[Federal Register Volume 72, Number 143 (Thursday, July 26, 2007)]
[Proposed Rules]
[Pages 41162-41210]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-3640]



[[Page 41161]]

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Part IV





Department of Energy





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Office of Energy Efficiency and Renewable Energy



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10 CFR Part 431



 Energy Conservation Program for Commercial and Industrial Equipment; 
Proposed Rule

  Federal Register / Vol. 72, No. 143 / Thursday, July 26, 2007 / 
Proposed Rules  

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DEPARTMENT OF ENERGY

Office of Energy Efficiency and Renewable Energy

10 CFR Part 431

[Docket No. EE-2006-STD-0126]
RIN 1904-AB59


Energy Conservation Program for Commercial and Industrial 
Equipment: Energy Conservation Standards for Commercial Ice-Cream 
Freezers; for Self-Contained Commercial Refrigerators, Commercial 
Freezers, and Commercial Refrigerator-Freezers without Doors; and for 
Remote Condensing Commercial Refrigerators, Commercial Freezers, and 
Commercial Refrigerator-Freezers

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of 
Energy.

ACTION: Advance notice of proposed rulemaking and notice of public 
meeting.

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SUMMARY: The Energy Policy and Conservation Act (EPCA) authorizes the 
Department of Energy (DOE) to establish energy conservation standards 
for various consumer products and commercial and industrial equipment, 
including commercial ice-cream freezers; self-contained commercial 
refrigerators, commercial freezers, and commercial refrigerator-
freezers without doors; and remote condensing commercial refrigerators, 
commercial freezers, and commercial refrigerator-freezers, if DOE 
determines that energy conservation standards would be technologically 
feasible and economically justified, and would result in significant 
energy savings. DOE publishes this Advance Notice of Proposed 
Rulemaking (ANOPR) to consider establishing energy conservation 
standards for the categories of commercial refrigeration equipment 
mentioned above, and to announce a public meeting to receive comments 
on a variety of issues.

DATES: DOE will hold a public meeting on August 23, 2007, from 9 a.m. 
to 5 p.m. in Washington, DC. DOE must receive requests to speak at the 
public meeting no later than 4 p.m., August 3, 2007. DOE must receive a 
signed original and an electronic copy of statements to be given at the 
public meeting no later than 4 p.m., August 9, 2007. DOE will accept 
comments, data, and information regarding this ANOPR no later than 
October 9, 2007. See section IV, ``Public Participation,'' of this 
ANOPR for details.

ADDRESSES: The public meeting will be held at the U.S. Department of 
Energy, Forrestal Building, Room 1E-245, 1000 Independence Avenue, SW., 
Washington, DC. Please note that foreign nationals visiting DOE 
Headquarters are subject to advance security screening procedures, 
requiring a 30-day advance notice. If you are a foreign national and 
wish to participate in the public meeting, please inform DOE of this 
fact as soon as possible by contacting Ms. Brenda Edwards-Jones at 
(202) 586-2945 so that the necessary procedures can be completed.
    You may submit comments identified by docket number EE-2006-STD-
0126 and/or Regulatory Information Number (RIN) 1904-AB59 using any of 
the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: [email protected]. 
Include EE-2006-STD-0126 and/or RIN 1904-AB59 in the subject line of 
your message.
     Postal Mail: Ms. Brenda Edwards-Jones, U.S. Department of 
Energy, Building Technologies Program, Mailstop EE-2J, 1000 
Independence Avenue, SW., Washington, DC 20585-0121. Telephone: (202) 
586-2945. Please submit one signed paper original.
     Hand Delivery/Courier: Ms. Brenda Edwards-Jones, U.S. 
Department of Energy, Building Technologies Program, Room 1J-018, 1000 
Independence Avenue, SW., Washington, DC 20585-0121. Please submit one 
signed original paper copy.
    For detailed instructions on submitting comments and additional 
information on the rulemaking process, see section IV, ``Public 
Participation,'' of this document.
    Docket: For access to the docket to read background documents or 
comments received, go to the U.S. Department of Energy, Forrestal 
Building, Room 1J-018 (Resource Room of the Building Technologies 
Program), 1000 Independence Avenue, SW., Washington, DC, (202) 586-
2945, between 9 a.m. and 4 p.m., Monday through Friday, except Federal 
holidays. Please call Ms. Brenda Edwards-Jones at the above telephone 
number for additional information regarding visiting the Resource Room. 
Please note: DOE's Freedom of Information Reading Room (Room 1E-190 at 
the Forrestal Building) no longer houses rulemaking materials.

FOR FURTHER INFORMATION CONTACT: Mr. Charles Llenza, U.S. Department of 
Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue, 
SW., Washington, DC 20585-0121, (202) 586-2192. E-mail: 
[email protected], or Ms. Francine Pinto, Esq., U.S. Department 
of Energy, Office of General Counsel, GC-72, 1000 Independence Avenue, 
SW., Washington, DC 20585, (202) 586-9507. E-mail: 
[email protected].

SUPPLEMENTARY INFORMATION: 
I. Introduction
    A. Purpose of the Advance Notice of Proposed Rulemaking
    B. Summary of the Analysis
    1. Engineering Analysis
    2. Markups To Determine Equipment Price
    3. Energy Use Characterization
    4. Life-Cycle Cost and Payback Period Analyses
    5. National Impact Analysis
    C. Authority
    D. Background
    1. History of Standards Rulemaking for Commercial Refrigeration 
Equipment
    2. Rulemaking Process
    3. Miscellaneous Rulemaking Issues
    a. Federal Preemption
    b. State Exemptions from Federal Preemption
    c. Equipment Class Prioritization
    4. Test Procedure
II. Commercial Refrigeration Equipment Analyses
    A. Market and Technology Assessment
    1. Definitions of Commercial Refrigeration Equipment Categories
    a. Coverage of Equipment Excluded From American National 
Standards Institute/Air-Conditioning and Refrigeration Institute 
Standard 1200-2006
    b. Coverage of Equipment Not Designed for Retail Use
    c. Remote Condensing Commercial Refrigerators, Commercial 
Freezers, and Commercial Refrigerator-Freezers
    d. Secondary Coolant Applications
    e. Self-Contained Commercial Refrigerators, Commercial Freezers, 
and Commercial Refrigerator-Freezers Without Doors
    f. Commercial Ice-Cream Freezers
    2. Equipment Classes
    3. Normalization Metric
    4. Extension of Standards
    5. Market Assessment
    6. Technology Assessment
    B. Screening Analysis
    C. Engineering Analysis
    1. Approach
    2. Equipment Classes Analyzed
    3. Analytical Models
    a. Cost Model
    b. Energy Consumption Model
    4. Baseline Models
    5. Cost-Efficiency Results
    D. Markups To Determine Equipment Price
    E. Energy Use Characterization
    F. Rebuttable Presumption Payback Periods
    G. Life-Cycle Cost and Payback Period Analyses
    1. Approach
    2. Life-Cycle Cost Analysis Inputs
    3. Baseline Manufacturer Selling Price
    4. Increase in Selling Price
    5. Markups

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    6. Installation Costs
    7. Energy Consumption
    8. Electricity Prices
    9. Electricity Price Trends
    10. Repair Costs
    11. Maintenance Costs
    12. Lifetime
    13. Discount Rate
    14. Payback Period
    15. Life-Cycle Cost and Payback Period Results
    H. Shipments Analysis
    I. National Impact Analysis
    1. Approach
    2. Base Case and Standards Case Forecasted Efficiencies
    3. National Impact Analysis Inputs
    4. National Impact Analysis Results
    J. Life-Cycle Cost Sub-Group Analysis
    K. Manufacturer Impact Analysis
    1. Sources of Information for the Manufacturer Impact Analysis
    2. Industry Cash Flow Analysis
    3. Manufacturer Sub-Group Analysis
    4. Competitive Impacts Assessment
    5. Cumulative Regulatory Burden
    6. Preliminary Results for the Manufacturer Impact Analysis
    L. Utility Impact Analysis
    M. Employment Impact Analysis
    N. Environmental Assessment
    O. Regulatory Impact Analysis
III. Candidate Energy Conservation Standards Levels
IV. Public Participation
    A. Attendance at Public Meeting
    B. Procedure for Submitting Requests to Speak
    C. Conduct of Public Meeting
    D. Submission of Comments
    E. Issues on Which DOE Seeks Comment
    1. Equipment Class Prioritization and Extending Analyses
    2. Air-Curtain Angle
    3. Door Angle
    4. Equipment Classes for Equipment With Doors
    5. Equipment Classes
    6. Case Lighting Operating Hours
    7. Operation and Maintenance Practices
    8. Equipment Lifetime
    9. Life-Cycle Cost Baseline Level
    10. Characterizing the National Impact Analysis Base Case
    11. Base Case and Standards Case Forecasts
    12. Differential Impact of New Standards on Future Shipments by 
Equipment Classes
    13. Selection of Candidate Standard Levels for Post-Advance 
Notice of Proposed Rulemaking Analysis
    14. Approach to Characterizing Energy Conservation Standards
    15. Standards for Commercial Refrigerator-Freezers
V. Regulatory Review and Procedural Requirements: Executive Order 
12866
VI. Approval of the Office of the Secretary

I. Introduction

A. Purpose of the Advance Notice of Proposed Rulemaking

    The purpose of this Advance Notice of Proposed Rulemaking (ANOPR) 
is to provide interested persons with an opportunity to comment on:
    1. The equipment classes that the Department of Energy (DOE) is 
planning to analyze in this rulemaking;
    2. The analytical framework, models, and tools (e.g., life-cycle 
cost (LCC) and national energy savings (NES) spreadsheets) that DOE has 
been using to perform analyses of the impacts of energy conservation 
standards for commercial ice-cream freezers; self-contained commercial 
refrigerators, commercial freezers, and commercial refrigerator-
freezers without doors; and remote condensing commercial refrigerators, 
commercial freezers, and commercial refrigerator-freezers; \1\
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    \1\ These types of equipment are referred to collectively 
hereafter as ``commercial refrigeration equipment.''
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    3. The results of the preliminary engineering analyses, the markups 
analysis to determine equipment price, the energy use characterization, 
the LCC and payback period (PBP) analyses, and the NES and national 
impact analyses as presented in the ANOPR Technical Support Document 
(TSD): Energy Efficiency Standards for Commercial and Industrial 
Equipment: Commercial Ice-Cream Freezers; Self-Contained Commercial 
Refrigerators, Freezers, and Refrigerator-Freezers without Doors; and 
Remote Condensing Commercial Refrigerators, Freezers, and Refrigerator-
Freezers, and summarized in this ANOPR; and
    4. The candidate energy conservation standard levels that DOE has 
developed from these analyses.

B. Summary of the Analysis

    The Energy Policy and Conservation Act, as amended, (EPCA) 
authorizes DOE to establish minimum energy conservation standards for 
various consumer products and commercial and industrial equipment, 
including commercial refrigeration equipment, which are the subject of 
this ANOPR. (42 U.S.C. 6291 et seq.) DOE conducted in-depth technical 
analyses for this ANOPR in the following areas: engineering, markups to 
determine equipment price, energy use characterization, LCC and PBP, 
and NES and net present value (NPV). The ANOPR discusses the 
methodologies and assumptions for each of these analyses. Table I.1 
identifies the sections in this document that contain the results of 
each of the analyses, and summarizes the methodologies, key inputs and 
assumptions for the analyses. DOE consulted with interested parties and 
stakeholders in developing these analyses, and invites further input 
from interested parties and stakeholders on these topics. Obtaining 
that input is a primary purpose of this ANOPR. Thus, the results of the 
preliminary analyses presented in this ANOPR are subject to revision 
following review and input from stakeholders and other interested 
parties. The final rule will contain the results of the final analyses.

                             Table I.1.--In-Depth Technical Analyses Conducted for the Advance Notice of Proposed Rulemaking
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                                                                                                                                       TSD section for
          Analysis area                 Methodology           Key inputs          Key assumptions       ANOPR section for results          results
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Engineering (TSD Chapter 5)......  Efficiency level      Component cost data   Component             Section II.C.5................  Chapter 5, section
                                    approach              and performance       performance                                           5.10, and appendix
                                    supplemented with     values.               improvements are                                      B.
                                    design option                               estimated using
                                    analysis.                                   ANSI/ARI Standard
                                                                                1200-2006.
Markups to Determine Equipment     Assessment of         Distribution          Markups for baseline  Section II.D..................  Chapter 6, section
 Price (TSD Chapter 6).             company financial     channels; market      and more efficient                                    6.7.
                                    reports to develop    shares across the     equipment are
                                    markups to            different channels;   different.
                                    transform             State sales taxes;
                                    manufacturer prices   and shipments to
                                    into customer         different States.
                                    prices.

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Energy Use Characterization (TSD   Energy use estimates  Component energy use  Case lighting         Section II.E..................  Chapter 7, section
 Chapter 7).                        from the              and refrigerant       operates for 24                                       7.4.4, and
                                    engineering           load (from            hours a day; and                                      appendix D.
                                    analysis, validated   engineering           supermarket is used
                                    using whole-          analysis); and        as building
                                    building annual       condenser rack        prototype.
                                    simulation for        performance data.
                                    selected climates.
LCC and Payback Period (TSD        Analysis of a         Manufacturer selling  Baseline efficiency   Section II.G.15...............  Chapter 8, section
 Chapter 8).                        representative        prices; markups       level is Level 1;                                     8.4, and appendix
                                    sample of             (including sales      average electricity                                   G.
                                    commercial            taxes);               prices are by
                                    customers by          installation price;   customer-type and
                                    building-type and     energy consumption;   State; Annual
                                    location.             electricity prices    Energy Outlook
                                                          and future trends;    (AEO) 2006 is used
                                                          maintenance costs;    as reference case
                                                          repair costs;         for future trends;
                                                          equipment lifetime;   equipment lifetime
                                                          and discount rate.    is 10 years; and
                                                                                discount rate is
                                                                                estimated by
                                                                                weighted average
                                                                                cost of capital by
                                                                                customer type.
Shipments (TSD Chapter 9)........  Projection of linear  Wholesaler markups    Market shares by      Section II.H..................  Chapter 9, section
                                    footage of total      from company          equipment class are                                   9.4.
                                    sales by equipment    balance-sheet data    constant;
                                    class for new and     and mechanical        saturation by
                                    replacement markets.  markups from U.S.     building type is
                                                          Census Bureau data;   constant; and
                                                          current shipments     shipments do not
                                                          data by equipment     change in response
                                                          class; average        to standards.
                                                          equipment lifetime;
                                                          construction
                                                          forecasts for food
                                                          sales buildings;
                                                          and shipments by
                                                          equipment size.
National Impact (TSD Chapter 10).  Forecasts of          Shipments; effective  Annual shipments are  Section II.I.4................  Chapter 10, section
                                    commercial            date of standard;     from shipments                                        10.4, and appendix
                                    refrigeration         base case             model; annual                                         I.
                                    equipment costs,      efficiencies;         weighted-average
                                    annual energy         shipment-weighted     energy efficiency
                                    consumption and       market shares;        and installed cost
                                    operating costs to    annual energy         are a function of
                                    the year 2042.        consumption, total    energy efficiency
                                                          installed cost and    level; annual
                                                          repair &              weighted-average
                                                          maintenance costs,    repair and
                                                          all on a per linear   maintenance costs
                                                          foot basis;           are constant with
                                                          escalation of         energy consumption
                                                          electricity prices;   level; AEO2006 is
                                                          electricity site-to-  used for
                                                          source conversion;    electricity price
                                                          discount rate; and    escalation;
                                                          present year.         National Energy
                                                                                Modeling System
                                                                                (NEMS) is used for
                                                                                site-to-source
                                                                                conversion;
                                                                                discount rates are
                                                                                3 percent and 7
                                                                                percent real; and
                                                                                future costs are
                                                                                discounted to
                                                                                present year: 2007.
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1. Engineering Analysis
    The engineering analysis establishes the relationship between the 
cost and efficiency of commercial refrigeration equipment. This 
relationship serves as the basis for cost and benefit calculations for 
individual commercial consumers, manufacturers, and the Nation. The 
engineering analysis identifies representative baseline equipment, 
which is the starting point for analyzing technologies that provide 
energy efficiency improvements. Baseline equipment here refers to a 
model or models having features and technologies typically found in 
equipment currently offered for sale. The baseline model in each 
equipment class represents the characteristics of equipment in that 
class. After identifying baseline models, DOE estimated manufacturer 
selling prices (MSPs) through an analysis of

[[Page 41165]]

manufacturer costs and manufacturer markups. Manufacturer markups are 
the multipliers used to determine the MSPs based on manufacturing cost.
    The engineering analysis uses 4 industry-supplied cost-efficiency 
curves, which are based on an efficiency-level approach, and 15 cost-
efficiency curves derived from DOE analysis, which are based on a 
design-options approach.2 3 DOE also discusses in the 
engineering analysis the equipment classes analyzed, the methodology 
used to extend the analysis to equipment classes that have low volumes 
of shipments, an analysis of sensitivity to material prices, and the 
use of alternative refrigerants.
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    \2\ An efficiency-level approach establishes the relationship 
between manufacturer cost and increased efficiency at predetermined 
efficiency levels above the baseline. Under this approach, 
manufacturers typically provide incremental manufacturer cost data 
for incremental increases in efficiency.
    \3\ A design-options approach uses individual or combinations of 
design options to identify increases in efficiency. Under this 
approach, estimates are based on manufacturer or component supplier 
data, or through the use of engineering computer simulation models. 
Individual design options, or combinations of design options, are 
added to the baseline model in ascending order of cost-
effectiveness.
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2. Markups To Determine Equipment Price
    DOE determines customer prices for commercial refrigeration 
equipment from MSP and equipment price markups using industry balance 
sheet data and U.S. Census Bureau data. To determine price markups, DOE 
identifies distribution channels for equipment sales and determines the 
existence and amounts of markups within each distribution channel. For 
each distribution channel, DOE distinguishes between ``baseline 
markups'' applied to the MSP for baseline equipment and ``incremental 
markups'' applied to the incremental increase in MSP for higher 
efficiency equipment. Overall baseline and overall incremental markups 
are calculated separately based on the product of all baseline markups 
at each step within a distribution channel or the product of all 
incremental markups at each step within a distribution channel, 
respectively. The combination of the overall baseline markup applied to 
the baseline MSP and the incremental markups applied to the incremental 
increase in MSP for higher efficiency equipment, including sales tax, 
determines the final customer price.
3. Energy Use Characterization
    The energy use characterization provides estimates of annual energy 
consumption for commercial refrigeration equipment, which are used in 
the subsequent LCC and PBP analyses and the national impact analysis 
(NIA). DOE developed energy consumption estimates for the 15 classes of 
equipment analyzed in the engineering analysis. DOE validated these 
estimates with simulation modeling of energy consumption on an annual 
basis for selected equipment classes and efficiency levels.
4. Life-Cycle Cost and Payback Period Analyses
    The LCC and PBP analyses determine the economic impact of potential 
standards on individual commercial consumers. The LCC is the total 
consumer expense for a piece of equipment over the life of the 
equipment. The LCC analysis compares the LCCs of equipment designed to 
meet more stringent energy conservation standards with the LCC of the 
equipment likely to be installed in the absence of standards. DOE 
determines LCCs by considering: (1) Total installed cost to the 
purchaser (which consists of MSP, sales taxes, distribution channel 
markups, and installation cost), (2) the operating expenses of the 
equipment (energy cost and maintenance and repair cost), (3) equipment 
lifetime, and (4) a discount rate that reflects the real consumer cost 
of capital and puts the LCC in present value terms. The PBP represents 
the number of years needed to recover the increase in purchase price 
(including installation cost) of more efficient equipment through 
savings in the operating cost of the equipment. The PBP is the increase 
in total installed cost due to increased efficiency divided by the 
(undiscounted) decrease in annual operating cost from increased 
efficiency.
5. National Impact Analysis
    The NIA estimates the NES, and the NPV of total national customer 
costs and savings, expected to result from new standards at specific 
efficiency levels. DOE calculated the NES and NPV for each standard 
level for commercial refrigeration equipment as the difference between 
a base case forecast (without new standards) and the standards case 
forecast (with new standards). For the NES, DOE determined national 
annual energy consumption by multiplying the number of commercial 
refrigeration equipment units in use (by vintage) by the average unit 
energy consumption (also by vintage). DOE then computed cumulative 
energy savings, which is the sum of each annual NES determined from the 
year 2012 to 2042. The national NPV is the sum over time of the 
discounted net savings each year, which consists of the difference 
between total operating cost savings and the increase in total 
installed costs. Critical inputs to the NIA include shipments 
projections, rates at which users retire equipment (based on estimated 
equipment lifetimes), and estimates of changes in shipments and 
retirement rates in response to changes in equipment costs due to new 
standards.

C. Authority

    Title III of EPCA, 42 U.S.C. 6311-6317, as amended by the Energy 
Policy Act of 2005 (EPACT 2005), Pub. L. 109-58, provides an energy 
conservation program for certain commercial and industrial equipment. 
Further, EPACT 2005 prescribes new or amended energy conservation 
standards and test procedures, and directs DOE to undertake rulemakings 
to promulgate such requirements. In particular, section 136(c) of EPACT 
2005 directs DOE to prescribe energy conservation standards for 
commercial refrigeration equipment. (42 U.S.C. 6313(c)(4)(A))
    Before DOE prescribes any such standards, however, it must first 
solicit comments on proposed standards. Moreover, DOE must design each 
new standard for commercial refrigeration equipment to achieve the 
maximum improvement in energy efficiency that is technologically 
feasible and economically justified, and will result in significant 
conservation of energy. (42 U.S.C. 6295(o)(2)(A), (o)(3)) To determine 
whether a standard is economically justified, DOE must, after receiving 
comments on the proposed standard, determine whether the benefits of 
the standard exceed its burdens to the greatest extent practicable, 
considering the following seven factors:
    (1) The economic impact of the standard on manufacturers and 
consumers of each of the products subject to the standard;
    (2) The savings in operating costs throughout the estimated average 
life of the covered products in the type (or class) compared with any 
increase in the price, initial charges, or maintenance expenses for 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

[[Page 41166]]

result from the imposition of the standard;
    (6) The need for national energy conservation; and
    (7) Other factors the Secretary of Energy (Secretary) considers 
relevant. (42 U.S.C. 6295(o)(2)(B)(i)).
    Other statutory requirements are set forth in 42 U.S.C. 6295 
(o)(1)-(2)(A), (2)(B)(ii)-(iii), and (3)-(4), and 42 U.S.C. 6316(e).

D. Background

1. History of Standards Rulemaking for Commercial Refrigeration 
Equipment
    Section 136(c) of EPACT 2005 amended section 342 of EPCA, in part, 
by adding new subsection 342(c)(4)(A), (42 U.S.C. 6313(c)(4)(A)) which 
directs the Secretary to issue, by rule, no later than January 1, 2009, 
energy conservation standards for the following equipment, manufactured 
on or after January 1, 2012: commercial ice-cream freezers; self-
contained commercial refrigerators, commercial freezers, and commercial 
refrigerator-freezers without doors; and remote condensing commercial 
refrigerators, commercial freezers, and commercial refrigerator-
freezers. This equipment, which has never before been regulated at the 
Federal level, is the subject of this rulemaking.
    Section 136(a)(3) of EPACT 2005 amended section 340 of EPCA, in 
part by adding the definitions for ``commercial refrigerator, freezer, 
and refrigerator-freezer,'' ``holding temperature application,'' 
``pull-down temperature application,'' ``remote condensing unit,'' and 
``self-contained condensing unit.'' \4\
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    \4\ ``(9)(A) The term `commercial refrigerator, freezer, and 
refrigerator-freezer' means refrigeration equipment that--
    (i) Is not a consumer product (as defined in section 321 of EPCA 
[42 U.S.C. 6291(1)]);
    (ii) Is not designed and marketed exclusively for medical, 
scientific, or research purposes;
    (iii) Operates at a chilled, frozen, combination chilled and 
frozen, or variable temperature;
    (iv) Displays or stores merchandise and other perishable 
materials horizontally, semivertically, or vertically;
    (v) Has transparent or solid doors, sliding or hinged doors, a 
combination of hinged, sliding, transparent, or solid doors, or no 
doors;
    (vi) Is designed for pull-down temperature applications or 
holding temperature applications; and
    (vii) Is connected to a self-contained condensing unit or to a 
remote condensing unit.'' (42 U.S.C. 6311(9)(A)).
    ``(B) The term `holding temperature application' means a use of 
commercial refrigeration equipment other than a pull-down 
temperature application, except a blast chiller or freezer.'' (42 
U.S.C. 6311(9)(B)).
    ``(D) The term `pull-down temperature application' means a 
commercial refrigerator with doors that, when fully loaded with 12 
ounce beverage cans at 90 degrees Fahrenheit (F), can cool those 
beverages to an average stable temperature of 38 degrees F in 12 
hours or less.'' (42 U.S.C. 6311(9)(D)).
    ``(E) The term `remote condensing unit' means a factory-made 
assembly of refrigerating components designed to compress and 
liquefy a specific refrigerant that is remotely located from the 
refrigerated equipment and consists of 1 or more refrigerant 
compressors, refrigerant condensers, condenser fans and motors, and 
factory supplied accessories.'' (42 U.S.C. 6311(9)(E)).
    ``(F) The term `self-contained condensing unit' means a factory-
made assembly of refrigerating components designed to compress and 
liquefy a specific refrigerant that is an integral part of the 
refrigerated equipment and consists of 1 or more refrigerant 
compressors, refrigerant condensers, condenser fans and motors, and 
factory supplied accessories.'' (42 U.S.C. 6311(9)(F)).
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    EPCA does not explicitly define the terms ``self-contained 
commercial refrigerator, freezer, or refrigerator-freezer'' and 
``remote condensing commercial refrigerator, freezer, or refrigerator-
freezer,'' which delineate two of the categories of equipment covered 
by this rulemaking. DOE construes these two terms to mean ``commercial 
refrigerator, freezer, or refrigerator-freezer that is connected to a 
self-contained condensing unit'' and ``commercial refrigerator, 
freezer, or refrigerator-freezer that is connected to a remote 
condensing unit,'' respectively.
    On April 25, 2006, DOE published in the Federal Register a notice 
of public meeting and availability of the Rulemaking Framework for 
Commercial Refrigeration Equipment Including Ice-Cream Freezers; Self-
Contained Commercial Refrigerators, Freezers, and Refrigerator-Freezers 
without doors; and Remote Condensing Commercial Refrigerators, 
Freezers, and Refrigerator-Freezers (Framework Document) that describes 
the procedural and analytical approaches that DOE anticipates using to 
evaluate energy conservation standards for commercial refrigeration 
equipment. 71 FR 23876. This document is available at http://www.eere.energy.gov/buildings/appliance_standards/commercial/refrigeration_equipment.html. DOE held a Framework public meeting on 
May 16, 2006, to discuss the procedural and analytical approaches for 
use in the rulemaking, and to inform and facilitate stakeholders' 
involvement in the rulemaking process. The analytical framework 
presented at the public meeting described different analyses, such as 
LCC and PBP, the proposed methods for conducting them, and the 
relationships among the various analyses. The ANOPR TSD describes the 
analytical framework in detail.
    Statements received after publication of the Framework Document and 
at the May 16, 2006, Framework public meeting helped identify issues 
involved in this rulemaking and provided information that has 
contributed to DOE's proposed resolution of these issues. Many of the 
statements are quoted or summarized in this ANOPR. A parenthetical 
reference at the end of a quotation or passage provides the location 
index in the public record.
2. Rulemaking Process
    Table I.2 sets forth a list of the analyses DOE has conducted and 
intends to conduct in its evaluation of standards for commercial 
refrigeration equipment. Until recently, DOE performed the manufacturer 
impact analysis (MIA) in its entirety between the ANOPR and notice of 
proposed rulemaking (NOPR) during energy conservation standards 
rulemakings. As noted in the table, DOE has performed a preliminary MIA 
for this ANOPR. DOE believes this change will improve the rulemaking 
process.

         Table I.2.--Commercial Refrigeration Equipment Analysis
------------------------------------------------------------------------
              ANOPR                      NOPR            Final Rule *
------------------------------------------------------------------------
 Market and technology     Revised     Revised
 assessment.                       ANOPR analyses.     NOPR analyses.
 Screening analysis.....   Life-
                                   cycle cost sub-
                                   group analysis.
 Engineering analysis...  
                                   Manufacturer
                                   impact analysis.
 Energy use                Utility
 characterization.                 impact analysis.
 Markups to determine     
 equipment price.                  Employment impact
                                   analysis.
 Life-cycle cost and      
 payback period analyses.          Environmental
                                   assessment.
 Shipments analysis.....  
                                   Regulatory impact
                                   analysis.
 National impact
 analysis.

[[Page 41167]]

 
 Preliminary
 manufacturer impact analysis.
------------------------------------------------------------------------
* During the Final Rule phase, DOE considers the comments submitted by
  the U.S. Department of Justice in the NOPR phase concerning the impact
  of any lessening of competition that is likely to result from the
  imposition of the standard. (42 U.S.C. 6295(o)(2)(B)(v)).

    The analyses in Table I.2 include the development of economic 
models and analytical tools. If timely new data, models, or tools that 
enhance the development of standards become available, DOE will 
incorporate them into this rulemaking.
3. Miscellaneous Rulemaking Issues
a. Federal Preemption
    During the Framework public meeting, the Air-Conditioning and 
Refrigeration Institute (ARI) stated that it interpreted EPACT 2005 as 
authorizing DOE to conduct a rulemaking for commercial refrigeration 
equipment, and to exempt certain categories from the standards DOE 
adopts. (Public Meeting Transcript, No. 3.4 at p. 80) \5\ The Appliance 
Standards Awareness Project (ASAP) responded that setting a ``no-
standard'' standard that preempts the States is problematic. (Public 
Meeting Transcript, No. 3.4 at pp. 81-82) However, ASAP agrees with 
ARI's basic view that DOE should address opportunities for energy 
savings, and should not necessarily have standards for every unit in 
the marketplace, because the objective is to save energy in a cost-
effective way. Id. The American Council for an Energy-Efficient Economy 
(ACEEE), in apparent agreement with ARI and ASAP, expressed doubt that 
States would seek to set energy conservation standards for equipment 
that are truly niche equipment. (Public Meeting Transcript, No. 3.4 at 
p. 82) The Alliance to Save Energy, ACEEE, ASAP, Natural Resources 
Defense Council (NRDC), Northeast Energy Efficiency Partnerships 
(NEEP), and Northwest Power and Conservation Council (hereafter ``Joint 
Comment'') strongly opposed any suggestion that States be preempted 
from setting standards for equipment for which DOE does not itself set 
standards. (Joint Comment, No. 9 at p. 3) \6\
---------------------------------------------------------------------------

    \5\ A notation in the form ``Public Meeting Transcript, No. 3.4 
at p. 80'' identifies an oral comment that DOE received during the 
May 16, 2006, Framework public meeting and which was recorded in the 
public meeting transcript in the docket for this rulemaking (Docket 
No. EE-2006-STD-0126), maintained in the Resource Room of the 
Building Technologies Program This particular notation refers to a 
comment (1) made during the public meeting, (2) recorded in document 
number 3.4, which is the public meeting transcript that is filed in 
the docket of this rulemaking, and (3) which appears on page 80 of 
document number 3.4.
    \6\ A notation in the form ``Joint Comment'', No. 9 at p. 3'' 
identifies a written comment that DOE has received and has included 
in the docket of this rulemaking. This particular notation refers to 
(1) A joint comment, (2) in document number 9 in the docket of this 
rulemaking, and (3) appearing on page 3 of document number 9.
---------------------------------------------------------------------------

    DOE is evaluating all commercial refrigeration equipment--i.e., all 
commercial ice-cream freezers, self-contained commercial refrigerators, 
commercial freezers, and commercial refrigerator-freezers without 
doors, and remote condensing commercial refrigerators, commercial 
freezers, and commercial refrigerator-freezers--for the development of 
standards. DOE will evaluate all relevant equipment classes during this 
evaluation. This equipment has a large number of classes, however, and 
DOE intends to prioritize the technical analyses based on shipment data 
and only to conduct a full technical analysis on classes with the 
highest numbers of shipments for this ANOPR. In accordance with 42 
U.S.C. 6316(e)(1), DOE intends to adopt standards for all equipment for 
which standards would satisfy the criteria in 42 U.S.C. 6295(o). DOE is 
not aware of any basis for it to exclude from this rule any commercial 
refrigeration equipment for which a standard would meet the statutory 
criteria above. Furthermore, the extent to which States will be barred 
from regulating the efficiency of any commercial refrigeration 
equipment for which the final rule in this rulemaking omits standards, 
will be governed by the relevant provisions of EPCA as to preemption, 
42 U.S.C. 6297 and 6316(e)(3)-(4).
b. State Exemptions From Federal Preemption
    Southern Company Services (Southern Company) and Edison Electric 
Institute (EEI) believe that the standards for commercial refrigeration 
equipment should be a ``50-state'' rule without exemptions from Federal 
preemption. They claim that exemptions would complicate the regulation 
of this equipment and increase costs to both manufacturers and 
consumers. (Southern Company, No. 6 at p. 1 and EEI, No. 8 at p. 1)
    DOE fully intends that any standards it adopts in this rulemaking 
will apply uniformly in all of the States. In addition, any such 
Federal standards would, on the date of publication of the final rule, 
preempt any State standards that apply to the equipment covered by the 
Federal standards. In the event any State or local standard is issued 
before the date of publication of the final rule by the Secretary, that 
State or local standard shall not be preempted until the Federal 
standards take effect. (42 U.S.C. 6297 and 6316(e)(3)(A)) However, EPCA 
allows the States to petition DOE for waivers of preemption with regard 
to specific State standards, and DOE to grant such waiver applications 
if the statutory criteria are met. (42 U.S.C. 6297(d)) DOE does not 
have the authority to preclude States from seeking waivers or to decree 
in advance that it will not grant them, either generally or for any 
particular type of equipment.
c. Equipment Class Prioritization
    ARI stated that it strongly recommends that DOE focus its 
rulemaking efforts on the commercial refrigeration equipment classes 
with the highest energy savings potential, and not spend its scarce 
resources establishing standards for equipment with limited shipment 
volume and/or energy consumption. (ARI, No. 7 at p. 1)
    Because of the large number of equipment classes included in this 
rulemaking, for the ANOPR phase of the rulemaking DOE has focused on 
conducting a thorough examination of the equipment classes with the 
greatest energy savings potential. To determine which equipment classes 
have the greatest energy savings potential, DOE relied on industry-
supplied shipment data and addressed equipment classes with the highest 
shipment values first. To address low-shipment equipment classes, DOE 
could, for the NOPR phase of the rulemaking, either conduct a full 
technical analysis of these equipment classes, or develop correlations 
to extend analyses or standard levels. DOE explored the approach of 
developing correlations by conducting a ``focused

[[Page 41168]]

matched-pair analysis.'' \7\ This methodology is described in further 
detail in chapter 5 of the TSD. DOE specifically seeks feedback on its 
approach to equipment-class prioritization and the approach to extend 
the technical analysis from high-shipment equipment classes to low-
shipment equipment classes. This is identified as Issue 1 under 
``Issues on Which DOE Seeks Comment'' in section IV.E of this ANOPR.
---------------------------------------------------------------------------

    \7\ The ``focused matched-pair analysis'' establishes a 
correlation between rating temperature levels and energy consumption 
by quantifying the differences in energy consumption for matched 
pairs of equipment classes that are very similar in features and 
dimensions, but have different operating temperatures.
---------------------------------------------------------------------------

4. Test Procedure
    A test procedure outlines the method by which manufacturers will 
determine the efficiency of their commercial refrigeration equipment, 
and thereby assess compliance with an energy conservation standard.
    Section 136(f)(1)(B) of EPACT 2005 amended section 343 of EPCA (42 
U.S.C. 6314) by adding new subsections 343(a)(6)(A)-(D) (42 U.S.C. 
6314(a)(6)(A)-(D)), which direct the Secretary to develop test 
procedures for commercial refrigeration equipment. On December 8, 2006, 
DOE published a final rule (the December 2006 final rule) in which it 
adopted American National Standards Institute (ANSI)/ARI Standard 1200-
2006, Performance Rating of Commercial Refrigerated Display 
Merchandisers and Storage Cabinets, with one modification, as the DOE 
test procedure for this equipment. 71 FR 71340, 71369-70.\8\ ANSI/ARI 
Standard 1200-2006 contains rating temperature specifications of 38 
[deg]F (2 [deg]F) for commercial refrigerators and 
refrigerator compartments, 0 [deg]F (2 [deg]F) for 
commercial freezers and freezer compartments, and -5 [deg]F (2 [deg]F) for commercial ice-cream freezers, and requires 
performance tests to be conducted according to the American Society of 
Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) 
Standard 72-2005, Method of Testing Commercial Refrigerators and 
Freezers, test method. The one modification DOE made in adopting ANSI/
ARI Standard 1200-2006 was to adopt in the final rule -15 [deg]F 
(2 [deg]F) as the rating temperature for commercial ice-
cream freezers, instead of -5 [deg]F (2 [deg]F). 71 FR 
71370. In addition, DOE adopted ANSI/Association of Home Appliance 
Manufacturers (AHAM) Standard HRF-1-2004, Energy, Performance and 
Capacity of Household Refrigerators, Refrigerator-Freezers and 
Freezers, for determining compartment volumes for this equipment. 71 FR 
71369-70.
---------------------------------------------------------------------------

    \8\ DOE incorporated by reference the ANSI/ARI Standard 1200-
2006 test procedure in section 431.64 of 10 CFR Part 431. 71 FR 
71340 (December 8, 2006).
---------------------------------------------------------------------------

    As mentioned above, on April 25, 2006, DOE published a Framework 
Document that describes the procedural and analytical approaches to 
evaluate energy conservation standards for commercial refrigeration 
equipment and presented this analytical framework to stakeholders 
during the Framework public meeting held on May 16, 2006. During the 
Framework public meeting, the Food Products Association (FPA) 
suggested, in lieu of climate-adjusted standards, climate conditions be 
part of the test method. FPA stated that DOE should specify the range 
of conditions that are expected for efficiency testing, and pointed out 
that most grocery stores across the country operate in a 65 [deg]F to 
70 [deg]F range. (Public Meeting Transcript, No. 3.4 at pp. 158-159) 
ANSI/ARI Standard 1200-2006 requires that testing be in accordance with 
ASHRAE Standard 72-2005, which requires ambient conditions during 
testing of 75.2 [deg]F (1.8 [deg]F) for dry bulb 
temperature and 64.4 [deg]F (1.8 [deg]F) for wet bulb 
temperature. Although this is not the range recommended by FPA, it is 
close to FPA's recommended range, these temperatures have been widely 
used for testing commercial refrigeration equipment, and they provide 
ambient test temperatures that are typical of the conditions in which 
this equipment generally operates. Therefore, DOE's test procedure for 
commercial refrigeration equipment does include ambient rating 
conditions that represent normal operation conditions for commercial 
refrigeration equipment.
    During the Framework public meeting and Framework comment period, 
DOE received comments on the inclusion of ``application temperatures'' 
for commercial refrigeration equipment, which are rating temperatures 
other than the standard rating temperatures prescribed by DOE's test 
procedures (38 [deg]F for commercial refrigerators, 0 [deg]F for 
commercial freezers, and -15 [deg]F for commercial ice-cream freezers). 
Hill Phoenix stated that manufacturers of commercial refrigeration 
equipment occasionally produce a piece of equipment (usually at the 
customer's request) that is designed to operate at a temperature 
significantly different from one of the three standard temperatures. 
(Public Meeting Transcript, No. 3.4 at pp. 74-76) ARI commented that 
DOE should analyze the shipment data and determine whether it would be 
worth regulating equipment that operates at application temperatures if 
shipments for these units are very low. (Public Meeting Transcript, No. 
3.4 at p. 79) ARI also asserted that allowing for an application 
temperature category is essential because operating temperature plays a 
key role in equipment energy consumption. (ARI, No. 7 at p. 4) The 
Joint Comment pointed out that the application temperature category 
should be reserved for equipment that cannot operate at 0 [deg]F or at 
38 [deg]F, that DOE should not regulate equipment that has a small 
shipments volume, and that appropriate Federal standards and rating 
temperatures should be developed if shipments are large. (Joint 
Comment, No. 9 at p. 3)
    DOE analyzed the shipments data provided by ARI during the 
Framework comment period. Excluding equipment for which EPACT 2005 
amended EPCA to set standards (self-contained commercial refrigerators 
and commercial freezers with doors), there were 170,949 units of remote 
condensing commercial refrigerators and commercial freezers, self-
contained commercial refrigerators and commercial freezers without 
doors, and commercial ice-cream freezers shipped in 2005. Shipments of 
commercial refrigerator-freezers were not reported, but are considered 
to be very small. Of the total shipments (both self-contained and 
remote condensing), only 1.7 percent were equipment that operate at 45 
[deg]F, 20 [deg]F, 10 [deg]F, or -30 [deg]F (application temperatures), 
and 98.3 percent were equipment that operate at 38 [deg]F, 0 [deg]F, or 
-15 [deg]F. By far, the application temperature with the largest number 
of units shipped is the 45 [deg]F category (typically ``wine 
chillers''), and these were predominately remote condensing equipment. 
There were 1,834 units of remote condensing wine chillers shipped in 
2005. Comparatively, in 2005 there were 85,001 units of remote 
condensing refrigerators that operate at 38 [deg]F.
    As stated above, DOE's test procedure for commercial refrigeration 
equipment requires that all equipment, including equipment designed to 
operate at application temperatures, be tested at one of the three 
rating temperatures: 38 [deg]F for refrigerators, 0 [deg]F for 
freezers, and -15 [deg]F for ice-cream freezers. Given the relatively 
low shipment volumes of equipment that operates at application 
temperatures, as well as DOE's understanding that some of this 
equipment already can operate and be tested at one of the standard 
rating temperatures and that manufacturers might be able to redesign 
other equipment in relatively minor ways to have these capabilities, 
DOE believes this requirement will not place an

[[Page 41169]]

unreasonable burden on manufacturers. In addition, if necessary, 
manufacturers could seek waivers from the DOE test procedure, pursuant 
to 10 CFR 431.401. For these reasons, DOE does not intend to develop 
separate standards for equipment that operates at application 
temperatures.

II. Commercial Refrigeration Equipment Analyses

    This section addresses the analyses DOE has performed and intends 
to perform for this rulemaking. A separate subsection addresses each 
analysis, and contains a general introduction that describes the 
analysis and a discussion of comments received from interested parties.

A. Market and Technology Assessment

    When DOE begins a standards rulemaking, it develops information 
that provides an overall picture of the market for the equipment 
concerned, including the nature of the equipment, the industry 
structure, and the market characteristics for the equipment. This 
activity consists of both quantitative and qualitative efforts based 
primarily on publicly available information. The subjects addressed in 
the market and technology assessment for this rulemaking include 
definitions, equipment classes, manufacturers and market shares, 
shipments of covered equipment, regulatory and non-regulatory programs, 
and technologies that could be used to improve the efficiency of 
covered commercial refrigeration equipment. This information serves as 
resource material for use throughout the rulemaking.
1. Definitions of Commercial Refrigeration Equipment Categories
    Section 136(c) of EPACT 2005 amended section 342 of EPCA to include 
new subsection (c)(4)(A), which mandates that DOE issue standards for 
three categories of commercial refrigerators, commercial freezers, and 
commercial refrigerator-freezers.\9\ Accordingly, pursuant to this 
provision, the three categories of equipment addressed by this 
rulemaking are: remote condensing commercial refrigerators, commercial 
freezers and commercial refrigerator-freezers; self-contained 
commercial refrigerators, commercial freezers, and commercial 
refrigerator-freezers without doors; and commercial ice-cream freezers. 
These categories of equipment are referred to collectively as 
``commercial refrigeration equipment.''
---------------------------------------------------------------------------

    \9\ ``Commercial refrigerators, commercial freezers, and 
commercial refrigerator-freezers'' is a type of covered commercial 
equipment. For purposes of discussion only in this proceeding, DOE 
uses the term ``categories'' to designate groupings of ``commercial 
refrigeration equipment.'' The categories of equipment are: self-
contained commercial refrigerators, commercial freezers, and 
commercial refrigerator-freezers without doors; remote condensing 
commercial refrigerators, commercial freezers, and commercial 
refrigerator-freezers; and commercial ice-cream freezers. DOE will 
analyze specific equipment classes that fall within these general 
categories and set appropriate standards.
---------------------------------------------------------------------------

a. Coverage of Equipment Excluded From American National Standards 
Institute/Air-Conditioning and Refrigeration Institute Standard 1200-
2006
    During the Framework comment period, ARI stated that the ANSI/ARI 
Standard 1200-2006 test procedure specifically excludes ice-cream 
``dipping cabinets,'' but recommended that DOE include this equipment 
under this rulemaking as commercial freezers. (ARI, No. 7 at p. 3) ARI 
also appeared to suggest, however, that this and certain other 
equipment excluded from ANSI/ARI Standard 1200-2006, such as floral 
merchandisers, are excluded from coverage under EPCA because they are 
not considered commercial display merchandisers or storage cabinets. 
(ARI, No. 7 at p. 7)
    EPCA directs DOE to set standards for commercial refrigeration 
equipment (i.e., the three categories of equipment identified above). 
Any equipment that meets the EPCA definition of a ``commercial 
refrigerator, freezer, or refrigerator-freezer'' (see section I.D and 
the preceding section) and falls under one of these three categories 
will be covered by this rulemaking. In the December 2006 final rule, 
DOE incorporated by reference certain sections of ANSI/ARI Standard 
1200-2006 as the test procedure for commercial refrigeration equipment, 
but did not reference section 2.2, which provides exclusions for 
certain equipment such as ice-cream dipping cabinets and floral display 
merchandisers. The equipment excluded in this section of ANSI/ARI 
Standard 1200-2006 will only be excluded from this rulemaking if they 
do not meet the EPACT 2005 definition of a ``commercial refrigerator, 
freezer, or refrigerator-freezer.''
b. Coverage of Equipment Not Designed for Retail Use
    During the Framework comment period, several stakeholders commented 
on whether this rulemaking applies to equipment not designated for 
retail use. FPA commented that DOE needs to distinguish between 
``industrial'' and ``commercial.'' FPA believes that the EPCA 
requirements for commercial refrigeration equipment were intended for 
``point-of-sale'' equipment that is found in convenience stores and 
supermarkets. FPA continued that, in the food industry, 
``refrigeration'' includes the industrial equipment found in 
manufacturing and processing facilities, not just the equipment in 
retail stores. (Public Meeting Transcript, No. 3.4 at pp. 23-24) 
Southern Company stated that the language ``storing or displaying or 
dispensing'' in DOE's definition of ``ice-cream freezer'' is ambiguous 
because it could include some industrial equipment the size of a 
tractor-trailer compartment. Southern Company believes there needs to 
be language to clarify that this rulemaking covers equipment used at 
the retail level. (Public Meeting Transcript, No. 3.4 at pp. 35-36) 
Southern Company and EEI both stated that a literal reading of DOE's 
proposed equipment classes appears to include industrial refrigeration 
equipment, which is not used for the display of merchandise for sale to 
the consumer. Southern Company and EEI believe that the inclusion of 
this equipment would unnecessarily complicate the analysis and the 
development of test procedures. They also stated that this equipment is 
not covered by EPCA and only commercial equipment is covered. They 
suggest that DOE define which equipment is for commercial purposes and 
which is for industrial purposes. Southern Company and EEI suggest that 
DOE define commercial refrigeration equipment as ``refrigeration 
equipment which would normally be used in a commercial business which 
sells products to ultimate consumers.'' Further, the definition 
``should not include equipment which is normally used only in 
refrigerated warehouses or manufacturing facilities.'' (Southern 
Company, No. 6 at pp. 1-2; EEI, No. 8 at p. 1)
    DOE understands that industrial refrigeration equipment consists of 
equipment used to process, manufacture, transport, or store chilled or 
frozen food and other perishable items. Industrial refrigeration 
equipment used to process or manufacture chilled or frozen food 
primarily includes equipment used to flash-freeze or chill food on an 
assembly line or in a batch manufacturing process. Industrial 
refrigeration equipment used to transport chilled or frozen food or 
other perishable items primarily includes refrigerated rail cars and 
tractor-trailers. In industrial buildings, temporary storage of chilled 
or frozen food is also necessary, as the manufactured product is often 
held at

[[Page 41170]]

the manufacturing facility for processing or while awaiting transport. 
Industrial refrigeration equipment used to store chilled or frozen food 
is accomplished with refrigerated warehouses and/or refrigerated walk-
in rooms (``walk-ins'').
    The term ``commercial refrigerator, freezer, and refrigerator-
freezer'' is defined as refrigeration equipment that, in part, 
``displays or stores merchandise and other perishable materials'' (see 
section I.D of this ANOPR). DOE interprets this language to mean that 
equipment used in the processing, manufacture or transport of chilled 
or frozen food is not considered commercial refrigeration equipment 
because it is not used to ``display or store.'' However, equipment that 
is used to store chilled or frozen food is considered covered 
equipment. This language does not make mention of the intended 
destination of the equipment, so DOE believes that walk-ins are covered 
under the definition because they store chilled or frozen food, 
regardless of whether the application is commercial or industrial. 
However, it is unclear whether this rulemaking would be the appropriate 
place to address walk-ins. The test procedures for self-contained 
commercial refrigerators, commercial freezers, and commercial 
refrigerator-freezers with doors specified in EPCA section 
343(a)(6)(A)(ii) specifically exclude walk-ins and therefore DOE 
believes that the standards in EPCA sections 342(c)(2) and (3) do not 
apply to walk-ins. Since the test procedures DOE adopted for equipment 
covered under this rulemaking also specifically exclude walk-ins, DOE 
believes that the standards being developed in this rulemaking under 
EPCA section 342(c)(4)(A) also do not apply to walk-ins.\10\ DOE could, 
however, address walk-ins under EPCA section 342(c)(4)(B), which states 
that DOE may issue standard levels, by rule, for other categories of 
commercial refrigerators, commercial freezers and commercial 
refrigerator-freezers.
---------------------------------------------------------------------------

    \10\ Test procedures are found at 10 CFR 431.64.
---------------------------------------------------------------------------

c. Remote Condensing Commercial Refrigerators, Commercial Freezers, and 
Commercial Refrigerator-Freezers
    Under EPCA, this equipment includes commercial refrigerators, 
commercial freezers, and commercial refrigerator-freezers that have a 
remote condensing unit, except for any remote condensing equipment that 
would meet DOE's definition of ``ice-cream freezer'' as set forth at 10 
CFR 431.62, 71 FR 71369.\11\ This equipment is typically used to store 
and display merchandise for direct sale to the consumer, and referred 
to as ``display cases,'' ``display cabinets,'' or ``merchandisers.'' 
The remote condensing unit has at least one compressor and a condenser 
coil, and most remote condensing units consist of multiple compressors 
(a compressor ``rack'') that serve multiple display cases.
---------------------------------------------------------------------------

    \11\ The EPCA provision that requires this rulemaking identifies 
``ice-cream freezers'' separately from ``self-contained commercial 
refrigerators, commercial freezers, and commercial refrigerator-
freezers without doors'' and ``remote condensing commercial 
refrigerators, commercial freezers, and commercial refrigerator-
freezers.'' (42 U.S.C. 6313(c)(4)(A), added by EPACT 2005, section 
136(c)) Since the Act neither specifies nor indicates that ``ice-
cream freezers'' are limited to equipment with a particular type of 
condensing unit (i.e., remote or self-contained), equipment that has 
a remote condensing unit and also meets DOE's definition of ``ice-
cream freezer'' would be considered an ``ice-cream freezer.''
---------------------------------------------------------------------------

    EPCA does not specifically define the term ``commercial 
refrigerator-freezer,'' nor is DOE aware of an existing, written 
definition for such equipment. Therefore, in its Framework Document, 
DOE sought feedback on use of the definition of ``electric 
refrigerator-freezer'' for consumer products (set forth in 10 CFR 
430.2) as a basis for defining the term ``remote condensing commercial 
refrigerator-freezer.'' (As discussed below, DOE also sought input on 
using this definition as a basis for defining self-contained commercial 
refrigerator-freezers.) The consumer product definition in 10 CFR 430.2 
states that ``electric refrigerator-freezer means a cabinet which 
consists of two or more compartments with at least one of the 
compartments designed for the refrigerated storage of food at 
temperatures above 32[deg]F. [sic] and with at least one of the 
compartments designed for the freezing and storage of food at 
temperatures below 8[deg]F. [sic] which may be adjusted by the user to 
a temperature of 0[deg]F. [sic] or below. The source of refrigeration 
requires single phase, alternating current [(AC)] electric energy input 
only.'' During the Framework comment period, three stakeholders 
commented on this definition. (ARI, No. 7 at p. 3; Public Meeting 
Transcript, No. 3.4 at p. 45; and Public Meeting Transcript, No. 3.4 at 
pp. 50-53) ARI and Zero Zone believe the definition is inappropriate 
for commercial equipment. ARI proposed that a remote condensing 
commercial refrigerator, freezer, or refrigerator-freezer be defined as 
``a cabinet cooled by a remote refrigerating system for displaying and/
or storing chilled and/or frozen food to be maintained within 
prescribed temperature limits. The cabinet is connected to one or more 
power sources ranging from 120 to 240 volts AC.'' (ARI, No. 7 at p. 3) 
During the Framework public meeting, ASAP indicated that DOE should 
look at the detailed definition given in EPACT 2005 for refrigerator-
freezers. (Public Meeting Transcript, No. 3.4 at p. 53)
    Based on the comments, DOE now believes that it need not adopt a 
definition of ``remote condensing commercial refrigerator-freezer.'' 
The comments by Zero Zone indicate the difficulties of adapting the 
residential product definition of refrigerator-freezer to the 
commercial setting. ARI did not comment on the need for a definition of 
commercial refrigerator-freezer discrete from definitions of 
refrigerator and freezer, and its suggested definition of ``commercial 
refrigerator, commercial freezer, and commercial refrigerator-freezer'' 
both duplicates and, in some ways, is inconsistent with the EPCA 
definition of this term. For example, one inconsistency is that the ARI 
definition states that the cabinet is connected to one or more power 
sources ranging from 120 to 240 volts AC, whereas the EPCA definition 
does not have any requirements for power sources. Further, ASAP did not 
address the fact that the definition in EPACT 2005 does not distinguish 
refrigerator-freezers from refrigerators and freezers. The comments by 
ARI and ASAP, however, indicate that they believe DOE does not need to 
adopt a separate definition for refrigerator-freezers.
    DOE intends to rely here on the definition of ``commercial 
refrigerator, freezer, and refrigerator-freezer'' in EPCA (42 U.S.C. 
6311(9)(A), added by EPACT 2005, section 136(a)(3)), and on its 
understanding of the well-accepted meaning of ``refrigerator-freezer.'' 
Thus, DOE construes the EPCA term ``remote condensing commercial 
refrigerator-freezer'' (see 42 U.S.C. 6313(c)(4)(A), added by EPACT 
2005, section 136(c)) to mean refrigeration equipment that operates at 
both chilled and frozen temperatures and that is connected to a remote 
condensing unit. This term refers to equipment with two or more 
separate compartments, at least one of which is capable of maintaining 
food or other perishable items at temperatures above freezing and at 
least one of which maintains its contents frozen. By contrast, 
refrigerators operate only at temperatures above freezing, and freezers 
only at or below freezing temperatures.
    In its Framework Document, DOE pointed out that EPCA defines a 
``self-contained condensing unit,'' in part, as an assembly of 
refrigerating components ``that is an integral part of the refrigerated 
equipment * * * '' (42

[[Page 41171]]

U.S.C. 6311(9)(F), added by EPACT 2005, section 136(a)(3)) EPCA also 
defines a ``remote condensing unit,'' in part, as an assembly of 
refrigerating components ``that is remotely located from the 
refrigerated equipment * * *.'' (42 U.S.C. 6311(9)(E), added by EPACT 
2005, section 136(a)(3)) DOE also stated in the Framework Document that 
this difference in the definitions may mean that, under EPCA, remote 
condensing units are not a part of the refrigerated equipment and that 
energy conservation standards for remote condensing commercial 
refrigerators, commercial freezers, and commercial refrigerator-
freezers would apply only to the refrigerated equipment (i.e., storage 
cabinets and display cases), but not to the remote condensing units. 
DOE specifically requested stakeholder comments on this topic.
    ARI asserted that it was responsible for the language in EPACT 2005 
on this subject and the intent was to cover the display case and 
storage cabinet only, not the remote condensing unit. (Public Meeting 
Transcript, No. 3.4 at pp. 47-48, 49) ACEEE responded by stating that 
it may be worth trying to cover the remote condensing unit so that the 
whole system is regulated. (Public Meeting Transcript, No. 3.4 at p. 
48) Zero Zone pointed out that regulating the remote condensing unit 
would prove to be difficult because of the wide range of design 
differences in compressors and condensing units, and recommended not 
regulating them now. (Public Meeting Transcript, No. 3.4 at p. 48) ARI 
stated that it agreed with DOE's interpretation of EPACT 2005 that the 
rulemaking should be limited to the refrigerated display merchandisers 
and storage cabinets only. Furthermore, ARI asserted that including the 
remote condensing unit in this rulemaking would significantly 
complicate the analysis and likely delay the completion date, and it 
recommended that DOE reassess the situation in the future to determine 
whether energy conservation standards should be established for remote 
condensing equipment. (ARI, No. 7 at p. 3) Finally, the Joint Comment 
stated that DOE should cover remote condensing units under this 
rulemaking because it would provide more opportunity for energy savings 
and for manufacturers to trade off performance between different parts 
of the system. However, if DOE determines that including the entire 
system in this rulemaking is impractical, then the balance of the 
system should not be included under ``covered'' equipment for now, but 
instead, DOE should consider such coverage in a subsequent revision to 
the standard. (Joint Comment, No. 9 at p. 5).
    Clearly, stakeholders differed on whether a remote condensing unit 
is considered part of the equipment to which it is connected, and 
whether such units are covered by the EPCA directive that DOE set 
standards for remote condensing commercial refrigerators, commercial 
freezers, and commercial refrigerator-freezers. (42 U.S.C. 
6313(c)(4)(A), added by EPACT 2005, section 136(c)) ARI indicated that 
it believes EPCA does not authorize application of standards to remote 
condensing units, while ACEEE and the Joint Comment argued that remote 
condensing units should be covered but not necessarily in this 
rulemaking. However, DOE agrees with the stakeholders who stated that 
including remote condensing units in the present rulemaking would 
significantly complicate the rulemaking. There would be many 
difficulties in establishing standards for the display cases and the 
remote condensing units as a system. For example, display cases and 
remote condensing units are typically purchased from different 
manufacturers and installed at the site. Multiple display cases may be 
connected to one or more remote condensing units through an extensive 
network of refrigerant piping. Since each system is custom designed for 
its location, each individual system will have unique aspects to its 
design and operation (e.g., number of display cases, variation in 
temperature control, use of heat recovery, etc.). Further, because the 
intended configuration of the final system design is not known when the 
components are manufactured, it would be difficult, if not impossible, 
to set an energy conservation standard for the entire system at the 
point of manufacture.
    For these reasons, the energy conservation standards DOE intends to 
develop in this rulemaking for remote condensing commercial 
refrigeration equipment will apply to display cases only, not to the 
remote condensing units. DOE will address at a later time whether and 
to what extent it has the authority to regulate remote condensing units 
and, if so, whether standards that address these units are warranted 
and feasible.
d. Secondary Coolant Applications
    In its Framework Document, DOE stated that it construed the 
language in section 136(a)(3) of EPACT 2005, 42 U.S.C. 6311(9)(A)(vii), 
the definition for ``commercial refrigerator, freezer, and 
refrigerator-freezer,'' to mean that so-called ``secondary-coolant 
applications'' are not covered under this rulemaking. DOE stated that 
it believed this interpretation of EPACT 2005 was consistent with ANSI/
ARI Standard 1200-2006, which explicitly excludes secondary-coolant 
applications.
    During the Framework comment period, several stakeholders commented 
on the coverage of equipment that uses secondary coolant systems.\12\ 
ACEEE stated that DOE should have a broad scope of coverage and should 
in general cover as much as possible in the rulemaking. (Public Meeting 
Transcript, No. 3.4 at p. 26) ARI stated that it agrees with the 
interpretation DOE expressed in the Framework Document that secondary 
coolant applications should not be covered under this rulemaking. ARI 
explained that these systems represent a very small percentage of 
currently installed commercial refrigeration systems in the United 
States, and that there are no test procedures currently available for 
measuring the energy consumption of such systems. ARI noted, however, 
that DOE should revisit the secondary coolant issue in the next three 
to four years. (ARI, No. 7 at p. 2) Hill Phoenix stated that based on 
its experience, display cases that use secondary coolant make up less 
than five percent of what it sells and that this statistic is probably 
representative of the market in general. (Public Meeting Transcript, 
No. 3.4 at p. 30) Further, Southern Company stated, and EEI agreed, 
that it opposes the inclusion of secondary-coolant systems in this 
rulemaking because of timing and complexity. Since ANSI/ARI Standard 
1200-2006 excludes secondary-coolant applications, their inclusion 
would complicate the development of a test procedure for commercial 
refrigeration equipment. Also, Southern Company and EEI oppose the 
inclusion of secondary coolant systems based on the small size of the 
secondary coolant market. (Southern Company, No. 6 at p. 2 and EEI, No. 
8 at p. 1) The Joint Comment stated that they do not object to DOE's 
interpretation that secondary-coolant equipment is not covered under 
this rulemaking, provided that this equipment in fact accounts for no 
more than five percent of remote equipment sold, as asserted by Hill 
Phoenix. (Joint Comment, No. 9 at p. 5)
---------------------------------------------------------------------------

    \12\ Secondary coolant systems use a direct expansion 
refrigeration cycle to cool a secondary single-phase fluid, which is 
pumped to heat exchangers in remote condensing display cases and is 
used to cool food or other perishable items.
---------------------------------------------------------------------------

    Section 340(9)(A)(vii) of EPCA (42 U.S.C. 6311((9)(A)(vii), added 
by EPACT 2005, section 136(a)(3)), states that the term ``commercial 
refrigerator, freezer,

[[Page 41172]]

and refrigerator-freezer means equipment that ``is connected to a self-
contained condensing unit or to a remote condensing unit.'' (See 
section I.D.1 of this ANOPR.) In the Framework Document, DOE stated 
that it construes this language to mean that secondary coolant 
applications are not covered under this rulemaking. As indicated in the 
Framework Document, equipment using such applications are not directly 
connected to a self-contained or remote condensing unit. DOE further 
stated that it believed its interpretation to be consistent with ANSI/
ARI Standard 1200-2006. DOE has considered the comments it received, 
but continues to believe that the language in section 340(9)(A)(vii) of 
EPCA means that equipment using secondary coolant systems are not 
covered under this rulemaking because they are not directly connected 
to a self-contained or remote condensing unit and, therefore, do not 
fit within the definition of ``commercial refrigerator, freezer, and 
refrigerator-freezer'' in EPCA.
e. Self-Contained Commercial Refrigerators, Commercial Freezers, and 
Commercial Refrigerator-Freezers Without Doors
    Under EPCA, this equipment includes all types of commercial 
refrigerators, commercial freezers, and commercial refrigerator-
freezers that have a self-contained condensing unit and have no doors, 
except for self-contained equipment that meets DOE's definition of 
``ice-cream freezer'' as set forth at 10 CFR 431.62. 71 FR 71369. As 
with remote condensing equipment, self-contained equipment is typically 
used to store and display merchandise for direct sale to the consumer, 
and is commonly referred to as a ``refrigerated display case,'' 
``display cabinet,'' or ``merchandiser.'' Self-contained equipment is 
defined as having an integral condensing unit (i.e., the condensing 
unit is not remote from the refrigerated cabinet). (See 42 U.S.C. 
6311(9)(F), added by EPACT 2005, section 136(a)(3)) The 2006 ASHRAE 
Refrigeration Handbook (see chapter 47, p. 47.1) defines ``reach-in'' 
refrigerators or freezers as being upright and box shaped, and having 
hinged or sliding doors. Given this definition, self-contained reach-in 
commercial refrigerators, commercial freezers, and commercial 
refrigerator-freezers (i.e., self-contained units with doors) are not 
covered in this rulemaking because the rulemaking only covers self-
contained equipment without doors.
    In its Framework Document, as with the term ``remote condensing 
commercial refrigerator-freezers,'' DOE sought feedback on use of the 
definition of ``electric refrigerator-freezer'' for consumer products 
(as set forth in 10 CFR 430.2) as a basis for defining the term ``self-
contained commercial refrigerator-freezer.'' The comments on this 
subject were virtually identical to those received with respect to the 
remote condensing equipment, which are discussed above in section 
II.A.1.c, and DOE has reached the same conclusion here as it reached 
with respect to that equipment. Specifically, DOE does not intend at 
this point to adopt a definition for ``self-contained commercial 
refrigerator-freezer without doors.'' Rather, DOE intends to rely on 
EPCA's definition of ``commercial refrigerator, freezer, and 
refrigerator-freezer,'' and on its understanding of the well-accepted 
meaning of ``refrigerator-freezer.'' DOE construes the EPCA term 
``self-contained commercial refrigerator-freezer without doors'' (see 
42 U.S.C. 6313(c)(4)(A), added by EPACT 2005, section 136(c)) to mean 
refrigeration equipment that operates at both chilled and frozen 
temperatures, is connected to a self-contained condensing unit, and has 
no doors. Such equipment has two or more separate compartments, at 
least one of which is capable of maintaining food or other perishable 
items at temperatures above freezing and at least one of which 
maintains its contents frozen.
f. Commercial Ice-Cream Freezers
    The EPCA provision that requires this rulemaking identifies ``ice-
cream freezers'' separately from ``self-contained commercial 
refrigerators, freezers, and refrigerator-freezers without doors'' and 
``remote condensing commercial refrigerators, freezers, and 
refrigerator-freezers.'' (42 U.S.C. 6313(c)(4)(A), added by EPACT 2005, 
section 136(c)) EPCA neither specifies nor indicates that ``ice-cream 
freezers'' are limited to equipment with a particular door 
configuration (e.g., with or without doors) or type of condensing unit 
(i.e., remote or self-contained). Thus, pursuant to EPCA's definition 
of ``commercial refrigerator, freezer, and refrigerator-freezer'' (42 
U.S.C. 6311(9)(A), added by EPACT 2005, section 136(a)(3)), DOE 
believes commercial ice-cream freezers include equipment with all door 
types (i.e., solid doors, transparent doors, or no doors) and 
configurations (e.g., vertical or horizontal), as well as equipment 
with either integral or remote condensing units (i.e., self-contained 
or remote condensing).
    During the Framework comment period, several stakeholders commented 
on the definition of commercial ice-cream freezer. ARI stated that the 
majority of equipment intended for ice cream operates at -5 [deg]F or 0 
[deg]F, with a minority that operates at -30 [deg]F, and stated that 
DOE should focus on those ice-cream freezers with high shipment 
volumes. (Public Meeting Transcript, No. 3.4 at pp. 32-33) Zero Zone 
stated that there are many interpretations of what an ice-cream freezer 
is. Zero Zone asserted that California and Canada define an ice-cream 
freezer ``along the lines of a dipping cabinet.'' (Public Meeting 
Transcript, No. 3.4 at p. 35) Zero Zone further commented that the 
display-type freezers it sells for ice cream and frozen food are the 
same, that these cases have adjustable temperatures, and that the user 
sets the temperature of the equipment a little lower when it uses the 
equipment for ice cream. Typically, the equipment has two ratings, one 
for use of frozen food and for ice cream, because customers want to 
know the energy use for each. Zero Zone also characterized as ``true 
ice-cream cabinets'' those which have specific functions for the 
processing and storage of ice cream, rather than its display, and 
asserted that comparatively few of these are sold. (Public Meeting 
Transcript, No. 3.4 at p. 38) Zero Zone asserted that the term ``ice-
cream freezer'' cannot be specifically defined because ice cream can be 
stored or displayed in a number of cabinets that have different cabinet 
styles and that may also be used to store other, non-ice-cream 
equipment. In addition, it stated that not all ice cream is stored at 
the same temperature. Zero Zone recommended that freezers be divided 
into three categories: ice-cream dipping cabinets, 0 [deg]F to -15 
[deg]F, and below -15 [deg]F. (Zero Zone, No. 5 at p. 1) Hill Phoenix 
stated that its freezer cases also can operate at either 0 [deg]F or -5 
[deg]F, but there is no distinction in the design of the case used for 
ice cream and that used for frozen food, only in how the customer uses 
it. Hill Phoenix added that because these two temperatures are so 
close, there is a linear relationship between temperature and energy 
usage. Hill Phoenix also stated there is a category of cases that 
operate at -15 [deg]F to -30 [deg]F, called ``hardening'' cabinets, 
which have a different design than typical freezer cases. (Public 
Meeting Transcript, No. 3.4 at p. 41) Both Southern Company and EEI 
stated that it is important that DOE develop definitions for commercial 
freezer and ice-cream freezer that are all-inclusive, and do not leave 
any loopholes for States to regulate. (Southern Company, No. 6 at p. 2; 
EEI, No. 8 at p. 1) ARI stated that there is very little difference

[[Page 41173]]

between freezers designed to operate at 0 [deg]F and -5 [deg]F, both in 
terms of features and in terms of energy consumption. ARI added that a 
recent survey of its members revealed that a significant number of ice-
cream freezers operate at -15 [deg]F. It requested that freezers that 
operate at -5 [deg]F be included in the freezer category. ARI intends 
to amend ANSI/ARI Standard 1200-2006 to reflect an ice-cream freezer 
temperature of -15 [deg]F. In addition, ARI proposed that specialty 
freezers, such as hardening cabinets that operate far below the ice-
cream freezer temperature, be excluded from this rulemaking. (ARI, No. 
7 at p. 2) The Joint Comment agreed with ARI that freezers that operate 
at -5 [deg]F be tested at 0 [deg]F, and that testing at -5 [deg]F will 
only be for information purposes, not for setting standards. (Joint 
Comment, No. 9 at p. 3)
    As part of the December 8, 2006 final rule, in which it adopted 
test procedures for commercial refrigeration equipment, DOE adopted the 
following definition for ``ice-cream freezer:'' ``a commercial freezer 
that is designed to operate at or below -5 [deg]F (-21 [deg]C) and that 
the manufacturer designs, markets, or intends for the storing, 
displaying, or dispensing of ice cream.'' 71 FR 71369; 10 CFR 431.62. 
In addition, this final rule prescribed the rating temperature at -15 
[deg]F for ice-cream freezers. 71 FR 71370; 10 CFR 431.64.
    Under this definition, unless equipment is designed, marketed, or 
intended specifically for the storage, display or dispensing of ice 
cream, it would not be considered an ``ice-cream freezer.'' Multi-
purpose commercial freezers, manufactured for storage and display, for 
example, of frozen foods as well as ice cream would not meet this 
definition, and DOE would not treat them as commercial ice-cream 
freezers in this rulemaking. This is in accord with the comments listed 
above, which indicated that DOE should not classify such freezers as 
ice-cream freezers. On the other hand, any commercial freezer that is 
specifically manufactured for storing, displaying or dispensing ice 
cream, and that is designed so that in normal operation it can operate 
at or below -5 [deg]F (-21 [deg]C), would meet the definition. This 
includes equipment that some stakeholders referred to as true ice-cream 
cabinets--freezers designed to operate considerably below -5 [deg]F and 
that are sometimes referred to as ``hardening'' cabinets and are 
specifically designed for ice cream storage, for example--as well as 
those ice-cream dipping cabinets that are designed to operate at least 
to some extent below -5 [deg]F. DOE intends to classify and address 
these types of equipment as commercial ice-cream freezers in this 
rulemaking.
2. Equipment Classes
    In general, when evaluating and establishing energy conservation 
standards, DOE divides covered equipment into equipment classes by the 
type of energy used, capacity or other performance-related features 
that affect efficiency, and factors such as the utility of the 
equipment to users. (See 42 U.S.C. 6295(q).) Different energy 
conservation standards may apply to different equipment classes.
    Commercial refrigeration equipment can be divided into various 
equipment classes categorized by physical characteristics that affect 
the efficiency of the equipment. Most of these characteristics affect 
the merchandise that the equipment can be used to display, and how that 
merchandise can be accessed by the customer. Key physical 
characteristics are the operating temperature, the presence or absence 
of doors (i.e., closed cases or open cases), the type of doors used 
(i.e., transparent or solid), the angle of the door or air curtain 
(i.e., horizontal, semivertical, or vertical) and the type of 
condensing unit (i.e., remote or self-contained). ARI agreed that 
definitions for the terms horizontal, semivertical, and vertical be 
based upon the angle of the air curtain. (ARI, No. 7 at p. 7)
    DOE could not identify an existing industry definition of air-
curtain angle, but developed a preliminary definition for 
consideration. DOE is considering defining air-curtain angle as the 
angle between a vertical line and the line formed by the points at the 
center of the discharge air grille and the center of the return air 
grille, when viewed in cross-section. DOE specifically seeks feedback 
on this definition of air-curtain angle. This is identified as Issue 2 
under ``Issues on Which DOE Seeks Comment'' in section IV.E of this 
ANOPR.
    DOE proposed an organization of equipment classes in its Framework 
Document based on the equipment classes for self-contained commercial 
refrigerators, commercial freezers and commercial refrigerator-freezers 
with doors described in section 136(c)(2) of EPACT 2005. Another 
organization of equipment classes for commercial refrigeration 
equipment was proposed by ARI during the Framework comment period, and 
presented by DOE during the Framework public meeting. ARI organized 
commercial refrigeration equipment by equipment family (where equipment 
family is considered as broad groups of covered equipment that have 
similar geometric characteristics), condensing unit type, and operating 
temperature.\13\ (ARI, No. 7 at pp. 5-7) During the public meeting, DOE 
noted that ARI's equipment families included a ``service over counter'' 
equipment family, which was absent from DOE's equipment class 
organization. DOE understands that the service over counter equipment 
family is unique in that access to merchandise on display is provided 
only to sales personnel from the rear of the cabinet. ARI noted that 
DOE did not categorize equipment with doors based on whether the doors 
are solid or transparent, and ARI explained that this is a necessary 
distinction. (ARI, No. 7 at p. 7) The Joint Comment stated that the 
equipment families proposed by ARI are reasonable. (Joint Comment, No. 
9 at p. 3)
---------------------------------------------------------------------------

    \13\ For this rulemaking, equipment class designations consist 
of a combination (in sequential order separated by periods) of an 
(1) equipment family code (VOP=vertical open, SVO=semivertical open, 
HZO=horizontal open, VCT=vertical transparent doors, VCS=vertical 
solid doors, HCT=horizontal transparent doors, HCS=horizontal solid 
doors, or SOC=service over counter), (2) an operating mode code 
(RC=remote condensing or SC=self-contained), and (3) a rating 
temperature code (M=medium temperature (38 [deg]F), L=low 
temperature (0 [deg]F), or I=ice-cream temperature (-15 [deg]F)). 
For example, ``VOP.RC.M'' refers to the ``vertical open, remote 
condensing, medium temperature'' equipment class. See discussion 
below and chapter 3 of the TSD, market and technology assessment, 
for a more detailed explanation of the equipment class terminology.
---------------------------------------------------------------------------

    DOE agrees with ARI that the characteristics of the service over 
counter design affect efficiency, and is proposing an equipment class 
organization that includes a service over counter equipment family. DOE 
also agrees with ARI that the energy consumption of commercial 
refrigeration equipment with doors is affected by whether the doors are 
solid or transparent, and is proposing to include this distinction in 
its equipment class organization.
    In its Framework Document, DOE suggested that equipment without 
doors be divided into equipment classes based on air-curtain angles of 
0[deg] to 30[deg] (vertical), 30[deg] to 60[deg] (semivertical), and 
60[deg] to 90[deg] (horizontal) from the vertical. During the Framework 
public meeting, DOE asked for comments on these proposed ranges of air-
curtain angle. Hill Phoenix stated that the industry defines these as 
0[deg] to 10[deg] for vertical, 10[deg] to 80[deg] for semivertical, 
and 80[deg] to 90[deg] for horizontal. (Public Meeting Transcript, No. 
3.4 at p. 86) The Joint Comment stated that the ranges for vertical and 
semivertical should be closer to those used in DOE's proposal. 
Specifically, the Joint Comment stated that because vertical equipment 
will tend to be more efficient and thus likely

[[Page 41174]]

to have more stringent standards, if the equipment family delineations 
allow manufacturers to substitute semivertical for vertical, they could 
unintentionally shift the market to the less efficient standard. 
Therefore, the Joint Comment stated that DOE should determine a divide 
between vertical and semivertical that will not result in one type of 
equipment being substituted for the other. (Joint Comment, No. 9 at pp. 
3-4)
    The cost-efficiency data DOE received from ARI for four covered 
equipment classes were based on the industry definitions of 0[deg] to 
10[deg] for vertical equipment, 10[deg] to 80[deg] for semivertical 
equipment, and 80[deg] to 90[deg] for horizontal equipment, as measured 
from the vertical. Therefore, DOE conducted its analyses for the ANOPR 
based on these definitions of equipment families, but recognizes the 
concern raised by the Joint Comment that these delineations may result 
in one type of equipment being substituted for another. To investigate 
the relationship of air-curtain angle to energy consumption for remote 
condensing medium temperature open display cases (VOP.RC.M, SVO.RC.M, 
and HZO.RC.M equipment classes), DOE collected market data, which is 
documented in the market and technology assessment (see chapter 3 of 
the TSD).14 15 These data show significant clusters of 
equipment divided by air-curtain angles of 10[deg], 30[deg] and 65[deg] 
from the vertical. The most significant cluster of equipment is in the 
range of 0[deg] to 10[deg] from the vertical (this cluster corresponds 
to the VOP.RC.M equipment class as currently defined), with less 
significant clusters between 10[deg] and 30[deg], 30[deg] and 65[deg], 
and 65[deg] and 90[deg] from the vertical. The large cluster of 
equipment between 0[deg] to 10[deg] from the vertical has a high 
frequency of units at 6[deg] to 9[deg] from the vertical. With the 
delineation between vertical and semivertical equipment families at an 
angle of 10[deg], if the SVO.RC.M equipment class had a less stringent 
standard than the VOP.RC.M equipment class, DOE is concerned that 
manufacturers may adjust their equipment designs slightly to take 
advantage of the lower standard for SVO.RC.M equipment. A piece of 
equipment could be redesigned with a small change in air-curtain angle 
(e.g., from 9[deg] to 11[deg] from the vertical), that would not 
significantly affect energy consumption or utility. This redesign would 
move the equipment from the VOP.RC.M equipment class to the SVO.RC.M 
equipment class, where it would not be subject to as stringent a 
standard.
---------------------------------------------------------------------------

    \14\ See Table II.1 through Table II.3, which set forth the 
meaning of the equipment class lettering designations. Also, see 
chapter 3 of the TSD for more details on the equipment class 
lettering designations. For example, ``VOP.RC.M'' refers to the 
``vertical open, remote condensing, medium temperature'' equipment 
class.
    \15\ The market data that DOE collected represents equipment 
offerings of major commercial refrigeration equipment manufacturers 
as of 2006. Each data point represents a particular model offered, 
not a piece of equipment shipped, and is not intended to represent 
shipments of equipment in the VOP.RC.M, SVO.RC.M, and HZO.RC.M 
equipment classes. However, in the absence of detailed shipment 
information broken down by energy use and air-curtain angle, DOE 
believes this market data provides a reasonable estimate of the 
distribution of equipment by energy use and air-curtain angle within 
these equipment classes.
---------------------------------------------------------------------------

    DOE understands that there is the potential for manufacturers to 
redesign equipment to move from one equipment class to another 
regardless of where the air-curtain angle delineation is made. However, 
the concern raised above is heightened by the concentration of 
equipment in the 0[deg] to 10[deg] from the vertical range, and the 
potential for mass redesign of the majority of equipment currently 
classified as VOP.RC.M in order to be classified as SVO.RC.M. According 
to DOE's market data, there is a clear region of low density at an air-
curtain angle of 30[deg] from the vertical, and DOE believes that 
drawing the delineation between the VOP and SVO equipment families here 
could potentially result in less equipment migration from the VOP.RC.M 
equipment class to the SVO.RC.M equipment class.
    Additionally, DOE's market data provides little support for 
delineating the SVO.RC.M and the HZO.RC.M equipment families at 80[deg] 
from the vertical. A significant group of equipment with similar 
characteristics (but clearly distinguished from the SVO.RC.M and 
VOP.RC.M equipment classes) is present with air curtain angles of 
65[deg] to 90[deg] from the vertical. This supports drawing the SVO.HZO 
equipment family delineation at 60[deg] to 65[deg] from the vertical. 
In light of this market data, DOE welcomes any additional data or 
feedback regarding the proposed ranges of air-curtain angles or 
shipments of equipment in the VOP.RC.M, SVO.RC.M and HZO.RC.M equipment 
classes broken down by energy use and air-curtain angle.
    DOE believes that the orientation of doors affects the energy 
consumption of commercial refrigeration equipment with doors and that 
this equipment can be broadly categorized by the angle of the door. DOE 
did not receive stakeholder feedback on how to define the door angle 
for equipment with doors, but is considering defining door angle as 
``the angle between a vertical line and the line formed by the plane of 
the door, when viewed in cross-section.'' DOE specifically seeks 
feedback on this definition of door angle. This is identified as Issue 
3 under ``Issues on Which DOE Seeks Comment'' in section IV.E of this 
ANOPR.
    During the Framework comment period, no objections were raised to 
the proposal of equipment families of ``horizontal'' and ``vertical'' 
equipment with doors. In addition, Hill Phoenix commented that ARI 
eliminated the ``semivertical with doors'' equipment family (doors with 
an angle that deviated substantially from 0[deg] or 90[deg] with 
respect to the vertical) because no manufacturers could identify any 
shipments of semivertical equipment with doors. (Public Meeting 
Transcript, No. 3.4 at p. 63) Therefore, for equipment with solid and 
transparent doors, DOE is considering defining two equipment families 
each, based on door angles of 0[deg] to 45[deg] (vertical) and 45[deg] 
to 90[deg] (horizontal). DOE specifically seeks feedback on these 
ranges of door angles for equipment with doors. This is identified as 
Issue 4 under ``Issues on Which DOE Seeks Comment'' in section IV.E of 
this ANOPR.
    Based on the above information, DOE intends to use eight equipment 
families, which are shown in Table II.1.

               Table II.1.--Equipment Family Designations
------------------------------------------------------------------------
           Equipment family                       Description
------------------------------------------------------------------------
Vertical Open (VOP)..................  Equipment without doors and an
                                        air-curtain angle greater than
                                        or equal to 0[deg] and less than
                                        10[deg] from the vertical.
Semivertical Open (SVO)..............  Equipment without doors and an
                                        air-curtain angle greater than
                                        or equal to 10 and less than
                                        80[deg] from the vertical.
Horizontal Open (HZO)................  Equipment without doors and an
                                        air-curtain angle greater than
                                        or equal to 80[deg] from the
                                        vertical.

[[Page 41175]]

 
Vertical Closed Transparent (VCT)....  Equipment with hinged or sliding
                                        transparent doors and a door
                                        angle less than 45[deg].
Horizontal Closed Transparent (HCT)..  Equipment with hinged or sliding
                                        transparent doors and a door
                                        angle greater than or equal to
                                        45[deg].
Vertical Closed Solid (VCS)..........  Equipment with hinged or sliding
                                        solid (opaque) doors and a door
                                        angle less than 45[deg].
Horizontal Closed Solid (HCS)........  Equipment with hinged or sliding
                                        solid (opaque) doors and a door
                                        angle greater than or equal to
                                        45[deg].
Service Over Counter (SOC)...........  Equipment with sliding or hinged
                                        doors intended for use by sales
                                        personnel and fixed or hinged
                                        glass for displaying
                                        merchandise.
------------------------------------------------------------------------

    Within each of these eight equipment families are equipment that 
have one of the two condensing unit configurations shown in Table II.2.

         Table II.2.--Condensing Unit Configuration Designations
------------------------------------------------------------------------
    Condensing unit configuration                 Description
------------------------------------------------------------------------
Remote condensing (RC)...............  Condensing unit is remotely
                                        located from the refrigerated
                                        equipment and consists of one or
                                        more refrigerant compressors,
                                        refrigerant condensers,
                                        condenser fans and motors, and
                                        factory-supplied accessories.
Self-contained (SC)..................  Condensing unit is an integral
                                        part of the refrigerated
                                        equipment and consists of one or
                                        more refrigerant compressors,
                                        refrigerant condensers,
                                        condenser fans and motors, and
                                        factory-supplied accessories.
------------------------------------------------------------------------

    Equipment classes would also be organized based on the three rating 
temperatures shown in Table II.3.

              Table II.3.--Rating Temperature Designations
------------------------------------------------------------------------
          Rating temperature                      Description
------------------------------------------------------------------------
38 [deg]F (M)........................  Medium temperature
                                        (refrigerators).
0 [deg]F (L).........................  Low temperature (freezers).
-15 [deg]F (I).......................  Ice-cream temperature (ice-cream
                                        freezers).
------------------------------------------------------------------------

    Based on stakeholder feedback, DOE is considering 38 of the 48 
equipment classes shown in Table II.4.\16\ The equipment classes are 
organized by equipment family, compressor operating mode, and rating 
temperature. The right hand column in Table II.4, which has the heading 
``Equipment Class Designation,'' identifies each of the 48 equipment 
classes with a particular set of letters. The first three letters for 
each class represent the equipment family for that class, the next two 
letters represent the condensing unit configuration, and the last 
letter represents the rating temperature. Table II.1 through Table II.3 
set forth the meaning of the equipment class lettering designations. 
(Also, see chapter 3 of the TSD for more details on the equipment class 
lettering designations.)
---------------------------------------------------------------------------

    \16\ Table II.4 identifies 48 classes of commercial 
refrigeration equipment. Of the 48 classes, 10 classes are 
identified by asterisks. EPCA has already established energy 
conservation standards for these 10 classes. (42 U.S.C. 6313(c)(2)-
(3)) Therefore, these 10 classes are not covered under this 
rulemaking.

                             Table II.4.--Commercial Refrigeration Equipment Classes
----------------------------------------------------------------------------------------------------------------
                                                                       Rating
           Equipment family                  Condensing unit         temperature    Equipment class designation
                                              configuration           ([deg]F)
----------------------------------------------------------------------------------------------------------------
Vertical Open.........................  Remote...................              38  VOP.RC.M.
                                                                                0  VOP.RC.L.
                                                                              -15  VOP.RC.I
                                        Self-Contained...........              38  VOP.SC.M.
                                                                                0  VOP.SC.L.
                                                                              -15  VOP.SC.I.
Semivertical Open.....................  Remote...................              38  SVO.RC.M.
                                                                                0  SVO.RC.L.
                                                                              -15  SVO.RC.I.
                                        Self-Contained...........              38  SVO.SC.M.
                                                                                0  SVO.SC.L.
                                                                              -15  SVO.SC.I.
Horizontal Open.......................  Remote...................              38  HZO.RC.M.

[[Page 41176]]

 
                                                                                0  HZO.RC.L.
                                                                              -15  HZO.RC.I.
                                        Self-Contained...........              38  HZO.SC.M.
                                                                                0  HZO.SC.L.
                                                                              -15  HZO.SC.I.
Vertical Closed Transparent...........  Remote...................              38  VCT.RC.M.
                                                                                0  VCT.RC.L.
                                                                              -15  VCT.RC.I.
                                        Self-Contained...........              38  VCT.SC.M.*
                                                                                0  VCT.SC.L.*
                                                                              -15  VCT.SC.I.
Horizontal Closed Transparent.........  Remote...................              38  HCT.RC.M.
                                                                                0  HCT.RC.L.
                                                                              -15  HCT.RC.I.
                                        Self-Contained...........              38  HCT.SC.M.*
                                                                                0  HCT.SC.L.*
                                                                              -15  HCT.SC.I.
Vertical Closed Solid.................  Remote...................              38  VCS.RC.M.
                                                                                0  VCS.RC.L.
                                                                              -15  VCS.RC.I.
                                        Self-Contained...........              38  VCS.SC.M.*
                                                                                0  VCS.SC.L.*
                                                                              -15  VCS.SC.I.
Horizontal Closed Solid...............  Remote...................              38  HCS.RC.M.
                                                                                0  HCS.RC.L.
                                                                              -15  HCS.RC.I.
                                        Self-Contained...........              38  HCS.SC.M.*
                                                                                0  HCS.SC.L.*
                                                                              -15  HCS.SC.I.
Service Over Counter..................   Remote..................              38  SOC.RC.M.
                                                                                0  SOC.RC.L.
                                                                              -15  SOC.RC.I.
                                        Self-Contained...........              38  SOC.SC.M.*
                                                                                0  SOC.SC.L.*
                                                                              -15  SOC.SC.I.
----------------------------------------------------------------------------------------------------------------
* These equipment classes have standards established by EPCA and are therefore not covered under this
  rulemaking. (42 U.S.C. 6313(c)(2)-(3)).

    EPCA contains standards for self-contained commercial 
refrigerators, commercial freezers and commercial refrigerator-freezers 
with doors (42 U.S.C. 6313(c)(2)-(3)); therefore this equipment is not 
included in this rulemaking. Table II.5 identifies, by sets of letters, 
10 potential equipment classes for this equipment. DOE has based the 
designations of these possible equipment classes on the equipment class 
designations presented in Table II.1 through Table II.3. Because these 
equipment classes are not included in this rulemaking, they are 
indicated with an asterisk in Table II.4.

                    Table II.5.--Potential Equipment Classes Not Included in This Rulemaking
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
VCT.SC.M........................  VCS.SC.M..........  HCT.SC.M..........  HCS.SC.M..........  SOC.SC.M.
VCT.SC.L........................  VCS.SC.L..........  HCT.SC.L..........  HCS.SC.L..........  SOC.SC.L.
----------------------------------------------------------------------------------------------------------------

    During the Framework public meeting, Hill Phoenix asserted that 
equipment with separate refrigerator and freezer compartments (i.e., 
refrigerator-freezers) is custom built and is a low shipment-volume 
type of equipment. Hill Phoenix believes that spending time on these 
equipment categories might unnecessarily slow the rulemaking. (Public 
Meeting Transcript, No. 3.4 at p. 52) Based on this comment and DOE's 
own analysis of the shipments data, DOE has not established equipment 
classes for remote condensing commercial refrigerator-freezers or self-
contained commercial refrigerator-freezers without doors (also called 
``dual temperature'' units). DOE addresses how it might set standards 
for this equipment in sections III and IV.E.1.
    In sum, Table II.6 presents the equipment classes covered under 
this rulemaking organized by the three equipment categories, in 
accordance with EPCA section 325(p)(1)(A). (42 U.S.C. 6295(p)(1)(A)) 
Pursuant to EPCA section 325(p)(1)(B), DOE specifically seeks feedback 
on these equipment classes and invites interested persons to submit 
written presentations of data, views, and arguments. (42 U.S.C. 
6295(p)(1)(B)) This is identified as Issue 5 under ``Issues on Which 
DOE Seeks Comment'' in section IV.E of this ANOPR.

[[Page 41177]]



                       Table II.6.--Commercial Refrigeration Equipment Classes by Category
----------------------------------------------------------------------------------------------------------------
                                                                             Rating
       Equipment category          Condensing unit    Equipment family     temperature       Equipment class
                                    configuration                           ([deg]F)           designation
----------------------------------------------------------------------------------------------------------------
Remote Condensing Commercial     Remote............  Vertical Open.....              38  VOP.RC.M.
 Refrigerators, Commercial                            Semivertical Open               0  VOP.RC.L.
 Freezers, and Commercial                            ..................              38  SVO.RC.M.
 Refrigerator-Freezers.                              Horizontal Open...               0  SVO.RC.L.
                                                     ..................              38  HZO.RC.M.
                                                     Vertical Closed                  0  HZO.RC.L.
                                                      Transparent.                   38  VCT.RC.M.
                                                     Horizontal Closed                0  VCT.RC.L.
                                                      Transparent.                   38  HCT.RC.M.
                                                     Vertical Closed                  0  HCT.RC.L.
                                                      Solid.                         38  VCS.RC.M.
                                                     Horizontal Closed                0  VCS.RC.L.
                                                      Solid.                         38  HCS.RC.M.
                                                     Service Over                     0  HCS.RC.L.
                                                      Counter.                       38  SOC.RC.M.
                                                                                      0  SOC.RC.L.
Self-Contained Commercial        Self-Contained....  Vertical Open.....              38  VOP.SC.M.
 Refrigerators, Commercial                           ..................               0  VOP.SC.L.
 Freezers, and Commercial                            Semivertical Open.              38  SVO.SC.M.
 Refrigerator-Freezers without                       ..................               0  SVO.SC.L.
 Doors.                                              Horizontal Open...              38  HZO.SC.M.
                                                     ..................               0  HZO.SC.L.
Commercial Ice-Cream Freezers..  Remote............  Vertical Open.....             -15  VOP.RC.I.
                                                     Semivertical Open.             -15  SVO.RC.I.
                                                     Horizontal Open...             -15  HZO.RC.I.
                                                     Vertical Closed                -15  VCT.RC.I.
                                                      Transparent.
                                                     Horizontal Closed              -15  HCT.RC.I.
                                                      Transparent.
                                                     Vertical Closed                -15  VCS.RC.I.
                                                      Solid.
                                                     Horizontal Closed              -15  HCS.RC.I.
                                                      Solid.
                                                     Service Over                   -15  SOC.RC.I.
                                                      Counter.
                                 Self-Contained....  Vertical Open.....             -15  VOP.SC.I.
                                                     Semivertical Open.             -15  SVO.SC.I.
                                                     Horizontal Open...             -15  HZO.SC.I.
                                                     Vertical Closed                -15  VCT.SC.I.
                                                      Transparent.
                                                     Horizontal Closed              -15  HCT.SC.I.
                                                      Transparent.
                                                     Vertical Closed                -15  VCS.SC.I.
                                                      Solid.
                                                     Horizontal Closed              -15  HCS.SC.I.
                                                      Solid.
                                                     Service Over                   -15  SOC.SC.I.
                                                      Counter.
----------------------------------------------------------------------------------------------------------------

3. Normalization Metric
    The standards being developed in this rulemaking must apply to 
equipment of varying size and capacity within an equipment class, so 
they must be normalized by some factor that is representative of the 
varying energy use of the equipment. A ``normalization metric'' is a 
measure of capacity or utility that allows comparison of energy use of 
various sizes of equipment on a unit capacity basis. During the 
Framework public meeting, DOE asked what normalization metric would be 
most appropriate for the equipment in this rulemaking--total display 
area (TDA), refrigerated volume, or length. ARI commented that in 
remote condensing equipment, the trend has been to use TDA, not only in 
the United States, but in Europe as well. ARI is trying to align itself 
with standards like those from the International Standards Organization 
(ISO) that use TDA, and wants DOE to be consistent with these ISO 
standards. ARI's certification program will be based on TDA, and that 
is how the data will be listed in its certification directory. (Public 
Meeting Transcript, No. 3.4 at pp. 95-96) ARI also proposed that daily 
energy consumption be calculated as a function of the refrigerated 
volume for self-contained equipment with doors, and as a function of 
TDA for self-contained equipment without doors, because these 
respective normalization metrics are most representative of the energy 
consumption of these two types of equipment. (ARI, No. 7 at p. 9) ARI 
also stated that it will collect and analyze data for daily energy 
consumption as a function of refrigerated volume and TDA for remote 
condensing equipment in order to develop an appropriate recommendation 
for that type of equipment. (ARI, No. 7 at p. 9) The Joint Comment 
stated that they do not agree with DOE's proposal to use TDA as the 
metric for cases without doors, because, they assert, such an approach 
would favor ``shallow'' and ``tall'' equipment over ``deeper'' and 
``shorter'' equipment of equivalent volume. The Joint Comment proposed 
that DOE instead use volume, length, or potentially a combination of 
TDA and volume. One compromise would be to use a multiple regression 
equation that would consider both refrigerated volume and length or 
refrigerated volume and TDA. (Joint Comment, No. 9 at p. 5, and Public 
Meeting Transcript, No. 3.4 at pp. 94-95)
    In this rulemaking, DOE intends to establish standards for remote 
condensing commercial refrigerators, commercial freezers and commercial 
refrigerator-freezers, as well as commercial ice-cream freezers, with 
solid or transparent doors. Equipment with transparent doors is subject 
to significant radiation loads (as much as 50 percent of the total 
refrigeration load) as well as loads due to anti-sweat heaters that are 
required to keep the door free of condensation. In addition, 
transparent doors are inherently poorer

[[Page 41178]]

insulators than solid doors with an insulation value of roughly R-2 
compared with R-16, respectively, for a typical freezer. For equipment 
with transparent doors, TDA is a good indicator of the magnitude of the 
radiation load, the anti-sweat load, and the conduction load through 
the door. Additionally, TDA is representative of the ability of the 
equipment to display merchandise, which is a measure of its utility or 
usefulness to the owner. Thus, DOE believes that TDA is an appropriate 
normalization metric for all remote condensing refrigerators and 
freezers with transparent doors, as well as all commercial ice-cream 
freezers with transparent doors. Remote condensing commercial 
refrigerators, commercial freezers and commercial refrigerator-freezers 
with solid doors and commercial ice-cream freezers with solid doors 
(i.e., ``storage cabinets'') inherently have no TDA, since there is no 
visible product and thus no glass or other transparent opening. 
Therefore, DOE believes refrigerated volume is an appropriate 
normalization metric for this equipment. This is consistent with the 
fact that EPCA sets standards for self-contained units with solid doors 
in the form of upper limits on daily energy consumption using 
refrigerated volume as the normalization metric (42 U.S.C. 6313(c)(2), 
added by EPACT 2005, section 136(c)). DOE also believes that length is 
not an appropriate metric for equipment with solid or transparent doors 
because it does not capture the physical relationship between heat 
loads and equipment capacity as accurately as either TDA or volume.
    DOE will also establish in this rulemaking standards for remote 
condensing and self-contained commercial refrigerators, commercial 
freezers and commercial refrigerator-freezers, and commercial ice-cream 
freezers, without doors. The physical relationship between heat loads 
and energy consumption is fundamentally different for this equipment 
than for the equipment that has standards set by EPCA (i.e., self-
contained commercial refrigerators, commercial freezers, and commercial 
refrigerator-freezers with doors).\17\ Equipment without doors is 
subject to large loads due to infiltration of warm moist air from the 
area around the equipment. These loads are typically 25 percent to 85 
percent of the total refrigeration load (depending on the air-curtain 
angle and other factors), while the conduction loads experienced by 
equipment without doors are typically less than 5 percent and are 
rarely more than 25 percent. TDA is a much better indicator of 
infiltration load than volume because the open area of the equipment is 
directly related to the amount of infiltrated air. Current standards in 
Europe (EUROVENT--CECOMAF), the United Kingdom (Enhanced Capital 
Allowance Program), and Australia (Australian Greenhouse Office Minimum 
Energy Performance Standards) use TDA as a normalization metric for 
equipment without doors. Moreover, similar to equipment with 
transparent doors, TDA is representative of the ability of equipment 
without doors to display merchandise, which is a measure of its utility 
or usefulness to the owner. Thus, DOE believes that TDA should be the 
normalization metric for all remote condensing and self-contained 
commercial refrigerators, commercial freezers and commercial 
refrigerator-freezers without doors, and all commercial ice-cream 
freezers without doors. DOE also believes that length is not an 
appropriate metric for equipment without doors because it does not 
capture the physical relationship between heat loads and equipment 
capacity as accurately as TDA.
---------------------------------------------------------------------------

    \17\ Standards for self-contained commerical refrigerators, 
commercial freezers, and commercial refrigerator-freezers with doors 
were added to 42 U.S.C. 6313(c)(2), by EPACT 2005, section 136(c).
---------------------------------------------------------------------------

4. Extension of Standards
    During the Framework public meeting, DOE asked stakeholders if it 
would be appropriate to extend the standards prescribed for self-
contained refrigeration equipment with doors in EPCA to similar remote 
condensing equipment with doors and commercial ice-cream freezers with 
doors covered in this rulemaking, and if so, what methodology would be 
appropriate. ARI commented that it would not be appropriate to extend 
the standards from self-contained equipment because that equipment is 
normalized by volume, and the remote condensing equipment industry uses 
TDA or some other metric. (Public Meeting Transcript, No. 3.4 at p. 89) 
Hill Phoenix commented that as DOE has the opportunity to look at 
energy data, it will see that for remote condensing cases, energy 
consumption would be lower than for the self-contained cases. However, 
Hill Phoenix did not explain how to make the comparison. (Public 
Meeting Transcript No. 3.4 at p. 91) ARI also asserted that an 
extension of the EPCA standards for self-contained commercial 
refrigeration equipment with doors to remote condensing commercial 
refrigeration equipment with doors is not appropriate. ARI explained 
that the interior volume of self-contained equipment is calculated 
using the ANSI/AHAM Standard HRF-1-2004, whereas the interior volume of 
remote condensing equipment should be calculated according to ANSI/ARI 
Standard 1200-2006. (ARI, No. 7 at p. 8)
    Because of the differences in energy consumption, and calculation 
of interior volume, DOE will not apply the standards prescribed by EPCA 
for self-contained equipment with doors to remote condensing equipment 
with doors. Instead, DOE will perform an analysis of the impacts of 
potential standards and will adopt levels that meet the requirements of 
EPCA section 325(o). (42 U.S.C. 6295(o)) As to commercial ice-cream 
freezers with doors, in the market and technology assessment (see 
chapter 3 of the TSD), DOE identified 16 commercial ice-cream freezer 
equipment classes. During the engineering analysis (see chapter 5 of 
the TSD), DOE developed cost-efficiency curves directly for 3 of the 16 
commercial ice-cream freezer equipment classes (HCT.SC.I, VCT.SC.I, and 
VCS.SC.I) because of their high shipment volumes. For these three 
classes, this eliminated the issue of extending standards from self-
contained commercial freezers with doors. For the remaining 13 
equipment classes, DOE is considering use of the cost-efficiency curves 
(or standards) developed in this rulemaking for certain equipment 
classes of remote condensing commercial freezers and self-contained 
commercial freezers without doors, for equivalent equipment classes of 
commercial ice-cream freezers. For a portion of these 13 low-shipment-
volume commercial ice-cream freezer equipment classes (as well as other 
low-shipment-volume equipment classes) DOE is also considering use of 
the EPACT 2005 standards for self-contained commercial freezers with 
doors. The intent of this approach is to save time and resources by 
eliminating direct analysis of equipment classes that have low shipment 
volumes and lower overall potential energy savings. At this point in 
the rulemaking, DOE only demonstrated this approach with two commercial 
ice-cream freezer equipment classes, as well as one other commercial 
refrigeration equipment class, (see chapter 5 of the TSD) and not the 
full set of covered equipment classes. DOE specifically seeks feedback 
on this approach to extending cost-efficiency curves (or standards) 
from high-shipment-volume equipment classes to low-shipment-volume 
equipment classes, and of extending EPCA standards to equipment classes 
in this rulemaking. This is identified as

[[Page 41179]]

Issue 1 under ``Issues on Which DOE Seeks Comment'' in section IV.E of 
this ANOPR.
5. Market Assessment
    In the market assessment, DOE develops a qualitative and 
quantitative characterization of the commercial refrigeration equipment 
industry and market structure based on publicly available information 
and data and information submitted by manufacturers and other 
stakeholders.
    DOE identified 34 manufacturers of commercial refrigeration 
equipment. Four of these companies hold approximately 85 percent of the 
domestic market share of refrigerated display cases. These four 
manufacturers produce self-contained commercial refrigerators, 
commercial freezers, and commercial refrigerator-freezers without doors 
and commercial ice-cream freezers, although their primary business is 
in remote condensing commercial refrigerators and commercial freezers 
with and without doors. Like most industries, there exists a second 
tier of smaller, but well-known manufacturers. These other 
manufacturers make up the remaining 15 percent of U.S. market share. 
See chapter 3 of the TSD for more information regarding manufacturers 
of commercial refrigeration equipment.
    DOE is considering the possibility that small businesses would be 
particularly impacted by the promulgation of energy conservation 
standards for commercial refrigeration equipment. The Small Business 
Administration (SBA) defines small business manufacturing enterprises 
for commercial refrigeration equipment as those having 750 employees or 
fewer. SBA lists small business size standards for industries as they 
are described in the North American Industry Classification System 
(NAICS). The size standard for an industry is the largest that a for-
profit concern can be in that industry and still qualify as a small 
business for Federal Government programs. These size standards are 
generally expressed in terms of the average annual receipts or the 
average employment of a firm. For commercial refrigeration equipment, 
the size standard is matched to NAICS code 333415, Air-Conditioning and 
Warm Air Heating Equipment and Commercial and Industrial Refrigeration 
Equipment Manufacturing, and is 750 employees. DOE will study the 
potential impacts on these small businesses in detail during the MIA, 
which will be conducted as a part of the NOPR analysis. See chapter 3 
of the TSD for more information regarding commercial refrigeration 
equipment for small businesses.
    ARI submitted annual shipment data by equipment class for its 
member companies. (ARI, No. 7 Exhibit B at p. 1) DOE understands that 
these data do not include the entire industry, since not all major 
manufacturers are represented by ARI (most notably, True Manufacturing, 
which DOE understands has a large market share of self-contained 
commercial equipment with doors and commercial ice-cream freezers). 
However, because these data cover the vast majority of the commercial 
refrigeration equipment sold, and because no other detailed data were 
available, the ARI shipment data became the basis of DOE's analysis.
    The market and technology assessment (see chapter 3 of the TSD) 
provides detailed shipment information from ARI for each category of 
commercial refrigeration equipment by equipment class for 2005. The ARI 
data included shipments for equipment that operates at an 
``application'' temperature (e.g., wine chillers that operate at 
45[deg]F and freezers that operate at -30[deg]F). However, DOE only 
considered shipments of equipment at the three operating temperatures 
considered in this rulemaking (38[deg]F, 0[deg]F, and -15[deg]F). The 
shipments of equipment that operate at one of these three temperatures 
constitute approximately 98 percent of the shipments reported by ARI. 
See chapter 3 of the TSD for more information regarding commercial 
refrigeration equipment shipments.
    DOE reviewed available literature and consulted with experts on 
commercial refrigeration equipment in order to establish typical 
equipment lifetimes. The literature and individuals consulted estimated 
a wide range of typical equipment lifetimes. Based on the literature 
reviewed and discussions with industry experts and other stakeholders, 
DOE concluded that a typical lifetime of 10 years is appropriate for 
commercial refrigeration equipment. See chapter 3 of the TSD for more 
information regarding equipment lifetimes.
    DOE characterized commercial refrigeration equipment energy 
consumption by conducting a survey of existing remote condensing 
refrigeration equipment from major manufacturers and compiling a 
performance database. The primary source of information for the 
database was equipment data sheets that were publicly available on 
manufacturers' websites. From these data sheets, equipment information 
such as total refrigeration load, evaporator temperature, lighting 
power draw, defrost power draw, and motor power draw allowed 
determination of calculated daily energy consumption (CDEC) according 
to the test procedure in ANSI/ARI Standard 1200-2006. See chapter 3 of 
the TSD for more information regarding the performance data for 
selected remote condensing equipment classes.
6. Technology Assessment
    In the technology assessment, DOE identified technologies and 
design options that could improve the efficiency of commercial 
refrigeration equipment. This assessment provides the technical 
background and structure on which DOE bases its screening and 
engineering analyses. For commercial refrigeration equipment, DOE based 
its list of technologically feasible design options on input from 
manufacturers, industry experts, component suppliers, trade 
publications, and technical papers. See chapter 3 of the TSD for 
additional detail on the technology assessment and technologies 
analyzed.

B. Screening Analysis

    The purpose of the screening analysis is to evaluate the 
technologies that improve the efficiency of equipment, to determine 
which technologies to consider further and which options to screen out. 
DOE consulted with industry, technical experts, and other interested 
parties to develop a list of technologies for consideration. DOE then 
applied the following four screening criteria to determine which 
technologies are unsuitable for further consideration in the rulemaking 
(10 CFR Part 430, Subpart C, Appendix A at 4(a)(4) and 5(b)):
    1. Technological feasibility. Technologies incorporated in 
commercial equipment or in working prototypes will be considered 
technologically feasible.
    2. Practicability to manufacture, install, and service. If mass 
production of a technology in commercial equipment and reliable 
installation and servicing of the technology could be achieved on the 
scale necessary to serve the relevant market at the time of the 
effective date of the standard, then that technology will be considered 
practicable to manufacture, install and service.
    3. Adverse impacts on equipment utility or equipment availability. 
If a technology is determined to have significant adverse impact on the 
utility of the equipment to significant subgroups of consumers, or 
result in the unavailability of any covered equipment type with 
performance characteristics (including reliability), features, sizes,

[[Page 41180]]

capacities, and volumes that are substantially the same as equipment 
generally available in the United States at the time, it will not be 
considered further.
    4. Adverse impacts on health or safety. If it is determined that a 
technology will have significant adverse impacts on health or safety, 
it will not be considered further.
    DOE eliminated five of the technologies considered in the market 
and technology assessment. The specific technologies that were 
eliminated are: (1) Air-curtain design, (2) thermoacoustic 
refrigeration, (3) magnetic refrigeration, (4) electro-hydrodynamic 
heat exchangers, and (5) copper rotor motors. Because all five of these 
technologies are in the research stage, DOE believes that they would 
not be practicable to manufacture, install and service on the scale 
necessary to serve the relevant market at the time of the effective 
date of the standard. In addition, because these technologies are in 
the research stage, DOE cannot assess whether they will have any 
adverse impacts on utility to significant subgroups of consumers, 
result in the unavailability of any types of equipment, or present any 
significant adverse impacts on health or safety. Therefore, DOE will 
not consider these technologies as design options for improving the 
energy efficiency of commercial refrigeration equipment.
    For more details on how DOE developed the technology options and 
the process for screening these options, refer to the market and 
technology assessment (see chapter 3 of the TSD) and the screening 
analysis (see chapter 4 of the TSD).

C. Engineering Analysis

    The purpose of the engineering analysis is to establish the 
relationship between the cost and efficiency of commercial 
refrigeration equipment. For each equipment class, this relationship 
estimates the baseline manufacturer cost, as well as the incremental 
cost for equipment at efficiency levels above a baseline. In 
determining the performance of higher efficiency equipment, DOE 
considers technologies and design option combinations not eliminated in 
the screening analysis. The output of the engineering analysis is a set 
of cost-efficiency ``curves'' that are used in downstream analyses 
(i.e., the LCC and PBP analyses and the NIA).
    DOE typically structures its engineering analysis around one of 
three methodologies. These are: (1) The design-option approach, which 
calculates the incremental costs of adding specific design options to a 
baseline model; (2) the efficiency-level approach, which calculates the 
relative costs of achieving increases in energy efficiency levels; and 
(3) the reverse-engineering or cost-assessment approach, which involves 
a ``bottoms-up'' manufacturing cost assessment based on a detailed bill 
of materials derived from commercial refrigeration equipment tear-
downs.
1. Approach
    In this rulemaking, DOE is adopting an efficiency-level approach, 
supplemented by a design-option approach. For the four equipment 
classes with the highest shipment volumes, DOE used industry-supplied 
cost-efficiency curves developed using an efficiency-level approach in 
downstream analyses.\18\ These industry-supplied curves are qualified 
using analytically derived curves developed by DOE using a design-
option approach. In addition, for the equipment classes where industry-
supplied curves were not available, DOE used the analytically derived 
curves developed using a design-option approach in the downstream 
analyses.
---------------------------------------------------------------------------

    \18\ The four equipment classes with the highest shipment 
volumes are: vertical closed transparent, remote condensing, low 
temperature (VCT.RC.L); vertical open, remote condensing, medium 
temperature (VOP.RC.M); semivertical open, remote condensing, medium 
temperature (SVO.RC.M); and horizontal open, remote condensing, low 
temperature (HZO.RC.L).
---------------------------------------------------------------------------

    In the Framework Document, DOE requested feedback on the use of an 
efficiency-level approach supported, as needed, by a design-option 
approach to determine the cost-efficiency relationship for commercial 
refrigeration equipment. ACEEE expressed concern about the use of an 
efficiency-level approach because it effectively creates a ``black 
box'' that does not allow for any independent analyses. ACEEE prefers 
the design-option approach because of its transparency and the ability 
to be independently verified. ACEEE noted that in the past, DOE has 
taken both approaches simultaneously. By doing both, DOE can calibrate 
one approach against another and have data that are publicly available 
so all parties can comment. (Public Meeting Transcript, No. 3.4 at p. 
110) ASAP stated that the design-option approach remains very important 
because it validates the data and shows the benefits of different 
technical options. (Public Meeting Transcript, No. 3.4 at p. 119) ARI 
stated that it supports DOE's suggested approach for determining the 
cost-efficiency relationship for commercial refrigeration equipment. 
(ARI, No. 7 at p. 9) The Joint Comment stated that it supports the use 
of an efficiency-level approach, provided that the estimates used are 
sufficiently supported with design-option data for purposes of both 
qualification and adding transparency to the ``black box'' of the 
efficiency-level data. In particular, the Joint Comment pointed out 
that this will require DOE to qualify multiple points for each 
equipment class, carrying out further design-option analysis as 
necessary to identify the most reasonable costs to use if the design-
options and efficiency-level data are not in alignment. (Joint Comment, 
No. 9 at p. 1)
    As previously described, DOE used an efficiency-level approach 
supported by a design-option approach. DOE supplemented the industry-
supplied data with its own design-option analysis, which involved 
consultation with outside experts, review of publicly available cost 
and performance information, and modeling of equipment cost and energy 
consumption. The supplemental design-option analysis provides 
validation of the industry efficiency-level data, transparency of 
assumptions and results, and the ability to perform independent 
analyses for verification. In addition, the supplemental design-option 
analysis allows analytically derived cost-efficiency curves to be 
generated for equipment classes where no industry-supplied curves are 
available. The methodology used to perform the design-option analysis 
is described in detail in chapter 5 of the TSD.
2. Equipment Classes Analyzed
    Because of the large number of equipment classes in this rulemaking 
(see Table II.6), DOE did not directly analyze all equipment classes in 
the engineering analysis for this ANOPR. Instead, DOE prioritized the 
engineering analysis by examining only the equipment classes with 
shipment volumes greater than 100 units per year. Table II.7 lists the 
15 equipment classes that DOE directly analyzed in the engineering 
analysis. This table includes the 14 equipment classes with greater 
than 100 annual unit shipments, as well as the VOP.RC.L equipment 
class.\19\ According to the 2005 ARI

[[Page 41181]]

shipments data, these 15 equipment classes represent 98 percent of the 
shipments of covered commercial refrigeration equipment.
---------------------------------------------------------------------------

    \19\ The VOP.RC.L equipment class was reported as having zero 
shipments in the ARI shipment data, but was included in the analysis 
based on a recommendation from a manufacturer during the preliminary 
manufacturer impact analysis interviews. This manufacturer estimated 
that shipments of the VOP.RC.L equipment class are actually around 
2500 units per year. Regardless of the actual shipment volume, DOE 
believes it is unlikely that this equipment class has zero annual 
shipments, and likely has more than 100 annual shipments. DOE 
believes this warrants inclusion of the VOP.RC.L equipment class in 
the analysis.

   Table II.7.--Equipment Classes Directly Analyzed in the Engineering
                                Analysis
------------------------------------------------------------------------
        Equipment class                        Description
------------------------------------------------------------------------
VOP.RC.M......................  Vertical Refrigerator without Doors with
                                 a Remote Condensing Unit, Medium
                                 Temperature.
VOP.RC.L......................  Vertical Freezer without Doors with a
                                 Remote Condensing Unit, Low
                                 Temperature.
SVO.RC.M......................  Semi-Vertical Refrigerator without Doors
                                 with a Remote Condensing Unit, Medium
                                 Temperature.
HZO.RC.M......................  Horizontal Refrigerator without Doors
                                 with a Remote Condensing Unit, Medium
                                 Temperature.
HZO.RC.L......................  Horizontal Freezer without Doors with a
                                 Remote Condensing Unit, Low
                                 Temperature.
VCT.RC.M......................  Vertical Refrigerator with Transparent
                                 Doors with a Remote Condensing Unit,
                                 Medium Temperature.
VCT.RC.L......................  Vertical Freezer with Transparent Doors
                                 with a Remote Condensing Unit, Low
                                 Temperature.
SOC.RC.M......................  Service Over Counter Refrigerator with a
                                 Remote Condensing Unit, Medium
                                 Temperature.
VOP.SC.M......................  Vertical Refrigerator without Doors with
                                 a Self-Contained Condensing Unit,
                                 Medium Temperature.
SVO.SC.M......................  Semi-Vertical Refrigerator without Doors
                                 with a Self-Contained Condensing Unit,
                                 Medium Temperature.
HZO.SC.M......................  Horizontal Refrigerator without Doors
                                 with a Self-Contained Condensing Unit,
                                 Medium Temperature.
HZO.SC.L......................  Horizontal Freezer without Doors with a
                                 Self-Contained Condensing Unit, Low
                                 Temperature.
VCT.SC.I......................  Vertical Ice-Cream Freezer with
                                 Transparent Doors with a Self-Contained
                                 Condensing Unit, Ice-Cream Temperature.
VCS.SC.I......................  Vertical Ice-Cream Freezer with Solid
                                 Doors with a Self-Contained Condensing
                                 Unit, Ice-Cream Temperature.
HCT.SC.I......................  Horizontal Ice-Cream Freezer with
                                 Transparent Doors with a Self-Contained
                                 Condensing Unit, Ice-Cream Temperature.
------------------------------------------------------------------------

3. Analytical Models
    In the design-option approach, DOE used models to develop estimates 
of cost and energy consumption for each equipment class at each 
efficiency level. A cost model was used to estimate the manufacturer 
production cost (MPC) in dollars, and an energy consumption model was 
used to estimate the daily energy consumption in kilowatt hours (kWh) 
of covered commercial refrigeration equipment.
a. Cost Model
    Development of the cost model involved the disassembly of a self-
contained refrigerator with transparent doors, an analysis of the 
materials and manufacturing processes, and the development of a 
parametric spreadsheet model flexible enough to cover all equipment 
classes. The manufacturing cost model estimated MPC and reported it in 
aggregated form to maintain confidentiality of sensitive cost data. DOE 
obtained input from stakeholders on the MPC estimates and assumptions 
to confirm accuracy. The cost model was used for 7 of the 15 examined 
equipment classes and the results were extended to 6 of the remaining 
examined equipment classes. The cost of the remaining two equipment 
classes was estimated using available manufacturer list price (MLP) 
information discounted to MPC. Details of the cost model are provided 
in chapter 5 of the TSD.
    A manufacturer markup is applied to the MPC estimates to arrive at 
the MSP. This is the price of equipment sold at which the manufacturer 
can recover both production and non-production costs, and earn a 
profit. A market-share-weighted average industry markup was developed 
by examining several major commercial refrigeration equipment 
manufacturers' gross margin information from annual reports and 
Securities and Exchange Commission (SEC) 10-K reports. The 
manufacturers whose gross margin information was examined by DOE 
represent approximately 80 percent of the commercial refrigeration 
equipment market, and each of these companies is a subsidiary of a more 
diversified parent company that manufactures equipment other than 
commercial refrigeration equipment. Because the SEC 10-K reports do not 
provide gross margin information at the subsidiary level, the estimated 
markups represent the average markups that the parent company applies 
over its entire range of offerings.
    Markups were evaluated for the years 2000 to 2005, inclusively. The 
manufacturer markup is calculated as 100/(100-average gross margin), 
where gross margin is calculated as revenue-cost of goods sold (COGS). 
To validate the SEC 10-K and annual report information, Internal 
Revenue Service industry statistics were used as a check. DOE estimated 
the average manufacturer markup within the industry as 1.39.
    DOE received industry-supplied curves from ARI in the form of daily 
energy consumption versus MLP, (both normalized by TDA). Since DOE's 
analytically derived curves were developed in the form of CDEC versus 
MSP (both normalized by TDA), it was necessary for DOE to estimate an 
industry list price markup so that comparisons between the two sets of 
curves could be made. The industry list price markup is a markup to the 
production cost that provides the list price. To make comparisons 
between the analytically derived cost-efficiency curves and the 
industry-supplied cost-efficiency curves, DOE discounted the industry 
data with the list price markup and normalized the analytically derived 
curves by TDA.
    DOE understands that manufacturers typically offer a discount off 
the MLP, which depends on various factors such as the relationship with 
the customer and the volume and type of equipment being purchased. For 
the estimate of list price markup, DOE relied on information gathered 
on self-contained commercial refrigeration equipment, since list price 
information is readily available and typically published by self-
contained equipment manufacturers for this equipment. A review of the 
data for self-contained equipment shows that the list price markup is 
typically 2.0 (i.e., manufacturers will typically sell their equipment 
for 50 percent off the published list price). DOE further verified the 
estimate by obtaining list price quotes from several remote condensing 
equipment manufacturers. During manufacturer interviews, some 
commercial refrigeration equipment manufacturers agreed with the 2.0 
markup estimate, while others stated the estimate was somewhat high. 
Because the list price markup can vary significantly from manufacturer 
to manufacturer and from customer to customer, DOE applied the same 
estimated list price markup across each

[[Page 41182]]

equipment class to simplify the analysis.
b. Energy Consumption Model
    The energy consumption model estimates the daily energy consumption 
of commercial refrigeration equipment at various performance levels 
using a design-options approach. The model is specific to the 
categories of equipment covered under this rulemaking, but is 
sufficiently generalized to model the energy consumption of all covered 
equipment classes. For a given equipment class, the model estimates the 
daily energy consumption for the baseline and the energy consumption of 
several levels of performance above the baseline. The model is used to 
calculate each performance level separately. For the baseline level, a 
corresponding cost is calculated using the cost model, and for each 
level above the baseline, the cost increases resulting from the 
addition of various design options are used to recalculate the cost.
    In the market and technology assessment (see chapter 3 of the TSD), 
DOE defined an initial list of technologies that can reduce the energy 
consumption of commercial refrigeration equipment. In the screening 
analysis, DOE screened out technologies based on four screening 
criteria: Technological feasibility, practicability to manufacture, 
changes to product utility, and safety. The remaining list of 
technologies becomes one of the inputs to the engineering analysis. 
However, for reasons noted below, DOE did not incorporate all of these 
technologies in the energy consumption model. Technologies that were 
not used include: Remote lighting ballast location, evaporator fan 
motor controllers, higher efficiency evaporator and condenser fan 
blades, insulation increases or improvements, low pressure differential 
evaporators, defrost cycle controls, and defrost mechanisms.
    Relocation of fluorescent lamp ballasts outside the refrigerated 
space can reduce energy consumption by lessening the refrigeration load 
on the compressor. However, for the majority of commercial 
refrigeration equipment currently manufactured, ballasts are already 
located in electrical trays outside of the refrigerated space, in 
either the base or top of the equipment. The notable exceptions are the 
equipment classes in the VCT equipment family, where ballasts are most 
often located on the interior of each door mullion. Most commercial 
refrigeration equipment manufacturers purchase doors for VCT units that 
are preassembled with the entire lighting system in place rather than 
configured for separate ballasts. DOE believes that most commercial 
refrigeration equipment manufacturers choose doors this way because it 
would be labor intensive and time consuming to relocate these ballasts 
at the factory, and because of the additional cost and labor of wiring 
separate ballasts. In addition, the potential energy savings are small, 
since modern electronic ballasts are very efficient and typically 
contribute only a few watts each to the refrigeration load. Therefore, 
DOE did not consider remote relocation of ballasts as a design option.
    Evaporator fan motor controllers allow fan motors to run at 
variable speed, to match changing conditions in the case. For 
evaporator fan motor controllers, there is some opportunity for savings 
as the buildup and removal of frost creates differing pressure drops 
across the evaporator coil. Theoretically, less fan power is required 
when the coil is free of frost. Additionally, the coil would operate at 
a more stable temperature during the period of frost build-up. However, 
the effectiveness of the air curtain in equipment without doors is very 
sensitive to changes in airflow, so fan motor controllers could disrupt 
the air curtain. The potential of disturbance to the air curtain, which 
could lead to higher infiltration loads, does not warrant the use of 
evaporator fan motor controllers in equipment without doors, even if 
there were some reduction in fan energy use. In addition, DOE believes 
that savings from evaporator fan motor controllers in all equipment 
types would be small. Therefore, DOE did not consider evaporator fan 
motor controllers as a design option.
    Higher efficiency evaporator and condenser fan blades reduce motor 
shaft power requirements by moving air more efficiently. Current 
technology used in commercial refrigeration equipment is stamped sheet 
metal or plastic axial fan blades. These fan blades are lightweight and 
inexpensive. DOE was not able to identify any axial fan blade 
technology that is significantly more efficient than what is currently 
used, but did identify one alternative fan blade technology that could 
potentially improve efficiency: Tangential fan blades. Tangential fan 
blades can produce a wide, even airflow, and have the potential to 
allow for increased saturated evaporator temperature (SET) through 
improved air distribution across the evaporator coil, which would 
reduce compressor power. However, tangential fan blades in small sizes 
are themselves less efficient at moving air, and thus require greater 
motor shaft power. Because of these competing effects, DOE did not 
consider tangential fan blades as a design option.
    Increases in or improvements to insulation thickness reduce the 
heat load due to conduction and thus reduce compressor power. Increases 
in the thickness of foam insulation are problematic because they must 
either borrow volume from the refrigerated space or increase the 
overall size of the equipment cabinet. Because the outer dimensions of 
commercial refrigeration equipment are limited, it is often not 
practical to increase the overall size of the cabinet (i.e., case 
exterior dimensions are optimized for packing equipment into freight 
and shipping containers). In addition, reducing the size of the 
refrigerated space would reduce the utility of the equipment. 
Therefore, increasing the thickness of foam insulation is not 
practical. Furthermore, many display cases do not have significant 
conduction loads, so insulation improvements do not offer large energy 
savings. Improvements to insulation material include better 
polyurethane foams and vacuum panels. In consultation with insulation 
material manufacturers, DOE determined that there are no significant 
differences in ``grades'' of insulation material, so most equipment 
manufacturers are already using the best commercially available foam 
materials in their equipment. Vacuum panels are an alternative form of 
insulation; however, they may degrade in performance in time as small 
leaks develop. In addition, vacuum panels cannot be penetrated by 
fasteners, and do not provide the rigidity of ``foamed-in-place'' 
panels that polyurethane insulation creates. Therefore, DOE did not 
consider insulation thickness increases or improvements as a design 
option. DOE did, however, consider improvements to the efficiency 
(e.g., thermal conductance) of doors in the design options analysis. 
Higher efficiency doors reduce the overall heat gain to the case by 
using better frame materials, more panes of glass and better (or more) 
insulation in the doorframe.
    Low pressure differential evaporators reduce energy consumption by 
reducing the power of evaporator fan motors. However, in space-
constrained equipment such as commercial refrigeration equipment, this 
reduction usually comes from a decrease in evaporator coil surface 
area, which generally requires a lower SET to achieve the same 
discharge air temperature and cooling potential. This, in turn, results 
in a reduction in compressor efficiency. Because of these competing 
effects, DOE did not consider

[[Page 41183]]

low pressure differential evaporators as a design option.
    Defrost cycle control can reduce energy consumption by reducing the 
frequency and duration of defrost periods. The majority of equipment 
currently manufactured already uses partial defrost cycle control in 
the form of cycle termination control. However, defrost cycle 
initiation is still scheduled at regular intervals. Full defrost cycle 
control would involve a method of detecting frost buildup and 
initiating defrost. As described in the market and technology 
assessment (see chapter 3 of the TSD), this could be accomplished 
through an optical sensor or sensing the temperature differential 
across the evaporator coil. However, both of these methods are 
unreliable due to problems with fouling of the coil due to dust and 
other surface contaminants. This becomes more of an issue as the 
display case ages. Because of these issues, DOE did not consider 
defrost cycle control as a design option.
    Defrosting for medium temperature equipment is typically 
accomplished with off-cycle defrost. Because off-cycle defrost uses no 
energy (and decreases compressor on-time) there is no defrost design 
option capable of reducing defrost energy in cases that use off-cycle 
defrost. Some medium temperature equipment and all low temperature and 
ice-cream temperature equipment use supplemental heat for defrost. 
Commonly, electric resistance heating (electric defrost) is used in 
this equipment. An alternative to electric defrost in equipment that 
requires supplemental defrost heat is hot-gas defrost. Hot-gas defrost 
is most often used in remote condensing equipment and involves the use 
of the hot compressor discharge gas to warm the evaporator from the 
refrigerant side. The test procedure for commercial refrigeration 
equipment is not capable of quantifying the energy expenditure of the 
compressor during a hot-gas defrost cycle. Therefore, DOE did not 
consider it as a design option.
    The design options DOE considered in the engineering analysis are:
     Higher efficiency lighting and ballasts for the VOP, SVO, 
HZO, and SOC equipment families (horizontal fixtures);
     Higher efficiency lighting and ballasts for the VCT 
equipment family (vertical fixtures);
     Higher efficiency evaporator fan motors;
     Increased evaporator surface area;
     Improved doors for the VCT equipment family, low 
temperature;
     Improved doors for the VCT equipment family, medium 
temperature;
     Improved doors for the HCT equipment family, ice-cream 
temperature;
     Improved doors for the SOC equipment family, medium 
temperature;
     Higher efficiency condenser fan motors (for self-contained 
equipment only);
     Increased condenser surface area (for self-contained 
equipment only); and
     Higher efficiency compressors (for self-contained 
equipment only).\20\
---------------------------------------------------------------------------

    \20\ Improvements to the condensing unit are not considered for 
remote condensing equipment, since the test procedure and standard 
apply only to the cabinet and not the condensing unit.
---------------------------------------------------------------------------

    In developing the energy consumption model, DOE made certain 
assumptions including general assumptions about the analysis 
methodology as well as specific numerical assumptions regarding load 
components and design options. DOE based its energy consumption 
estimates on new equipment tested in a controlled-environment chamber 
subjected to ANSI/ARI Standard 1200-2006, which references the ANSI/
ASHRAE Standard 72-2005 test method.\21\ Manufacturers that are 
certifying their equipment to comply with Federal standards will be 
required to test new units with this test method, which specifies a 
certain ambient temperature, humidity, light level, and other 
requirements. One specification which DOE noted was absent from this 
standard is the operating hours of the display case lighting in a 24-
hour period. DOE considered the operating hours to be 24 hours (i.e., 
that lights are on continuously). Other commercial refrigeration 
equipment considerations are detailed in chapter 5 of the TSD.
---------------------------------------------------------------------------

    \21\ Test procedures are found at 10 CFR 431.64.
---------------------------------------------------------------------------

    The energy consumption model calculates CDEC as two major 
components: compressor energy consumption and component energy 
consumption (expressed as kilowatt hours per day (kWh/day)). Component 
energy consumption is a sum of the direct electrical energy consumption 
of fan motors, lighting, defrost and drain heaters, anti-sweat heaters, 
and pan heaters. Compressor energy consumption is calculated from the 
total refrigeration load (expressed as British thermal units per hour 
(Btu/h)) and one of two compressor models: one version for remote 
condensing equipment and one for self-contained equipment. The total 
heat load is a sum of the component load and the non-electric load. The 
component load is a sum of the heat emitted by evaporator fan motors, 
lighting, defrost and drain heaters, and anti-sweat heaters inside and 
adjacent to the refrigerated space (condenser fan motors and pan 
heaters are outside of the refrigerated space and do not contribute to 
the component heat load). The non-electric load is a sum of the heat 
contributed by radiation through glass and openings, heat conducted 
through walls and doors, and sensible and latent loads from warm, moist 
air infiltration through openings. Details of component energy 
consumption, compressor energy consumption, and load models are shown 
in chapter 5 of the TSD.
4. Baseline Models
    As mentioned above, the engineering analysis estimates the 
incremental costs for equipment with efficiency levels above the 
baseline in each equipment class. DOE was not able to identify a 
voluntary or industry standard that provided a minimum baseline 
efficiency requirement for commercial refrigeration equipment. 
Therefore, it was necessary for DOE to establish baseline 
specifications for each equipment class to define the energy 
consumption and cost of the typical baseline equipment. These 
specifications include dimensions, number of components, temperatures, 
nominal power ratings, and other case features that affect energy 
consumption, as well as a basic case cost (the cost of a piece of 
equipment not including the major efficiency-related components such as 
lights, fan motors, and evaporator coils).
    DOE established baseline specifications for each of the equipment 
classes modeled in the engineering analysis by reviewing available 
manufacturer data, selecting several representative units from 
available manufacturer data, and then aggregating the physical 
characteristics of the selected units. This process created a 
representative unit for each equipment class with average 
characteristics for physical parameters (e.g., volume, TDA), and 
minimum performance of energy-consuming components (e.g., fans, 
lighting). The cost model was used to develop the basic case cost for 
each equipment class. See appendix B of the TSD for these 
specifications.
5. Cost-Efficiency Results
    The results of the engineering analysis are reported as cost-
efficiency data (or ``curves'') in the form of CDEC \22\ (in

[[Page 41184]]

kWh) versus MSP (in dollars), which form the basis for subsequent 
analyses in the ANOPR. DOE created 15 cost-efficiency curves and 
received 4 industry aggregated curves from ARI. The industry-supplied 
curves are in the form of CDEC versus MLP, both normalized by TDA. To 
compare the analytically derived curves to the industry-supplied 
curves, DOE discounted the industry data with the list price markup and 
normalized the analytically derived curves by TDA. For the four 
equipment classes with the highest shipment volumes DOE used the 
industry-supplied cost-efficiency curves in the downstream analyses. 
For the equipment classes where industry-supplied curves were not 
available, DOE used the analytically derived curves in the downstream 
analyses. See chapter 5 for additional detail on the engineering 
analysis and appendix B of the TSD for complete cost-efficiency 
results.
---------------------------------------------------------------------------

    \22\ The ANSI ARI Standard 1200-2006 test procedure uses CDEC as 
the metric for remote condensing equipment and total daily energy 
consumption (TDEC) as the metric for self-contained equipment. In 
the engineering analysis, DOE used CDEC as the metric for both 
equipment types, but will refer to each equipment type's specific 
metric when developing standard equations.
---------------------------------------------------------------------------

D. Markups To Determine Equipment Price

    This section explains how DOE developed the supply chain markups to 
determine installed prices for commercial refrigeration equipment (see 
chapter 6 of the TSD). DOE used the supply chain markups it developed 
(along with sales taxes and installation costs) in conjunction with the 
MSPs developed from the engineering analysis to arrive at the final 
installed equipment prices for baseline and higher efficiency 
equipment. As shown in Table II.8, DOE defined three distribution 
channels for commercial refrigeration equipment to describe how the 
equipment passes from the manufacturer to the customer. In the first 
distribution channel, the manufacturer sells the equipment directly to 
the customer through a national account. In the second and third 
distribution channels, the manufacturer sells the commercial 
refrigeration equipment to a wholesaler, who in turn may sell it 
directly to the customer or sell it to a mechanical contractor who may 
sell it and its installation to the customer. The wholesaler in this 
case can be a refrigeration wholesaler focusing on commercial 
refrigeration equipment, or a grocery warehouser (supply chain 
distributor) who sells food and retail store equipment to the retailer. 
Table II.8 also gives the estimated distribution channel shares (in 
percentage of total sales) through each of the three distribution 
channels.

      Table II.8.--Distribution Channels and Shares for Commercial
                         Refrigeration Equipment
------------------------------------------------------------------------
            Channel 1                  Channel 2           Channel 3
------------------------------------------------------------------------
Manufacturer....................  Manufacturer,       Manufacturer,
                                   Wholesaler.         Wholesaler,
                                                       Contractor.
Customer........................  Customer..........  Customer.
86 percent......................  7 percent.........  7 percent.
------------------------------------------------------------------------

    For each of the steps in the distribution channels presented above, 
DOE estimated a baseline markup and an incremental markup. A baseline 
markup is applied to the purchase of equipment with the baseline 
efficiency. An incremental markup is applied to the incremental 
increase in MSP for the purchase of higher efficiency equipment. The 
overall baseline or overall incremental markup is then given by the 
product of all the markups at each step in the distribution channel 
plus sales tax. Overall baseline or overall incremental markups for the 
entire commercial refrigeration equipment market can be determined 
using the shipment weights through each distribution channel and the 
corresponding overall baseline markup or the corresponding overall 
incremental markup, respectively, for each distribution channel 
including the applicable sales tax.
    Markups for each step of the distribution channel were developed 
based on available financial data. DOE based the wholesaler markups on 
firm balance-sheet data from the Heating, Airconditioning & 
Refrigeration Distributors International (HARDI), the trade association 
representing wholesalers of refrigeration and heating, ventilating and 
air-conditioning (HVAC) equipment. DOE used median financial statistics 
reported by the controls and refrigeration industry segment of this 
trade association in HARDI's 2005 Profit Planning Report. DOE based the 
mechanical contractor markups on U.S. Census Bureau financial data for 
the plumbing, heating, and air conditioning industry as a whole. 
Average markups for sales through national accounts were estimated as 
one-half that of the wholesaler to customer distribution channel.
    Baseline markups for wholesalers and for contractors are calculated 
as total revenue (equal to all expenses paid plus profit) divided by 
the COGS. Expenses include direct costs for equipment, labor expenses, 
occupancy expenses, and other operating expenses (e.g., insurance, 
advertising). Some of these are presumed to be fixed costs (labor, 
occupancy) that do not change with the distribution of higher 
efficiency equipment. Other expenses are variable costs that may change 
in response to changes in COGS. In developing incremental markup, DOE 
considered the labor and occupancy costs to be fixed, and the other 
operating costs and profit to scale with the MSP.
    The overall markup is the product of all the markups plus sales tax 
within a distribution channel. Both baseline and incremental overall 
markups were calculated for each distribution channel. Sales taxes were 
calculated based on State-by-State sales tax data reported by the Sales 
Tax Clearinghouse. Both contractor costs and sales tax vary by State, 
so the markup analysis develops distributions of markups within each 
distribution channel as a function of State and business type (e.g., 
supermarket, convenience store, convenience store with gas station, or 
superstore). Because the State-by-State distribution of commercial 
refrigeration equipment units varies by business type (e.g., 
supermarkets may be more prevalent relative to convenience stores in 
one part of the country than another), a national level distribution of 
the markups is different for each business type.
    Average overall markups in each distribution channel can be 
calculated using estimates of the shipments of commercial refrigeration 
equipment units by business type and by State. The ANOPR analysis used 
estimates of relative total frozen and refrigerated food sales by State 
and each business type as reported by the U.S. Census Bureau as a proxy 
for relative shipments of commercial refrigeration equipment. Overall 
baseline and incremental markups for sales to supermarkets

[[Page 41185]]

within each distribution channel are shown in Table II.9 and Table 
II.10.

           Table II.9.--Baseline Markups by Distribution Channel Including Sales Tax for Supermarkets
----------------------------------------------------------------------------------------------------------------
                                                               Mechanical
                                                               contractor     National account
                                             Wholesaler         (includes      (manufacturer-        Overall
                                                               wholesaler)         direct)
----------------------------------------------------------------------------------------------------------------
Distributor(s) Markup...................             1.436             2.182             1.218             1.301
Sales Tax...............................             1.068             1.068             1.068             1.068
Overall Markup..........................             1.533             2.330             1.300             1.389
----------------------------------------------------------------------------------------------------------------


         Table II.10.--Incremental Markups by Distribution Channel Including Sales Tax for Supermarkets
----------------------------------------------------------------------------------------------------------------
                                                               Mechanical
                                                               contractor     National account
                                             Wholesaler         (includes      (manufacturer-        Overall
                                                               wholesaler)         direct)
----------------------------------------------------------------------------------------------------------------
Distributor(s) Markup...................             1.107             1.362             1.054             1.079
Sales Tax...............................             1.068             1.068             1.068             1.068
Overall Markup..........................             1.182             1.454             1.125             1.152
----------------------------------------------------------------------------------------------------------------

    Additional detail on markups can be found in chapter 6 of the TSD.

E. Energy Use Characterization

    The energy use characterization estimates the annual energy 
consumption of commercial refrigeration equipment systems (including 
remote condensing units). This estimate is used in the subsequent LCC 
and PBP analyses (see chapter 8 of the TSD) and NIA (see chapter 10 of 
the TSD). DOE estimated the energy consumption of the 15 equipment 
classes analyzed in the engineering analysis (see chapter 5 of the TSD) 
using the relevant test procedure. These energy consumption estimates 
were then validated with annual simulation modeling of selected 
equipment classes and efficiency levels.
    ANSI/ARI Standard 1200-2006, which references ANSI/ASHRAE Standard 
72-2005, is an industry-developed test procedure for measuring the 
energy consumption of commercial refrigeration equipment. ANSI/ARI 
Standard 1200-2006 provides a method for estimating the daily energy 
consumption for a piece of commercial refrigeration equipment under 
steady-state conditions. ANSI/ARI Standard 1200-2006 treats remote 
condensing and self-contained commercial refrigeration equipment 
differently. In the case of remote condensing equipment, the test 
procedure measures the energy use of each component (e.g., fans and 
lights) as well as the total refrigeration load of the equipment. The 
total refrigeration load is used to calculate compressor energy 
consumption based on a standardized relationship of evaporator 
temperature and compressor energy efficiency ratio. In the case of 
self-contained commercial equipment, the test procedure measures the 
total energy use of the equipment as a whole, including both component 
energy use and compressor energy use. The resulting daily energy 
consumption estimate is either CDEC for remote condensing equipment or 
TDEC for self-contained equipment. Both metrics represent the sum of 
compressor energy consumption and the energy consumption of all other 
energy consuming components in the equipment (i.e., evaporator fan 
motors, lighting, anti-sweat heaters, defrost and drain heaters, and 
condensate evaporator pan heaters).
    Several options were considered to provide estimates of the energy 
consumption of commercial refrigeration equipment. These options 
include: using a whole building simulation which would analyze case, 
compressor, and HVAC impacts; using an existing simulation program that 
would analyze display case and compressor energy use on an annual 
basis; and using estimates of energy consumption for various categories 
of equipment as developed in the engineering analysis. For the ANOPR, 
DOE used energy consumption estimates from the engineering analysis 
directly in the LCC analysis. To validate these estimates, DOE 
conducted a whole building energy use simulation for seven equipment 
classes at selected design-option levels.
    A whole building simulation was the option first considered by DOE 
and was discussed during DOE?s Framework public meeting. During that 
meeting Southern Company and ARI commented that a whole building 
analysis is the desired approach (Public Meeting Transcript No. 3.4 at 
p. 151). The Northwest Power Planning Council (NWPPC) and ASAP were 
concerned about the additional difficulty and complexity of the 
resulting analysis (Public Meeting Transcript No. 3.4 at p. 161 and 
Public Meeting Transcript No. 3.4 at p. 155). The approach taken by DOE 
was to use energy estimates developed from the engineering analysis but 
to validate those estimates with whole building simulation of 
supermarkets, which included simulation of the refrigeration system. 
There were four reasons for adopting this approach.
    1. The energy consumption ratings provided by ANSI/ARI Standard 
1200-2006 do not distinguish between energy consumption by the 
compressor (which may vary as a function of environmental conditions) 
and energy consumption by other components in the case (e.g., 
lighting), which do not vary as a function of environmental conditions. 
These two types of energy consumption are roughly similar in magnitude, 
and it is difficult to assess where the energy savings are coming from 
or what the impact on a building HVAC load might be.
    2. The initial engineering analysis (see chapter 5 of the TSD) did 
not suggest design options that would provide significant changes to 
the building load relative to the commercial refrigeration system 
energy consumption.
    3. The net interaction between the refrigeration system and HVAC 
energy consumption is a function of the variation in HVAC designs. HVAC 
system designs for food sales buildings, like supermarkets, may 
incorporate such features as separate dehumidification and refrigerant 
condenser reheat systems, which make assessing overall HVAC impact 
complicated. Also, detailed data on the relative prevalence

[[Page 41186]]

of different HVAC system designs incorporating these features is not 
readily available.
    4. The interaction between the refrigeration and overall HVAC 
energy consumption is a function of the ratio of the total heat removed 
from the space by the display cases relative to the other internal 
loads (lighting, occupancy, and plug load) and external loads (building 
envelope and ventilation driven) in the building. This ratio determines 
the fraction of the year that the building is either in heating or 
cooling mode. However, the balance of refrigeration-driven space loads 
to the other space loads is impacted by the efficiency levels for all 
commercial refrigeration equipment classes, complicating the analysis 
of each equipment class individually. For the equipment classes with 
the largest shipment, which make up the largest base of equipment in a 
typical store and have the biggest overall impact on the space load 
balance, the industry-supplied efficiency curves do not provide 
information about changes in equipment design that could be used to 
assess this change in refrigeration-driven space loads.
    In its validation effort, DOE used a modified version of the DOE 
developed DOE-2 whole-building energy analysis tool, DOE-2.2 
refrigeration version (DOE-2.2R), to model whole-building energy use in 
a typical supermarket in five U.S. climate locations (Baltimore, 
Chicago, Houston, Los Angeles, and Memphis). Each of these locations 
has a climate that typifies one of five distinct U.S. climate zones 
developed by DOE for use in building energy codes development work. 
These five climate zones taken together encompass approximately three-
fourths of the U.S. population. Annual energy use for seven equipment 
classes was simulated at four representative efficiency levels. Data on 
refrigeration loads from the engineering analysis supported the 
development of the energy efficiency levels analyzed. These 
refrigeration loads included those from internal features (e.g., 
lighting and fans inside the case), and externally driven loads from 
radiation, convection/infiltration, and conduction through the case 
wall. These loads and other direct energy-consuming features (e.g., fan 
and lights) were mapped to corresponding inputs in DOE-2.2R for the 
simulation analysis. Pull-down loads from shelving of food are not part 
of the test procedure and were therefore not considered.
    To examine the impacts of ambient relative humidity, refrigerant 
piping heat loss, and climate location on energy consumption of 
commercial refrigeration equipment, annual simulation data from the DOE 
2.2R model was converted to average daily energy consumption and 
average daily refrigeration load comparison with the engineering 
analysis estimates. DOE also assessed the magnitude of interactions 
between the refrigeration system and the building HVAC system.
    The results of the whole-building simulation showed that climate 
location has no influence on energy consumption of the refrigerated 
case components for the remote condensing equipment classes examined. 
For a given efficiency level, the energy consumption of case components 
is the same for the simulation and the engineering analysis. In 
addition, climate location was shown to have relatively little 
influence on compressor energy consumption for equipment classes with 
doors, where display case infiltration levels are relatively low. 
Climate conditions do have a significant impact on compressor energy 
consumption for open equipment. Compressor energy consumption is 
determined by total refrigeration load and compressor efficiency, both 
of which are affected by climate conditions for remote condensing 
equipment.
    In general, the average daily refrigeration load from the DOE 2.2R 
simulations was smaller than that predicted by the engineering 
analysis, due to differences between the building space conditions 
throughout the year captured by the simulations and the space 
conditions used for the steady-state rating of equipment used in the 
engineering analysis. The actual energy consumption of the compressors 
was, however, generally higher than that predicted by the engineering 
analysis. The difference in energy consumption is due to the 
aforementioned differences in refrigeration loads, the fact that the 
simulation accounts for changes in condensing temperatures over the 
year for each climate, and the additional superheat loads calculated by 
the simulation software to bring the return refrigerant return vapor up 
to the compressor suction temperature conditions, which is estimated to 
be 65[deg]F (the ARI rating condition used to provide rated compressor 
performance).
    Analysis of the annual refrigeration system energy savings for each 
of 3 efficiency levels above the baseline level were all within 14 
percent of that predicted by the engineering analysis for 6 equipment 
classes across all efficiency levels and climates examined. Net energy 
savings averaged 8 percent higher for the highest efficiency level 
examined. For the remote condensing VOP.RC.L equipment class the annual 
energy savings deviated by as much as 21 percent. No shipments for this 
equipment class were reported by ARI. Actual shipments, if any, are 
expected to be small. This suggests that for the majority of commercial 
refrigeration equipment, the energy savings predicted by the test 
procedure agreed reasonably well with the annual simulation results, 
although the impact of individual design options may differ.
    Estimates of whole-building energy consumption and refrigeration 
energy consumption were examined at selected efficiency levels and 
climate locations to determine if the design options considered in the 
engineering analysis would have a significant effect on building HVAC 
energy use. The influence of refrigeration equipment efficiency changes 
on HVAC system energy use varies depending on the design option. For 
example, improved display case lighting efficiency would reduce the 
energy consumption of the refrigeration system and potentially the air-
conditioning system, depending on lighting placement. Reduced 
conduction and radiation loads in the refrigeration equipment would, by 
contrast, increase the air-conditioning load and subsequent energy 
consumption while decreasing the heating load. For all equipment 
classes and efficiency levels examined, the annual whole-building 
energy savings was within 10 percent of that calculated for the 
refrigeration system alone. For the highest efficiency level examined, 
savings were within 1.4 percent. The simulation results suggest that 
the collective impact of the design options considered does not 
significantly affect the HVAC energy consumption.
    In the energy use characterization, DOE used whole-building 
simulation to explore the relative energy savings of refrigeration 
systems and whole-building energy use for supermarkets. While there 
were some differences in the annual energy use predicted by the whole-
building simulation and that derived in the engineering analysis, DOE 
concludes that these differences were generally small.
    Both the engineering analysis and the whole-building simulation 
presumed that display case lighting operated 24 hours per day. In many 
applications, display case lighting may not be required 24 hours per 
day. DOE conducted a sensitivity analysis to explore how variation in 
display case lighting operating hours affected the energy savings. This 
sensitivity analysis was done for all equipment classes using the 
engineering analysis spreadsheet and the design options considered for 
each equipment class. No such analysis could be done using the

[[Page 41187]]

industry-supplied efficiency curves as details on component energy 
consumption were not provided with these curves. The sensitivity 
analysis showed that energy savings were reduced as lighting operating 
hours were reduced for all equipment classes that used display case 
lighting. The magnitude of this effect depended upon the equipment 
class. For a 20-hour lighting time assumption, the reduction in energy 
savings was between 1 percent and 6 percent. For a 16-hour lighting 
time assumption, the reduction in energy savings was between 2 percent 
and 15 percent. DOE's analysis suggests that typical lighting operating 
hours for most classes of commercial refrigeration equipment would fall 
within the range of 16 to 24 hours per day, depending on store 
operating hours, use of lighting during after-hours case stocking, and 
typical lighting operation or controls used for unoccupied periods. 
Display case lighting hours may also depend on the business type as 
convenience stores have distinctly different operating hours than other 
segments of the food retail industry.
    Because of the sensitivity of the annual energy savings to display 
case lighting hours and the lack of data on actual lighting use, DOE 
specifically seeks feedback on the assumption of 24 hours for case 
lighting operation. This is identified as Issue 6 under ``Issues on 
Which DOE Seeks Comment'' in section IV.E of this ANOPR.
    Also, DOE specifically seeks feedback on operation and maintenance 
practices for commercial refrigeration equipment, which may be 
prevalent in the field and may differ from standardized conditions, 
such as those represented in a test procedure. Operation and 
maintenance practices could potentially affect the energy consumption 
savings experienced in the field as a result of increased energy 
efficiency as compared to those savings estimated in the TSD's energy 
consumption analysis under idealized testing conditions. These factors 
include: compressor operation that is inefficient due to age or some 
other condition associated with the compressor unit; location of a 
commercial refrigeration unit adjacent to an outside door or in direct 
sunlight; operation of a room-cooling fan nearby the commercial 
refrigeration unit; a unit routinely stocked with products that are 
significantly under or over the ambient room temperature; overstocking 
of a unit; frequency and promptness of repair/maintenance of a unit; 
operation of doors during periods of high volume use; frequency of 
cooling coil cleaning; maintenance of sufficient space surrounding a 
unit for proper air circulation or proper operation of air vents; and 
wear/tear of, or damage to, door seals and hinges on a unit. Such 
factors may or may not be associated with use of a unit in the field, 
and thus their impacts would be difficult to analyze in a quantitative 
manner. Nevertheless, these factors are among those commonly 
highlighted in energy use reduction guidelines as important to 
achieving the maximum energy efficiency for the given unit. Therefore, 
DOE requests comment on the frequency that such factors come in to play 
in energy use in the field, and whether and how DOE might account for 
these factors in assessing the overall impacts of the candidate 
standards levels for commercial refrigeration equipment. This is 
identified as Issue 7 under ``Issues on Which DOE Seeks Comment'' in 
section IV.E of this ANOPR.
    In determining the reduction in energy consumption of commercial 
refrigeration equipment due to increased efficiency, DOE did not take 
into account a rebound effect. The rebound effect occurs when a piece 
of equipment that is made more efficient is used more intensively, so 
that the expected energy savings from the efficiency improvement do not 
fully materialize. Because commercial refrigeration equipment is 
operated 24 hours a day, 7 days a week to maintain adequate conditions 
for the merchandise being retailed, a rebound effect resulting from 
increased refrigeration energy consumption seemed unlikely. The 
engineering estimates of energy use also used a 24-hour lighting 
schedule; although a sensitivity analysis to a reduced lighting 
schedule was performed. It is possible that under a reduced lighting 
schedule, lower lighting power draw resulting from energy conservation 
standards could lead to equipment operation strategies with increased 
lighting operating hours; however, DOE has no data with which to 
examine this impact for the commercial refrigeration equipment market 
and has not taken it into account in the energy use characterization.
    Additional detail on the energy use characterization can be found 
in chapter 7 of the TSD.

F. Rebuttable Presumption Payback Periods

    Section 345(e)(1)(A) of EPCA (42 U.S.C. 6316(e)(1)(A)) establishes 
a rebuttable presumption for commercial refrigeration equipment. The 
rebuttable presumption states that a standard is economically justified 
if the Secretary finds that ``the additional cost to the consumer of 
purchasing a product complying with an energy conservation standard 
level will be less than three times the value of the energy * * * 
savings during the first year that the consumer will receive as a 
result of the standard, as calculated under the applicable test 
procedure * * *.'' (42 U.S.C. 6295(o)(2)(B)(iii))
    To evaluate the rebuttable presumption, DOE estimated the 
additional cost of a more efficient, standard-compliant unit, and 
compared this cost to the value of the energy saved during the first 
year of operation of the equipment as determined by ANSI/ARI Standard 
1200-2006. DOE interprets that the increased cost of purchasing a 
standard-compliant unit includes the cost of installing the equipment 
for use by the purchaser. DOE calculated the rebuttable presumption 
PBP, or the ratio of the value of the increased installed price above 
the baseline efficiency level to the first year's energy cost savings. 
When this PBP is less than three years, the rebuttable presumption is 
satisfied; when this PBP is equal to or more than three years, the 
rebuttable presumption is not satisfied.
    Rebuttable presumption PBPs were calculated based on a distribution 
of installed costs and energy prices that included four types of 
businesses and all 50 States. The rebuttable presumption PBPs differ 
from the other PBPs calculated in the LCC analysis (see section II.G.14 
of this ANOPR) in that they do not include maintenance or repair costs. 
The baseline efficiency level for the rebuttable presumption 
calculation is the baseline established in the engineering analysis. 
From the range of efficiency levels for which cost data was determined 
in the engineering analysis, DOE selected up to eight efficiency levels 
in each equipment class, including the baseline efficiency level, for 
the LCC and subsequent ANOPR analysis. The selection of these 
efficiency levels is discussed in chapter 8 and appendix F of the TSD. 
For each equipment class the rebuttable presumption PBP was calculated 
for each efficiency level higher than the baseline.
    Inputs to the PBP calculation are the first seven inputs shown in 
Table II.12 found in section II.G.2 of this ANOPR.
    Table II.11 shows the nationally averaged rebuttable presumption 
paybacks calculated for all equipment classes and efficiency levels. 
The highest efficiency level with a rebuttable presumption payback of 
less than three years is also shown in Table II.11 for each equipment 
class. For all equipment classes analyzed in the ANOPR analysis with 
the exception of the SOC.RC.M

[[Page 41188]]

equipment class, the rebuttable presumption criteria were satisfied at 
either the maximum efficiency level examined or the next lower 
efficiency level examined. However, while DOE has examined the 
rebuttable presumption PBPs, DOE has not determined economic 
justification for any of the standard levels analyzed based on the 
ANOPR rebuttable presumption analysis. The setting of candidate 
standard levels (CSLs) by DOE will take into account the more detailed 
analysis of the economic impacts of increased efficiency pursuant to 
section 325(o)(2)(B)(i) of EPCA. (42 U.S.C. 6295(o)(2)(B)(i))

                              Table II.11.--Rebuttable Presumption Payback Periods by Efficiency Level and Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Rebuttable presumption payback period (years)
             Equipment type             -------------------------------------------------------------------------------- Highest level with PBP <3 years
                                          Level 1   Level 2   Level 3   Level 4   Level 5   Level 6   Level 7   Level 8
--------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.RC.M...............................        NA       3.2       2.8       2.6       2.7       2.8       2.9       3.1  Level 7.
VOP.RC.L...............................        NA       0.5       0.8       1.1       1.2       1.9        NA        NA  Level 6.
VOP.SC.M...............................        NA       0.7       0.7       0.8       1.1       1.3       2.0       2.9  Level 8.
VCT.RC.M...............................        NA       0.3       0.4       0.6       0.8       2.6       3.7        NA  Level 6.
VCT.RC.L...............................        NA       1.4       1.6       1.8       2.1       2.2       2.3       2.7  Level 8.
VCT.SC.I...............................        NA       0.2       0.4       0.4       0.6       1.3       1.5       2.0  Level 8.
VCS.SC.I...............................        NA       0.3       0.6       0.6       0.7       0.7       0.8       1.2  Level 8.
SVO.RC.M...............................        NA       3.2       2.8       2.7       2.8       2.9       3.0        NA  Level 6.
SVO.SC.M...............................        NA       0.8       0.8       0.9       1.1       1.3       1.7       2.3  Level 8.
SOC.RC.M...............................        NA       0.6       1.0       1.1       1.3       2.9       3.6        NA  Level 6.
HZO.RC.M...............................        NA       0.8       1.2       1.5        NA        NA        NA        NA  Level 4.
HZO.RC.L...............................        NA       1.2       1.6       1.7       1.8       1.9        NA        NA  Level 6.
HZO.SC.M...............................        NA       0.7       1.0       1.1       1.1       1.2       1.4       1.8  Level 8.
HZO.SC.L...............................        NA       0.6       0.6       0.8       0.8       0.9       1.3       1.3  Level 8.
HCT.SC.I...............................        NA       0.7       0.7       1.3       1.4       1.4        NA        NA  Level 6.
--------------------------------------------------------------------------------------------------------------------------------------------------------

G. Life-Cycle Cost and Payback Period Analyses

    The LCC and PBP analyses determine the economic impact of potential 
standards on consumers. The effects of standards on individual 
commercial consumers include changes in operating expenses (usually 
lower) and changes in total installed cost (usually higher). DOE 
analyzed the net effect of these changes for commercial refrigeration 
equipment, first, by calculating the changes in consumers' LCCs likely 
to result from a CSL as compared to a base case (no new standards). The 
LCC calculation considers total installed cost (includes MSP, sales 
taxes, distribution channel markups, and installation cost), operating 
expenses (energy, repair, and maintenance costs), equipment lifetime, 
and discount rate. DOE performed the LCC analysis from the perspective 
of the user of commercial refrigeration equipment.
    DOE calculated the LCC for all customers as if each would purchase 
a new commercial refrigeration equipment unit in the year the standard 
takes effect. The effective date is the future date when a new standard 
becomes operative. Section 136(c) of EPACT 2005 amends EPCA to add 
section 342(c)(4), 42 U.S.C. 6313(c)(4), which directs the Secretary to 
issue a final rule for commercial refrigeration equipment not later 
than January 1, 2009, with the energy conservation standards levels 
effective for equipment manufactured on or after January 1, 2012. 
Further, the Secretary may issue, by rule, energy conservation 
standards levels for other types of commercial refrigeration equipment, 
with the standard levels effective for equipment three or more years 
after a final rule is published. (42 U.S.C. 6313(c)(4)(B), added by 
EPACT 2005, section 136(c)) Consistent with EPCA, DOE used these dates 
in the ANOPR analyses. Further, DOE based the cost of the equipment on 
projected costs in 2012. However, all dollar values are expressed in 
2006 dollars. Annual energy prices are considered for the life of the 
commercial refrigeration equipment.
    DOE also analyzed the effect of changes in operating expenses and 
installed costs by calculating the PBP of potential standards relative 
to a base case. The PBP estimates the amount of time it would take the 
commercial consumer to recover the incrementally higher purchase 
expense of more energy efficient equipment through lower operating 
costs. Similar to the LCC, the PBP is based on the total installed cost 
and the operating expenses. However, unlike the LCC, only the first 
year's operating expenses are considered in the calculation of the PBP. 
Because the PBP does not account for changes in operating expense over 
time or the time value of money, it is also referred to as a simple 
PBP. For more details on the LCC and PBP analyses, refer to chapter 8 
of the ANOPR TSD.
1. Approach
    Recognizing that each commercial building that uses commercial 
refrigeration equipment is unique, DOE analyzed variability and 
uncertainty by performing the LCC and PBP calculations for two 
prototype commercial buildings (stores) and four types of businesses 
(two types of businesses for each prototype store). The first store 
prototype is a ``large'' grocery store, which encompasses supermarkets 
and wholesaler/retailer multi-line stores such as ``big-box'' stores, 
``warehouse'' stores, and ``supercenters.'' The second prototype is a 
``small'' store, which encompasses convenience stores and small 
specialty stores such as meat markets, wine, beer, and liquor stores, 
and convenience stores associated with gasoline stations. Within a 
given prototype of store, various types of commercial refrigeration 
equipment can serve the store's refrigeration needs.
    Aside from energy, the most important factors influencing the LCC 
and PBP analyses are related to the State to which each commercial 
refrigeration equipment unit is shipped. These factors include energy 
prices, installation cost, markup, and sales tax. The LCC analysis 
presented here used the predicted energy consumption based on the 
engineering analysis (see chapter 5 of the TSD) and reviewed in the 
energy use characterization (see chapter 7 of the TSD). Energy 
consumption of commercial refrigeration equipment calculated using this 
approach is not sensitive to climatic conditions, so energy consumption 
in the LCC analysis does not vary by geographical location.

[[Page 41189]]

At the national level, the analysis explicitly modeled both the 
uncertainty and the variability in the model's inputs using probability 
distributions based on the shipment of units to different States.
2. Life-Cycle Cost Analysis Inputs
    For each efficiency level analyzed, the LCC analysis requires input 
data for the total installed cost of the equipment, the operating cost, 
and the discount rate. Table II.12 summarizes the inputs and key 
assumptions used to calculate the economic impacts of various 
efficiency levels. A more detailed discussion of the inputs follows.

  Table II.12.--Summary of Inputs and Key Assumptions Used in the Life-
                           Cycle Cost Analysis
------------------------------------------------------------------------
                Input                             Description
------------------------------------------------------------------------
Baseline Manufacturer Selling Price..  Price charged by manufacturer to
                                        either a wholesaler or large
                                        customer for baseline equipment.
Standard-Level Manufacturer Selling    Incremental change in
 Price Increases.                       manufacturer selling price for
                                        equipment at each of the higher
                                        efficiency standard levels.
Markups and Sales Tax................  Associated with converting the
                                        manufacturer selling price to a
                                        customer price (see chapter 6 of
                                        TSD).
Installation Price...................  Cost to the customer of
                                        installing the equipment. This
                                        includes labor, overhead, and
                                        any miscellaneous materials and
                                        parts. The total installed cost
                                        equals the customer equipment
                                        price plus the installation
                                        price.
Equipment Energy Consumption.........  Site energy use associated with
                                        the use of commercial
                                        refrigeration equipment, which
                                        includes only the use of
                                        electricity by the equipment
                                        itself.
Electricity Prices...................  Average commercial electricity
                                        price ($/kWh) in each State and
                                        for four classes of commercial
                                        customers, as determined from
                                        Energy Information
                                        Administration (EIA) data for
                                        2003 converted to 2006$.
Electricity Price Trends.............  Used the AEO2006 reference case
                                        to forecast future electricity
                                        prices.
Maintenance Costs....................  Labor and material costs
                                        associated with maintaining the
                                        commercial refrigeration
                                        equipment (e.g., cleaning heat
                                        exchanger coils, checking
                                        refrigerant charge levels, lamp
                                        replacement).
Repair Costs.........................  Labor and material costs
                                        associated with repairing or
                                        replacing components that have
                                        failed.
Equipment Lifetime...................  Age at which the commercial
                                        refrigeration equipment is
                                        retired from service (estimated
                                        to be 10 years).
Discount Rate........................  Rate at which future costs are
                                        discounted to establish their
                                        present value to commercial
                                        refrigeration equipment users.
Rebound Effect.......................  A rebound effect was not taken
                                        into account in the LCC
                                        analysis.
------------------------------------------------------------------------

3. Baseline Manufacturer Selling Price
    The baseline MSP is the price charged by manufacturers to either a 
wholesaler/distributor or very large customer for equipment meeting 
existing minimum efficiency (or baseline) standards. The MSP includes a 
markup that converts the MPC to MSP. DOE obtained the baseline MSPs 
through industry supplied efficiency-level data supplemented with a 
design-option analysis. Refer to chapter 5 of the TSD for details. MSPs 
were developed for equipment classes consisting of eight possible 
equipment families, two possible condensing unit configurations (remote 
condensing and self-contained) and three possible rating temperatures. 
Not all covered equipment classes have significant actual shipments 
(see chapter 3 of the TSD). The LCC and PBP analyses have been carried 
out on a set of 15 equipment classes identified earlier.
    DOE was not able to identify data on relative shipments for 
equipment classes by efficiency level, nor were equivalent data found 
by DOE in the literature or studies examined by DOE. For the equipment 
for which DOE performed a design option analysis as the basis for the 
engineering analysis, DOE designated the highest-energy-use equipment 
as Level 1, and selected this as the baseline equipment.
4. Increase in Selling Price
    The standard-level MSP increase is the change in MSP associated 
with producing equipment at lower energy consumption levels associated 
with higher standards. DOE developed MSP increases associated with 
decreasing equipment energy consumption (or higher efficiency) levels 
through a combination of energy consumption level and design-option 
analyses. Refer to chapter 5 of the TSD for details. MSP increases as a 
function of equipment energy consumption were developed for each of the 
15 equipment classes. Although the engineering analysis produced up to 
11 energy consumption levels, depending on equipment type, only up to 8 
selected energy consumption levels were used in the LCC and PBP 
analyses.
5. Markups
    As discussed earlier, overall markups are based on one of three 
distribution channels, as well as whether the equipment is being 
purchased for the new construction or the replacement market. Based on 
input received by DOE, approximately 7 percent of equipment purchased 
by end-use customers is from wholesaler/distributors, 7 percent is from 
mechanical contractors, and 86 percent is through national accounts. 
DOE's understanding is that most equipment replacements are done 
through store remodels (as opposed to equipment failure), and that the 
distribution channels and installation process are similar for the new 
and replacement markets. Available information suggests that the 
fraction of equipment purchased through the distribution channels is 
the same for new and replacement equipment.
6. Installation Costs
    DOE derived installation costs for commercial refrigeration 
equipment from data provided in RS Means Mechanical Cost Data.\23\ RS 
Means provides estimates on the person-hours required to install 
commercial refrigeration equipment and the labor rates associated with 
the type of crew required to install the equipment. The installation 
cost was calculated by multiplying the number of person-hours by the 
corresponding labor rate. RS Means provides specific person-hour and 
labor rate data for the installation of so-called ``mercantile 
equipment'' (CSI Masterformat Number 11100), which includes commercial 
refrigeration equipment. Labor rates vary significantly from region to 
region of the

[[Page 41190]]

country and the RS Means data provide the necessary information to 
capture this regional variability. RS Means provides cost indices that 
reflect the labor rates for 295 cities in the United States. Several 
cities in all 50 States and the District of Columbia are identified in 
the RS Means data. These cost indices were incorporated into the 
analysis to capture variation in installation cost, depending on the 
location of the customer. To arrive at an average index for each State, 
the city indices in each State were weighted by their population. 
Population weights for the year 2000 from the U.S. Census Bureau were 
used to calculate a weighted-average index for each State. Further, 
since data was not available to indicate how installation costs vary 
with the commercial refrigeration equipment type or its efficiency, DOE 
considered the installation costs to be fixed, independent of the cost 
or efficiency of the equipment. Even though the LCC spreadsheet allows 
for alternative scenarios, DOE did not find a basis for changing its 
basic premise for the ANOPR analysis.
---------------------------------------------------------------------------

    \23\ R.S. Means Company, Inc. 2005. Mechanical Cost Data 28th 
Annual Edition. Kingston, Massachusetts.
---------------------------------------------------------------------------

    As described earlier, the total installed cost is the sum of the 
equipment price and the installation cost. DOE derived the customer 
equipment price for any given standard level by multiplying the 
baseline MSP by the baseline markup and adding to it the product of the 
incremental MSP and the incremental markup. Because MSPs, markups, and 
the sales tax can all take on a variety of values depending on 
location, the resulting total installed cost for a particular standard 
level will not be a single-point value, but rather a distribution of 
values.
7. Energy Consumption
    The electricity consumed by the commercial refrigeration equipment 
was based on the engineering analysis estimates as described previously 
in section II.C.1 after the whole-building simulations validation 
described in section II.E.
8. Electricity Prices
    Electricity prices are necessary to convert the electric energy 
savings into energy cost savings. DOE received several comments on the 
development of electricity prices for its life cycle cost analysis. In 
its Framework Document, DOE suggested the use of average commercial 
electric prices. Comments received from Southern Company suggested that 
due to high load factors, the price of electricity for commercial 
refrigeration customers would be lower than the commercial average. 
(Southern Company No. 3.4 at p. 170) Pacific Gas & Electric Company 
(PG&E) commented it has a heavy ratcheting charge and is converting 
customers to time-of-use metering. The very high coincident demand for 
commercial refrigeration units could result in DOE underestimating the 
cost of electricity. (PG&E No. 3.4 at p. 171) PG&E also questioned how 
DOE would handle the time dependent valuation of energy. (PG&E No. 3.4 
at p. 191) Southern Company responded that customers in its region were 
not exposed to marginal rates because it has cost-based rates. 
(Southern Company No. 3.4 at p. 193) Both groups supported the use of a 
sensitivity analysis by DOE in this area. In another area of 
discussion, ACEEE also commented that AEO electricity price forecasts 
might require revision. (Public Meeting Transcript No. 3.4 at p. 174; 
Joint Comment, No. 9 at p. 2) In the latter comment received, the Joint 
Comment also suggested that DOE adopt the load profile and rate 
schedule- (tariff-) based approach to electricity prices that DOE used 
in the commercial unitary air conditioner rulemaking. (Joint comment, 
No. 9 at p. 2)
    DOE decided to use average electricity prices for four classes of 
commercial refrigeration equipment customers on a State-by-State basis. 
This approach will include the regional variations in energy prices and 
provide for estimated electricity prices suitable for the target 
market, yet reduce the analysis complexity. An effort to build tariff-
based costs would have significantly increased the complexity and time 
needed for the analysis and it is not clear whether the results of the 
analysis will be improved. The development and use of State-average 
electricity prices by building type is described below and in more 
detail in chapter 8 of the TSD.
9. Electricity Price Trends
    Because of the wide variation in electricity consumption patterns, 
wholesale costs, and retail rates across the country, it is important 
to consider regional differences in electricity prices. DOE used 
average effective commercial electricity prices at the State level from 
the Energy Information Administration (EIA) publication, State Energy 
Consumption, Price, and Expenditure Estimates. The latest available 
prices from this source are for the calendar year 2003. These were 
adjusted to represent 2006$ prices in two steps. First, national data 
on the reported average commercial electricity prices from the EIA 
website, Average Retail Price of Electricity to Ultimate Customers by 
End-Use Sector, were used to adjust the 2003 prices to 2005 prices. 
Next, because actual prices were not yet available for the entire year 
of 2006, the forecasted ratio between 2006 and 2005 national commercial 
retail electricity prices from AEO2006 was used to adjust the 2005 
State-level prices to 2006$. Furthermore, DOE recognized that different 
kinds of businesses typically use electricity in different amounts at 
different times of the day, week, and year, and therefore face 
different effective prices. To make this adjustment, DOE used the 2003 
Commercial Building Energy Consumption Survey (CBECS) data set to 
identify the average prices paid by the four kinds of businesses in 
this analysis compared with the average prices paid by all commercial 
customers. The ratios of prices paid by the four types of businesses to 
the national average commercial prices seen in the 2003 CBECS were used 
as multiplying factors to increase or decrease the average commercial 
2006 price data previously developed as necessary for each of the four 
kinds of businesses. Once the electricity prices for the four types of 
businesses have been adjusted, the resulting prices are used in the 
analysis. To obtain a weighted-average national electricity price, the 
prices paid by each business in each State is weighted by the estimated 
sales of frozen and refrigerated food products, which also serves as 
the distribution of commercial refrigeration equipment units in each 
state, to each prototype building. The State/business type weights are 
the probabilities that a given commercial refrigeration equipment unit 
shipped will be operated with a given electricity price. For evaluation 
purposes, the prices and weights can be depicted as a cumulative 
probability distribution. The effective electricity prices range from 
approximately 5 cents per kWh to approximately 14 cents per kWh.
    The electricity price trend provides the relative change in 
electricity prices for future years out to the year 2030. Estimating 
future electricity prices is difficult, especially considering that 
there are efforts in many States throughout the country to restructure 
the electricity supply industry. DOE applied the AEO2006 reference case 
as the default scenario and extrapolated the trend in values from the 
years 2020 to 2030 of the forecast to establish prices in the years 
2030 to 2042. This method of extrapolation is in line with methods 
currently being used by the EIA to forecast fuel prices for the Federal 
Energy Management Program (FEMP). DOE provides a sensitivity analysis 
of the life cycle costs saving and PBP results to future electricity 
price

[[Page 41191]]

scenarios using both the AEO2006 high-growth and low-growth forecasts 
in chapter 8 of the TSD.
10. Repair Costs
    The equipment repair cost is the cost to the consumer for replacing 
or repairing components in the commercial refrigeration equipment that 
have failed. DOE based the annualized repair cost for baseline 
efficiency equipment on the following expression:

RC = kx EQP/LIFE

Where:
RC = repair cost in dollars
k = fraction of equipment price (estimated to be 0.5)
EQP = baseline equipment price in dollars, and
LIFE = average lifetime of the equipment in years (estimated to be 
10 years)

    Because data were not available for how the repair costs vary with 
equipment efficiency, DOE held repair costs constant as the default 
scenario for the LCC and PBP analyses.
11. Maintenance Costs
    DOE estimated the annualized maintenance costs for commercial 
refrigeration equipment from data in RS Means Facilities Maintenance & 
Repair Cost Data. RS Means provides estimates on the person-hours, 
labor rates and materials required to maintain commercial refrigeration 
equipment on a semi-annual basis. DOE used a single figure of $156/year 
(2006$) for preventative maintenance for all classes of commercial 
refrigeration equipment. Because data were not available for how the 
maintenance costs vary with equipment efficiency, DOE held maintenance 
costs constant even as equipment efficiency increased. Lamp replacement 
and other lighting maintenance activities are required maintenance for 
commercial refrigeration equipment, which DOE considered to be separate 
from preventative maintenance, and were not itemized in the 
preventative maintenance activities described by RS Means. Different 
commercial refrigeration equipment classes have different numbers of 
lamps (and ballasts) and many of the efficiency options considered in 
DOE's engineering analysis involved changes to the lighting 
configuration (lamp, ballast, or use of light emitting diode (LED) 
lighting systems). Because the lighting configurations can vary by 
energy consumption level, DOE estimated the relative maintenance costs 
for lighting by each case type for which a design-option analysis was 
performed. The methodology used was to estimate the frequency of 
failure and replacement of individual lighting components, to estimate 
the cost of replacement in the field, and to develop an annualized 
maintenance cost based on the sum of the total lighting maintenance 
costs (in 2006$) over the estimated life of the equipment divided by 
the estimated life of the equipment.
    Costs for fluorescent lamp and ballast replacements were based on 
review of the original equipment manufacturer (OEM) costs used in the 
engineering analysis, RS Means estimates and cost data from Grainger, 
Inc., and previous studies. DOE estimated the costs of field 
replacement using labor cost hours from RS Means Electrical Cost Data 
for typical lamp or ballast replacement for other lighting fixtures, 
using a 150 percent multiplier on OEM costs for lamps and ballasts 
(provided in the engineering analysis spreadsheets) to reflect retail 
pricing.
    Fluorescent lamp and ballast technology is mature, so DOE made no 
change in inflation-adjusted costs for these components. However, 
because of rapid technological improvement, costs for LED lamps are 
declining. DOE estimated that costs for replacing LED lighting fixtures 
(believed to occur 6 years after the effective date of the standard) 
are 140 percent of the OEM installed cost of LED lighting fixtures 
today (in 2006$). These LED fixture replacement costs represent a 30 
percent reduction to the current costs for in-the-field replacement. 
DOE recognizes that both life and cost estimates for LED replacement 
are speculative and believes it has taken a conservative approach to 
estimating price reduction over time for this technology. Overhead and 
profit factors from RS Means were not considered.
12. Lifetime
    DOE defines lifetime as the age when a commercial refrigeration 
equipment unit is retired from service. DOE based equipment lifetime on 
discussions with industry experts and other stakeholders, and concluded 
that a typical lifetime of 10 years is appropriate for commercial 
refrigeration equipment. Commercial refrigeration equipment units are 
typically replaced when stores are renovated--about every 10 years--
which is before the commercial refrigeration equipment units would have 
physically worn out. Because of this, there is a used-equipment market 
for commercial refrigeration equipment. DOE understands, however, that 
the salvage value to the original purchaser is very low and thus this 
has not been taken into account in the LCC. Chapter 3 of the TSD, 
Market and Technology Assessment, contains a discussion of equipment 
life data and the sources of such data.
    DOE understands that the actual lifetime of a commercial 
refrigeration equipment unit in the field might vary from the estimated 
average 10-year lifetime, to some degree, by equipment class, 
variations associated with components and manufacturing methods, as 
well as store type where the unit is placed in service. Nevertheless, 
the 10-year lifetime estimate is an important benchmark for testing to 
a standard level of performance, making comparisons of different units 
for purchasing decisions, and making a reasonable quantitative analysis 
of the impacts that could result from different standard levels of 
efficiency. Therefore, DOE specifically requests feedback on the 
lifetime of commercial refrigeration equipment and whether, in fact, 
this is a significant issue. Where the lifetime data indicate a 
substantial variation from the assumed 10-year lifetime, DOE will 
perform a sensitivity analysis of this variable in the LCC and NES 
analyses and may adjust the best estimate of equipment lifetime as 
well. In particular, DOE seeks comment on how long these units are 
typically maintained in service, on average, either for all equipment 
covered under this rulemaking or by equipment class and store type. 
Also, DOE seeks comment on the existence of used-equipment markets for 
commercial refrigeration equipment, and the importance of considering 
such markets in its analysis. This is identified as Issue 8 under 
``Issues on Which DOE Seeks Comment'' in section IV.E of this ANOPR.
13. Discount Rate
    The discount rate is the rate at which future expenditures are 
discounted to establish their present value. DOE received comments on 
the development of discount rates at the Framework Public Meeting. FPA 
suggested that DOE's analysis should consider discount rates for 
convenience stores separately from other food stores, but considered 
superstores in the same general market as the traditional grocery 
store. (FPA No. 3.4 at p. 179) ARI suggested that DOE consider 
developing discount rates explicitly for supercenters. (ARI No. 3.4 at 
p. 179)
    DOE derived the discount rates for the LCC analysis by estimating 
the cost of capital for companies that purchase commercial 
refrigeration equipment. The cost of capital is commonly used to 
estimate the present value of cash flows to be derived from a typical 
company project or investment. Most companies use both debt and equity 
capital to fund investments, so their cost of capital is

[[Page 41192]]

the weighted average of the cost to the company of equity and debt 
financing. DOE estimated the cost of equity financing by using the 
Capital Asset Pricing Model (CAPM). The CAPM, among the most widely 
used models to estimate the cost of equity financing, considers the 
cost of equity to be proportional to the amount of systematic risk 
associated with a company. The cost of equity financing tends to be 
high when a company faces a large degree of systematic risk and it 
tends to be low when the company faces a small degree of systematic 
risk. To estimate the weighted average cost of capital (WACC) 
(including the weighted average cost of debt and equity financing) of 
commercial refrigeration equipment purchasers, DOE used a sample of 
companies involved in groceries and multi-line retailing drawn from a 
database of 7,319 U.S. companies on the Damodaran Online website. The 
WACC approach taken for the determination of the discount rates takes 
into account the current tax status of the individual firms on an 
overall corporate basis. The marginal effects of increased costs and 
thus depreciation due to higher cost equipment on the overall tax 
status was not evaluated.
    DOE used a sample of 23 companies to represent the purchasers of 
commercial refrigeration equipment. For each company in the sample, DOE 
derived the cost of debt, percent debt financing, and systematic 
company risk from information provided at the Damodaran Online Web 
site. It estimated the cost of debt financing from the long-term 
government bond rate (4.39 percent) and the standard deviation of the 
stock price. The cost of capital for small, independent grocers, 
convenience store franchisees, gasoline station owner-operators, and 
others with more limited access to capital is more difficult to 
determine. Individual credit-worthiness varies considerably, and some 
franchisees have access to the financial resources of the franchising 
corporation. However, personal contacts with a sample of commercial 
bankers yielded an estimate for the small operator weighted cost of 
capital of about 200 to 300 basis points (2 percent to 3 percent) above 
the rates for large grocery chains. A central value equal to the 
weighted average of large grocery chains, plus 2.5 percent, was used 
for small operators. Deducting expected inflation from the cost of 
capital provides the estimates of the real discount rate by ownership 
category. The average after-tax discount rate, weighted by the 
percentage shares of total purchases of commercial refrigeration 
equipment, is 4.76 percent for large grocery stores, 5.66 percent for 
multi-line retailers, and 7.26 percent for convenience stores and 
convenience stores associated with gasoline stations.
14. Payback Period
    The PBP is the amount of time it takes the customer to recover the 
incrementally higher purchase cost of more energy efficient equipment 
as a result of lower operating costs. Numerically, the PBP is the ratio 
of the increase in purchase cost (i.e., from a less efficient design to 
a more efficient design) to the decrease in annual operating 
expenditures. This type of calculation is known as a ``simple'' PBP, 
because it does not take into account changes in operating cost over 
time or the time value of money, that is, the calculation is done at an 
effective discount rate of zero percent.
    The equation for PBP is:

PBP = [Delta]IC / [Delta]OC

Where:
PBP = payback period in years,
[Delta]IC = difference in the total installed cost between the more 
efficient standard level equipment (energy consumption levels 2, 3, 
etc.) and the baseline (energy consumption level 1) equipment, and
[Delta]OC = difference in annual operating costs.

    PBPs are expressed in years. PBPs greater than the life of the 
equipment means that the increased total installed cost of the more 
efficient equipment is not recovered in reduced operating costs for the 
more efficient equipment.
    The data inputs to PBP analysis are the total installed cost of the 
equipment to the customer for each energy consumption level and the 
annual (first year) operating costs for each energy consumption level. 
The inputs to the total installed cost are the equipment price and the 
installation cost. The inputs to the operating costs are the annual 
energy cost, the annual repair cost, and the annual maintenance cost. 
The PBP uses the same inputs as the LCC analysis, except that 
electricity price trends and discount rates are not required. Since the 
PBP is a ``simple'' (undiscounted) payback, the required electricity 
cost is only for the year in which a new energy conservation standard 
is to take effect--in this case, the year 2012. The electricity price 
used in the PBP calculation of electricity cost was the price projected 
for 2012, expressed in 2006$, but not discounted to 2006. Discount 
rates are not used in the PBP calculation.
15. Life-Cycle Cost and Payback Period Results
    This section presents the LCC and PBP results for the energy 
consumption levels analyzed. Because the values of most inputs to the 
LCC analysis are uncertain, DOE represents them as a distribution of 
values rather than a single-point value. Thus, DOE derived the LCC 
results also as a distribution of values.
    DOE provides a summary of the change in LCC from the baseline by 
percentile groupings of the distribution of results for each of the 
equipment classes in chapter 8 and appendix G of the TSD. A sample for 
one equipment class (VOP.RC.M) is shown in Table II.13. Table II.13 
also shows the mean LCC savings and the percent of units with LCC 
savings at each of the efficiency levels.

   Table II.13.--Distribution of Life-Cycle Cost Savings From a Baseline Level (Level 1) by Efficiency Level for the Vertical Open, Remote Condensing,
                                                      Medium Temperature (VOP.RC.M) Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                      Decrease in LCC from baseline (Level 1) shown by percentiles of the distribution of results               Percent
                                                                                (2006$)                                                 Mean    of units
         Efficiency level         --------------------------------------------------------------------------------------------------- savings   with LCC
                                      0%      10%      20%      30%      40%      50%      60%      70%      80%      90%      100%             savings
--------------------------------------------------------------------------------------------------------------------------------------------------------
Level 2..........................     $145     $238     $301     $340     $361     $398     $425     $509     $711     $878   $1,285     $485        100
Level 3..........................      317      471      569      634      665      730      775      911    1,238    1,512    2,169      871        100
Level 4..........................      473      686      822      911      952    1,044    1,106    1,294    1,748    2,127    3,036    1,239        100
Level 5..........................      717    1,048    1,260    1,399    1,464    1,606    1,703    1,995    2,701    3,290    4,704    1,910        100
Level 6..........................      797    1,186    1,435    1,600    1,681    1,845    1,958    2,303    3,135    3,828    5,497    2,203        100
Level 7..........................      842    1,288    1,576    1,769    1,863    2,047    2,177    2,574    3,533    4,330    6,255    2,459        100
Level 8..........................      835    1,349    1,694    1,911    2,021    2,230    2,379    2,839    3,950    4,871    7,105    2,707        100
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 41193]]

    As an example of how to interpret the information in Table II.13, 
here is a review of the results for the VOP.RC.M equipment class. The 
efficiency Level 4 in Table II.13 (row 3) shows that the change in LCC 
(zero percentile column) is a minimum saving of $473. For 90 percent of 
the cases studied (90th percentile), the change in LCC is a reduction 
of $2,127 or less. The largest reduction in LCC is $3,036 (100th 
percentile). The mean change in LCC is a net savings of $1,239. The 
last column shows that 100 percent of the sample have LCC savings 
(i.e., reductions in LCC greater than zero) when compared to the 
baseline efficiency level.
    Table II.14 provides the national average life cycle cost savings 
calculated for each efficiency level when compared to the baseline 
efficiency (Level 1) for all equipment classes. Review of Table II.14 
shows that every efficiency level analyzed generated national average 
life-cycle cost savings compared with the baseline efficiency level. It 
should be pointed out that 100 percent of the units analyzed have 
positive LCC savings.

 Table II.14.--Average Life-Cycle Cost Savings From a Baseline Level (Level 1) by Efficiency Level and Equipment
                                                      Class
----------------------------------------------------------------------------------------------------------------
                                                       National average LCC savings (2006$)
         Equipment class         -------------------------------------------------------------------------------
                                   Level 1   Level 2   Level 3   Level 4   Level 5   Level 6   Level 7   Level 8
----------------------------------------------------------------------------------------------------------------
VOP.RC.M........................         0       485       871      1239      1910      2203      2459      2707
VOP.RC.L........................         0      1209      2604      3512      3470      3443        NA        NA
VOP.SC.M........................         0       759       883      1006      1265      1328      1487      1482
VCT.RC.M........................         0      1046      1309      1596      1750      2362      1925        NA
VCT.RC.L........................         0      1179      1650      2105      2949      3333      3684      4272
VCT.SC.I........................         0      1371      2581      3020      3285      5313      5613      5398
VCS.SC.I........................         0       398       961      1383      1451      1559      1619      1609
SVO.RC.M........................         0       227       500       758      1000      1223      1458        NA
SVO.SC.M........................         0       552       588       644       824       841      1200      1186
SOC.RC.M........................         0       835      1779      1718      1901      1868      1540        NA
HZO.RC.M........................         0       208       435       490        NA        NA        NA        NA
HZO.RC.L........................         0       234       591       935      1267      1459        NA        NA
HZO.SC.M........................         0        66       286       354       381       445       466       543
HZO.SC.L........................         0        68       555      1071      1136      1155      1448      1457
HCT.SC.I........................         0       250       315       731       809       835        NA        NA
----------------------------------------------------------------------------------------------------------------

    DOE specifically seeks feedback on the validity of selecting Level 
1 as the baseline in the LCC analysis. Since higher efficiency 
equipment are known to be sold into the market, the LCC savings 
estimates presented above represent overestimates with respect to the 
life-cycle savings anticipated for base case efficiencies higher than 
Level 1. DOE seeks input on whether a distribution of efficiencies 
should be used for the LCC analysis baseline (instead of a single 
efficiency level), and if so, what data could be used to populate this 
distribution. This is identified as Issue 9 under ``Issues on Which DOE 
Seeks Comment'' in section IV.E of this ANOPR.
    Table II.15 summarizes the PBP results for each of the efficiency 
levels for the VOP.RC.M equipment class. Results are summarized for PBP 
by percentile groupings of the distribution of results. The chart also 
shows the mean PBP for each efficiency level.

         Table II.15.--Summary of Payback Period Results for the Vertical Open, Remote Condensing, Medium Temperature (VOP.RC.M) Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Payback period in years shown by percentiles of the distribution of results
              Efficiency level               ---------------------------------------------------------------------------------------------------   Mean
                                                 0%      10%      20%      30%      40%      50%      60%      70%      80%      90%      100%     PBP
--------------------------------------------------------------------------------------------------------------------------------------------------------
Level 2.....................................      1.4      2.1      2.3      2.8      3.1      3.3      3.5      3.6      3.8      4.1      4.7      3.2
Level 3.....................................      1.2      1.8      2.0      2.4      2.7      2.9      3.0      3.1      3.3      3.6      4.1      2.8
Level 4.....................................      1.1      1.8      1.9      2.3      2.5      2.7      2.9      3.0      3.2      3.4      3.9      2.6
Level 5.....................................      1.2      1.8      1.9      2.3      2.6      2.8      2.9      3.0      3.2      3.5      4.0      2.7
Level 6.....................................      1.2      1.8      2.0      2.4      2.7      2.9      3.0      3.1      3.3      3.6      4.1      2.8
Level 7.....................................      1.3      1.9      2.1      2.5      2.8      3.0      3.2      3.3      3.5      3.8      4.3      2.9
Level 8.....................................      1.4      2.1      2.2      2.7      3.0      3.2      3.4      3.5      3.8      4.0      4.6      3.1
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Table II.16 provides the national average payback calculated for 
each efficiency level when compared to the baseline efficiency level 
(Level 1) for all equipment classes. Table II.16 also shows the 
percentage of units reporting PBPs of less than three years. The 
results of the analysis shows that purchases of higher efficiency 
levels resulted in PBPs (with respect to purchase of baseline 
efficiency units) of less than four years for any of the efficiency 
levels considered for any equipment class.

[[Page 41194]]



             Table II.16.--National Average Payback Periods by Efficiency Level and Equipment Class
----------------------------------------------------------------------------------------------------------------
         Equipment class           Level 1   Level 2   Level 3   Level 4   Level 5   Level 6   Level 7   Level 8
----------------------------------------------------------------------------------------------------------------
                                                      National Average Payback Period (Years)
----------------------------------------------------------------------------------------------------------------
VOP.RC.M........................        NA       3.2       2.8       2.6       2.7       2.8       2.9       3.1
VOP.RC.L........................        NA       0.5       0.8       1.1       1.2       2.0        NA        NA
VOP.SC.M........................        NA       0.7       0.7       0.8       1.1       1.4       2.0       3.1
VCT.RC.M........................        NA       0.3       0.4       0.7       0.9       2.7       3.9        NA
VCT.RC.L........................        NA       1.4       1.6       1.8       2.1       2.2       2.3       2.7
VCT.SC.I........................        NA       0.3       0.4       0.5       0.6       1.3       1.5       2.1
VCS.SC.I........................        NA       0.3       0.6       0.6       0.7       0.7       0.8       1.2
SVO.RC.M........................        NA       3.2       2.8       2.7       2.8       2.9       3.0        NA
SVO.SC.M........................        NA       0.8       0.8       0.9       1.1       1.3       1.8       2.4
SOC.RC.M........................        NA       0.6       1.0       1.2       1.4       3.1       3.9        NA
HZO.RC.M........................        NA       0.8       1.2       1.5        NA        NA        NA        NA
HZO.RC.L........................        NA       1.2       1.6       1.7       1.8       1.9        NA        NA
HZO.SC.M........................        NA       0.7       1.0       1.1       1.1       1.2       1.4       1.8
HZO.SC.L........................        NA       0.6       0.6       0.8       0.8       0.9       1.3       1.3
HCT.SC.I........................        NA       0.7       0.7       1.3       1.4       1.4        NA        NA
----------------------------------------------------------------------------------------------------------------
                                             Percent of Units With Payback Period of Less Than 3 Years
----------------------------------------------------------------------------------------------------------------
VOP.RC.M........................         0        38        58        74        64        58        50        40
VOP.RC.L........................         0       100       100       100       100       100        NA        NA
VOP.SC.M........................         0       100       100       100       100       100        98        41
VCT.RC.M........................         0       100       100       100       100        60        24        NA
VCT.RC.L........................         0       100       100       100        98        94        88        64
VCT.SC.I........................         0       100       100       100       100       100       100        98
VCS.SC.I........................         0       100       100       100       100       100       100       100
SVO.RC.M........................         0        38        57        60        58        50        42        NA
SVO.SC.M........................         0       100       100       100       100       100       100        87
SOC.RC.M........................         0       100       100       100       100        40        25        NA
HZO.RC.M........................         0       100       100       100        NA        NA        NA        NA
HZO.RC.L........................         0       100       100       100       100       100        NA        NA
HZO.SC.M........................         0       100       100       100       100       100       100       100
HZO.SC.L........................         0       100       100       100       100       100       100       100
HCT.SC.I........................         0       100       100       100       100       100        NA        NA
----------------------------------------------------------------------------------------------------------------

    DOE emphasizes that the PBPs shown in Table II.16 as well as the 
rebuttable PBPs shown in Table II.11 take into account the cumulative 
impact of all technologies used in a design option to reach a specific 
energy efficiency level when compared to the baseline equipment. 
Shorter PBP resulting from the most cost-effective technologies can 
offset longer PBP from less cost-effective technologies to yield a low 
overall PBP for the design option. For this reason, the choice of 
baseline efficiency level affects the PBP for higher efficiency levels. 
The LCC spreadsheet allows the user to select alternate baseline 
efficiency levels for each equipment class and calculate the LCC 
savings and PBP for all higher levels compared to the selected 
baseline.
    Table II.17 illustrates the impact of the selection of baseline 
level on the VCT.RC.M equipment class for the supermarket business type 
and using national average energy prices. Note that the values shown in 
Table II.17 differ from the values shown in Table II.14 since the 
values in Table II.17 do not represent a national average developed 
through the weighting of all business types and fuel costs. 
Nevertheless, they serve to illustrate the impact of the selected 
baseline efficiency level on LCC savings and PBP. The LCC savings and 
PBP are shown for four alternate baseline efficiency levels: Level 1, 
Level 2, Level 3 and Level 4. As the baseline efficiency is moved from 
Level 1 to Level 4, the life-cycle-cost savings are correspondingly 
reduced for each of the higher efficiency levels. The efficiency level 
with the maximum life-cycle-cost savings (level 6) is, however, the 
same regardless of choice of baseline level. Selection of the baseline 
level at level 6 would show no life-cycle-cost savings for higher 
levels.
    The calculated PBP also changes with selection of alternate 
baseline efficiency levels. As the baseline efficiency is moved from 
Level 1 to Level 4, the PBP for each of the higher efficiency levels, 
relative to the selected baseline, increases, with the Level 7 PBP 
moving from 3.9 years--using Level 1 as the baseline efficiency level--
to 6.2 years using Level 4 as the baseline efficiency level.

    Table II.17.--Sensitivity of Average Life-Cycle Cost Savings and Payback Period to Selection of Baseline
 Efficiency Level for the Vertical Transparent Door, Remote Condensing, Medium Temperature (VCT.RC.M) Equipment
                                                      Class
----------------------------------------------------------------------------------------------------------------
         Baseline level            Level 1   Level 2   Level 3   Level 4   Level 5   Level 6   Level 7   Level 8
----------------------------------------------------------------------------------------------------------------
                                                            Average LCC Savings (2006$)
----------------------------------------------------------------------------------------------------------------
Level 1.........................         0       983      1232      1503      1646      2175      1709        NA
Level 2.........................        NA         0       249       520       664      1193       726        NA

[[Page 41195]]

 
Level 3.........................        NA        NA         0       271       414       944       477        NA
Level 4.........................        NA        NA        NA         0       144       673       206        NA
----------------------------------------------------------------------------------------------------------------
                                                          Average Payback Period (Years)
----------------------------------------------------------------------------------------------------------------
Level 1.........................        NA       0.3       0.4       0.7       0.9       2.7       3.9        NA
Level 2.........................        NA        NA       0.8       1.2       1.5       3.7       5.2        NA
Level 3.........................        NA        NA        NA       1.6       1.9       4.0       5.6        NA
Level 4.........................        NA        NA        NA        NA       2.4       4.5       6.2        NA
----------------------------------------------------------------------------------------------------------------

    DOE provided a sensitivity analysis of the life-cycle-cost savings 
as well as the PBP to the choice of baseline efficiency level in 
Chapter 8 of the TSD. DOE presents these findings to facilitate 
stakeholder review of the LCC and PBP analyses. DOE seeks information 
and comments relevant to the assumptions, methodology, and results of 
this analysis. See chapter 8 of the TSD for additional detail on the 
LCC and PBP analyses.

H. Shipments Analysis

    This section presents DOE's shipments analysis, which is an input 
to the NIA (section II.I) and MIA (section II.K). DOE will undertake 
the MIA after the ANOPR is published, and will report the results of 
the MIA in the NOPR.
    The results of the shipments analysis are driven primarily by 
historical shipments data for the 15 equipment classes of commercial 
refrigeration equipment under consideration. The model estimates that, 
in each year, the existing stock of commercial refrigeration equipment 
either ages by one year or is worn out and replaced. In addition, new 
equipment can be shipped into new commercial floor space, and old 
equipment can be removed through demolitions. DOE chose to analyze all 
efficiency levels analyzed in the LCC in the NIA. Because DOE is 
assessing impacts presuming each level analyzed represents a possible 
standard level, DOE refers to the efficiency levels analyzed in the NIA 
as ``candidate standard levels'' (CSLs). Shipments forecasts were 
determined for all of the CSLs analyzed in the NIA and NPV analysis.
    The shipments analysis is a description of commercial refrigeration 
equipment stock flows as a function of year and age. While there are 15 
equipment classes, the shipment analysis treats each category of 
equipment independently and without coupling between them. DOE 
formulated the equations used in the analysis as updates of the 
distribution of stock in any given year, as a function of age, to the 
following year using the following steps: (1) DOE first converted the 
equipment units to linear feet of display space cooled by those units 
by taking the national statistics on sales of equipment and calculating 
equipment capacity per linear foot of retail grocery building display 
space; (2) DOE used this calculation of existing stock, and the average 
age of the equipment, as a basis for calculating replacement sales; (3) 
DOE subtracted replacement sales from historical total sales statistics 
to calculate new sales of commercial refrigeration equipment; (4) DOE 
forecast new sales as a function of new construction of retail food 
sales space; (5) DOE recorded sales of new and replacement equipment by 
the year sold, and depreciated each annual vintage over the estimated 
life of the equipment; and (6) DOE allocated sales in each year to the 
15 equipment classes in proportion to their relative historical sales.
    Table II.18 shows the results of the shipments analysis for the 15 
commercial refrigeration equipment classes for the base case (baseline 
efficiency level or Level 1). As equipment purchase price increases 
with higher efficiency levels, a drop in shipments could be expected 
relative to the base case. However, as annual energy consumption is 
reduced, there is potentially a countering effect of increased 
equipment sales due to more frequent installations and use of 
commercial refrigeration equipment by retailers (a potential rebound 
effect). Although there is a provision in the spreadsheet for a change 
in projected shipments in response to efficiency level increases (or 
energy consumption level decreases), DOE has no information with which 
to calibrate such a relationship. Therefore, for the ANOPR analysis, 
DOE presumed that the shipments do not change in response to the 
changing CSLs.

                        Table II.18.--Forecasted Shipments for Commercial Refrigeration Equipment, 2012-2042, Level 1 (Base Case)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Thousands of linear feet shipped by year and equipment class
                      Equipment class                       --------------------------------------------------------------------------------------------
                                                               2012      2015      2020      2025      2030      2035      2040      2042     Cumulative
--------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.RC.M...................................................       423       446       490       538       591       649       714       742        17574
VOP.RC.L*..................................................         0         0         0         0         0         0         0         0            0
VOP.SC.M...................................................        28        30        33        36        40        44        48        50         1182
VCT.RC.M...................................................        30        32        35        38        42        46        51        53         1255
VCT.RC.L...................................................       420       443       487       535       587       645       709       737        17456
VCT.SC.I...................................................        10        11        12        13        14        16        17        18          430
VCS.SC.I...................................................         3         3         3         3         4         4         4         5          107
SVO.RC.M...................................................       323       340       374       411       451       495       545       566        13405
SVO.SC.M...................................................        43        45        49        54        59        65        72        75         1769
SOC.RC.M...................................................        81        86        94       104       114       125       137       143         3379

[[Page 41196]]

 
HZO.RC.M...................................................        50        52        57        63        69        76        84        87         2060
HZO.RC.L...................................................       156       164       181       198       218       239       263       273         6476
HZO.SC.M...................................................         4         4         4         5         5         6         6         6          152
HZO.SC.L...................................................         8         8         9        10        11        12        13        13          315
HCT.SC.I...................................................        34        35        39        43        47        52        57        59        1397
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Estimated shipments of this equipment class were zero. The industry requested that this equipment class be included in the rulemaking.

    Additional details on the shipments analysis can be found in 
chapter 9 of the TSD.

I. National Impact Analysis

    The NIA assesses future NES and the national economic impacts of 
CSLs. The analysis measures economic impacts using the NPV metric 
(i.e., future amounts discounted to the present) of total commercial 
customer costs and savings expected to result from new standards at 
specific efficiency levels. For a given CSL, DOE calculated the NPV, as 
well as the NES, as the difference between a base case forecast and the 
standards case. Additional details on the national impacts analysis for 
commercial refrigeration equipment are found in chapter 10 of the TSD.
    DOE determined national annual energy consumption as the product of 
the annual energy consumption per commercial refrigeration equipment 
unit and the number of commercial refrigeration equipment units of each 
vintage. This approach accounts for differences in unit energy 
consumption from year to year. Cumulative energy savings are the sum of 
the annual NES determined over the period of analysis. DOE calculated 
net economic savings each year as the difference between total 
operating cost savings and increases in total installed costs. 
Cumulative savings are the sum of the annual NPV.
1. Approach
    Over time, in the standards case, more efficient equipment 
gradually replaces less efficient equipment. This affects the 
calculation of both the NES and NPV, both of which are a function of 
the total number of units in use and their efficiencies, and thus are 
dependent upon annual shipments and the lifetime of equipment. Both 
calculations start by using the estimate of shipments and the quantity 
of units in service, which are derived from the shipments model. With 
regard to the estimation of NES, because more efficient commercial 
refrigeration equipment units gradually replace less efficient ones, 
the energy per unit of capacity used by the commercial refrigeration 
equipment in service gradually decreases in the standards case relative 
to the base case. To estimate the total energy savings for each 
candidate efficiency level, DOE first calculated the national site 
energy consumption (site energy is the energy directly consumed by the 
units in operation) for commercial refrigeration equipment each year, 
beginning with the expected effective date of the standards (2012). 
This calculation was done for the base case forecast and the standards 
case forecast. Second, DOE determined the annual site energy savings, 
which is the difference between site energy consumption in the base 
case and in the standards case. Third, DOE converted the annual site 
energy savings into the annual amount of energy saved at the source of 
electricity generation (the source energy). Finally, DOE summed the 
annual source energy savings from 2012 to 2042 to calculate the total 
NES for that period. DOE performed these calculations for each CSL.
2. Base Case and Standards Case Forecasted Efficiencies
    A key component of DOE's estimates of NES and NPV are the energy 
efficiencies for shipped equipment that it forecasts over time for the 
base case (without new standards) and for each of the standards cases. 
The forecasted efficiencies represent the distribution of energy 
efficiency of the equipment under consideration that is shipped over 
the forecast period (i.e., from the assumed effective date of a new 
standard to 30 years after the standard becomes effective). Because key 
inputs to the calculation of the NES and NPV are dependent on the 
estimated efficiencies, they are of great importance to the analysis. 
In the case of the NES, the per-unit annual energy consumption is a 
direct function of efficiency. With regard to the NPV, two inputs, the 
per-unit total installed cost and the per-unit annual operating cost, 
both depend on efficiency. The per-unit total installed cost is a 
direct function of efficiency while the per-unit annual operating cost, 
because it is a direct function of the per-unit energy consumption, is 
indirectly dependent on equipment efficiency.
    The annual per-unit energy consumption is the site energy consumed 
by a commercial refrigeration equipment unit per year. The annual 
energy consumption is directly tied to the efficiency of the unit. 
Thus, knowing the efficiency of a commercial refrigeration equipment 
unit determines the corresponding annual energy consumption. DOE 
determined annual forecasted market shares by efficiency level that, in 
turn, enabled a determination of shipment-weighted annual energy 
consumption values.
    Because no data were available on market shares broken down by 
efficiency level, DOE determined market shares by efficiency level for 
commercial refrigeration equipment based on its own analysis. First, 
DOE converted 2005 shipment information by equipment class into market 
shares by equipment class, and then adapted a cost-based method similar 
to that used in the NEMS to estimate market shares for each equipment 
class by efficiency level. This cost-based method relied on cost data 
developed in the engineering and life-cycle cost analyses as well as 
economic purchase criteria data taken directly from NEMS. Then, from 
those market shares and projections of shipments by equipment class, 
DOE developed the future efficiency scenarios for a base case (i.e., 
without new standards) and for various standards cases (i.e., with new 
standards). DOE did not have data to calibrate this approach to actual 
market shipments by efficiency level. Therefore, DOE specifically seeks 
feedback on this economic-based approach to estimating market shares. 
This is identified as Issue 10 under ``Issues on Which DOE Seeks 
Comment'' in section IV.E of this ANOPR.
    DOE developed base case efficiency forecasts based on the estimated 
market

[[Page 41197]]

shares by equipment class and efficiency level. Because there are no 
historical data to indicate how equipment efficiencies or relative 
equipment class preferences have changed over time, DOE predicted that 
forecasted market shares would remain frozen at the 2012 efficiency 
level until the end of the forecast period (30 years after the 
effective date--the year 2042). Realizing that this prediction very 
likely has the effect of causing the estimates of savings associated 
with these efficiency standards to be overstated, DOE seeks comment on 
this prediction and the potential significance of the over-estimate of 
savings. In particular, DOE requests data that would enable it to 
better characterize the likely increases in efficiency that would occur 
over the 30-year modeling period in absence of this rule.
    For its determination of standards case forecasted efficiencies, 
DOE used a ``roll-up'' scenario to establish the market shares by 
efficiency level for the year that standards become effective (i.e., 
2012). Information available to DOE suggests that equipment shipments 
with efficiencies in the base case that did not meet the standard level 
under consideration would ``roll-up'' to meet the new standard level. 
Also, available information suggests that all equipment efficiencies in 
the base case that were above the standard level under consideration 
would not be affected.
    DOE specifically seeks feedback on its basis for the forecasted 
base case and standards case efficiencies and its prediction on how 
standards impact efficiency distributions in the year that standards 
take effect. This is identified as Issue 11 under ``Issues on Which DOE 
Seeks Comment'' in section IV.E of this ANOPR. In addition, DOE 
specifically seeks feedback on whether higher standard levels in 
specific equipment classes are likely to cause commercial refrigeration 
equipment customers to shift to using other, less-efficient equipment 
classes for displaying merchandise. This is identified as Issue 12 
under ``Issues on Which DOE Seeks Comment'' in section IV.E of this 
ANOPR.
3. National Impact Analysis Inputs
    The difference in shipments by equipment efficiency level between 
the base and standards cases was the basis for determining the 
reduction in per-unit annual energy consumption that could result from 
new standards. The commercial refrigeration equipment stock in a given 
year is the total linear footage of commercial refrigeration equipment 
shipped from earlier years that survive in the given year. The NES 
spreadsheet model keeps track of the total linear footage of commercial 
refrigeration equipment units shipped each year. For purposes of the 
ANOPR NES and NPV analyses, DOE estimated that approximately 10 percent 
of the existing commercial refrigeration equipment units are retired 
each year (based on a 10-year average lifetime) and that for units 
shipped in 2042, any units still remaining at the end of 2052 are 
replaced.
    The site-to-source conversion factor is the multiplicative factor 
used for converting site energy consumption, expressed in kWh, into 
primary or source energy consumption, expressed in quads (quadrillion 
Btu). DOE used annual site-to-source conversion factors based on U.S. 
average values for the commercial sector, calculated from AEO2006, 
Table A5. The average conversion factors vary over time, due to 
projected changes in electricity generation sources (i.e., the power 
plant types projected to provide electricity to the country).
    To estimate NPV, DOE calculated the net impact each year as the 
difference between total operating cost savings (including electricity, 
repair, and maintenance cost savings) and increases in total installed 
costs (which consists of MSP, sales taxes, distribution channel 
markups, and installation cost). DOE calculated the NPV of each CSL 
over the life of the equipment, using three steps. First, DOE 
determined the difference between the equipment costs under the CSL 
case and the base case, to get the net equipment cost increase 
resulting from the CSL. Second, DOE determined the difference between 
the base case operating costs and the CSL operating costs, to get the 
net operating cost savings from the CSL. Third, DOE determined the 
difference between the net operating cost savings and the net equipment 
cost increase to get the net savings (or expense) for each year. DOE 
then discounted the annual net savings (or expenses) for commercial 
refrigeration equipment purchased on or after 2012 to the year 2007, 
and summed the discounted values to provide the NPV of a CSL. An NPV 
greater than zero shows net savings (i.e., the CSL would reduce overall 
customer expenditures relative to the base case in present value 
terms). An NPV that is less than zero indicates that the candidate 
energy standard level would result in a net increase in customer 
expenditures in present value terms.
    Table II.19 summarizes the NES and NPV inputs to the NES 
spreadsheet model. For each input a brief description of the data 
source is given.

   Table II.19.--National Energy Savings and Net Present Value Inputs
------------------------------------------------------------------------
            Input data                           Description
------------------------------------------------------------------------
Shipments.........................  Annual shipments from shipments
                                     model (see chapter 9 Shipments
                                     Analysis).
Effective Date of Standard........  2012.
Base-Case Efficiencies............  Distribution of base-case shipments
                                     by efficiency level.
Standards-Case Efficiencies.......  Distribution of shipments by
                                     efficiency level for each standards
                                     case. Standards case annual market
                                     shares by efficiency level remain
                                     constant over time for the base-
                                     case and each standards case.
Annual Energy Consumption per       Annual weighted-average values are a
 Linear Foot.                        function of energy consumption
                                     level, which are established in the
                                     Engineering Analysis (see chapter 5
                                     of the TSD). Converted to a per
                                     linear foot basis.
Total Installed Cost per Linear     Annual weighted-average values are a
 Foot.                               function of energy consumption
                                     level (see chapter 8 of the TSD).
                                     Converted to a per linear foot
                                     basis.
Repair Cost per Linear Foot.......  Annual weighted-average values are
                                     constant with energy consumption
                                     level (see chapter 8 of the TSD).
                                     Converted to a per linear foot
                                     basis.
Maintenance Cost per Linear Foot..  Annual weighted-average value equals
                                     $156 (see chapter 8 of the TSD),
                                     plus lighting maintenance cost.
                                     Converted to a per linear foot
                                     basis.
Escalation of Electricity Prices..  EIA AEO2006 forecasts (to 2030) and
                                     extrapolation for beyond 2030 (see
                                     chapter 8 of the TSD).
Electricity Site-to-Source          Conversion varies yearly and is
 Conversion.                         generated by DOE/EIA's NEMS*
                                     program (a time series conversion
                                     factor; includes electric
                                     generation, transmission, and
                                     distribution losses).
Discount Rate.....................  3 and 7 percent real.
Present Year......................  Future costs are discounted to year
                                     2007.

[[Page 41198]]

 
Rebound Effect....................  A rebound effect (due to changes in
                                     shipments resulting from standards)
                                     was not considered in the National
                                     Impact Analysis.
------------------------------------------------------------------------
* Chapter 13 (utility impact analysis) and chapter 14 (environmental
  assessment) provide more detail on NEMS.

4. National Impact Analysis Results
    Below are the NES results for each efficiency level considered for 
the 15 equipment classes of commercial refrigeration equipment 
analyzed. Results are cumulative to 2042 and are shown as primary 
energy savings in quads. Inputs to the NES spreadsheet model are based 
on weighted-average values, yielding results that are discrete point 
values, rather than a distribution of values as in the LCC analysis.
    Table II.20 shows the NES results for the CSLs analyzed for each 
equipment class of commercial refrigeration equipment. DOE based all 
the results on electricity price forecasts from the AEO2006 reference 
case. The range of overall cumulative energy impacts for establishing 
standards above the baseline level (Level 1) for all equipment classes 
is from 0.12 quad for a standard at Level 2 to 1.73 quads with all 
equipment at the highest efficiency level.

   Table II.20.--Cumulative National Energy Savings for Commercial Refrigeration Equipment (2012-2042) (Quads)
----------------------------------------------------------------------------------------------------------------
                                                    National energy savings (quads*,**) by standard level
              Equipment class              ---------------------------------------------------------------------
                                             Level 2   Level 3   Level 4   Level 5   Level 6   Level 7   Level 8
----------------------------------------------------------------------------------------------------------------
VOP.RC.M..................................      0.04      0.07      0.13      0.26      0.33      0.41      0.52
VOP.RC.L[dagger]..........................      0.00      0.00      0.00      0.00      0.00      0.00        NA
VOP.SC.M..................................      0.00      0.01      0.01      0.02      0.02      0.04      0.06
VCT.RC.M..................................      0.00      0.00      0.01      0.01      0.03      0.03        NA
VCT.RC.L..................................      0.04      0.08      0.13      0.27      0.36      0.45      0.66
VCT.SC.I..................................      0.00      0.00      0.01      0.01      0.02      0.02      0.03
VCS.SC.I..................................      0.00      0.00      0.00      0.00      0.00      0.00      0.00
SVO.RC.M..................................      0.01      0.03      0.06      0.10      0.14      0.20        NA
SVO.SC.M..................................      0.00      0.01      0.01      0.01      0.02      0.04      0.05
SOC.RC.M..................................      0.01      0.02      0.02      0.03      0.06      0.06        NA
HZO.RC.M..................................      0.00      0.00      0.01        NA        NA        NA        NA
HZO.RC.L..................................      0.00      0.01      0.03      0.05      0.07        NA        NA
HZO.SC.M..................................      0.00      0.00      0.00      0.00      0.00      0.00      0.00
HZO.SC.L..................................      0.00      0.00      0.00      0.00      0.00      0.01      0.01
HCT.SC.I..................................      0.00      0.00      0.02      0.02      0.02        NA       NA
----------------------------------------------------------------------------------------------------------------
* A value of NA means that no energy savings were calculated for this level of efficiency. For example, a
  vertical open, remote condensing, low temperature unit (VOP.RC.L) had only six possible energy consumption
  levels and, therefore, only six possible standards. Level 1 = Baseline, so there would be no savings at Level
  1 and it has been omitted from the table.
** 0.00 indicates savings are less than 0.005 quadrillion Btu.
[dagger] The VOP.RC.L equipment class had no projected shipments. It was included in the analysis at the request
  of the industry.

    Below are the NPV results for the CSLs considered for the 15 
equipment classes of commercial refrigeration equipment. Results are 
cumulative and are shown as the discounted value of these savings in 
dollar terms. The present value of increased total installed costs is 
the total installed cost increase (i.e., the difference between the 
standards case and base case), discounted to 2007, and summed over the 
time period in which DOE evaluates the impact of standards (i.e., from 
the effective date of standards, 2012, to the year 2052 when the last 
commercial refrigeration equipment unit is retired).
    Savings are decreases in operating costs (including electricity, 
repair, and maintenance) associated with the higher energy efficiency 
of commercial refrigeration equipment units purchased in the standards 
case compared to the base case. Total operating cost savings are the 
savings per unit multiplied by the number of units of each vintage 
(i.e., the year of manufacture) surviving in a particular year. 
Commercial refrigeration equipment consumes energy and must be 
maintained over its entire lifetime. For units purchased in 2042, the 
operating cost includes energy consumed and maintenance and repair 
costs incurred until the last unit is retired from service in 2052.
    Table II.21 shows the NPV results for the standard levels 
considered for commercial refrigeration equipment based upon a seven 
percent discount rate. DOE based all results on electricity price 
forecasts from the AEO2006 reference case. Detailed results showing the 
breakdown of the NPV into national equipment costs and national 
operating costs are provided in appendix I of the TSD. At a seven 
percent discount rate, the range of overall national NPV benefits 
calculated for different CSL scenarios above the baseline was from $120 
million to $1.4 billion. The present value of the installed cost 
increase varied from a low of $70 million to a high of $1.82 billion. 
The present value of the operating cost savings for higher standards 
varied from a low of $210 million to a high of $3.14 billion.

[[Page 41199]]



    Table II.21.--Cumulative Net Present Value Results Based on a Seven Percent Discount Rate (Billion 2006$)
----------------------------------------------------------------------------------------------------------------
                                                             Standard level (billion 2006$) * **
              Equipment class              ---------------------------------------------------------------------
                                             Level 2   Level 3   Level 4   Level 5   Level 6   Level 7   Level 8
----------------------------------------------------------------------------------------------------------------
VOP.RC.M..................................      0.03      0.07      0.12      0.25      0.31      0.36      0.40
VOP.RC.L[dagger]..........................      0.00      0.00      0.00      0.00      0.00        NA        NA
VOP.SC.M..................................      0.01      0.01      0.01      0.02      0.02      0.03      0.02
VCT.RC.M..................................      0.00      0.01      0.01      0.01      0.02      0.00        NA
VCT.RC.L..................................      0.06      0.10      0.16      0.30      0.37      0.44      0.55
VCT.SC.I..................................      0.00      0.01      0.01      0.01      0.02      0.03      0.02
VCS.SC.I..................................      0.00      0.00      0.00      0.00      0.00      0.00      0.00
SVO.RC.M..................................      0.01      0.03      0.06      0.09      0.13      0.17        NA
SVO.SC.M..................................      0.01      0.01      0.01      0.02      0.02      0.04      0.04
SOC.RC.M..................................      0.01      0.03      0.02      0.03      0.02     -0.01        NA
HZO.RC.M..................................      0.00      0.01      0.01        NA        NA        NA        NA
HZO.RC.L..................................      0.00      0.02      0.04      0.06      0.08        NA        NA
HZO.SC.M..................................      0.00      0.00      0.00      0.00      0.00      0.00      0.00
HZO.SC.L..................................      0.00      0.00      0.01      0.01      0.01      0.01      0.01
HCT.SC.I..................................      0.00      0.01      0.02      0.03      0.03        NA       NA
----------------------------------------------------------------------------------------------------------------
* A value of NA means that no energy savings were calculated for this level of efficiency. For example, a
  vertical open, remote condensing, low temperature unit (VOP.RC.L) had only six possible energy consumption
  levels and, therefore, only six possible standards. Level 1 = Baseline, so there would be no savings at Level
  1 and it has been omitted from the table.
** 0.00 indicates savings are less than 0.005 quadrillion Btu.
[dagger] The VOP.RC.L equipment class had no projected shipments. It was included in the analysis at the request
  of the industry.

    Table II.22 provides the NPV results based on the three percent 
discount rate and electricity price forecasts from the AEO2006 
reference case. As with the NPV results based upon a seven percent 
discount rate, detailed results showing the breakdown of the NPV into 
national equipment costs and national operating costs based upon a 
three percent discount rate are provided in appendix I of the TSD. At a 
three percent discount rate, the range of overall NPV benefits 
calculated for different CSL scenarios above the assumed baseline was 
from $360 million to $4.03 billion. The present value of the installed 
cost varied from a low of $150 million to a high of $3.57 billion. The 
present value of the operating cost savings for higher standards varied 
from a low of $510 million to a high of $7.51 billion.

    Table II.22.--Cumulative Net Present Value Results Based on a Three Percent Discount Rate (Billion 2006$)
----------------------------------------------------------------------------------------------------------------
                                                             Standard level (billion 2006$) * **
              Equipment class              ---------------------------------------------------------------------
                                             Level 2   Level 3   Level 4   Level 5   Level 6   Level 7   Level 8
----------------------------------------------------------------------------------------------------------------
VOP.RC.M..................................      0.09      0.20      0.35      0.69      0.86      1.03      1.20
VOP.RC.L [dagger].........................      0.00      0.00      0.00      0.00      0.00        NA        NA
VOP.SC.M..................................      0.02      0.02      0.03      0.06      0.06      0.08      0.08
VCT.RC.M..................................      0.01      0.01      0.02      0.03      0.05      0.03        NA
VCT.RC.L..................................      0.15      0.27      0.42      0.80      1.00      1.21      1.59
VCT.SC.I..................................      0.01      0.01      0.02      0.02      0.07      0.07      0.07
VCS.SC.I..................................      0.00      0.00      0.00      0.00      0.00      0.00      0.00
SVO.RC.M..................................      0.03      0.09      0.17      0.26      0.36      0.49        NA
SVO.SC.M..................................      0.02      0.02      0.03      0.05      0.05      0.12      0.12
SOC.RC.M..................................      0.02      0.07      0.06      0.08      0.07      0.03        NA
HZO.RC.M..................................      0.00      0.02      0.02        NA        NA        NA        NA
HZO.RC.L..................................      0.01      0.05      0.10      0.17      0.21        NA        NA
HZO.SC.M..................................      0.00      0.00      0.00      0.00      0.00      0.00      0.00
HZO.SC.L..................................      0.00      0.01      0.01      0.01      0.02      0.02      0.02
HCT.SC.I..................................      0.01      0.01      0.06      0.07      0.08        NA       NA
----------------------------------------------------------------------------------------------------------------
* A value of NA means that no energy savings were calculated for this level of efficiency. For example, a
  vertical open, remote condensing, low temperature unit (VOP.RC.L) had only six possible energy consumption
  levels and, therefore, only six possible standards. Level 1 = Baseline, so there would be no savings at Level
  1 and it has been omitted from the table.
** 0.00 indicates savings are less than 0.005 quadrillion Btu.
[dagger] The VOP.RC.L equipment class had no projected shipments. It was included in the analysis at the request
  of the industry.

J. Life-Cycle Cost Sub-Group Analysis

    The LCC sub-group analysis evaluates impacts of standards on 
identifiable groups of customers, such as customers of different 
business types, which may be disproportionately affected by standards. 
In the NOPR phase of this rulemaking, DOE will analyze the LCCs and 
PBPs for customers that fall into those groups. The analysis will 
determine whether any particular group of commercial consumers would be 
adversely affected by any of the CSLs.
    Also, DOE plans to examine variations in energy prices and energy 
use that might affect the NPV of a standard to customer sub-
populations. To the extent possible, DOE will obtain estimates of the 
variability of each input parameter and consider this variability

[[Page 41200]]

in the calculation of customer impacts. Variations in energy use for a 
particular equipment type may depend on factors such as climate and 
type of business.
    DOE will determine the effect on customer sub-groups using the LCC 
spreadsheet model. The spreadsheet model used for the LCC analysis can 
be used with different data inputs. The standard LCC analysis includes 
various customer types that use commercial refrigeration equipment. DOE 
can analyze the LCC for any sub-group, such as a convenience store, by 
using the LCC spreadsheet model and sampling only that sub-group. 
Details of this model are explained in section II.G, which describes 
the LCC and PBP analyses. DOE will be especially sensitive to purchase 
price increases (``first-cost'' increases) to avoid negative impacts on 
identifiable population groups such as small businesses (i.e., those 
with low annual revenues), which may not be able to afford a 
significant increase in the price of commercial refrigeration 
equipment. For such customers that are sensitive to price increases, 
increases in first costs of equipment can preclude the purchase of a 
new model. As a result, some customers may retain equipment past its 
useful life. This older equipment is generally less efficient to begin 
with, and its efficiency may deteriorate further if it is retained 
beyond its useful life. Large increases in first cost also can possibly 
preclude the purchase and use of equipment altogether, resulting in a 
potentially large loss of utility to the customer.
    Although business income and annual revenues are not known for the 
types of businesses analyzed in the LCC analysis, the floor space 
occupied by a business may be an indicator of its annual income. If 
this is generally true, then DOE will be able to perform sub-group 
analyses on smaller businesses. As stated earlier, DOE can also use SBA 
data for businesses with 750 or fewer employees as a proxy for 
``smaller businesses.''

K. Manufacturer Impact Analysis

    The purpose of the manufacturer impact analysis is to identify the 
likely impacts of energy conservation standards on manufacturers. DOE 
will conduct this analysis with input from manufacturers and other 
interested parties and will apply this methodology to its evaluation of 
standards. DOE will also consider financial impacts and a wide range of 
quantitative and qualitative industry impacts that might occur 
following the adoption of a standard. For example, a particular 
standard level, if adopted by DOE, could require changes to commercial 
refrigeration equipment manufacturing practices. DOE will identify and 
understand these impacts through interviews with manufacturers and 
other stakeholders during the NOPR stage of its analysis.
    Recently, DOE announced changes to the format of the manufacturer 
impact analysis through a report submitted to Congress on January 31, 
2006 (as required by section 141 of EPACT 2005), entitled ``Energy 
Conservation Standards Activities.'' Previously, DOE did not report any 
manufacturer impact analysis results during the ANOPR phase; however, 
under this new format, DOE has collected, evaluated, and reported 
preliminary information and data in the ANOPR (see section II.K.6 of 
this ANOPR). Such preliminary information includes the anticipated 
conversion capital expenditures by efficiency level and the 
corresponding anticipated impacts on jobs. DOE solicited this 
information during the ANOPR engineering analysis manufacturer 
interviews and reported the results in the preliminary manufacturer 
impact analysis (see chapter 12 of the TSD).
    DOE conducts the manufacturer impact analysis in three phases, and 
further tailors the analytical framework based on stakeholder comments. 
In Phase I, an industry profile is created to characterize the 
industry, and a preliminary manufacturer impact analysis is conducted 
to identify important issues that require consideration. Results of the 
Phase I analysis are presented in the ANOPR TSD. In Phase II, an 
industry cash flow model and an interview questionnaire are prepared to 
guide subsequent discussions. In Phase III, manufacturers are 
interviewed, and the impacts of standards are assessed both 
quantitatively and qualitatively. Industry and sub-group cash flow and 
net present value are assessed through use of the Government Regulatory 
Impact Model (GRIM). Then impacts on competition, manufacturing 
capacity, employment, and regulatory burden are assessed based on 
manufacturer interview feedback and discussions. Results of the Phase 
II and Phase III analyses are presented in the NOPR TSD. For more 
detail on the manufacturer impact analysis, refer to chapter 12 of the 
TSD.
1. Sources of Information for the Manufacturer Impact Analysis
    Many of the analyses described above provide important information 
applicable to the MIA. Such information includes manufacturing costs 
and prices from the engineering analysis, retail price forecasts, and 
shipments forecasts. DOE will supplement this information with company 
financial data and other information gathered during interviews its 
contractor conducts with manufacturers. This interview process plays a 
key role in the manufacturer impact analysis because it allows 
interested parties to privately express their views on important 
issues. To preserve confidentiality, DOE aggregates these perspectives 
across manufacturers, creating a combined opinion or estimate for DOE. 
This process enables DOE to incorporate sensitive information from 
manufacturers in the rulemaking process without specifying precisely 
which manufacturer provided a certain set of data.
    DOE conducts detailed interviews with manufacturers to gain insight 
into the range of potential impacts of standards. During the 
interviews, DOE typically solicits both quantitative and qualitative 
information on the potential impacts of efficiency levels on sales, 
direct employment, capital assets, and industrial competitiveness. DOE 
prefers an interactive interview process, rather than a written 
response to a questionnaire, because it helps clarify responses and 
identify additional issues. Before the interviews, DOE will circulate a 
draft document showing the estimates of the financial parameters based 
on publicly available information. DOE will solicit comments and 
suggestions on these estimates during the interviews.
    DOE will ask interview participants to identify any confidential 
information that they have provided, either orally or in writing. DOE 
will consider all information collected, as appropriate, in its 
decision-making process. However, DOE will not make confidential 
information available in the public record. DOE also will ask 
participants to identify all information that they wish to have 
included in the public record, but that they do not want to have 
associated with their interview. DOE will incorporate this information 
into the public record, but will report it without attribution.
    DOE will collate the completed interview questionnaires and prepare 
a summary of the major issues. For more detail on the methodology used 
in the manufacturer impact analysis, refer to chapter 12 of the TSD.
2. Industry Cash Flow Analysis
    The industry cash flow analysis relies primarily on the GRIM. DOE 
uses the GRIM to analyze the financial impacts of more stringent energy 
conservation standards on the industry.

[[Page 41201]]

    The GRIM analysis uses several factors to determine annual cash 
flows from a new standard: Annual expected revenues; manufacturer costs 
(including COGS, depreciation, research and development, selling, 
general and administrative expenses); taxes; and conversion capital 
expenditures. DOE compares the results against base case projections 
that involve no new standards. The financial impact of new standards is 
the difference between the two sets of discounted annual cash flows. 
For more information on the industry cash flow analysis, refer to 
chapter 12 of the TSD.
3. Manufacturer Sub-Group Analysis
    Industry cost estimates are not adequate to assess differential 
impacts among sub-groups of manufacturers. For example, small and niche 
manufacturers, or manufacturers whose cost structure differs 
significantly from the industry average, could experience a more 
negative impact. Ideally, DOE would consider the impact on every firm 
individually; however, it typically uses the results of the industry 
characterization to group manufacturers exhibiting similar 
characteristics.
    During the interview process, DOE will discuss the potential sub-
groups and sub-group members it has identified for the analysis. DOE 
will encourage the manufacturers to recommend sub-groups or 
characteristics that are appropriate for the sub-group analysis. For 
more detail on the manufacturer sub-group analysis, refer to chapter 12 
of the TSD.
4. Competitive Impacts Assessment
    DOE must also consider whether a new standard is likely to reduce 
industry competition, and the Attorney General must determine the 
impacts, if any, of any reduced competition. DOE will make a determined 
effort to gather and report firm-specific financial information and 
impacts. The competitive analysis will focus on assessing the impacts 
on smaller manufacturers. DOE will base this assessment on 
manufacturing cost data and on information collected from interviews 
with manufacturers. The manufacturer interviews will focus on gathering 
information to help assess asymmetrical cost increases to some 
manufacturers, increased proportions of fixed costs that could increase 
business risks, and potential barriers to market entry (e.g., 
proprietary technologies).
5. Cumulative Regulatory Burden
    DOE recognizes and seeks to mitigate the overlapping effects on 
manufacturers of new or revised DOE standards and other regulatory 
actions affecting the same equipment. DOE will analyze and consider the 
impact on manufacturers of multiple, equipment-specific regulatory 
actions.
    Based on its own research and discussions with manufacturers, DOE 
identified several regulations relevant to commercial refrigeration 
equipment, including: existing or new standards for commercial 
refrigeration equipment, phaseout of hydrochlorofluorocarbons and foam 
insulation blowing agents, standards for other equipment made by 
commercial refrigeration equipment manufacturers, State energy 
conservation standards, and international energy conservation 
standards. DOE will study the potential impacts of these cumulative 
burdens in greater detail during the MIA conducted during the NOPR 
phase.
6. Preliminary Results for the Manufacturer Impact Analysis
    DOE received views from manufacturers about what they perceived to 
be the possible impact of potential new standards on their future 
profitability. As stated by manufacturers, a new energy conservation 
standard has the potential to impact financial performance in several 
different ways. The capital investment needed to upgrade or redesign 
equipment and equipment platforms before they have reached the end of 
their useful life can require conversion costs that otherwise would not 
be expended, resulting in stranded investments. In addition, more 
stringent standards can result in higher per-unit costs that may deter 
some customers from buying higher-margin units with more features, 
thereby decreasing manufacturer profitability.
    DOE estimates that a commercial refrigeration equipment production 
line would have a life cycle of approximately 15 to 20 years in the 
absence of standards. During that period, manufacturers would not make 
major changes that altered the underlying platforms. Thus, a standard 
that took effect and resulted in a major equipment platform redesign 
before the end of the platform's life would strand a portion of the 
earlier capital investments.
    DOE asked manufacturers what level of conversion costs they 
anticipated if energy conservation standards were to take effect. In 
general, manufacturers expected only conversion costs associated with 
redesigning of insulation foaming fixtures. One manufacturer estimated 
this to be approximately $10 million in new fixtures, research, and 
testing. Manufacturers indicated there would not be a significant 
amount of stranded assets because of standards, but any stranded assets 
that did exist would be primarily in the insulation foaming fixtures. 
The manufacturers also indicated that standards would have little 
effect on capacity and utilization.
    The impact of new energy conservation standards on employment is an 
important consideration in the rulemaking process. To assess how 
domestic employment patterns might be affected by new energy 
conservation standards for commercial refrigeration equipment, DOE 
posed several questions related to this topic to manufacturers.
    Over the past several years, some commercial refrigeration 
equipment manufacturers have moved a portion of their production out of 
the United States, primarily driven by concerns about profitability and 
the opportunity for lower labor costs. Mexico is the most common 
location for U.S. manufacturers to establish new production capacity, 
since it offers low labor rates relative to the United States and 
proximity to the U.S. market. Manufacturers indicated that they 
anticipate new standards will accelerate the trend to manufacture 
commercial refrigeration equipment outside of the United States. 
Further, new standards may accelerate the rate at which commercial 
refrigeration equipment production is moved to Mexico because if 
manufacturers need to make large capital investments to produce 
redesigned equipment platforms, they have strong financial incentives 
to invest in a location with lower labor costs.
    Manufacturers indicated that new standards could cause them to exit 
one or more portions of the markets affected by the standards. Thus, 
standards could affect the degree of industry consolidation, that is, 
the degree to which a limited number of companies dominate a market. At 
present, four companies account for a large majority of commercial 
refrigeration equipment sales.
    DOE asked manufacturers to what degree they expected industry 
consolidation to occur in the absence of standards. In general, 
manufacturers felt that there would be little industry consolidation in 
the future. Historically, the commercial refrigeration equipment 
industry has not seen extensive consolidation, although several 
manufacturers have been bought and sold by parent companies in the 
past.
    For more preliminary results for the manufacturer impact analysis 
such as other impacts on financial performance, impacts on utility and 
performance, and

[[Page 41202]]

additional details on the impacts of cumulative regulatory burden, 
refer to chapter 12 of the TSD.

L. Utility Impact Analysis

    The utility impact analysis estimates the effects on the utility 
industry of reduced energy consumption due to improved appliance 
efficiency. The analysis compares modeling results for the base case 
with results for each candidate standards case. It consists of 
forecasted differences between the base and standards cases for 
electricity generation, installed capacity, sales, and prices.
    To estimate these effects of proposed commercial refrigeration 
equipment standard levels on the electric utility industry, DOE intends 
to use a variant of the EIA's NEMS.\24\ EIA uses NEMS to produce the 
2007 Annual Energy Outlook (AEO). DOE will use a variant known as NEMS-
Building Technologies (BT) to provide key inputs to the analysis. NEMS-
BT produces a widely recognized reference case forecast for the United 
States and is available in the public domain.
---------------------------------------------------------------------------

    \24\ For more information on NEMS, please refer to the U.S. 
Department of Energy, Energy Information Administration 
documentation. A useful summary is National Energy Modeling System: 
An Overview 2000, DOE/EIA-0581(2000), March 2000. DOE/EIA approves 
use of the name NEMS to describe only an official version of the 
model without any modification to code or data. Because this 
analysis entails some minor code modifications and the model is run 
under various policy scenarios that are variations on DOE/EIA 
assumptions, in this analysis, DOE refers to it by the name NEMS-BT.
---------------------------------------------------------------------------

    The use of NEMS-BT for the utility impact analysis offers several 
advantages. As the official DOE energy forecasting model, it relies on 
a set of assumptions that are transparent and have received wide 
exposure and commentary. NEMS-BT allows an estimate of the interactions 
between the various energy supply and demand sectors and the economy as 
a whole. The utility impact analysis will determine the changes in 
installed capacity and generation by fuel type produced by each CSL, as 
well as changes in electricity sales to the commercial sector.
    DOE conducts the utility analysis as a policy deviation from the 
AEO2007, applying the same basic set of premises. For example, the 
operating characteristics (e.g., energy conversion efficiency, 
emissions rates) of future electricity generating plants are as 
specified in the AEO2007 reference case, as are the prospects for 
natural gas supply. DOE also will explore deviations from some of the 
reference case premises, to represent alternative futures. Two 
alternative scenarios use the high and low economic growth cases of 
AEO2007. (The reference case corresponds to medium growth.) The high 
economic growth case projects higher growth rates for population, labor 
force, and labor productivity, resulting in lower predicted inflation 
and interest rates relative to the reference case and higher overall 
aggregate economic growth. The opposite is true for the low growth 
case. Starting in 2012, the high growth case predicts growth in per 
capita gross domestic product of 3.5 percent per year, compared with 
3.0 percent per year in the reference case and 2.5 percent per year in 
the low growth case. While supply-side growth determinants are varied 
in these cases, AEO2007 uses the same reference case energy prices for 
all three economic growth cases. Different economic growth scenarios 
will affect the rate of growth of electricity demand.
    The electric utility industry analysis will consist of NEMS-BT 
forecasts for generation, installed capacity, sales, and prices. The 
NEMS-BT provides reference case load shapes for several end uses, 
including commercial refrigeration. The model uses predicted growth in 
demand for each end use to build up a projection of the total electric 
system load growth for each region, which it uses in turn to predict 
the necessary additions to capacity. The NEMS-BT accounts for the 
implementation of energy conservation standards by decrementing the 
appropriate reference case load shape. DOE determines the size of the 
decrement using data for the per-unit energy savings developed in the 
LCC and PBP analyses (see chapter 8 of the TSD) and the forecast of 
shipments developed for the NIA (see chapter 9 of the TSD).
    The predicted reduction in capacity additions is sensitive to the 
peak load impacts of the standard. DOE will investigate the need to 
adjust the hourly load profiles that include this end use in NEMS-BT. 
Since the AEO2007 version of NEMS-BT forecasts only to the year 2030, 
DOE must extrapolate the results to 2042. DOE will use the approach 
developed by EIA to forecast fuel prices for the FEMP. FEMP uses these 
prices to estimate LCCs of Federal equipment procurements. For 
petroleum products, EIA uses the average growth rate for the world oil 
price over the years 2010 to 2025, in combination with the refinery and 
distribution markups from the year 2025, to determine the regional 
price forecasts. Similarly, EIA derives natural gas prices from an 
average growth rate figure in combination with regional price margins 
from the year 2025. Results of the analysis will include changes in 
commercial electricity sales, and installed capacity and generation by 
fuel type, for each trial standard level, in five-year, forecasted 
increments extrapolated to the year 2040.

M. Employment Impact Analysis

    DOE estimates the impacts of standards on employment for equipment 
manufacturers, relevant service industries, energy suppliers, and the 
economy in general. Both indirect and direct employment impacts are 
covered. Direct employment impacts would result if standards led to a 
change in the number of employees at manufacturing plants and related 
supply and service firms. Direct impact estimates are covered in the 
MIA.
    Indirect employment impacts are impacts on the national economy 
other than in the manufacturing sector being regulated. Indirect 
impacts may result both from expenditures shifting among goods 
(substitution effect) and changes in income which lead to a change in 
overall expenditure levels (income effect). DOE defines indirect 
employment impacts from standards as net jobs eliminated or created in 
the general economy as a result of increased spending driven by the 
increased equipment prices and reduced spending on energy.
    DOE expects new standards to increase the total installed cost of 
equipment (includes MSP, sales taxes, distribution channel markups, and 
installation cost). DOE also expects the new standards to decrease 
energy consumption, and thus expenditures on energy. Over time, 
increased total installed cost is paid back through energy savings. The 
savings in energy expenditures may be spent on new commercial 
investment and other items.
    Using an input/output model of the U.S. economy, this analysis 
seeks to estimate the effects on different sectors and the net impact 
on jobs. DOE will estimate national employment impacts for major 
sectors of the U.S. economy in the NOPR, using public and commercially 
available data sources and software. DOE will make all methods and 
documentation available for review.
    DOE developed Impact of Sector Energy Technologies (ImSET), a 
spreadsheet model of the U.S. economy that focuses on 188 sectors most 
relevant to industrial, commercial, and residential building energy 
use.\25\ ImSET is a special-purpose version of

[[Page 41203]]

the U.S. Benchmark National Input-Output (I-O) model, which has been 
designed to estimate the national employment and income effects of 
energy saving technologies that are deployed by the DOE Office of 
Energy Efficiency and Renewable Energy. In comparison with previous 
versions of the model used in earlier rulemakings, the current version 
allows for more complete and automated analysis of the essential 
features of energy efficiency investments in buildings, industry, 
transportation, and the electric power sectors.
---------------------------------------------------------------------------

    \25\ Roop, J. M., M. J. Scott, and R. W. Schultz. 2005. ImSET: 
Impact of Sector Energy Technologies. PNNL-15273. Pacific Northwest 
National Laboratory, Richland, WA.
---------------------------------------------------------------------------

    The ImSET software includes a personal computer-based I-O model 
with structural coefficients to characterize economic flows among the 
188 sectors. ImSET's national economic I-O structure is based on the 
1997 Benchmark U.S. table (Lawson, et al. 2002),\26\ specially 
aggregated to 188 sectors. The time scale of the model is 50 years.
---------------------------------------------------------------------------

    \26\ Lawson, Ann M., Kurt S. Bersani, Mahnaz Fahim-Nader, and 
Jiemin Guo. 2002. ``Benchmark Input-Output Accounts of the U.S. 
Economy, 1997,'' Survey of Current Business, December, pp. 19-117.
---------------------------------------------------------------------------

    The model is a static I-O model, which allows a great deal of 
flexibility concerning the types of energy efficiency effects that can 
be accommodated. For example, certain economic effects of energy 
efficiency improvements require an assessment of inter-industry 
purchases, which is handled in the model. Some energy efficiency 
investments will not only reduce the costs of energy in the economy but 
the costs of labor and other goods and services as well, which is 
accommodated through a recalculation of the I-O structure in the model. 
Output from the ImSET model can be used to estimate changes in 
employment, industry output, and wage income in the overall U.S. 
economy resulting from changes in expenditures in the various sectors 
of the economy.
    Although DOE intends to use ImSET for its analysis of employment 
impacts, it welcomes input on other tools and factors it might 
consider. For more information on the employment impacts analysis, 
refer to chapter 14 of the TSD.

N. Environmental Assessment

    DOE will assess the impacts of proposed commercial refrigeration 
equipment standard levels on certain environmental indicators, using 
NEMS-BT to provide key inputs to the analysis. The environmental 
assessment produces results in a manner similar to those provided in 
the AEO.
    The intent of the environmental assessment is to provide estimates 
of reduced powerplant emissions and to fulfill requirements to properly 
quantify and consider the environmental effects of all new Federal 
rules. The environmental assessment that will be produced by NEMS-BT 
considers two pollutants (sulfur dioxide (SO2) and nitrogen 
oxides (NOX)) and one other emission (carbon). The only form 
of carbon the NEMS-BT model tracks is carbon dioxide (CO2). 
Therefore, the only carbon discussed in this analysis is in the form of 
CO2. For each of the CSLs, DOE will calculate total 
undiscounted and discounted emissions using NEMS-BT and will use 
external analysis as needed.
    DOE will conduct the environmental assessment as an incremental 
policy impact (i.e., a commercial refrigeration equipment standard) of 
the AEO2007 forecast, applying the same basic set of assumptions used 
in AEO2007. For example, the emissions characteristics of an 
electricity generating plant will be exactly those used in AEO2007. 
Also, forecasts conducted with NEMS-BT consider the supply-side and 
demand-side effects on the electric utility industry. Thus, DOE's 
analysis will account for any factors affecting the type of electricity 
generation and, in turn, the type and amount of airborne emissions 
generated by the utility industry. The NEMS-BT model tracks carbon 
emissions with a specialized carbon emissions estimation subroutine, 
producing reasonably accurate results due to the broad coverage of all 
sectors and inclusion of interactive effects. Past experience with 
carbon results from NEMS-BT suggests that emissions estimates are 
somewhat lower than emissions based on simple average factors. One of 
the reasons for this divergence is that NEMS-BT tends to predict that 
conservation displaces generating capacity in future years. On the 
whole, NEMS-BT provides carbon emissions results of reasonable 
accuracy, at a level consistent with other Federal published results.
    NEMS-BT also reports SO2 and NOX, which DOE 
has reported in past analyses. The Clean Air Act Amendments of 1990 set 
an SO2 emissions cap on all power generation. The attainment 
of this target, however, is flexible among generators through the use 
of emissions allowances and tradable permits. Although NEMS-BT includes 
a module for SO2 allowance trading and delivers a forecast of 
SO2 allowance prices, accurate simulation of SO2 
trading implies that the effect of energy conservation standards on 
physical emissions will be zero because emissions will always be at or 
near the ceiling. This fact has caused considerable confusion in the 
past. However, there may be an SO2 benefit from energy 
conservation, in the form of a lower SO2 allowance price. 
Since the impact of any one standard on the allowance price is likely 
small and highly uncertain, DOE does not plan to monetize any potential 
SO2 benefit.
    NEMS also has an algorithm for estimating NOX emissions 
from power generation. The impact of these emissions, however, will be 
affected by the Clean Air Interstate Rule (CAIR), which the U.S. 
Environmental Protection Agency issued on March 10, 2005.\27\ CAIR will 
permanently cap emissions of NOX in 28 eastern States and 
the District of Columbia. 70 FR 25162 (May 12, 2005). As with 
SO2 emissions, a cap on NOX emissions means that 
equipment energy conservation standards may have no physical effect on 
these emissions. When NOX emissions are subject to emissions 
caps, DOE's emissions reduction estimate corresponds to incremental 
changes in the prices of emissions allowances in cap-and-trade 
emissions markets rather than physical emissions reductions. Therefore, 
while the emissions cap may mean that physical emissions reductions 
will not result from standards, standards could produce an 
environmental-related economic benefit in the form of lower prices for 
emissions allowances. However, as with SO2 allowance prices, 
DOE does not plan to monetize this benefit because the impact on the 
NOX allowance price from any single energy conservation 
standard is likely small and highly uncertain.
---------------------------------------------------------------------------

    \27\ See http://www.epa.gov/cleanairinterstaterule/.
---------------------------------------------------------------------------

    The results for the environmental assessment are similar to a 
complete NEMS run as published in the AEO2007. These results include 
power sector emissions for SO2, NOX, and carbon in five-year forecasted 
increments extrapolated to 2042. The outcome of the analysis for each 
CSL is reported as a deviation from the AEO2007 reference (base) case.
    For more detail on the environmental assessment, refer to the 
environmental assessment report of the TSD.

O. Regulatory Impact Analysis

    DOE will prepare a draft regulatory impact analysis in compliance 
with Executive Order 12866, ``Regulatory Planning and Review,'' which 
will be subject to review by the Office of Management and Budget's 
Office of Information and Regulatory Affairs (OIRA). 58 FR 51735 
(September 30, 1993).

[[Page 41204]]

    As part of the regulatory impact analysis (and as discussed in 
section II.K of this ANOPR), DOE will identify and seek to mitigate the 
overlapping effects on manufacturers of new or revised DOE standards 
and other regulatory actions affecting the same equipment. Through 
manufacturer interviews and literature searches, DOE will compile 
information on burdens from existing and impending regulations 
affecting commercial refrigeration equipment. DOE also seeks input from 
stakeholders about regulations it should consider.
    The regulatory impact analysis also will address the potential for 
non-regulatory approaches to supplant or augment energy conservation 
standards to improve the efficiency of commercial refrigeration 
equipment. The following list includes non-regulatory means of 
achieving energy savings that DOE can consider.

 No new regulatory action
 Consumer tax credits
 Manufacturer tax credits
 Performance standards
 Rebates
 Voluntary energy efficiency targets
 Early replacement
 Bulk government purchases

    The TSD, in support of DOE's NOPR, will include an analysis of each 
alternative, the methodology for which is discussed briefly below.
    DOE will use the NES spreadsheet model (as discussed in sections 
I.B.5 and II.I of this ANOPR) to calculate the NES and the NPV 
corresponding to each alternative to the proposed standards. The 
details of NES spreadsheet model are discussed in chapter 10 of the 
TSD. To compare each alternative quantitatively to the proposed 
conservation standards, it will be necessary to quantify the effect of 
each alternative on the purchase and use of energy efficient commercial 
equipment. Once each alternative is properly quantified, DOE will make 
the appropriate revisions to the inputs in the NES spreadsheet model. 
The following are key inputs that DOE may revise in the NES spreadsheet 
model.

 Energy prices and escalation factors
 Implicit market discount rates for trading off purchase price 
against operating expense when choosing equipment efficiency
 Customer purchase price, operating cost, and income 
elasticities
 Customer price versus efficiency relationships
 Equipment stock data (purchase of new equipment or turnover 
rates for inventories)

The following are the key measures of the impact of each alternative.
     Commercial energy use (EJ = 1018 joule) is the 
cumulative energy use of the equipment from the effective date of the 
new standard to the year 2035. DOE will report electricity consumption 
as primary energy.
     NES is the cumulative national energy use from the base 
case projection less the alternative policy case projection.
     NPV is the value of future operating cost savings from 
commercial refrigeration equipment bought in the period from the 
effective date of the new standard to the year 2035. DOE calculates the 
NPV as the difference between the present value of equipment and 
operating expenditures (including energy) in the base case, and the 
present value of expenditures in each alternative policy case. DOE 
discounts future operating and equipment expenditures to 2006 using a 
seven percent real discount rate. It calculates operating expenses 
(including energy) for the life of the equipment.
    For more information on the regulatory impact analysis, refer to 
the regulatory impact analysis report in the TSD.

III. Candidate Energy Conservation Standards Levels

    DOE will specify CSLs in the ANOPR, but will not propose a 
particular standard. DOE selected between four and eight energy 
consumption levels for each commercial refrigeration equipment class 
for use in the LCC and NIA. Based on the results of the ANOPR analysis, 
DOE selects from the CSLs analyzed in the ANOPR a subset for a more 
detailed analysis for the NOPR stage of the rulemaking. The range of 
CSLs selected includes: the most energy efficient level or most energy 
efficient combination of design options, the combination of design 
options or efficiency level with the minimum LCC, and a combination of 
design options or efficiency level with a PBP of not more than three 
years. Additionally, CSLs that incorporate noteworthy technologies or 
fill in large gaps between efficiency levels of other CSLs may be 
selected.
    DOE will include the most energy efficient level analyzed as a CSL. 
The level with the maximum LCC savings was identified for each 
equipment category. In some instances this was identical to the most 
efficient level analyzed. In other cases it was the next most efficient 
level analyzed. The calculated national average PBPs from the LCC 
analysis suggested that many of the energy efficiency levels analyzed 
provided a national average payback of less than three years when 
compared with the baseline equipment. DOE opted to designate as a CSL 
the maximum energy efficiency level that provided for a payback of less 
than three years. These three selection criteria provided only one or 
two CSLs selections per equipment class. Therefore, DOE selected two or 
three lower energy consumption levels for each equipment class in order 
to provide greater variation in CSLs for its future analysis. The 
selection of these additional levels reflects DOE review of the 
relative cost effectiveness of the levels when compared with the 
baseline equipment and when compared with other efficiency levels. Four 
CSLs were selected for each equipment class. Table III.1 shows the 
selected CSLs based on the energy consumption for the specific 
equipment analyzed in the engineering analysis. DOE specifically seeks 
feedback on its selection of specific candidate standard levels for the 
post ANOPR analysis phase. This is identified as Issue 13 under 
``Issues on Which DOE Seeks Comment'' in section IV.E of this ANOPR.
    DOE will refine its final selection of CSLs for further analysis 
after receiving input from stakeholders on the ANOPR and after any 
revision of the ANOPR analyses. At that point, the CSLs will be recast 
as Trial Standard Levels (TSLs). DOE will analyze specific TSLs during 
the post-ANOPR analysis and will report the results of that analysis in 
the NOPR.

[[Page 41205]]



                          Table III.1.--Candidate Standard Levels and Factors Considered in their Selection for Future Analysis
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Candidate standard level selection considerations
                                ------------------------------------------------------------------------------------------------------------------------
Equipment class                       Maximum           Maximum         Efficiency        Highest       Additional candidate standard level selected for
                                     efficiency        efficiency       level with       efficiency                      future analysis
                                       level           level with       minimum LCC    level with PBP
                                                      positive LCC                        <3 years
                                                        savings
--------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.RC.M.......................  Level 8.........  Level 8.........  Level 8........  Level 7........  Level 6........  Level 4........
VOP.RC.L.......................  Level 6.........  Level 6.........  Level 4........  Level 6........  Level 5........  Level 3........
VOP.SC.M.......................  Level 8.........  Level 8.........  Level 7........  Level 7........  Level 5........  Level 3........
VCT.RC.M.......................  Level 7.........  Level 7.........  Level 6........  Level 6........  Level 5........  Level 3........
VCT.RC.L.......................  Level 8.........  Level 8.........  Level 8........  Level 8........  Level 7........  Level 5........  Level 3.
VCT.SC.I.......................  Level 8.........  Level 8.........  Level 7........  Level 8........  Level 6........  Level 3........
VCS.SC.I.......................  Level 8.........  Level 8.........  Level 7........  Level 8........  Level 6........  Level 5........
SVO.RC.M.......................  Level 7.........  Level 7.........  Level 7........  Level 6........  Level 4........  Level 2........
SVO.SC.M.......................  Level 8.........  Level 8.........  Level 7........  Level 8........  Level 5........  Level 3........
SOC.RC.M.......................  Level 7.........  Level 7.........  Level 5........  Level 5........  Level 4........  Level 3........
HZO.RC.M.......................  Level 4.........  Level 4.........  Level 4........  Level 4........  Level 3........  Level 2........
HZO.RC.L.......................  Level 6.........  Level 6.........  Level 6........  Level 6........  Level 5........  Level 4........  Level 3.
HZO.SC.M.......................  Level 8.........  Level 8.........  Level 8........  Level 8........  Level 7........  Level 6........  Level 4.
HZO.SC.L.......................  Level 8.........  Level 8.........  Level 8........  Level 8........  Level 7........  Level 6........  Level 3.
HCT.SC.I.......................  Level 6.........  Level 6.........  Level 6........  Level 6........  Level 5........  Level 4........  Level 3.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Because the equipment classes cover a variety of equipment sizes, 
DOE has suggested defining the standard in terms of upper limits on 
daily energy consumption (CDEC or TDEC as provided for remote 
condensing and self-contained equipment, respectively) normalized by 
TDA for remote condensing commercial equipment with transparent doors 
or without doors, commercial ice-cream freezers with transparent doors, 
and self-contained commercial equipment without doors. DOE has 
suggested defining the standard levels in terms of maximum rated daily 
energy consumption (CDEC or TDEC as provided for remote condensing and 
self-contained equipment, respectively) normalized by refrigerated 
volume (V, as measured by ANSI/AHAM Standard HRF-1-2004) for remote 
condensing commercial refrigerators, commercial freezers, and 
commercial refrigerators-freezers with solid doors and for commercial 
ice-cream freezers with solid doors. The industry supplied cost-
efficiency curves are in the form of CDEC normalized by TDA (kWh/day/
ft\2\). In the engineering analysis, DOE normalized the CDEC for each 
efficiency level by TDA or refrigerated volume. Table III.2 presents 
the CSLs for the analyzed equipment classes in terms of these 
normalized metrics.

                Table III.2.--Candidate Standard Levels for Analyzed Equipment Classes Expressed in Terms of the Normalized Test Metrics
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Candidate standard level in order of efficiency     Candidate standard levels for equipment analyzed
                                                -------------------------------------------------------       expressed in terms of the test metric
       Equipment class            Test metric                                                          -------------------------------------------------
                                                  Baseline     CSL1       CSL2       CSL3       CSL4    Baseline    CSL1      CSL2      CSL3      CSL4
--------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.RC.M.....................  CDEC/TDA kWh/day/  Level 1    Level 4    Level 6    Level 7    Level 8       1.08      0.90      0.75      0.70      0.64
                                ft\2\.
VOP.RC.L.....................  CDEC/TDA kWh/day/  Level 1    Level 3    Level 4    Level 5    Level 6       2.93      2.61      2.47      2.46      2.39
                                ft\2\.
VOP.SC.M.....................  TDEC/TDA kWh/day/  Level 1    Level 3    Level 5    Level 7    Level 8       2.55      2.23      2.07      1.84      1.65
                                ft\2\.
VCT.RC.M.....................  CDEC/TDA kWh/day/  Level 1    Level 3    Level 5    Level 6    Level 7       0.54      0.42      0.38      0.24      0.19
                                ft\2\.
VCT.RC.L.....................  CDEC/TDA kWh/day/  Level 1    Level 3    Level 5    Level 7    Level 8       1.06      0.90      0.75      0.65      0.55
                                ft\2\.
VCT.SC.I.....................  TDEC/TDA kWh/day/  Level 1    Level 3    Level 6    Level 7    Level 8       1.58      1.24      0.77      0.69      0.63
                                ft\2\.
VCS.SC.I.....................  TDEC/V kWh/day/    Level 1    Level 5    Level 6    Level 7    Level 8       0.27      0.19      0.18      0.17      0.17
                                ft\3\.
SVO.RC.M.....................  CDEC/TDA kWh/day/  Level 1    Level 2    Level 4    Level 6    Level 7       1.05      1.00      0.90      0.80      0.74
                                ft\2\.
SVO.SC.M.....................  TDEC/TDA kWh/day/  Level 1    Level 3    Level 5    Level 7    Level 8       2.24      1.99      1.87      1.62      1.54
                                ft\2\.
SOC.RC.M.....................  CDEC/TDA kWh/day/  Level 1    Level 3    Level 4    Level 5    Level 7       0.95      0.76      0.74      0.71      0.60
                                ft\2\.
HZO.RC.M.....................  CDEC/TDA kWh/day/  Level 1    Level 1    Level 2    Level 3    Level 4       0.16      0.16      0.14      0.11      0.10
                                ft\2\.
HZO.RC.L.....................  CDEC/TDA kWh/day/  Level 1    Level 3    Level 4    Level 5    Level 6       0.83      0.75      0.70      0.65      0.62
                                ft\2\.
HZO.SC.M.....................  TDEC/TDA kWh/day/  Level 1    Level 4    Level 6    Level 7    Level 8       0.78      0.61      0.56      0.54      0.48
                                ft\2\.
HZO.SC.L.....................  TDEC/TDA kWh/day/  Level 1    Level 3    Level 6    Level 7    Level 8       2.05      1.80      1.52      1.33      1.32
                                ft\2\.
HCT.SC.I.....................  TDEC/TDA kWh/day/  Level 1    Level 3    Level 4    Level 5    Level 6       1.63      1.28      0.73      0.61      0.57
                                ft\2\.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    When an energy conservation standard is defined for an equipment 
class, DOE must consider how to express the level in a manner suitable 
for all equipment within that class. This is of particular concern when 
the rating is in terms of energy consumption and there is variation of 
energy consumption within a class due to variation in equipment size or 
capacity. DOE believes that TDA captures the most significant driver 
behind capacity-related energy consumption differences between like 
equipment designs within an equipment class (see section II.A.2 of the 
ANOPR). For this reason, DOE has suggested that the maximum energy 
consumption standards for this equipment be expressed as:

MECSC = ASC x TDA (self-contained equipment)
MECRC = ARC x TDA (remote condensing equipment)

Where:
MECSC = maximum TDEC (kWh/day) from ANSI/ARI Standard 
1200-2006,

[[Page 41206]]

MECRC = maximum CDEC (kWh/day) from ANSI/ARI Standard 
1200-2006,
ARC = a minimum normalized energy consumption factor 
(expressed in kWh/day/ft\2\ TDA),
ASC = a minimum normalized TDEC factor (expressed in kWh/
day/ft\2\ TDA), and
TDA = Total Display Area (ft\2\).

    Commercial refrigerators, commercial freezers and commercial 
refrigerator-freezers with a self-contained condensing unit designed 
for holding temperature applications manufactured on or after January 
1, 2010, will have energy conservation standards in terms of:

Maximum energy consumption M (kWh/yr) = B x V + K

Where:
B is expressed in terms of kWh/yr/ft\3\ of rated volume,
V is the adjusted volume (ft\3\) calculated for the equipment class, 
and
K is an offset factor expressed in kWh/yr.

    In similar fashion, DOE has suggested that the energy conservation 
standards for remote condensing refrigerators, commercial freezers, and 
commercial refrigerators-freezers with solid doors and for commercial 
ice-cream freezers with solid doors, respectively, be expressed as:

MECRC= BRC x V + KRC (remote 
condensing equipment)
MECSC= BSC x V + KSC (self-contained 
equipment)

Where:
MECRC = maximum CDEC (kWh/day) from ANSI/ARI Standard 
1200-2006,
MECSC = maximum TDEC (kWh/day) from ANSI/ARI Standard 
1200-2006,
BRC = a minimum normalized energy consumption factor 
(expressed in kWh/day/ft\3\ gross refrigerated volume) calculated 
using the CDEC rating from the DOE adopted test procedure (ANSI/ARI 
Standard 1200-2006),
BSC = a minimum normalized TDEC factor (expressed in kWh/
day/ft\3\ gross refrigerated volume) and calculated using the TDEC 
rating from the DOE adopted test procedure (ANSI/ARI Standard 1200),
V = Gross Refrigerated Volume (ft\3\),
KRC = an offset factor in kWh/day for remote condensing 
equipment, and
KSC = an offset factor in kWh/day for self-contained 
equipment.

    DOE is concerned that V may not completely capture the most 
significant driver behind capacity- or size-related energy consumption 
differences between equipment designs within these equipment classes. 
In particular, for these equipment classes, the surface area for heat 
gain may not vary linearly with volume. The VCS.SC.I equipment class 
falls under this category.
    DOE specifically seeks feedback on its approach for characterizing 
energy conservation standards for commercial refrigeration equipment. 
If the approach to characterizing standards for remote condensing 
commercial refrigerators, commercials freezers, and commercial 
refrigerators-freezers with solid doors and for commercial ice-cream 
freezers with solid doors is acceptable, DOE seeks comments on how it 
could develop appropriate offset factors (KSC and 
KRC) for these classes of equipment. This is identified as 
Issue 14 under ``Issues on Which DOE Seeks Comment'' in section IV.E of 
this ANOPR.
    Commercial refrigerator-freezers (also called dual temperature 
units) are equipment that have two or more compartments that operate at 
different temperatures. During the Framework public meeting, Hill 
Phoenix stated that shipments of this equipment are very low. (Public 
Meeting Transcript, No. 3.4 at p. 52) In the engineering analysis 
(section II.C of this ANOPR), DOE only analyzed those equipment classes 
with the highest shipment volumes, and therefore did not include an 
analysis of commercial refrigerator-freezers. However, DOE explained in 
the market and technology assessment (section II.A of this ANOPR) that 
it intended to adapt the analytical results for commercial 
refrigerators and commercial freezers to commercial refrigerator-
freezers.
    DOE understands that remote condensing commercial refrigerator-
freezers (with and without doors) and self-contained commercial 
refrigerator-freezers without doors may operate in one of two ways. 
First, they may operate as separate chilled and frozen compartments 
with evaporators fed by two sets of refrigerant lines or two 
compressors. Second, they may operate as separate chilled and frozen 
compartments fed by one set of low temperature refrigerant lines (with 
evaporator pressure regulator (EPR) valves or similar devices used to 
raise the evaporator pressure, and thus the temperature of one or more 
compartments) or one compressor. Accordingly, for the purposes of 
implementing standards, DOE is considering the following method for 
implementing standards for commercial refrigerator-freezers.
     For remote condensing commercial refrigerator-freezers 
where two or more chilled and frozen compartments are cooled by 
independent remote condensing units, each compartment should have its 
total refrigeration load measured separately according to the ANSI/
ASHRAE Standard 72-2005 test procedure. Compressor energy consumption 
(CEC) for each compartment shall be calculated using Table 1 in ANSI/
ARI Standard 1200-2006 using the evaporator temperature for that 
compartment. The CDEC for the entire case shall be the sum of the CEC 
for each compartment, fan energy consumption (FEC), lighting energy 
consumption (LEC), anti-condensate energy consumption (AEC), defrost 
energy consumption (DEC), and condensate evaporator pan energy 
consumption (PEC) (as measured in ANSI/ARI Standard 1200-2006). 
Determine the maximum limit on CDEC for each compartment, based on that 
compartment's respective equipment class and TDA or volume. The maximum 
limit on CDEC for the entire case is the sum of all the maximum limits 
on CDEC of all compartments.
     For remote condensing commercial refrigerator-freezers 
where two or more chilled and frozen compartments are cooled by one 
condensing unit (with EPR valves or similar devices used to raise the 
evaporator pressure, and thus the temperature of one or more 
compartments), the total case shall have its total refrigeration load 
measured according to the ANSI/ASHRAE Standard 72-2005 test procedure. 
CEC for the entire case shall be calculated using Table 1 in ANSI/ARI 
Standard 1200-2006 using the lowest evaporator temperature of all 
compartments. The CDEC for the entire case shall be the sum of the CEC, 
FEC, LEC, AEC, DEC, and PEC. Determine the maximum limit on CDEC for 
the compartment with the lowest integrated average temperature (IAT), 
based on that compartment's respective equipment class and the total 
TDA or volume of all compartments. This value is the maximum limit on 
CDEC for the entire case.
     For self-contained commercial refrigerator-freezers 
without doors where two or more chilled and frozen compartments are 
cooled by independent self-contained condensing units, the CDEC for the 
entire case shall be measured according to the ANSI/ASHRAE Standard 72-
2005 test procedure. Determine the maximum limit on CDEC for each 
compartment, based on that compartment's respective equipment class and 
TDA. The maximum limit on CDEC for the entire case is the sum of all 
the maximum limits on CDEC of all compartments.
     For self-contained commercial refrigerator-freezers 
without doors where two or more chilled and frozen compartments are 
cooled by one condensing unit (with EPR valves or similar devices used 
to raise the evaporator pressure, and thus the temperature of one or 
more compartments), the daily energy consumption for the entire case 
shall be measured according to the ANSI/

[[Page 41207]]

ASHRAE Standard 72-2005 test procedure. Determine the maximum limit on 
CDEC for the compartment with the lowest IAT, based on that 
compartment's respective equipment class and the total TDA of all 
compartments. This value is the maximum limit on CDEC for the entire 
case.
    DOE specifically seeks feedback on its approach for setting 
standards for remote condensing commercial refrigerator-freezers. 
Additionally, DOE seeks feedback on how to implement standards for 
self-contained commercial refrigerator-freezers without doors. These 
are identified as Issue 15 under ``Issues on Which DOE Seeks Comment'' 
in section IV.E of this ANOPR.

IV. Public Participation

A. Attendance at Public Meeting

    The time, date and location of the public meeting are set forth in 
the DATES and ADDRESSES sections at the beginning of this document. 
Anyone who wants to attend the public meeting must notify Ms. Brenda 
Edwards-Jones at (202) 586-2945. As explained in the ADDRESSES section, 
foreign nationals visiting DOE Headquarters are subject to advance 
security screening procedures.

B. Procedure for Submitting Requests to Speak

    Any person who has an interest in today's notice, or who is a 
representative of a group or class of persons that has an interest in 
these issues, may request an opportunity to make an oral presentation. 
Please hand-deliver requests to speak to the address shown under the 
heading ``Hand Delivery/Courier'' in the ADDRESSES section of this 
ANOPR, between 9 a.m. and 4 p.m., Monday through Friday, except Federal 
holidays. Also, requests may be sent by mail to the address shown under 
the heading ``Postal Mail'' in the ADDRESSES section of this ANOPR, or 
by e-mail to [email protected].
    Persons requesting to speak should briefly describe the nature of 
their interest in this rulemaking and provide a telephone number for 
contact. DOE asks persons selected to be heard to submit a copy of 
their statements at least two weeks before the public meeting, either 
in person, by postal mail, or by e-mail as described in the preceding 
paragraph. Please include an electronic copy of your statement on a 
computer diskette or compact disk when delivery is by postal mail or in 
person. Electronic copies must be in WordPerfect, Microsoft Word, 
Portable Document Format (PDF), or text (American Standard Code for 
Information Interchange (ASCII)) file format. At its discretion, DOE 
may permit any person who cannot supply an advance copy of his or her 
statement to participate, if that person has made alternative 
arrangements with the Building Technologies Program. In such 
situations, the request to give an oral presentation should ask for 
alternative arrangements.

C. Conduct of Public Meeting

    DOE will designate a DOE official to preside at the public meeting 
and may also use a professional facilitator to aid discussion. The 
meeting will not be a judicial or evidentiary-type public hearing, but 
DOE will conduct it in accordance with 5 U.S.C. 553 and section 336 of 
EPCA. (42 U.S.C. 6306) A court reporter will be present to record and 
transcribe the proceedings. DOE reserves the right to schedule the 
order of presentations and to establish the procedures governing the 
conduct of the public meeting. After the public meeting, interested 
parties may submit further comments about the proceedings, and any 
other aspect of the rulemaking, until the end of the comment period.
    The public meeting will be conducted in an informal, conference 
style. DOE will present summaries of comments received before the 
public meeting, allow time for presentations by participants, and 
encourage all interested parties to share their views on issues 
affecting this rulemaking. Each participant will be allowed to make a 
prepared general statement (within time limits determined by DOE) 
before discussion of a particular topic. DOE will permit other 
participants to comment briefly on any general statements.
    At the end of all prepared statements on a topic, DOE will permit 
participants to clarify their statements briefly and comment on 
statements made by others. Participants should be prepared to answer 
questions by DOE and by other participants concerning these issues. DOE 
representatives may also ask questions of participants concerning other 
matters relevant to the public meeting. The official conducting the 
public meeting will accept additional comments or questions from those 
attending, as time permits. The presiding official will announce any 
further procedural rules or modification of the above procedures that 
may be needed for proper conduct of the public meeting.
    DOE will make the entire record of this proposed rulemaking, 
including the transcript from the public meeting, available for 
inspection at the U.S. Department of Energy, Forrestal Building, Room 
1J-018 (Resource Room of the Building Technologies Program), 1000 
Independence Avenue, SW., Washington, DC, (202) 586-2945, between 9 
a.m. and 4 p.m., Monday through Friday, except Federal holidays. Any 
person may purchase a copy of the transcript from the transcribing 
reporter.

D. Submission of Comments

    DOE will accept comments, data, and information regarding all 
aspects of this ANOPR before or after the public meeting, but no later 
than October 9, 2007. Please submit comments, data, and information 
electronically to the following e-mail address: 
[email protected]. Submit electronic 
comments in WordPerfect, Microsoft Word, PDF, or ASCII file format and 
avoid the use of special characters or any form of encryption. Comments 
in electronic format should be identified by the docket number EE-2006-
STD-0126 and/or RIN 1904-AB59, and whenever possible carry the 
electronic signature of the author. Absent an electronic signature, 
comments submitted electronically must be followed and authenticated by 
submitting a signed original paper document. No telefacsimiles (faxes) 
will be accepted.
    Under 10 CFR Part 1004.11, any person submitting information that 
he or she believes to be confidential and exempt by law from public 
disclosure should submit two copies: One copy of the document including 
all the information believed to be confidential, and one copy of the 
document with the information believed to be confidential deleted. DOE 
will make its own determination about the confidential status of the 
information and treat it according to its determination.
    Factors of interest to DOE when evaluating requests to treat 
submitted information as confidential include: (1) A description of the 
items; (2) whether and why such items are customarily treated as 
confidential within the industry; (3) whether the information is 
generally known by, or available from, other sources; (4) whether the 
information has previously been made available to others without 
obligation concerning its confidentiality; (5) an explanation of the 
competitive injury to the submitting person which would result from 
public disclosure; (6) when such information might lose its 
confidential character due to the passage of time; and (7) why 
disclosure of the information would be contrary to the public interest.

[[Page 41208]]

E. Issues on Which DOE Seeks Comment

    DOE is interested in receiving comments on all aspects of this 
ANOPR. DOE particularly invites comments or data to improve DOE's 
analysis, including data or information that will respond to the 
following questions or concerns that were addressed in this ANOPR:
1. Equipment Class Prioritization and Extending Analyses
    Because of the large number of equipment classes included in this 
rulemaking, DOE focused on conducting a thorough examination of the 
equipment classes with the greatest energy-savings potential. To 
address low-shipment equipment classes, DOE could either conduct a full 
technical analysis of these equipment classes or develop correlations 
to extend analyses or standard levels in the NOPR phase of the 
rulemaking. DOE requests feedback on the approach to equipment type 
prioritization and its approach to address low-shipment volume 
equipment classes, and of extending EPCA standards to equipment classes 
in this rulemaking. (See section I.D.3.c and II.A.2 of this ANOPR and 
chapter 5 of the TSD for further details.)
2. Air-Curtain Angle
    For equipment without doors, DOE believes that the orientation of 
the air curtain affects the energy consumption (both remote condensing 
and self-contained equipment) and that equipment without doors can be 
broadly categorized by the angle of the air curtain that divides the 
refrigerated compartment from the ambient space. DOE is considering 
defining air-curtain angle as ``the angle between a vertical line and 
the line formed by the points at the center of the discharge air grille 
and the center of the return air grille, when viewed in cross-
section.'' DOE requests feedback on this definition of air-curtain 
angle. (See section II.A.2 of this ANOPR for further details.)
3. Door Angle
    For equipment with doors, DOE believes that the orientation of 
doors affects the energy consumption and that equipment with doors can 
be broadly categorized by the angle of the door. DOE is considering 
defining door angle as ``the angle between a vertical line and the line 
formed by the plane of the door, when viewed in cross-section.'' DOE 
requests feedback on this on this definition of door angle. (See 
section II.A.2 of this ANOPR for further details.)
4. Equipment Classes for Equipment With Doors
    DOE is proposing to define two equipment families each for 
equipment with solid and transparent doors, based on door angles of 
0[deg] to 45[deg] (vertical) and 45[deg] to 90[deg] (horizontal). DOE 
requests comments on these ranges of door angles in defining equipment 
classes with doors. (See section II.A.2 of this ANOPR for further 
details.)
5. Equipment Classes
    In accordance with EPCA section 325(p)(1)(A), DOE identified the 
equipment classes covered under this rulemaking in Table II.6. (42 
U.S.C. 6295(p)(1)(A)) Pursuant to EPCA section 325(p)(1)(B), DOE 
requests comments on these equipment classes and invites interested 
persons to submit written presentations of data, views, and arguments. 
(42 U.S.C. 6295(p)(1)(B)) (See section II.A.2 of this ANOPR for further 
details.)
6. Case Lighting Operating Hours
    DOE's analysis suggests that typical lighting operating hours for 
most classes of commercial refrigeration equipment would fall in the 
range of 16 to 24 hours per day, depending on store operating hours, 
use of lighting during after-hours case stocking, and typical lighting 
operation or controls used for unoccupied periods. Display case 
lighting hours may also depend on business type as convenience stores 
have distinctly different operating hours than other segments of the 
food retail industry. DOE requests comments on whether the 24-hour 
basis for case lighting operating hours is valid for DOE's continued 
analysis, and if not, what changes should be made to better 
characterize the case lighting operating hours? (See section II.E of 
this ANOPR for further details.)
7. Operation and Maintenance Practices
    DOE requests comments on operation and maintenance practices for 
commercial refrigeration equipment that may be prevalent in the field 
which may differ from standardized conditions, such as those 
represented in a test procedure. These field conditions could 
potentially affect the energy consumption savings experienced in the 
field as a result of increased energy efficiency as compared to those 
savings estimated in the TSD's energy consumption analysis under 
idealized conditions. DOE requests comment on the frequency to which 
such factors come in to play in energy use in the field, and whether 
and how DOE could account for these factors in assessing the overall 
impacts of the candidate standards levels for commercial refrigeration 
equipment. (See section II.E of this ANOPR for further details.)
8. Equipment Lifetime
    DOE requests comments on the lifetime of commercial refrigeration 
equipment and whether, in fact, this is a significant issue and whether 
DOE should perform a sensitivity analysis of this variable in the LCC 
and NES analyses. In particular, DOE seeks comment on how long these 
units are typically maintained in service by equipment class and store 
type. Also, DOE seeks comment on the existence and importance of a 
used-equipment market for commercial refrigeration equipment, and the 
importance of considering such a market in its analysis. (See section 
II.E of this ANOPR for further details.)
9. Life-Cycle Cost Baseline Level
    DOE did not receive data from industry concerning the average 
energy efficiency of commercial refrigeration equipment currently being 
shipped, nor was data provided in further discussion with 
manufacturers. An analysis of the literature suggests little data on 
the energy characteristics of display cases in the general market is 
available. Based on this, DOE used the Level 1 (minimum energy 
efficiency level) established in the engineering analysis as the 
baseline for the LCC analysis.
    The selection of baseline level has two impacts in the LCC and PBP 
analyses. It can affect the PBP calculated since payback is calculated 
from the baseline level, and it can affect the maximum level showing 
LCC savings. It can also affect the fraction of users on the market who 
experience LCC savings at any level. The selection of the baseline 
level does not generally affect the level identified as having the 
maximum LCC savings. DOE requests feedback on whether the Level 1 
baseline selected by DOE is valid for the LCC analysis, and if not, 
what changes should be made to provide a more realistic baseline level. 
Since higher efficiency equipment is known to be sold into the market, 
DOE also seeks input on whether a distribution of efficiencies should 
be used for the LCC analysis baseline, and if so, what data could be 
used to populate this distribution. If more detailed data to develop a 
distribution of efficiencies in the baseline cannot be provided, DOE 
seeks input on how a sensitivity analysis to alternative baselines 
could best be used to inform the LCC and NES analyses supporting the 
rulemaking. (See section II.G.15 of this ANOPR for further details.)

[[Page 41209]]

10. Characterizing the National Impact Analysis Base Case
    No data have been found on the market shares of various commercial 
refrigeration equipment classes by energy consumption level. Therefore, 
for the National Impact Analysis base case, DOE adapted a cost-based 
method used in the NEMS to estimate market shares for each equipment 
class by efficiency level. DOE did not have data to calibrate this 
approach to actual market shipments. Does the economic-based approach 
DOE used to establish base case shipments by efficiency level provide a 
valid base case assumption for the NIA and future analyses? If not, 
what should DOE do to improve the base case efficiency forecast? (See 
section II.I.2 of this ANOPR for further details.)
11. Base Case and Standards Case Forecasts
    Because key inputs to the calculation of the NES and NPV are 
dependent on the estimated efficiencies under the base case (without 
standards) and the standards case (with standards), forecasted 
efficiencies are of great importance to the analysis. Information 
available to DOE suggests that forecasted market shares would remain 
frozen throughout the analysis period (i.e., 2012-2042). For its 
determination of standards case forecasted efficiencies, DOE used a 
``roll-up'' scenario to establish the market shares by efficiency level 
for the year that standards become effective (i.e., 2012). Available 
information suggests that equipment shipments with efficiencies in the 
base case that did not meet the standard level under consideration 
would ``roll-up'' to meet the new standard level. Also, available 
information suggests that all equipment efficiencies in the base case 
that were above the standard level under consideration would not be 
affected. DOE requests feedback on its development of standards case 
efficiency forecasts from the base case efficiency forecast and its 
basis for how standards would impact efficiency distributions in the 
year that standards are to take effect. (See section II.I.2 of this 
ANOPR for further details.)
12. Differential Impact of New Standards on Future Shipments by 
Equipment Classes
    The shipment models used in the NES and NIA presume that the 
relative market share of the different classes of commercial 
refrigeration equipment remains constant over the time period analyzed. 
While DOE is aware that market preferences for certain types of 
products may change in the future, DOE has no data with which to 
predict or characterize those changes. DOE is however particularly 
concerned whether higher standards for certain classes of commercial 
refrigeration equipment are likely to generate significant market 
shifts to other equipment that may have higher energy consumption. By 
developing standards for all classes of commercial refrigeration 
equipment within the scope of this rulemaking using the same economic 
criteria, DOE hopes to mitigate this concern. However, DOE specifically 
requests stakeholder input on the potential for standards-driven market 
shifts between equipment classes that could reduce national energy 
savings as well as stakeholder input on how the standards setting 
process can reduce or eliminate these shifts. (See section II.I.2 of 
this ANOPR for further details.
13. Selection of Candidate Standard Levels for Post-Advance Notice of 
Proposed Rulemaking Analysis
    DOE is required to examine specific criteria for the selection of 
CSLs for further analysis. Some of these criteria are economic based 
and the resulting CSLs selected may be impacted by updates to the ANOPR 
analysis after input from stakeholders. DOE has discretion in the 
selection of additional standard levels it may choose to analyze. DOE 
seeks input on the candidate standard levels selected for future 
analysis shown in Table III.1 (See section III of this ANOPR for 
further details.)
14. Approach to Characterizing Energy Conservation Standards
    When an efficiency or energy consumption standard is defined for a 
class of equipment, DOE must consider how to express the level in a 
manner suitable for all equipment within that class. DOE seeks input on 
its approach for characterizing energy conservation standards for 
commercial refrigeration equipment as discussed in section III. If the 
approach to characterizing standards for remote condensing commercial 
refrigerators, commercial freezers, and commercial refrigerators-
freezers with solid doors and for commercial ice-cream freezers with 
solid doors is acceptable, DOE seeks comments on how it could develop 
appropriate offset factors (KSC and KRC) for 
these classes of equipment. (See section III of this ANOPR for further 
details.)
15. Standards for Commercial Refrigerator-Freezers
    DOE is addressing standards for commercial refrigerator-freezers 
(both remote condensing and self-contained). For equipment served by 
independent condensing units, the maximum limit on CDEC for the entire 
case is the sum of the maximum limits on CDEC of all compartments, 
based on each compartment's respective equipment class and TDA or 
volume. For equipment served by one condensing unit, the maximum limit 
on CDEC for the entire case is the maximum limit on CDEC for the 
compartment with the lowest IAT, based on the equipment class of that 
compartment and the total TDA or volume of all compartments. DOE 
requests feedback on this approach to implementing standards for 
commercial refrigerator-freezers. (See section III of this ANOPR for 
further details.)

V. Regulatory Review and Procedural Requirements: Executive Order 12866

    DOE submitted this ANOPR for review to the Office of Management and 
Budget, under Executive Order 12866, ``Regulatory Planning and 
Review.'' 58 FR 51735 (October 4, 1993). If DOE later proposes energy 
conservation standards for certain commercial refrigeration equipment, 
and if the proposed rule constitutes a significant regulatory action, 
DOE would prepare and submit to OMB for review the assessment of costs 
and benefits required under section 6(a)(3) of the Executive Order. The 
Executive Order requires agencies to identify the specific market 
failure or other specific problem that it intends to address that 
warrant new agency action, as well as assess the significance of that 
problem, to enable assessment of whether any new regulation is 
warranted. (Executive Order 12866, Sec.  1(b)(1)). Without a market 
failure, a regulation cannot result in net benefits.
    DOE's preliminary analysis suggests that accounting for the market 
value of energy savings alone (i.e., excluding any possible 
``externality'' benefits such as those noted below) would produce 
enough benefits to yield net benefits across a wide array of equipment 
and circumstances. These results, if correct, imply the existence of a 
market failure in the commercial refrigeration equipment market. DOE 
requests data on, and suggestions for testing the existence and extent 
of, these potential market failures to complete an assessment in the 
proposed rule of the significance of these failures and thus the net 
benefits of regulation.

[[Page 41210]]

    First, DOE believes that there is a lack of consumer information 
and/or information processing capability about energy efficiency 
opportunities in the commercial refrigeration equipment market. If this 
is in fact the case, DOE would expect the energy efficiency for 
commercial refrigeration equipment to be randomly distributed across 
key variables such as energy prices and usage levels. DOE seeks data on 
the efficiency levels of existing commercial refrigeration equipment in 
use by store type (e.g., large grocery, multi-line retailer, small 
grocery/convenience store) and electricity price (and/or geographic 
region of the country). DOE plans to use these data to test the extent 
to which purchasers of this equipment behave as if they are unaware of 
the costs associated with their energy consumption. Also, DOE seeks 
comment on knowledge of the Federal ENERGYSTAR program, and it's 
penetration into the commercial refrigeration equipment consumer market 
as a resource for knowledge of the availability and benefits of energy 
efficient refrigeration units.
    Second, for small businesses in particular, DOE believes there may 
be ``split incentives'' for more energy efficient equipment. The 
commercial space owner may not invest in efficient equipment because 
the owner of the space does not pay the energy bill, and the retail 
establishment owner (building tenant) does not want to invest so as not 
to risk losing the capital investment at the end of the lease. If this 
is in fact the case, DOE would expect that, other things equal, 
establishments that own the equipment purchase higher efficiency 
commercial refrigeration equipment on average than those who rent the 
equipment through building lease arrangements. DOE seeks data on owner-
occupied buildings versus leased/non-owner occupied buildings for given 
store types (e.g., large grocery) and their associated use of high-
efficiency units. With these data, DOE plans to assess the significance 
of this market failure by comparing the energy efficiencies of the 
units in place by building occupancy status.
    Of course, there are likely to be certain ``external'' benefits 
resulting from the improved efficiency of units that are not captured 
by the users of such equipment. These include both environmental and 
energy security-related externalities that are not already reflected in 
energy prices such as reduced emissions of greenhouse gases and reduced 
use of natural gas (and oil) for electricity generation. DOE invites 
comments on the weight that should be given to these factors in DOE's 
determination of the maximum efficiency level at which the total 
benefits are likely to exceed the total burdens resulting from a DOE 
standard.
    In addition, various other analyses and procedures may apply to 
such future rulemaking action, including those required by the National 
Environmental Policy Act, Pub. L. 91-190, 42 U.S.C. 4321 et seq.; the 
Unfunded Mandates Act of 1995, Pub. L. 104-4; the Paperwork Reduction 
Act, 44 U.S.C. 3501 et seq.; the Regulatory Flexibility Act, 5 U.S.C. 
601 et seq.; and certain Executive Orders.
    The draft of today's action and any other documents submitted to 
OIRA for review are part of the rulemaking record and are available for 
public review at the U.S. Department of Energy, Forrestal Building, 
Room 1J-018, (Resource Room of the Building Technologies Program), 1000 
Independence Avenue, SW., Washington, DC, (202) 586-2945, between 9 
a.m. and 4 p.m., Monday through Friday, except Federal holidays.

VI. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of today's ANOPR.

    Issued in Washington, DC, on July 19, 2007.
John Mizroch,
Principal Deputy Assistant Secretary, Energy Efficiency and Renewable 
Energy.
[FR Doc. 07-3640 Filed 7-25-07; 8:45 am]
BILLING CODE 6450-01-P