force all or many
manufacturers to revise their products to lessen the number and
quality of their features. Many in the industry contend that the
only way to produce products that will comply with the standard
would be to reduce or eliminate features that consume electricity
such as brighter pictures, remote control, picture-in-picture,
improved sound and in-set program guides and other features
presently being developed. Development and marketing of product
improvements and new features has been an important factor driving
competition in the market for television sets. Reducing or retarding
the development of such features could substantially reduce demand
for sets, retard development and refinement of technology, and
reduce utility of the product.
Manufacturers might attempt to circumvent the proposed standard
by letting features ``migrate''--incorporating them in units to be
sold separately or packaged with television sets. It is claimed that
disaggregating features in this manner will decrease overall
television energy efficiency. There is evidence that it could also
lessen competition because the development and marketing of features
in such attached units could be costly and cumbersome, among other
things encountering receivers that receive cable signals.
There is evidence that the proposed standard for television sets
could affect competition in other markets. Representatives of the
television industry assert that as the ``Information Highway''
develops television manufacturers intend to expand the capabilities
of their products to include new features to enable them to serve as
in-home devices for data transmission and communication. They argue
that the TV receiver, already located in virtually every American
home, could be a uniquely efficient vehicle for the introduction of
new data-processing and communication devices. The Department does
not make final judgement on this contention but does conclude that,
given the apparent difficulties in the marketing of new features as
part of attached units, the standard is likely to retard the
development of technology and inhibit the ability of television
manufacturers to compete with computer manufacturers and others in
the development of new technologies and features for the Information
Highway.
Professional-Style and Standard Ranges
The Notice proposes a single set of standards for gas ovens and
cooking tops in household ranges. There is substantial evidence that
one category of home range cannot be manufactured to meet these
proposed standards without losing so much of its distinct
characteristics that it is no longer marketable. Professional-style
or high-end ranges are products designed to provide some of the
performance characteristics of professional or restaurant ranges for
home kitchens. Some of these characteristics which differentiate
them from standard kitchen ranges, such as high performance burners
and ovens, involve considerably more energy consumption than do
standard ranges; the special uses and appeal of these products, and
their premium in price, depends in good measure on these features.
Representatives of the range industry assert that high-end ranges
cannot be modified to comply with the proposed standards without
giving up so much of the special features of the product that they
are no longer marketable. The Department concludes that it is likely
that competition in the manufacture and sale of these products will
be eliminated if the proposed standards are adopted.
While not as strong as the evidence relating to professional
style ranges there is evidence challenging the conclusions in the
TSD that the proposed standards for standard gas and electric range
ovens and cooking tops will not require significant retooling or
redesign and will have not more than minimal impact on
manufacturers' long run rates of return on equity. The Association
of Home Appliance Manufacturers contends that the standard could
have a destructive impact on the range industry. It and various
range manufacturers claim that design options suggested in the TSD
are not effective and that compliance would require substantial
investment in redesign and retooling. The Association also insists
that suppliers of equipment and technology necessary to comply may
not be able to respond simultaneously and evenly to range
manufacturers, a problem that could impose a competitive handicap on
some range manufacturers.
A range manufacturer has commented that compliance with the
standard could seriously weaken it and its ability to compete. There
is also evidence that the cumulative costs of compliance with this
standard and with other and future appliance standards could induce
or force ``full line'' appliance manufacturers to exit one or more
of the markets that they serve. The range market is concentrated
and, while there is conflicting evidence, the Department concludes
that there is a possibility that this proposed standard could force
one or more
[[Page 50150]]
firms out of the manufacture of standard ranges thus lessening
competition.
Microwave Ovens
The Notice and the TSD conclude that the proposed standard for
microwave ovens will not involve any substantial redesign or
retooling by manufacturers and will have little impact on their long
run returns on equity. Representatives of the industry strongly
challenge these conclusions. For example, a representative of MCD
Corporation has testified that compliance with the standard would
require that her company, a manufacturer of microwaves, make large
investments in retooling, and would threaten its viability. The
Association of Home Appliance Manufacturers contends that the
standard will in all likelihood eliminate all U.S. Production of
microwaves and concentrate U.S. sales in the hands of one or two
companies. The Department is not in a position to resolve all of the
contested technical and financial issues but concludes that this
proposed standard could force some significant producers from this
concentrated market and substantially lessen competition in it.
Room Air Conditioners
The Notice and TSD conclude that this proposed standard will not
involve substantial redesign or retooling and, while it may produce
some reductions in the short run, will have little or no effect on
manufacturers' long run returns on equity. This conclusion has been
challenged by firms in the industry. There is evidence that some of
the design options suggested in the Notice are less effective and
more costly than the TSD assumes and that manufacturers may, among
other things, need to redesign the chassis of some classes to comply
with the standard. Such redesigns could add to unit installation
costs, make units larger and more cumbersome to install, and
otherwise depress demand. There is evidence that at least one
product, the five thousand BTU unit, may cease to be manufactured if
the standard is adopted. There are also unresolved issues about such
matters as the availability and efficacy of some design options
suggested in the TSD. The Department is not able to resolve these
issues but concludes that the standard could have a substantial
negative impact on demand and rates of return, and cause one or more
firms to cease the manufacture and sale of some of these products,
thus lessening competition.
Direct Heating Equipment
Manufacturers of direct heating equipment contend that this
standard will seriously depress demand for their product and likely
force some, perhaps all, manufacturers out of this business. Among
other things, they contend that the TSD substantially underestimates
the added costs of manufacture, and also the added installation
costs for venting and wiring, that will be required. They insist
that consumer cost increases will seriously depress demand for their
product and that their profit margins will suffer because it will be
impossible to pass on much of the increased manufacturing costs to
consumers. The Department cannot resolve many of these issues but
concludes that there is a possibility that several of the five
companies that account for most of the production of these products
might exit the market if the standard is adopted thus substantially
lessening competition.
Water Heaters
Manufacturers of oil-fired heaters contend that the proposed
standard for their product class would threaten the survival of the
product, likely forcing all or most producers out of this business.
Some claim that it may not be possible with presently available
technology to design and manufacture a product that would comply.
Manufacturers assert that the added costs of producing a product in
compliance with the standard would, in any event, be considerably
higher than the TSD indicates and that increases in price would very
seriously depress consumer demand for this product. Five firms, two
of them Canadian producers, account for most of the sales of this
product in the U.S. The Department is not able to resolve all the
questions raised regarding this standard; it concludes that there is
at least a possibility that the standard might force one or more of
these competitors to exitthe U.S. market. Another firm has been
taking steps to enter the oil-fired water heater market; adoption of
the standard may deter it from doing so. The loss of one such firm
could result in a substantial lessening of competition.
DOE's proposed standard for electric water heaters would, in
effect, require that such products have an integral heat pump. DOE
concedes that this would involve major changes and might cause one
or more existing firms to cease the marketing of electric water
heaters but believes that other firms such as air conditioner
manufacturers may begin producing electric water heaters as a result
of the standard. There are complex and unresolved issues as to what
would happen to demand for electric water heaters if consumers were
required to purchase heat pumps with them. It seems clear that the
price of such units will be considerably higher than that of the
electric resistance heaters that the standard would remove from the
market, but the range of future prices, costs of installation and
maintenance and degree of consumer acceptance of a product that has
not been widely accepted until now are very difficult to predict.
Heat pump water heaters may be useful and economically attractive to
many consumers but serious issues have been raised in this
proceeding as to whether certain kinds of consumers, such as
households with relatively little demand for hot water, will derive
a benefit from the product.
Even if the heat pump water heater is eventually widely accepted
in the market the Department has concluded that it is likely that
competition will be adversely affected for some period of time if
adequate time is not permitted for the phasing in of the standard.
Three million units or more of electric resistance units are now
sold annually in the U.S. Only a few thousand heat pump units are
now produced annually in this country, by two firms. It could take a
considerable time for other firms to design new product lines and
being substantial ne production capacity on line. There is also
evidence from those with experience with the product that heat pump
water heaters require special maintenance and servicing.
Considerable time may be required for firms to develop and train
adequate distribution and service networks if they are to compete
effectively. If adequate time for phasing in the standard is not
allowed, for a considerable period of time there could be fewer
companies competing effectively in the electric water heater
business than there are now, and competition in this concentrated
market could be substantially lessened.
Cumulative Effects of Regulation
Many of the manufacturers of appliances subject to the proposed
standards manufacture several different types of appliance, each
subject to those standards or to others authorized by the Act. As
indicated above, there is evidence that compliance with some of
these standards may require manufacturers to make considerable
investments. It is anticipated that future standards for other
appliances could require manufacturers to make similar investments.
Full-line manufacturers such as General Electric, Whirlpool,
Frigidaire, Amana and Maytag could thus be required to make changes
in several product lines.
As the TSD recognizes, it is difficult for manufacturers to pass
redesign and retooling costs on to consumers. And the impact of a
single product redesign may fall more heavily on firms with small
shares of the market since they must write off their costs against
less sales volume. There is some evidence that firms, particularly
the smaller ones, facing the prospect of repeated redesigns
involving several different products, may be induced to cease
manufacturing one or more of such product lines. Thus to a degree
that we cannot fully assess there is a possibility that the
cumulative effect of these and future energy efficiency standards
could be to lessen competition in one or more home appliance
markets.
Sincerely yours,
Anne K. Bingaman,
Assistant Attorney General.
[FR Doc. 97-24978 Filed 9-23-97; 8:45 am]
BILLING CODE 6450-01-P