Department of Energy: Monday, April 7, 2008

Monday,
April 7, 2008
Part II
Department of
Energy
Office of Energy Efficiency and
Renewable Energy
10 CFR Part 431

Energy Conservation Program for
Commercial and Industrial Equipment:
Packaged Terminal Air Conditioner and
Packaged Terminal Heat Pump Energy
Conservation Standards; Proposed Rule
mstockstill on PROD1PC66 with PROPOSALS2
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18858 Federal Register / Vol. 73, No. 67 / Monday, April 7, 2008 / Proposed Rules
DEPARTMENT OF ENERGY STD–0012 and/or Regulation Identifier B. Authority

Number (RIN) 1904–AB44 using any of C. Background
Office of Energy Efficiency and the following methods: 1. Current Standards
2. History of Standards Rulemaking for
Renewable Energy • Federal eRulemaking Portal: http://
Packaged Terminal Air Conditioners and
www.regulations.gov. Follow the Packaged Terminal Heat Pumps
10 CFR Part 431 instructions for submitting comments. III. General Discussion
[Docket No. EERE–2007–BT–STD–0012] • E-mail: ptac_hp@ee.doe.gov. A. Test Procedures
Include EERE–2007–BT–STD–0012 and/ B. Technological Feasibility
RIN 1904–AB44 or RIN 1904–AB44 in the subject line of 1. General
your message. 2. Maximum Technologically Feasible
Energy Conservation Program for • Postal Mail: Ms. Brenda Edwards, Levels
Commercial and Industrial Equipment: U.S. Department of Energy, Building C. Energy Savings
Packaged Terminal Air Conditioner 1. Determination of Savings
Technologies Program, Mailstop EE–2J, 2. Significance of Savings
and Packaged Terminal Heat Pump 1000 Independence Avenue, SW.,
Energy Conservation Standards D. Economic Justification
Washington, DC 20585–0121. 1. Economic Impact on Manufacturers and
AGENCY: Office of Energy Efficiency and Telephone: (202) 586–2945. Please Commercial Customers
Renewable Energy, Department of submit one signed paper original. 2. Life-Cycle Costs
Energy. • Hand Delivery/Courier: Ms. Brenda 3. Energy Savings
Edwards, U.S. Department of Energy, 4. Lessening of Utility or Performance of
ACTION: Notice of proposed rulemaking Equipment
and public meeting. Building Technologies Program, 950
5. Impact of Any Lessening of Competition
L’Enfant Plaza, 6th Floor, Washington,
6. Need of the Nation to Conserve Energy
SUMMARY: The Energy Policy and DC 20024. Please submit one signed 7. Other Factors
Conservation Act (EPCA) prescribes original paper copy. IV. Methodology and Analyses
energy conservation standards for Instructions: All submissions received A. Market and Technology Assessment
various consumer products and must include the agency name and 1. Definitions of a PTAC and a PTHP
commercial and industrial equipment, docket number or RIN for this 2. Equipment Classes
and requires the Department of Energy rulemaking. For detailed instructions on 3. Market Assessment
(DOE) to administer an energy submitting comments and additional a. Trade Association
conservation program for these information on the rulemaking process, b. Manufacturers
c. Shipments
products. In this notice, DOE is see section VII, ‘‘Public Participation,’’
4. Technology Assessment
proposing amended energy conservation of this document. B. Screening Analysis
standards for packaged terminal air Docket: For access to the docket to C. Engineering Analysis
conditioners (PTACs) and packaged read background documents or 1. Approach
terminal heat pumps (PTHPs) and is comments received, visit the U.S. 2. Equipment Classes Analyzed
announcing a public meeting. Department of Energy, Forrestal 3. Cost Model
DATES: DOE will hold a public meeting Building, Resource Room of the 4. Baseline Equipment
Building Technologies Program, 950 5. Alternative Refrigerant Analysis
on May 1, 2008, from 9 a.m. to 4 p.m.,
L’Enfant Plaza, SW., 6th Floor, a. R–22
in Washington, DC. DOE must receive b. R–410A
requests to speak at the public meeting Washington, DC 20024, (202) 586–2945,
c. R–410A Compressor Availability
before 4 p.m., April 21, 2008. DOE must between 9 a.m. and 4 p.m., Monday d. R–410A Manufacturing Production Cost
receive a signed original and an through Friday, except Federal holidays. 6. Cost-Efficiency Results
electronic copy of statements to be given Please call Ms. Brenda Edwards at the 7. Mapping Energy Efficiency Ratio to
at the public meeting before 4 p.m., above telephone number for additional Coefficient of Performance
April 21, 2008. information regarding visiting the D. Markups to Determine Equipment Price
DOE will accept comments, data, and Resource Room. E. Energy Use Characterization
information regarding the notice of 1. Building Type
FOR FURTHER INFORMATION CONTACT: Wes
2. Simulation Approach
proposed rulemaking (NOPR) before and Anderson, Project Manager, Energy F. Life-Cycle Cost and Payback Period
after the public meeting, but no later Conservation Standards for Packaged Analyses
than June 6, 2008. See section VII, Terminal Air Conditioners and 1. Approach
‘‘Public Participation,’’ of this NOPR for Packaged Terminal Heat Pumps, U.S. 2. Life-Cycle Cost Inputs
details. Department of Energy, Energy Efficiency a. Equipment Prices
ADDRESSES: The public meeting will be and Renewable Energy, Building b. Installation Costs
held at the U.S. Department of Energy, Technologies Program, EE–2J, 1000 c. Annual Energy Use
Independence Avenue, SW., d. Electricity Prices
Forrestal Building, Room 1E–245, 1000
e. Maintenance Costs
Independence Avenue, SW., Washington, DC 20585–0121, (202) 586–
f. Repair Costs
Washington, DC. Please note that 7335. E-mail: g. Equipment Lifetime
foreign nationals visiting DOE Wes.Anderson@ee.doe.gov. Francine h. Discount Rate
Headquarters are subject to advance Pinto, Esq., or Eric Stas, Esq., U.S. 3. Payback Period
security screening procedures, requiring Department of Energy, Office of General G. National Impact Analysis—National
a 30-day advance notice. If you are a Counsel, GC–72, 1000 Independence Energy Savings and Net Present Value
foreign national and wish to participate Avenue, SW., Washington, DC 20585– Analysis
in the public meeting, please inform 0121, (202) 586–9507. E-mail: 1. Approach
Francine.Pinto@hq.doe.gov or 2. Shipments Analysis
DOE as soon as possible by contacting
3. Base Case and Standards Case
Ms. Brenda Edwards at (202) 586–2945 Eric.Stas@hq.doe.gov.
Forecasted Distribution of Efficiencies
so that the necessary procedures can be SUPPLEMENTARY INFORMATION: 4. National Energy Savings and Net Present
completed. I. Summary of the Proposed Rule Value
You may submit comments identified II. Introduction H. Life-Cycle Cost Sub-Group Analysis
by docket number EERE–2007–BT– A. Overview I. Manufacturer Impact Analysis
Federal Register / Vol. 73, No. 67 / Monday, April 7, 2008 / Proposed Rules 18859
1. Overview 7. Other Factors conservation standards for certain

a. Phase 1, Industry Profile C. Proposed Standard commercial equipment covered by the
b. Phase 2, Industry Cash Flow Analysis 1. Overview American Society of Heating,
c. Phase 3, Sub-Group Impact Analysis 2. Conclusion
2. Government Regulatory Impact Model VI. Procedural Issues and Regulatory Review
Refrigerating, and Air-Conditioning
Analysis A. Review Under Executive Order 12866 Engineers (ASHRAE) and the
3. Manufacturer Interviews B. Review Under the Regulatory Flexibility Illuminating Engineering Society of
a. Issues Act/Initial Regulatory Flexibility North America (IESNA) Standard 90.1,
b. Government Regulatory Impact Model Analysis including packaged terminal air
Scenarios and Key Inputs 1. Reasons for the proposed rule conditioners (PTACs) and packaged
i. Base Case Shipments Forecast 2. Objectives of, and legal basis for, the terminal heat pumps (PTHPs), the
ii. Standards Case Shipments Forecast proposed rule
iii. R–410A Base Case and Amended subject of this proceeding. (42 U.S.C.
3. Description and estimated number of
Energy Conservation Standards Markup small entities regulated 6313(a)(6)(A)) Section 342(a)(6)(A)
Scenarios 4. Description and estimate of compliance provides that DOE may prescribe a
iv. Equipment and Capital Conversion requirements standard more stringent than the level
Costs 5. Duplication, overlap, and conflict with in ASHRAE/IESNA Standard 90.1, after
J. Employment Impact Analysis other rules and regulations ASHRAE amends the energy
K. Utility Impact Analysis 6. Significant alternatives to the rule conservation standards found in
L. Environmental Analysis C. Review Under the Paperwork Reduction
M. Discussion of Other Issues
ASHRAE/IESNA Standard 90.1, if DOE
Act
1. Effective Date of the Proposed Amended can demonstrate ‘‘by clear and
D. Review Under the National
Energy Conservation Standards Environmental Policy Act convincing evidence,’’ that such a more
2. ASHRAE/IESNA Standard 90.1–1999 E. Review Under Executive Order 13132 stringent standard ‘‘would result in
Labeling Requirement F. Review Under Executive Order 12988 significant additional conservation of
V. Analytical Results G. Review Under the Unfunded Mandates energy and is technologically feasible
A. Trial Standard Levels Reform Act of 1995 and economically justified.’’ (42 U.S.C.
B. Economic Justification and Energy H. Review Under the Treasury and General 6313(a)(6)(A)(II) In accordance with
Savings Government Appropriations Act of 1999
1. Economic Impacts on Commercial these criteria discussed in this notice,
I. Review Under Executive Order 12630 DOE proposes to amend the energy
Customers J. Review Under the Treasury and General
a. Life-Cycle Cost and Payback Period Government Appropriations Act of 2001
conservation standards for PTACs and
b. Life-Cycle Cost Sub-Group Analysis K. Review Under Executive Order 13211 PTHPs by raising the efficiency levels
2. Economic Impacts on Manufacturers L. Review Under the Information Quality for this equipment to the levels shown
a. Industry Cash Flow Analysis Results Bulletin for Peer Review in Table I.1, above the efficiency levels
i. Standard Size PTACs and PTHPs VII. Public Participation specified by ASHRAE/IESNA Standard
ii. Non-Standard Size PTACs and PTHPs A. Attendance at Public Meeting
b. Cumulative Regulatory Burden 90.1–1999. The proposed standards
B. Procedure for Submitting Requests to would apply to all covered PTACs and
c. Impacts on Employment Speak
d. Impacts on Manufacturing Capacity PTHPs manufactured on or after the
C. Conduct of Public Meeting
e. Impacts on Subgroups of Manufacturers
D. Submission of Comments
date four years after publication of the
3. National Impact Analysis final rule in the Federal Register. (42
E. Issues on Which DOE Seeks Comment
a. Amount and Significance of Energy U.S.C. 6313(a)(6)(D)) The proposed
VIII. Approval of the Office of the Secretary
Savings standards for PTACs and PTHPs
b. Net Present Value I. Summary of the Proposed Rule
c. Impacts on Employment
represent an improvement in energy
4. Impact on Utility or Performance of The Energy Policy and Conservation efficiency of 12 to 33 percent compared
Equipment Act (EPCA), as amended, provides the to the efficiency levels specified by
5. Impact of Any Lessening of Competition Department of Energy (DOE) the ASHRAE/IESNA Standard 90.1–1999,
6. Need of the Nation to Conserve Energy authority to establish energy depending on the equipment class.
TABLE I.1.—PROPOSED ENERGY CONSERVATION STANDARDS FOR PTACS AND PTHPS

Equipment class
Proposed energy conservation standards*
Equipment Category Cooling capacity
PTAC ............................... Standard Size** ............. <7,000 Btu/h ...................................... EER = 11.4
≥7,000 Btu/h and ≤15,000 Btu/h ....... EER = 13.0¥(0.233 × Cap††)
>15,000 Btu/h .................................... EER = 9.5
Non-Standard Size† ....... <7,000 Btu/h ...................................... EER = 10.2
>15,000 Btu/h .................................... EER = 8.5
PTHP ............................... Standard Size** ............. <7,000 Btu/h ...................................... EER = 11.8
COP = 3.3
COP = 3.7¥(0.053 × Cap††)
>15,000 Btu/h .................................... EER = 9.9
COP = 2.9
Non-Standard Size† ....... <7,000 Btu/h ...................................... EER = 10.8
COP = 3.0
COP = 3.1¥(0.026 × Cap††)
TABLE I.1.—PROPOSED ENERGY CONSERVATION STANDARDS FOR PTACS AND PTHPS—Continued

Equipment class
Proposed energy conservation standards*
>15,000 Btu/h .................................... EER = 9.1

COP = 2.8
* For equipment rated according to the DOE test procedure (ARI Standard 310/380–2004), all energy efficiency ratio (EER) values must be
rated at 95°F outdoor dry-bulb temperature for air-cooled equipment and evaporatively-cooled equipment and at 85°F entering water temperature
for water cooled equipment. All coefficient of performance (COP) values must be rated at 47°F outdoor dry-bulb temperature for air-cooled equip-
ment, and at 70°F entering water temperature for water-source heat pumps.
** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or
equal to 42 inches wide.
† Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide.
†† Cap means cooling capacity in thousand British thermal units per hour (Btu/h) at 95°F outdoor dry-bulb temperature.
DOE’s analyses indicate that the a result of the proposed standards. some customers) of the higher efficiency
proposed energy conservation Additionally, based on DOE’s levels outweighed the benefits (energy
standards, trial standard level (TSL) 4 interviews with manufacturers of savings, LCC savings for some
for PTAC and PTHP equipment (See PTACs and PTHPs, DOE expects customers, national NPV increase, and
section V.A for a discussion of the minimal plant closings or loss of emission reductions) of those higher
TSLs), would save a significant amount employment as a result of the proposed levels.
of energy—an estimated 0.019 standards. DOE recognizes that manufacturers of
quadrillion British thermal units (Btu), DOE’s analyses indicate that the PTAC and PTHP equipment are also
or quads, of cumulative energy over 30 proposed standard, TSL 4, has energy facing a mandated refrigerant phase-out
years (2012–2042). The economic savings and environmental benefits. All on January 1, 2010. R–22, the only
impacts on the nation (i.e., national net of the energy saved is electricity, and refrigerant currently used by PTACs and
present value) and the commercial DOE expects the energy savings from PTHPs, is an HCFC refrigerant and
customer (i.e., the average life-cycle cost the proposed standards to eliminate the subject to the phase-out requirement.
(LCC) savings) are positive. need for approximately 81 megawatts Phase-out of this refrigerant could have
The national net present value (NPV) (MW) of generating capacity by 2042. a significant impact on the
of TSL 4 is $17 million using a 7 percent These results reflect DOE’s use of energy manufacturing, performance, and cost of
discount rate and $61 million using a 3 price projections from the U.S. Energy PTAC and PTHP equipment. DOE
percent discount rate, cumulative from Information Administration (EIA)’s further discusses and estimated the
2012 to 2062 in 2006$. This is the Annual Energy Outlook 2007 impacts of the refrigerant phase-out on
estimated total value of future savings (AEO2007).1 The proposed standard has PTAC and PTHP equipment and on the
minus the estimated increased environmental benefits leading to manufacturers of this equipment in
equipment costs, discounted to 2008. reductions in greenhouse gas emissions today’s notice.
The benefits and costs of the standard (i.e., cumulative (undiscounted)
II. Introduction
can also be expressed in terms of emission reductions) of 2.7 million tons
annualized 2006$ values over the (Mt) of carbon dioxide (CO2) from 2012 A. Overview
forecast period 2012 through 2062. to 2042. Additionally, the standard The proposed standard will save a
Using a 7 percent discount rate for the would likely result in 0.16 thousand significant amount of energy and, as a
annualized cost analysis, the cost of the tons (kt) of nitrogen oxides (NOX) result of less energy being produced,
standard is $3.4 million per year in emissions reductions or generate a result in a cleaner environment. In the
increased equipment and installation similar amount of NOX emissions 30-year period after the amended
costs while the annualized benefits are allowance credits in areas where such standard becomes effective, the nation
$5.0 million per year in reduced emissions are subject to emissions caps. will save 0.019 quads of primary energy.
equipment operating costs. Using a 3 In view of its analyses, DOE believes These energy savings also will result in
percent discount rate, the annualized that the proposed standard, TSL 4, significantly reduced emissions of air
cost of the standard is $2.9 million per represents the maximum improvement pollutants and greenhouse gases
year while the annualized benefits of in energy efficiency of PTAC and PTHP associated with electricity production,
today’s standard are $5.6 million per equipment that is technologically by avoiding the emission of 2.7 Mt of
year. See section V.B.3 for additional feasible and economically justified. DOE CO2 and 0.16 kt of NOX. In addition,
details. found that the benefits to the Nation once the standard is implemented in
Using a real corporate discount rate of (energy savings, customer average LCC 2012, DOE expects to eliminate the need
5 percent, DOE estimated the industry’s savings, national NPV increase, and for the construction of approximately 81
NPV (INPV) for manufacturers of PTACs emission reductions) of the proposed MW of new power plants by 2042. In
and PTHPs to be $332 million in 2006$. standards outweigh the burdens (loss of total, DOE estimates the net present
The impact of the proposed standards INPV and LCC increases for some value to the Nation of this standard to
on INPV of manufacturers of standard customers). When DOE considered be $17 million from 2012 to 2062 in
size PTACs and PTHPs is estimated to higher energy efficiency levels as TSLs, 2006$.
be between an 18 percent loss and a 2 it found that the burdens (loss of Finally, commercial customers will
percent loss (¥$56 million to ¥$5 manufacturer NPV and LCC increase for see benefits from the proposed standard.
million). The non-standard size PTAC 1 DOE intends to use EIA’s Annual Energy
Although DOE expects the price of the
and PTHP industry is estimated to lose Outlook 2008 (AEO2008) to generate the results for
high efficiency PTAC and PTHP
between 44 percent and 34 percent of its the final rule. In addition, DOE will use 2007$ to equipment to be approximately 2
NPV (¥$12 million to ¥$9 million) as reflect all dollar values in the final rule. percent higher than the average price of
this equipment today, the energy energy savings and be technologically Council v. Abraham, 355 F.3d 179 (2nd
efficiency gains will result in lower feasible and economically justified. (42 Cir. 2004).
energy costs. Based on this calculation, U.S.C. 6313(a)(6)(A)(ii)(II). Additionally, the Secretary may not
DOE estimates that the mean payback EPCA also provides that in deciding prescribe an amended standard if
period for the high efficiency PTACs whether such a more stringent standard interested persons have established by a
will be approximately 11.2 years and is economically justified, DOE must, preponderance of the evidence that the
the mean payback period for the high after receiving comments on the amended standard is ‘‘likely to result in
efficiency PTHPs will be approximately proposed standard, determine whether the unavailability in the United States of
4.4 years. When these savings are the benefits of the standard exceed its any product type (or class)’’ with
summed over the lifetime of the high burdens by considering, to the greatest performance characteristics, features,
efficiency equipment, customers of extent practicable, the following seven sizes, capacities, and volumes that are
PTACs will save $4, on average, and factors: substantially the same as those generally
customers of PTHPs will save $35, on (1) The economic impact of the
available in the United States at the time
average, compared to their expenditures standard on manufacturers and
of the Secretary’s finding. (42 U.S.C.
on today’s baseline PTACs and PTHPs. consumers of the products subject to the
6316(a); 42 U.S.C. 6295(o)(4))
standard;
B. Authority (2) The savings in operating costs Federal energy efficiency
Part A–1 of Title III of EPCA throughout the estimated average life of requirements for commercial equipment
addresses the energy efficiency of the product in the type (or class) generally supersede State laws or
certain types of commercial and compared to any increase in the price regulations concerning energy
industrial equipment.2 (42 U.S.C. 6311– of, or in the initial charges for, or conservation testing, labeling, and
6317) It contains specific mandatory maintenance expenses of the products standards. (42 U.S.C. 6316(a) and (b))
energy conservation standards for which are likely to result from the DOE can, however, grant waivers of
commercial PTACs and PTHPs. (42 imposition of the standard; preemption for particular State laws or
U.S.C. 6313(a)(3)) The Energy Policy Act (3) The total projected amount of regulations, in accordance with the
of 1992 (EPACT), Public Law 102–486, energy savings likely to result directly procedures and other provisions of
also amended EPCA with respect to from the imposition of the standard; section 327(d) of EPCA. (42 U.S.C.
PTACs and PTHPs, providing (4) Any lessening of the utility or the 6297(d) and 6316(b)(2)(D))
definitions in section 122(a), test performance of the products likely to
procedures in section 122(b), labeling result from the imposition of the C. Background
provisions in section 122(c), and the standard; 1. Current Standards
authority to require information and (5) The impact of any lessening of
reports from manufacturers in section competition, as determined in writing The current energy conservation
122(e).3 DOE publishes today’s notice of by the Attorney General, that is likely to standards in EPCA for PTACs and
proposed rulemaking (NOPR) pursuant result from the imposition of the PTHPs apply to all equipment
to Part A–1. The PTAC and PTHP test standard; manufactured on or after January 1,
procedures appear at Title 10 Code of (6) The need for national energy 1994, (42 U.S.C. 6313(a)(3)) and
Federal Regulations (CFR) section conservation; and correspond to the minimum efficiency
431.96. (7) Other factors the Secretary levels in ASHRAE/IESNA Standard
EPCA established Federal energy considers relevant. 90.1–1989. These levels consist of the
conservation standards that generally (42 U.S.C. 6316(a); 42 U.S.C. EER for the cooling mode and the COP
correspond to the levels in ASHRAE/ 6295(o)(2)(B)(i)–(ii)). for the heating mode. The EER means
IESNA Standard 90.1, as in effect on Furthermore, EPCA contains what is ‘‘the ratio of the produced cooling effect
October 24, 1992 (ASHRAE/IESNA commonly known as an ‘‘anti- of an air conditioner or heat pump to its
Standard 90.1–1989), for each type of backsliding’’ provision. (42 U.S.C. net work input, expressed in Btu/watt-
covered equipment listed in section 6316(a); 42 U.S.C. 6295(o)(1)) This hour.’’ 10 CFR 431.92. The COP means
342(a) of EPCA, including PTACs and provision mandates that the Secretary ‘‘the ratio of produced cooling effect of
PTHPs. (42 U.S.C. 6313(a)) For each not prescribe any amended standard an air conditioner or heat pump (or its
type of equipment, EPCA directed that that either increases the maximum produced heating effect, depending on
if ASHRAE/IESNA Standard 90.1 is allowable energy use or decreases the model operation) to its net work input,
amended, DOE must adopt an amended minimum required energy efficiency of when both the cooling (or heating) effect
standard at the new level in ASHRAE/ covered equipment. It is a fundamental and the net work input are expressed in
IESNA Standard 90.1, unless clear and principle in EPCA’s statutory scheme identical units of measurement.’’ 10
convincing evidence supports a that DOE cannot amend standards CFR 431.92. Table II.1 depicts the
determination that adoption of a more downward; that is, weaken standards, Federal energy conservation standards
stringent level as a national standard from those that have been published as for PTACs and PTHPs found in 10 CFR
would produce significant additional a final rule. Natural Resources Defense 431.97.
TABLE II.1.—EXISTING FEDERAL ENERGY CONSERVATION STANDARDS FOR PTACS AND PTHPS
Equipment class Existing federal energy
conservation standards*
Equipment Cooling capacity
PTAC .................................... < 7,000 Btu/h ................................................................... EER = 8.88

≥ 7,000 Btu/h and ≤ 15,000 Btu/h EER = 10.0 ¥ (0.16 × Cap**)
2 This part was originally titled Part C., However, 3 These requirements are codified in Part C of Federal Regulations, Part 431 (10 CFR Part 431) at
it was redesignated Part A–1 after Part B of Title Title III of EPCA, now Part A–1, as amended, 42 10 CFR 431.92, 431.96, 431.97, and subparts U and
III of EPCA was repealed by Public Law 109–58. U.S.C. 6311–6316, and Title 10 of the Code of V.
TABLE II.1.—EXISTING FEDERAL ENERGY CONSERVATION STANDARDS FOR PTACS AND PTHPS—Continued
Equipment class Existing federal energy
conservation standards*
Equipment Cooling capacity
> 15,000 Btu/h EER = 7.6

PTHP .................................... < 7,000 Btu/h ................................................................... EER = 8.88
COP = 2.7
≥ 7,000 Btu/h and ≤ 15,000 Btu/h EER = 10.0¥(0.16 × Cap**)
COP = 1.3 + (0.16 × EER)
> 15,000 Btu/h EER = 7.6
COP = 2.5
* For equipment rated according to the Air-Conditioning and Refrigeration Institute (ARI) standards, all EER values must be rated at 95 °F out-
door dry-bulb temperature for air-cooled products and evaporatively-cooled products and at 85 °F entering water temperature for water cooled
products. All COP values must be rated at 47 °F outdoor dry-bulb temperature for air-cooled products, and at 70 °F entering water temperature
for water-source heat pumps.
** Cap means cooling capacity in kBtu/h at 95 °F outdoor dry-bulb temperature.
2. History of Standards Rulemaking for and water heating equipment covered Standard 90.1–1999 used the equipment
Packaged Terminal Air Conditioners by EPCA, including PTACs and PTHPs. classes defined by EPCA, which are
and Packaged Terminal Heat Pumps In amending the ASHRAE/IESNA distinguished by equipment (i.e., air
Standard 90.1–1989 levels for PTACs conditioner or heat pump) and cooling
On October 29, 1999, ASHRAE’s and PTHPs, ASHRAE acknowledged the capacity, and further separated these
Board of Directors approved ASHRAE/ physical size constraints between the equipment classes by wall sleeve
IESNA Standard 90.1–1999 (ASHRAE/ varying sleeve sizes on the market. dimensions as further discussed in
IESNA Standard 90.1–1999), which Specifically, the wall sleeve dimensions section IV.C.2. Table II.2 shows the
addressed efficiency standard levels for of the PTAC and PTHP affect the energy efficiency levels in ASHRAE/IESNA
34 categories of commercial heating, efficiency of the equipment. Standard 90.1–1999 for PTACs and
ventilating and air-conditioning (HVAC) Consequently, ASHRAE/IESNA PTHPs.
TABLE II.2.—ASHRAE/IESNA STANDARD 90.1–1999 ENERGY EFFICIENCY LEVELS FOR PTACS AND PTHPS
Equipment class ASHRAE/IESNA standard
90.1–1999 efficiency levels*
PTAC ............................... Standard Size** ............. < 7,000 Btu/h ..................................... EER = 11.0
≥ 7,000 Btu/h and ≤ 15,000 Btu/h EER = 12.5¥(0.213 × Cap††)
> 15,000 Btu/h EER = 9.3
Non-Standard Size† ....... < 7,000 Btu/h EER = 9.4
> 15,000 Btu/h EER = 7.7
PTHP ............................... Standard Size** ............. < 7,000 Btu/h ..................................... EER = 10.8
COP = 3.0
COP = 3.2¥(0.026 × Cap††)
> 15,000 Btu/h EER = 9.1
COP = 2.8
Non-Standard Size† ....... < 7,000 Btu/h ..................................... EER = 9.3
COP = 2.7
COP = 2.9¥(0.026 × Cap††)
>15,000 Btu/h EER = 7.6
COP = 2.5
* For equipment rated according to ARI standards, all EER values must be rated at 95°F outdoor dry-bulb temperature for air-cooled products
and evaporatively-cooled products and at 85°F entering water temperature for water cooled products. All COP values must be rated at 47°F out-
door dry-bulb temperature for air-cooled products, and at 70°F entering water temperature for water-source heat pumps.
ASHRAE/IESNA Standard 90.1–1999 also includes a factory labeling requirement for non-standard size PTAC and PTHP equipment as follows:
‘‘MANUFACTURED FOR REPLACEMENT APPLICATIONS ONLY; NOT TO BE INSTALLED IN NEW CONSTRUCTION PROJECTS.’’
†† Cap means cooling capacity in kBtu/h at 95°F outdoor dry-bulb temperature.
Following the publication of would result in significant additional in EPCA and ASHRAE/IESNA Standard
ASHRAE/IESNA Standard 90.1–1999, energy conservation of energy, be 90.1–1999, as well as the maximum
DOE performed a screening analysis that technologically feasible and technologically feasible efficiency
covered 24 of the 34 categories of economically justified. For each of these levels. The report ‘‘Screening Analysis
equipment addressed in ASHRAE/ types of equipment, the screening for EPACT-Covered Commercial
IESNA Standard 90.1–1999, to analysis examined a range of efficiency [Heating, Ventilating and Air-
determine if more stringent levels levels that included the levels specified Conditioning] HVAC and Water-Heating
Equipment’’ (commonly referred to as DOE’s decision to explore more products or in working prototypes will
the 2000 Screening Analysis) 4 stringent efficiency levels than in be considered technologically feasible.’’
summarizes this analysis, and estimates ASHRAE/IESNA Standard 90.1–1999 10 CFR part 430, subpart C, appendix A,
the annual national energy consumption for PTACs and PTHPs through a section 4(a)(4)(i).
and the potential for energy savings that separate rulemaking. 72 FR 10038, In each energy conservation standards
would result if the covered equipment 10044. rulemaking, DOE conducts a screening
were to meet efficiency levels higher In January 2008, ASHRAE published analysis based on information gathered
than those specified in ASHRAE/IESNA ASHRAE/IESNA Standard 90.1–2007, on all current technology options and
Standard 90.1–1999. The baselines for which reaffirmed the definitions and prototype designs that could improve
the comparison were the corresponding efficiency levels for PTACs and PTHPs the efficiency of the equipment that is
levels specified in ASHRAE/IESNA in ASHRAE/IESNA Standard 90.1–1999. the subject of the rulemaking. In
Standard 90.1–1999 and EPCA. Since the definitions and efficiency consultation with interested parties,
On January 12, 2001, DOE published levels for PTACs and PTHPs are the DOE develops a list of design options
a final rule for commercial HVAC and same in the two versions of ASHRAE/ for consideration in the rulemaking. All
water heating equipment, which IESNA Standard 90.1, DOE is only technologically feasible design options
concluded that the 2000 Screening referencing the ASHRAE/IESNA are candidates in this initial assessment.
Analysis indicated at least a reasonable Standard 90.1–1999 version throughout DOE eliminates from consideration,
possibility of finding ‘‘clear and today’s notice even though DOE early in the process, any design option
convincing evidence’’ that more reviewed both versions. that is not practicable to manufacture,
stringent standards ‘‘would be install, or service; that will have adverse
technologically feasible and III. General Discussion impacts on equipment utility or
economically justified and would result A. Test Procedures availability; or for which there are
in significant additional conservation of adverse impacts on health or safety. 10
energy’’ for PTACs and PTHPs. 66 FR Section 343(a) of EPCA authorizes the CFR 430, subpart C, appendix A, section
3336, 3349. Under EPCA, these are the Secretary to amend the test procedures 4(a)(4). In addition, for the types of
criteria for DOE adoption of standards for PTACs and PTHPs to the latest equipment identified in section 342(a)
more stringent than those in ASHRAE/ version generally accepted by industry of EPCA, 42 U.S.C. 6313(a), which
IESNA Standard 90.1. (42 U.S.C. or the rating procedures developed by includes PTACs and PTHPs, DOE
6313(a)(6)(A)(ii)(II)) the Air-Conditioning and Refrigeration eliminates from consideration any
In addition, on March 13, 2006, DOE Institute (ARI) 5, as referenced by design option whose technological
issued a Notice of Availability (NOA) ASHRAE/IESNA Standard 90.1, unless feasibility is not supported by clear and
announcing the availability of a the Secretary determines by clear and convincing evidence.
technical support document (TSD) DOE convincing evidence the latest version The design options DOE considered
was using in re-assessing whether to of the industry test procedure does not as part of this rulemaking all have the
adopt, as uniform national standards, meet the requirements for test potential to improve EER or COP. DOE
energy conservation standards procedures described in paragraphs (2) considered any design option for PTACs
contained in amendments to the and (3) of that section. (42 U.S.C. and PTHPs to be technologically
ASHRAE/IESNA Standard 90.1–1999 6314(a)(4)) feasible if it is used in equipment the
for certain types of commercial DOE published a final rule on October PTAC and PTHP industry distributes in
equipment. 71 FR 12634. In the NOA, 21, 2004, that amends its test procedure commerce or is in a working prototype.
DOE revised the energy savings analysis for PTACs and PTHPs to incorporate by
reference the most recent amendments 2. Maximum Technologically Feasible
from the 2000 Screening Analysis and
to the industry test procedure for PTACs Levels
summarized the assumptions and
results in the NOA TSD. Id. DOE also and PTHPs, ARI Standard 310/380– In developing today’s proposed
stated that, even though the revised 2004. 69 FR 61962 (October 21, 2004). standards, DOE has determined the
analysis reduced the potential energy DOE does not believe further maximum improvement in energy
savings that might result from more modifications to this test procedure are efficiency that is technologically
stringent standards than the efficiency necessary at this time because no further feasible (‘‘max tech’’) for PTACs and
levels specified in ASHRAE/IESNA amendments have been made to the PTHPs. EPCA requires that DOE adopt
Standard 90.1–1999 for PTACs and industry test procedure for PTACs and amended energy conservation standards
PTHPs, DOE believed that there was a PTHPs. for equipment covered by ASHRAE/
possibility that clear and convincing IESNA Standard 90.1 that achieves the
B. Technological Feasibility maximum improvement in energy
evidence exists that more stringent
standards are warranted. Therefore, 1. General efficiency that is technologically
DOE stated in the NOA that it was feasible and economically justified, or to
DOE considers design options
inclined to seek more stringent standard identify the ‘‘max tech’’ efficiency
technologically feasible if the industry
levels than the efficiency levels in levels. (42 U.S.C. 6316(a); 42 U.S.C.
is already using them or if research has
ASHRAE/IESNA Standard 90.1–1999 6295(o)(2)(A)) Therefore, in reviewing
progressed to development of a working
for PTACs and PTHPs through a the amended ASHRAE/IESNA Standard
prototype. DOE defines technological
separate rulemaking. 71 FR 12639. 90.1 efficiency standards for PTACs and
feasibility as: ‘‘Technologies
Lastly, on March 7, 2007, DOE issued a PTHPs, DOE identified the ‘‘max tech’’
incorporated in commercially available
final rule reaffirming DOE’s inclination levels as part of the engineering analysis
in the March 2006 NOA and stating 5 The Air-Conditioning and Refrigeration Institute (Chapter 5 of the TSD). At the present
(ARI) and the Gas Appliance Manufacturers time, those levels are the levels set forth
4 U.S. Department of Energy, Office of Energy Association (GAMA) announced on December 17, in TSL 7. For the representative cooling
Efficiency and Renewable Energy. ‘‘Energy 2007, that their members voted to approve the capacities within a given equipment
Conservation Program for Consumer Products: merger of the two trade associations to represent the
Screening Analysis for EPACT-Covered Commercial interests of cooling, heating, and commercial
class, PTACs and PTHPs utilizing R–22
HVAC and Water-Heating Equipment Screening refrigeration equipment manufacturers. The merged with these efficiency levels already are
Analysis.’’ April 2000. association became AHRI on Jan. 1, 2008. being offered for sale and there is no
equipment at higher efficiency levels lists the ‘‘max tech’’ levels that DOE
that are currently available. Table III.1 identified for this rulemaking.
TABLE III.1.—‘‘MAX TECH’’ EFFICIENCY LEVELS (≥7,000 BTU/H AND ≤15,000 BTU/H EQUIPMENT CLASSES)*
Cooling ‘‘Max tech’’
Equipment type Equipment class capacity efficiency
(Btu/h) level**
PTAC ................................................... Standard Size† ................................................................................................. 9,000 12.0 EER

12,000 11.5 EER
Non-standard Size†† ........................................................................................ 11,000 11.2 EER
PTHP ................................................... Standard Size† ................................................................................................. 9,000 12.0 EER

3.5 COP
12,000 11.7 EER
3.3 COP
Non-standard Size†† ........................................................................................ 11,000 11.4 EER
2.9 COP
* As discussed in section IV.C.2 of today’s notice, DOE is presenting the results for two cooling capacities of standard size PTACs and PTHPs,
9,000 Btu/h and 12,000 Btu/h, which fall within the equipment classes of PTACs and PTHPs with cooling capacities ≥7,000 Btu/h and ≤15,000
Btu/h.
** For equipment rated according to the DOE test procedure, all EER values would be rated at 95°F outdoor dry-bulb temperature for air-cooled
products and evaporatively-cooled products and at 85°F entering water temperature for water cooled products. All COP values must be rated at
47°F outdoor dry-bulb temperature for air-cooled products, and at 70°F entering water temperature for water-source heat pumps.
† Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or
†† Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide.
C. Energy Savings 2. Significance of Savings 1. Economic Impact on Manufacturers

and Commercial Customers
1. Determination of Savings Section 342(a)(6)(A)(ii)(II) of EPCA
allows DOE to adopt a more stringent DOE has established procedures,
DOE used the national energy savings standard for PTACs and PTHPs than the interpretations, and policies to guide
(NES) Microsoft Excel spreadsheet to amended level in ASHRAE/IESNA DOE in considering new or amended
estimate energy savings that could result Standard 90.1, if clear and convincing appliance energy conservation
from amended energy conservation evidence supports a determination that standards. DOE investigates the impacts
standards for PTACs and PTHPs. The the more stringent standard would of amended energy conservation
spreadsheet forecasts energy savings result in ‘‘significant’’ additional energy standards of PTACs and PTHPs on
over the period of analysis for TSLs savings. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) manufacturers through the manufacturer
relative to the base case. DOE quantified While EPCA does not define the term impact analysis (MIA) (see Chapter 13 of
the energy savings attributable to an ‘‘significant,’’ a U.S. Court of Appeals, the TSD). First, DOE uses an annual
energy conservation standard as the in Natural Resources Defense Council v. cash flow approach in determining the
difference in energy consumption Herrington, 768 F.2d 1355, 1373 (D.C. quantitative impacts of a new or
between the trial standards case and the Cir. 1985), indicated that Congress amended energy conservation standard
base case. The base case represents the intended ‘‘significant’’ energy savings in on manufacturers. This includes both a
forecast of energy consumption in the section 325 of EPCA to mean savings short- and long-term assessment based
absence of amended mandatory energy that are not ‘‘genuinely trivial.’’ For all on the cost and capital requirements
conservation standards beyond the the TSLs considered in this rulemaking, during the period between the
levels in ASHRAE/IESNA Standard DOE’s estimates of energy savings announcement of a regulation and the
90.1–1999. Section IV.G of this Notice provide clear and convincing evidence time when the regulation comes into
and Chapter 11 of the TSD describes the that the additional energy savings to be effect. Impacts analyzed include INPV,
NES spreadsheet model. achieved from exceeding the cash flows by year, changes in revenue
corresponding efficiency level[s] in and income, and other measures of
The NES spreadsheet model ASHRAE/IESNA Standard 90.1–1999 impact, as appropriate. Second, DOE
calculates the energy savings in both are nontrivial, and therefore DOE analyzes and reports the impacts on
site energy (in kilowatt-hours (kWh)) or considers them ‘‘significant’’ as required different types of manufacturers, paying
source energy (in British thermal units by section 342 of EPCA. (42 U.S.C. 6313 particular attention to impacts on small
(Btu)). Site energy is the energy directly (a)(6)(A)(ii)(II)) manufacturers. Third, DOE considers
consumed at building sites by PTACs the impact of standards on domestic
and PTHPs. DOE expresses national D. Economic Justification manufacturer employment,
energy savings in terms of source energy As noted earlier, EPCA provides manufacturing capacity, plant closures,
savings (i.e., savings in energy used to seven factors for DOE to evaluate in and loss of capital investment. Finally,
generate and transmit the energy determining whether an energy DOE takes into account cumulative
consumed at the site). Chapter 11 of the conservation standard for PTAC and impacts of different DOE regulations on
TSD contains a table of factors used to PTHP is economically justified. (42 manufacturers.
convert site energy consumption in kWh U.S.C. 6316(a); 42 U.S.C. For customers, DOE measures the
to source energy consumption in Btu. 6295(o)(2)(B)(i)–(ii)) The following economic impact as the change in
DOE derived these conversion factors, discussion explains how DOE has installed cost and life-cycle operating
which change over time, from EIA’s addressed each factor in this costs, i.e., the LCC. Chapter 8 of the TSD
AEO2007. rulemaking. presents the LCC of the equipment at
each efficiency level examined. LCC, can identify the percentage of customers 42 U.S.C. 6295(o)(2)(B)(i)(V)) DOE has
described below, is one of the seven achieving LCC savings or attaining transmitted a copy of this NOPR to the
factors EPCA requires DOE to consider certain payback values due to an Attorney General soliciting written
in determining the economic increased energy conservation standard, views on this issue.
justification for a new or amended in addition to identifying the average
6. Need of the Nation To Conserve
standard. (42 U.S.C. 6316(a); 42 U.S.C. LCC savings or average payback period
for that standard. DOE gives the LCC Energy
6295(o)(2)(B)(i)(II))
savings as a distribution, with a mean The non-monetary benefits of the
2. Life-Cycle Costs value and a range. DOE’s analysis proposed standards are likely to be
The LCC is the sum of the purchase assumes that the customer purchases reflected in improvements to the
price, including the installation and the PTAC and PTHP in 2012. Chapter 8 security and reliability of the Nation’s
operating expense (including operating of the TSD contains the details of the energy system-namely, reductions in the
energy consumption, maintenance, and LCC calculations. overall demand for energy will result in
repair expenditures) discounted over a reduction in the Nation’s reliance on
3. Energy Savings
the lifetime of the equipment. To foreign sources of energy and increased
determine the purchase price including While significant additional energy reliability of the Nation’s electricity
installation, DOE estimated the markups conservation is a separate statutory system. DOE conducts a utility impact
that are added to the manufacturer requirement for imposing a more analysis to show the reduction in
selling price (MSP) by distributors and stringent energy conservation standard installed generation capacity. The
contractors, and estimated installation than the level in ASHRAE/IESNA
proposed standards are also likely to
costs from an analysis of PTAC and Standard 90.1, EPCA requires that DOE
result in improvements to the
PTHP installation cost estimates for consider the total projected energy
environment. In quantifying these
each of the equipment classes. DOE savings expected to result directly from
improvements, DOE has defined a range
determined that maintenance cost is not the standard when determining the
of primary energy conversion factors
dependent on PTAC and PTHP economic justification for a standard.
and associated emission reductions
efficiency and that repair cost increases (42 U.S.C. 6316(a); 42 U.S.C.
based on the generation displaced by
with MSP. 6295(o)(2)(B)(i)(III)) DOE used the NES
energy conservation standards. DOE
In estimating operating energy costs, spreadsheet results in its consideration
reports the environmental effects from
DOE used the average commercial of total projected savings. Section V.B.3
each TSL in the environmental
electricity price in each State, using EIA discusses the savings figures.
assessment, Chapter 16 of the TSD. (42
data from 2006.6 DOE modified the 2006 4. Lessening of Utility or Performance of U.S.C. 6313(a); 42 U.S.C.
average commercial electricity prices to Equipment 6295(o)(2)(B)(i)(VI))
reflect the average electricity prices for
each of four types of businesses In establishing equipment classes, and 7. Other Factors
examined in this analysis. The LCC in evaluating design options and the
impact of proposed standards, DOE has EPCA allows the Secretary of Energy,
savings analysis compares the LCCs of in determining whether a proposed
equipment designed to meet possible attempted to avoid proposing amended
standards for PTACs and PTHPs that standard is economically justified, to
proposed energy conservation standards consider any other factors that the
with the LCC of the equipment likely to would lessen the utility or performance
of such equipment. (See 42 U.S.C. Secretary deems to be relevant. (42
be installed in the absence of amended U.S.C. 6316(a); 42 U.S.C.
energy conservation standards. The LCC 6316(a); 42 U.S.C. 6295(o)(2)(B)(i)(IV))
The design options considered in the 6295(o)(2)(B)(i)(VII)) DOE considered
analysis also defines a range of energy the impacts of setting different amended
price forecasts for electricity used in the engineering analysis of this rulemaking
do not involve changes in equipment energy conservation standards for
economic analyses. PTACs and PTHPs (i.e., the amended
For each PTAC and PTHP equipment design or unusual installation
requirements that could reduce the standard level for a given PTAC cooling
class, DOE calculated both the LCC and
utility or performance of PTACs and capacity would be different from the
LCC savings at various efficiency levels.
PTHPs. In addition, DOE is also amended standard level for a give PTHP
The LCC analysis estimated the LCC for
considering manufacturers’ concerns with the same cooling capacity). DOE
representative equipment used in four
that one-third of the non-standard size also considered the effects of potential
types of buildings, two of which were
market subject to the more stringent equipment switching within the PTAC
hotels/motels and health care facilities
standards under ASHRAE/IESNA and PTHP market (e.g., switching from
that are representative of the segment of
Standard 90.1–1999 would not be able PTHPs to PTACs, which include a less-
U.S. commercial building stock that
to meet the efficiency levels specified by efficient heating system). In addition,
uses PTACs and PTHPs.
ASHRAE/IESNA Standard 90.1–1999 DOE also considered the uncertainty
To account for uncertainty and
for standard size equipment due to the associated with the market due to the
variability in specific inputs, such as
physical size constraints of the wall impending refrigerant phase-out in
equipment lifetime and discount rate,
sleeve as further discussed in section 2010, including equipment availability,
DOE used a distribution of values with
IV.A.2. compressor availability, and the
probabilities attached to each value. For
available efficiencies of R–410A PTACs
each of the four types of commercial 5. Impact of Any Lessening of and PTHPs. Lastly, DOE considered the
buildings, DOE sampled the value of Competition uniqueness of the non-standard size of
these inputs from the probability
EPCA directs that DOE consider any this equipment and any differential
distributions. As a result, the analysis
lessening of competition that is likely to impacts that might result on this
produced a range of LCCs. A distinct
result from proposed standards. The industry from amended energy
advantage of this approach is that DOE
Attorney General considers the impact, conservation standards. The non-
6 The EIA data for 2006 is the latest data set if any, of any lessening of competition standard size market is further
published by EIA on commercial electricity prices likely to result from imposition of a discussed in section IV and the impacts
by State. proposed standard. (42 U.S.C. 6316(a); on the non-standard size industry from
amended energy conservation standards intended for mounting through the wall. Therefore, units that have a wall sleeve
are estimated in section V. It includes a prime source of dimension of 16 inches high by 42
refrigeration, separable outdoor louvers, inches wide are considered ‘‘standard
IV. Methodology and Analyses
forced ventilation, and heating size’’ equipment and all other units are
This section addresses the analyses availability by builder’s choice of hot considered ‘‘non-standard size’’
DOE has performed for this rulemaking. water, steam, or electricity.’’ (42 U.S.C. equipment. In contrast, the industry
A separate sub-section addresses each 6311(10)(A)) EPCA defines a ‘‘packaged does not have a common wall sleeve
analysis. DOE used a spreadsheet to terminal heat pump’’ as ‘‘a packaged dimension that is typical for all older
calculate the LCC and payback periods terminal air conditioner that utilizes existing facilities. These facilities, such
(PBPs) of potential amended energy reverse cycle refrigeration as its prime as high-rise buildings found in large
conservation standards. Another heat source and should have cities, typically use non-standard size
spreadsheet was used to provide supplementary heat source available to equipment. In these installations,
shipments forecasts and then calculates builders with the choice of hot water, altering the existing wall sleeve opening
national energy savings and net present steam, or electric resistant heat.’’ (42 to accommodate the more efficient,
value impacts of potential amended U.S.C. 6311(10)(B)) DOE codified these standard size equipment could include
energy conservation standards. DOE definitions in 10 CFR 431.92 in a final extensive structural changes to the
also assessed manufacturer impacts, rule issued October 21, 2004. 69 FR building, could be very costly, and is
largely through use of the Government 61970. therefore, rarely done.
Regulatory Impact Model (GRIM). When ASHRAE amended the
DOE also estimated the impacts of 2. Equipment Classes efficiency levels for PTACs and PTHPs
proposed PTAC and PTHP energy When evaluating and establishing in 1999, it acknowledged the physical
conservation standards on electric energy conservation standards, DOE size constraints among various sleeve
utilities and the environment using a generally divides covered equipment sizes on the market. Consequently,
version of EIA’s National Energy into equipment classes by the type of ASHRAE/IESNA Standard 90.1–1999
Modeling System (NEMS). The NEMS energy used or by capacity or other used the equipment classes defined by
model simulates the U.S. energy performance-related features that affect EPCA, which are distinguished by
economy and has been developed over efficiency. Different energy conservation whether the product has reverse cycle
several years by the EIA primarily for standards may apply to different heating (i.e., air conditioner or heat
preparing the AEO. The NEMS produces equipment classes. (42 U.S.C. 6316(a); pump) and cooling capacity in Btu/h,
a widely known baseline forecast for the 42 U.S.C. 6295(q)) and further separated these equipment
United States through 2030 that is PTACs and PTHPs can be divided classes by wall sleeve dimensions.
available in the public domain. The into various equipment classes ASHRAE/IESNA Standard 90.1–1999
version of NEMS used for the proposed categorized by physical characteristics refers to wall sleeve dimensions in two
energy conservation standards analysis that affect equipment efficiency. Key categories: ‘‘New Construction’’ and
is called NEMS–BT , and is based on the characteristics affecting the energy ‘‘Replacement.’’ ASHRAE/IESNA
AEO2007 version with minor efficiency of the PTAC or PTHP are Standard 90.1–1999 does not describe
modifications. The NEMS–BT offers a whether the equipment has reverse ‘‘New Construction,’’ but Table 6.21D,
sophisticated picture of the effect of cycle heating (i.e., air conditioner or footnote b of ASHRAE/IESNA Standard
standards, since it can measure the heat pump), the cooling capacity, and 90.1–1999 states that ‘‘replacement’’
interactions between the various energy the physical dimensions of the unit. efficiencies apply only to units: (1)
supply and demand sectors and the The existing Federal energy ‘‘Factory labeled as follows:
economy as a whole. conservation standards for PTACs and Manufactured for Replacement
PTHPs correspond to the efficiency Applications Only; Not to be Installed
A. Market and Technology Assessment levels in ASHRAE/IESNA Standard in New Construction Projects’’; and (2)
When beginning an energy 90.1–1989, as shown in Tables 1 and 2 ‘‘with existing wall sleeves less than 16
conservation standards rulemaking, of 10 CFR Part 431.97, dividing PTACs inches high and less than 42 inches
DOE develops information that provides and PTHPs into six equipment classes. wide.’’ DOE understands that the ‘‘New
an overall picture of the market for the These equipment classes are Construction’’ category under ASHRAE/
equipment concerned, including the differentiated by whether the equipment IESNA Standard 90.1–1999 is residual,
purpose of the equipment, the industry has supplemental heating or reverse and covers all other PTAC and PTHPs.
structure, and market characteristics. cycle heating (i.e., air conditioner or Hence, this category consists of
This activity includes both quantitative heat pump) and by cooling capacity in equipment with wall sleeve dimensions
and qualitative assessments based Btu/h. greater than or equal to 16 inches high
primarily on publicly available When installed, PTACs and PTHPs and greater than or equal to 42 inches
information. The subjects addressed in are fitted into a wall sleeve. There is a wide, or lacking the requisite label. In
the market and technology assessment wide variety of wall sleeve sizes found addition, when ASHRAE approved
for this rulemaking (see Chapter 3 of the in different buildings. These wall ASHRAE/IESNA Standard 90.1–1999,
TSD) include equipment classes, sleeves are market driven (i.e., the not only did it include delineations by
manufacturers, quantities, and types of applications or facilities where the wall sleeve dimensions, but it also
equipment sold and offered for sale, PTACs or PTHPs are installed is what associated these delineations with
retail market trends, and regulatory and determines the ‘‘market standard’’ wall specified efficiency levels. The
non-regulatory programs. sleeve dimension) and require efficiency levels associated with non-
manufacturers to offer various PTACs standard equipment, or ‘‘Replacement’’

1. Definitions of a PTAC and a PTHP and PTHPs that can fit into various wall equipment, are significantly less
Section 340 of EPCA defines a sleeve dimensions. For new units, the stringent than those associated with
‘‘packaged terminal air conditioner’’ as industry has standardized the wall standard size equipment, or ‘‘New
‘‘a wall sleeve and a separate unencased sleeve dimension for PTACs and PTHPs Construction’’ equipment.
combination of heating and cooling in buildings over the past 20 years to be ARI recently submitted a continuous
assemblies specified by the builder and 16 inches high by 42 inches wide. maintenance proposal on PTAC and
PTHP equipment to the ASHRAE/ PTACs and PTHPs in place of the potentially misclassified and could not
IESNA Standard 90.1 committee, which ‘‘replacement’’ delineation in ASHRAE/ meet the more stringent standards.
in part suggests alterations to the IESNA Standard 90.1–1999. The new Under the ARI continuous maintenance
delineations within ASHRAE/IESNA definition of non-standard size PTACs proposal to ASHRAE, all of the non-
Standard 90.1–1999 for standard and and PTHPs reads: ‘‘equipment with standard size equipment would be
non-standard size equipment.7 ARI existing sleeves having an external wall subject to the less stringent standards.
believes ASHRAE misclassified opening of less than 16 in. high or less Since ARI’s proposed definitions
approximately one-third of the non- than 42 in. wide, and having a cross- would effectively reclassify some
standard size market when it adopted sectional area less than 670 in 2.’’ equipment under ASHRAE/IESNA
ASHRAE/IESNA Standard 90.1–1999. Effectively, this new definition of non- 90.1–1999’s delineations as non-
ARI believes the one third of the non- standard equipment would allow standard size equipment, DOE believes
standard size market subject to the more approximately five percent of the total ASHRAE must adopt ARI’s continuous
stringent standards under ASHRAE/ PTAC and PTHP market to qualify for maintenance proposal before DOE can
IESNA Standard 90.1–1999 are not the less stringent, non-standard officially use this definition as the basis
capable of meeting the efficiency levels efficiency levels. for DOE’s standard. (42 U.S.C.
specified by ASHRAE/IESNA Standard DOE recognizes ARI’s concerns 6313(a)(6)(A)(ii)) DOE understands that
90.1–1999 for standard size equipment regarding non-standard size equipment the ARI continuous maintenance
due to the physical size constraints of and the possible misclassification under proposal on PTACs and PTHPs has been
the wall sleeve. For example, a PTAC or the delineations established by approved by ASHRAE as Addendum t
PTHP unit with wall sleeve dimensions ASHRAE/IESNA Standard 90.1–1999. to ASHRAE/IESNA Standard 90.1–2007
of 16.5 inches high and 27 inches wide When ASHRAE approved ASHRAE/ and will be the subject of public review.
would be classified as standard size IESNA Standard 90.1–1999, not only If ASHRAE is able to adopt Addendum
equipment under ASHRAE’s did it include delineations by wall t to ASHRAE/IESNA Standard 90.1–
delineations and would be required to sleeve dimensions, but it also associated 2007 prior to September 2008, when
meet the higher efficiency levels these delineations with specified DOE must issue a final rule on this
specified by ASHRAE/IESNA Standard efficiency levels. The efficiency levels rulemaking, DOE proposes to
90.1–1999. However, since this unit associated with non-standard incorporate that version of the ASHRAE
does not have the industry standard equipment, or ‘‘Replacement’’ standard, including the modified
wall sleeve dimension of 16 inches high equipment, are significantly less definition in its final rule.
by 42 inches wide, ARI believes these stringent than those associated with At this time, DOE seeks stakeholder
units are solely non-standard units that standard size equipment, or ‘‘New comment on Addendum t to ASHRAE/
are used in very old buildings and Construction’’ equipment. IESNA Standard 90.1–2007 (i.e., ARI’s
should therefore be considered as DOE reviewed the ARI shipment data continuous maintenance proposal to
replacement units. Due to the space and found approximately 15 percent of ASHRAE). Specifically, Addendum t to
limitations typically associated with the total market (i.e., approximately ASHRAE/IESNA Standard 90.1–2007
non-standard size PTACs and PTHPs, 67,000 units shipped annually) are non- incorporates the following revised
manufacturers have few options to standard size equipment. Under definition for non-standard size
increase energy efficiency. As noted ASHRAE/IESNA Standard 90.1–1999, equipment: ‘‘equipment with existing
above, many of the existing buildings approximately 5 percent of the total sleeves having an external wall opening
cannot be retrofitted to accommodate non-standard size equipment market of less than 16 in. high or less than 42
larger wall sleeves associated with more would be required to meet the more in. wide, and having a cross-sectional
efficient standard-size units. stringent standards established for area less than 670 in 2.’’ If ASHRAE
In response to this apparent standard size equipment. If DOE were to were to approve Addendum t to
misclassification within ASHRAE/ adopt equipment classes consistent with ASHRAE/IESNA Standard 90.1–2007
IESNA Standard 90.1–1999, ARI those delineations in ASHRAE/IESNA prior to September 2008, DOE proposes
proposed a continuous maintenance Standard 90.1–1999, manufacturers to adopt equipment classes in the final
proposal to ASHRAE that includes a could be forced to cease production of rule for PTACs and PTHPs as shown in
new definition for non-standard size those equipment lines, which are Table IV.1.
TABLE IV.1.—EQUIPMENT CLASSES FOR PTACS AND PTHPS IF ASHRAE ADOPTS ADDENDUM T TO ASHRE/IESNA
STANDARD 90.1–2007
Equipment Class
PTAC ......................................... Standard Size* ................................................. < 7,000 Btu/h

≥ 7,000 Btu/h and ≤ 15,000 Btu/h
> 15,000 Btu/h
Non-Standard Size** ........................................ < 7,000 Btu/h
≥ 7,000 Btu/h and ≤ 15,000 Btu/h
> 15,000 Btu/h
PTHP ......................................... Standard Size* ................................................. < 7,000 Btu/h

≥ 7,000 Btu/h and ≤ 15,000 Btu/h
> 15,000 Btu/h
7 Air-Conditioning and Refrigeration Institute.
Continuous Maintenance Proposal on Package

Terminal Equipment. October 5, 2007.
TABLE IV.1.—EQUIPMENT CLASSES FOR PTACS AND PTHPS IF ASHRAE ADOPTS ADDENDUM T TO ASHRE/IESNA
STANDARD 90.1–2007—Continued
Equipment Class
≥ 7,000 Btu/h and ≤ 15,000 Btu/h

> 15,000 Btu/h
* Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions having an external wall opening of greater than or equal to 16
inches high or greater than or equal to 42 inches wide, and having a cross-sectional area greater than or equal to 670 inches squared.
** Non-standard size refers to PTAC or PTHP equipment with existing wall sleeve dimensions having an external wall opening of less than 16
inches high or less than 42 inches wide, and having a cross-sectional area less than 670 inches squared.
DOE would add the definitions of Seeks Comment’’ in section VII.E of dimensions, consistent with ASHRAE/
standard size and non-standard size as today’s proposed rule. IENSNA Standard 90.1–1999.
defined in the footnotes of Table IV.1 In the absence of final action by Specifically, DOE would adopt
under 10 CFR 431.2. This is identified ASHRAE on the addendum, DOE would equipment classes in the final rule for
as Issue 1 under ‘‘Issues to Which DOE subdivide EPCA’s existing classes for PTACs and PTHPs as shown in Table
this equipment by wall sleeve IV.2.
TABLE IV.2.—EQUIPMENT CLASSES FOR PTACS AND PTHPS IF ASHRAE DOES NOT ADOPT ADDENDUM T TO ASHRE/
IESNA STANDARD 90.1–2007
Equipment class
PTAC ......................................... Standard Size* ................................................. < 7,000 Btu/h

≥ 7,000 Btu/h and ≤ 15,000 Btu/h
> 15,000 Btu/h
≥ 7,000 Btu/h and ≤ 15,000 Btu/h
> 15,000 Btu/h
PTHP ......................................... Standard Size* ................................................. < 7,000 Btu/h
≥ 7,000 Btu/h and ≤ 15,000 Btu/h
> 15,000 Btu/h
≥ 7,000 Btu/h and ≤ 15,000 Btu/h
> 15,000 Btu/h
* Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or
** Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide.
DOE would add the definitions of 3. Market Assessment refrigeration equipment manufacturers.
standard size and non-standard size as The merged association became AHRI
The subjects addressed in this market
defined in the footnotes of Table IV.2 on Jan. 1, 2008.
assessment for this rulemaking include ARI develops and publishes technical
under section 10 CFR 431.2. trade associations, manufacturers, and standards for residential and
For the purposes of today’s notice, the quantities and types of equipment commercial equipment using rating
DOE has based the proposed standards sold and offered for sale. The criteria and procedures for measuring
and the proposed definitions of non- information DOE gathered serves as and certifying equipment performance.
standard and standard size PTACs and resource material throughout the The DOE test procedure is an ARI
PTHPs as shown in the rule language of rulemaking. Chapter 3 of the TSD standard. ARI has developed a
today’s notice on the delineations in provides additional detail on the market certification program that the majority
ASHRAE/IESNA Standard 90.1–1999. assessment. of the manufacturers in the PTAC and
However as stated above, if ASHRAE a. Trade Association PTHP industry have used to certify their
adopts Addendum t to ASHRAE/IESNA equipment. Manufacturers certify their
Standard 90.1–2007 prior to September The Air-Conditioning, Heating, and own equipment by providing ARI with
2008, DOE proposes to incorporate the Refrigeration Institute (AHRI), formerly test data. Through the ARI certification
and throughout this notice referred to as program, ARI evaluates the test data and
modified definitions from the
ARI, is the trade association determines if the equipment conforms
Addendum in the final rule. (42 U.S.C.
representing PTAC and PTHP to ARI 310/380–2004.8 Once ARI has
6313(a)(6)(A)(ii)) If Addendum t is not

manufacturers. ARI and the Gas determined that the equipment has met
available for DOE to include in the final Appliance Manufacturers Association
rule, DOE’s ability to do so at a later all the requirements under ARI 310/
(GAMA) announced on December 17, 380–2004 standards and certification
date will be constrained by the anti- 2007, that their members voted to
backsliding provision. (42 U.S.C. approve the merger of the two trade 8 DOE has incorporated by reference ARI
6316(a); 42 U.S.C. 6295(o)(1)) associations to represent the interests of Standard 310/380–2004 as the DOE test procedure
cooling, heating, and commercial at 10 CFR 431.97.
program, it is added to a directory of (section IV.I of today’s notice and identified as potential means to improve
certified equipment. DOE used ARI’s Chapter 13 of the TSD). PTAC and PTHP performance:
certification data, as summarized by the • Scroll compressors
c. Shipments • Variable-speed compressors
2006 ARI directory of certified PTACs
and PTHPs, in the engineering analysis. DOE reviewed data collected by the • Higher efficiency compressors
U.S. Census Bureau and ARI to evaluate • Complex control boards
b. Manufacturers the annual PTAC and PTHP equipment • Higher efficiency fan motors
DOE identified five large shipment trends and the value of these • Microchannel heat exchangers
manufacturers of standard size PTAC shipments. The historical shipments • Increase heat exchanger area
and PTHP that hold approximately 90 data shown in Tables IV.3 provide a • Material treatment of heat
percent of the market in terms of picture of the market for PTAC and exchanger
shipments. These five manufacturers PTHP equipment. The historical • Recircuiting heat exchanger coils
include: General Electric (GE) Company, shipments for PTACs and PTHPs are • Improved air flow and fan design
Carrier Corporation, Amana,9 Trane,10 based on data provided by ARI for the • Heat pipes
and McQuay International. Three major years 1997–2005. • Corrosion protection
manufacturers including McQuay B. Screening Analysis
International, RetroAire, and Fedders TABLE IV.3.—2006 TOTAL PTAC AND
The purpose of the screening analysis
Islandaire, Inc. share the non-standard PTHP INDUSTRY ESTIMATED SHIP- is to evaluate the technologies that
size PTAC and PTHP market. All of the MENT DATA FROM ARI (STANDARD improve equipment efficiency to
major manufacturers certify their AND NON-STANDARD) determine which technologies to
equipment with ARI and are included in
consider further and which to screen
the ARI directory of certified products. Total
The standard size PTAC and PTHP Year (thousands
out. DOE consulted with a range of
market differs from the non-standard of units) parties, including industry, technical
size PTAC and PTHP industry in that experts, and others to develop a list of
many of the manufacturers are
2005 .......................................... 484 technologies for consideration. DOE
2004 .......................................... 446 then applied the following four
domestically owned with manufacturing 2003 .......................................... 399
facilities located outside of the United screening criteria to determine which
2002 .......................................... 389 technologies are unsuitable for further
States. Currently there is only one major 2001 .......................................... 388
manufacturer of standard size PTAC and consideration in the rulemaking (10 CFR
2000 .......................................... 402
PTHP equipment manufacturing 1999 .......................................... 453 Part 430, Subpart C, Appendix A at
equipment in the United States. In 1998 .......................................... 471 4(a)(4) and 5(b)):
1997 .......................................... 434 (1) Technological feasibility.
addition, there has been a recent trend
Technologies incorporated in
in the PTAC and PTHP standard size
Using currently available data, ARI commercial equipment or in working
market for foreign owned companies to
estimated that 85 percent of the prototypes will be considered
enter and sell equipment in the United
shipments for PTACs and PTHPs are technologically feasible.
States.
standard size units, while 15 percent are (2) Practicability to manufacture,
Almost all of the manufacturers of
non-standard size units. In addition, install, and service. If mass production
non-standard size PTACs and PTHPs are
ARI identified the two cooling of a technology in commercial
domestically owned with manufacturing
capacities for standard size PTACs and equipment and reliable installation and
facilities located inside of the United
PTHPs with the highest number of servicing of the technology could be
States. The non-standard manufacturers
shipments, which are 9,000 Btu/h and achieved on the scale necessary to serve
tend to specialize in equipment solely
12,000 Btu/h. the relevant market at the time of the
for replacement applications. In
effective date of the standard, then that
addition, non-standard size 4. Technology Assessment technology will be considered
manufacturers produce PTAC and PTHP
In the technology assessment, DOE practicable to manufacture, install, and
equipment on a made-to-order basis.
identified technologies and design service.
Unlike standard size manufacturers,
options that could improve the (3) Adverse impacts on equipment
there has not been an influx of foreign
efficiency of PTACs and PTHPs. This utility or equipment availability. If a
owned companies to sell non-standard
assessment provides the technical technology is determined to have
size PTAC and PTHP equipment in the
background and structure on which significant adverse impact on the utility
United States.
DOE bases its screening and engineering of the equipment to significant
In addition, DOE takes into
analyses. For PTACs and PTHPs, DOE subgroups of customers, or result in the
consideration the impact of amended
based its list of technologically feasible unavailability of any covered equipment
energy conservation standards on small
design options on input from type with performance characteristics
businesses. At this time, DOE has
manufacturers, industry experts, (including reliability), features, sizes,
identified several small business in both
component suppliers, trade capacities, and volumes that are
the standard size and non-standard size
publications, and technical papers. substantially the same as equipment
PTAC and PTHP industry that fall under In surveying PTAC and PTHP generally available in the United States
the Small Business Administration technology options, DOE considered a at the time, it will not be considered
(SBA)’s definition as having 750 wide assortment of equipment further.
employees or fewer. DOE studies the literature, information derived from the (4) Adverse impacts on health or
potential impacts on these small teardown analysis, information derived safety. If it is determined that a
businesses in detail during the MIA from the stakeholder interviews, and the technology will have significant adverse
9 Amana is a trademark of Maytag Corporation
previous DOE energy conservation impacts on health or safety, it will not
and is used under license to Goodman Global, Inc. standards rulemaking for air- be considered further.
10 Trane is a trademark and business of American conditioning rulemaking analyses. The DOE eliminated three technologies
Standard companies. following technology options were because they have no effect on, or do
not increase EER or COP as measured by heat exchanger area, and recircuiting the detailed data derived from equipment
the test procedure since the test heat exchanger coils as the most tear-downs, as to costs for parts,
procedure measures steady-state energy common ways by which manufacturers material, labor, shipping/packaging, and
efficiency. However, these features (i.e., improve the energy efficiency of their investment for models that operate at
variable speed compressors, complex PTACs and PTHPs as measured by the particular efficiency levels.
control boards, and corrosion test procedure and that are not excluded
1. Approach
protection) can reduce the energy by the four criteria in Appendix A to
consumption of the PTAC or PTHP in Subpart B of 10 CFR Part 430 listed For PTACs and PTHPs, each energy
actual applications, since they affect the above. See Chapter 3 of the TSD for efficiency level is expressed as an EER,
cyclic operation of the equipment. They additional detail on the technology which is a function of cooling capacity.
do not affect the measure of efficiency assessment and technologies analyzed. For each class analyzed, DOE used
(i.e., EER and COP) since both are There are PTACs and PTHPs utilizing representative cooling capacities
steady-state measures, not cyclic R–22 in the market at various efficiency corresponding to the cooling capacities
measures. levels incorporating the three design with the highest equipment shipments
DOE also eliminated six of the options analyzed in today’s notice. DOE within a given equipment class. For the
technologies it identified in the market believes this constitutes clear and purposes of conducting the analyses,
and technology assessment. The specific convincing evidence that all of the DOE believes that the results from the
technologies that were eliminated based efficiency levels discussed in today’s representative cooling capacities can be
on the four screening criteria outlined notice is technologically feasible. extrapolated to the entire range of
above are: (1) Scroll compressors, (2) However, DOE recognizes the cooling capacities for each equipment
higher efficiency fan motors, (3) uncertainty associated with the class. DOE’s approach for extending the
microchannel heat exchangers, (4) conversion to R–410A refrigerant and results to the omitted cooling capacities
material treatment of heat exchangers, will take this into further consideration is discussed further in section V.1 of
(5) improved airflow and fan design, when weighing the benefits and burdens this NOPR. DOE seeks comment on this
and (6) heat pipes. DOE screened out for each TSL. For more details on how approach to extend the engineering
scroll compressors because they are not DOE developed the technology options analysis to cooling capacities for which
currently practical to manufacturer in and the process for screening these complete analysis was not performed.
the sizes necessary for use in PTACs options, refer to the market and This is identified as Issue 2 under
and PTHPs. DOE screened out higher technology assessment (see Chapter 3 of ‘‘Issues to Which DOE Seeks Comment’’
efficiency fan motors, improved airflow the TSD) and the screening analysis (see in section VII.E of today’s proposed
and fan design because further gains in Chapter 4 of the TSD). rule.
PSC fan motor technology or changing For this analysis, DOE used a design
C. Engineering Analysis option approach, which involved
the type of fan design would affect the
size of the motor or fan. Because PTACs The purpose of the engineering consultation with outside experts,
and PTHPs are space-constrained analysis is to establish the relationship review of publicly available cost and
equipment, it is unlikely that between the cost and efficiency of performance information, and modeling
manufacturers would be able to redesign PTACs and PTHPs, to show the of equipment cost. The design options
the motor or fans that would be manufacturing costs of achieving DOE considered in the Engineering
practical to manufacture, install, and increased efficiency. For each Analysis include higher efficiency
service on a scale necessary to serve the equipment class, this analysis estimates compressors, increasing the heat
relevant market at the time of the the baseline manufacturer cost, as well exchanger area, and recircuiting the heat
effective date of the standard. DOE as the incremental cost for equipment at exchanger coils. The design option
screened out microchannel heat efficiency levels above the baseline. In analysis provides transparency of
exchangers because they are still in the determining the performance and the assumptions and results and the ability
research stage for PTAC and PTHP costs of more efficient equipment, DOE to perform independent analyses for
equipment and would not be practicable considers technologies and design verification. The methodology used to
to manufacture, install, or service on a option combinations not eliminated in perform design-option analysis and
scale necessary to serve the relevant the screening analysis. The output of the derive the cost-efficiency relationship is
market at the time of the effective date engineering analysis is a set of cost- described in detail in Chapter 5 of the
of the standard. DOE screened out efficiency relationships or cost- TSD.
material treatment of heat exchangers efficiency curves that are used in further
analyses (e.g., the LCC and PBP analyses 2. Equipment Classes Analyzed
because it is currently patented and
only used by one PTAC and PTHP and the national impact analysis (NIA)). For the engineering analysis, DOE
manufacturer; thus, it would not be DOE typically structures its reviewed all twelve equipment classes
practical to manufacture on broad scale engineering analysis around one of three covered by this rulemaking. Since the
for the entire industry. Lastly, DOE methodologies: (1) The design-option wall sleeve dimensions effect the energy
screened out heat pipes because they are approach, which calculates the efficiency of the equipment, DOE
still in the research stage and their incremental costs of adding specific examined standard size and non-
energy savings potential has not been design options to a baseline model; (2) standard size PTACs and PTHPs
fully established. the efficiency-level approach, which separately. In addition, since the energy
Based on equipment literature, calculates the relative costs of achieving efficiency equations for PTACs and
teardown analysis, and manufacturer increases in energy efficiency levels, PTHPs established by EPCA and
interviews, DOE has identified higher without regard to the particular design ASHRAE/IESNA Standard 90.1–1999
efficiency compressors,11 increasing the options used to achieve such increases; are a function of the equipment’s
and (3) the reverse-engineering or cost- cooling capacity, DOE examined
11 Currently, all PTAC and PTHP manufacturers
assessment approach, which involves specific cooling capacities for standard
incorporate rotary compressors into their ‘‘bottom-up’’ manufacturing cost size and non-standard size PTACs and
equipment designs. DOE is referring to rotary
compressors throughout today’s notice unless assessments for achieving various levels PTHPs, which are referred to as
specifically noted. of increased efficiency, based on representative cooling capacities. See
Table 1 and Table 2 of 10 CFR Part standard size PTACs and PTHPs are representative cooling capacity for non-
431.97 and ASHRAE/IESNA Standard 9,000 Btu/h and 12,000 Btu/h. DOE standard size equipment because it is
90.1–1999 for the energy efficiency found these two representative cooling the middle of the cooling capacity
equations. DOE reviewed the shipments capacities to have the highest number of range. Therefore, for the engineering
data provided by ARI for the 2000 shipments based on data in the 2006 analysis and subsequent analyses, DOE
Screening Analysis and today’s ARI Directory, the ACEEE database of analyzed non-standard size PTACs and
rulemaking,12 and found the majority of equipment, as well as the shipment PTHPs with 11,000 Btu/h cooling
shipments have a cooling capacity information provided to DOE found in capacity. See Chapter 5 of the TSD for
within the 7,000 Btu/h to 15,000 Btu/h the 2000 Screening Analysis. For non- additional details.
range. See Chapter 3 of the TSD for standard size equipment, DOE could not
more details on the shipments data. identify representative cooling DOE developed the cost-efficiency
Consequently, DOE choose to examine capacities or wall sleeve dimensions. curves based on these representative
these four equipment classes further. The non-standard size PTAC and PTHP cooling capacities and wall sleeve-size
For standard size PTAC and PTHP market also has a greater variety of units. Table IV.4 exhibits the
equipment classes, DOE identified two shipments based on the customers that representative cooling capacities within
representative cooling capacities. The use them and specialized applications. each equipment class analyzed in the
representative cooling capacities for DOE used 11,000 Btu/h as the engineering analysis.
TABLE IV.4.—REPRESENTATIVE COOLING CAPACITIES FOR THE ENGINEERING ANALYSIS

Representative
Equipment type Equipment class cooling capacity
(Btu/h)
PTAC ....................................................................................... Standard Size* ........................................................................ 9,000

12,000
Non-Standard Size** ............................................................... 11,000
PTHP ....................................................................................... Standard Size* ........................................................................ 9,000
12,000
Non-Standard Size** ............................................................... 11,000
* Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or
DOE’s selection of representative Btu/h. Similarly, for PTACs and PTHPs, fabrication resources required to
cooling capacities for further DOE is proposing to equate the manufacture the equipment. Developing
examination is based on shipment amended energy conservation standards the cost model involved disassembling
information provided by ARI. For the for equipment with a cooling capacity various PTACs and PTHPs, analyzing
PTAC and PTHP equipment classes greater than 15,000 Btu/h to the the materials and manufacturing
with a cooling capacity greater than or amended energy conservation standards processes, and developing component
equal to 7,000 Btu/h and less than or for equipment with a cooling capacity costing flexible enough to be applicable
equal to 15,000 Btu/h, the energy equal to 15,000 Btu/h. This is the same to all equipment classes. In addition to
efficiency equation characterizes the method established in the Energy Policy disassembling various PTACs and
relationship between the EER of the Act of 1992 as shown by the existing PTHPs, manufacturers provided DOE
equipment and cooling capacity (i.e., Federal minimum energy conservation supplemental component data for
EER is a function of the cooling capacity standards and maintained by ASHRAE various PTAC and PTHP equipment.
of the equipment). Therefore, for these Standard 90.1–1999 for calculating the The manufacturing cost model used the
equipment classes, DOE explicitly EER and COP of equipment with cooling component specifications supplied by
analyzed the two cooling capacities capacities less than 7,000 Btu/h and manufacturers, the teardown data,
with the greatest number of shipments, greater than 15,000 Btu/h. More details component cost sources, and
which allows DOE to investigate the explaining how DOE developed the engineering interviews to estimate the
slope of the energy efficiency capacity proposed energy efficiency equations MPCs. DOE reported the MPCs in
relationship. For all cooling capacities based on the analysis results for the aggregated form to maintain
less than 7,000 Btu/h and all cooling representative cooling capacities are confidentiality of sensitive component
capacities greater than 15,000 Btu/h, the found in section V.A of today’s notice. data. DOE obtained input from
EER is calculated based on the energy stakeholders on the MPC estimates and
efficiency equation for 7,000 Btu/h or 3. Cost Model assumptions to confirm accuracy. DOE
15,000 Btu/h, respectively. DOE developed a manufacturing cost used the cost model for all of the
For PTACs and PTHPs, DOE is model to estimate the manufacturing representative cooling capacities within
proposing to equate the amended energy production cost (MPC) of PTACs and the PTAC and PTHP equipment classes.
conservation standards for equipment PTHPs. The manufacturing cost model Chapter 5 of the TSD provides details
with a cooling capacity less than 7,000 is a spreadsheet model, which details and assumptions of the cost model.
Btu/h with the amended energy the structured bill of materials to DOE applied a manufacturer markup
conservation standards for equipment estimate the MPCs of a PTAC or PTHP to the MPC estimates to arrive at the
with a cooling capacity equal to 7,000 based on all the manufacturing and MSP. This is the price at which the
12 ARI provided DOE shipments data from 2000
for the 2000 Screening Analysis and shipments data

from 2006 for today’s rulemaking.
manufacturer can recover both classes modeled in the engineering adopted the Montreal Protocol on
production and non-production costs 13 analysis by reviewing available Substances that Deplete the Ozone
and earns a profit. DOE developed a manufacturer data, selecting several Layer (Montreal Protocol), which
market-share-weighted average industry representative units from available regulates the phase-out of ozone-
markup by examining the major PTAC manufacturer data, and then aggregating depleting substances through a
and PTHP manufacturers’ gross margin the physical characteristics of the collaborative and international effort. In
information from annual reports and selected units. These specifications 1988, the United States ratified the
Securities and Exchange Commission include wall sleeve dimensions, number Montreal Protocol and thus committed
(SEC) 10–K reports. The manufacturers of components, and other equipment to the phase-out.15
DOE examined represent approximately features that affect energy consumption, In 1990, the Clean Air Act was
75 percent of the PTAC and PTHP as well as a base cost (the cost of a piece amended to include Title VI,
industry. Each of these companies is a of equipment not including the major ‘‘Stratospheric Ozone Protection,’’ to
subsidiary of a more diversified parent efficiency-related components such as implement the Montreal Protocol. (42
company that manufactures equipment compressors, fan motors, and heat U.S.C. 7671, et seq.) Title VI mandated
other than PTACs and PTHPs. Because exchanger coils). By excluding the the phase-out by 2020 of
the SEC 10-K reports do not provide equipment designs, which can be hydrochlorofluorocarbon (HCFC)
gross margin information at the attributable to specific manufacturers, refrigerants for use in new air-
subsidiary level, the estimated markups DOE created an engineering baseline conditioning systems. (42 U.S.C. 7671d)
represent the average markups that the that is representative of each equipment Title VI, however, also authorized the
parent company applies over its entire class with average characteristics, Environmental Protection Agency (EPA)
range of offerings. including dimensions, components, and to accelerate this date if certain criteria
DOE evaluated manufacturer markups other equipment features that are were met, (42 U.S.C. 7671e) and EPA
from 2002 to 2006, except for one necessary to calculate the MPC of each subsequently adopted a rule on
manufacturer, whose markup was unit within each equipment class. The December 10, 1993 to require the phase-
evaluated from 1998 to 2002 because cost model was used to develop the out of HCFC refrigerants for use in new
data from the latter years was not MPC for each equipment class. equipment by 2010. 58 FR 65018. R–22,
publicly available. The manufacturer Specifications of the baseline equipment the only refrigerant currently used by
markup is calculated as 100/(100 ¥ are provided in Chapter 5 of the TSD. PTACs and PTHPs, is an HCFC
average gross margin), where gross In estimating the economic impacts of refrigerant and subject to the phase-out
margin is calculated as revenue ¥ cost standards, DOE used the efficiency requirement. Phase-out of this
of goods sold (COGS). DOE used levels in ASHRAE/IESNA Standard refrigerant could have a significant
Internal Revenue Service industry 90.1–1999 as the baseline efficiencies in impact on the manufacturing,
statistics to validate the SEC 10-K and order to estimate the impacts of performance, and cost of PTAC and
annual report information. DOE standards more stringent than ASHRAE/ PTHP equipment.
estimated the average manufacturer IESNA Standard 90.1–1999. ASHRAE/
markup within the industry as 1.29. See IESNA Standard 90.1–1999 is the least b. R–410A
Chapter 5 of the TSD for additional stringent energy efficiency level DOE As part of the engineering analysis,
details. could adopt since EPCA directs that if DOE performed an alternative
ASHRAE/IESNA Standard 90.1 is refrigerant analysis to characterize the
4. Baseline Equipment
amended, DOE must adopt an amended performance implications on PTACs
As mentioned above, the engineering standard at the new level in ASHRAE/ and PTHPs. This analysis included
analysis estimates the incremental costs IESNA Standard 90.1 unless clear and researching technical journal reports,
for equipment with efficiency levels convincing evidence supports a discussions with industry experts and
above the baseline in each equipment determination that adoption of a more manufacturers, and developing an
class. For the purpose of the engineering stringent level as a national standard analysis that used the methodology DOE
analysis, DOE used the engineering would produce significantly more used in performing the engineering
baseline EER as the starting point to energy savings and be technologically analysis as to equipment using the R–22
build the cost efficiency curves. DOE feasible and economically justified. (42 refrigerant. ARI, in comment on the
usually uses the Federal minimum U.S.C. 6313(a)(6)(A)(ii)(II)) March 13, 2006, Notice of Document
energy conservation standards to Consequently, the minimum energy Availability (71 FR 12634) commented
represent the baseline model’s energy conservation standard levels DOE could that R–410A is the most likely
efficiency in the engineering analysis. adopt in this rulemaking proceeding
However, all of the PTAC and PTHP replacement refrigerant for R–22 in
would be the efficiency levels contained standard and non-standard size PTACs
equipment offered for sale, according to in ASHRAE/IESNA Standard 90.1–1999.
the ARI directory, exceed the efficiency and PTHPs. (Docket No. EE–RM/STD–
Thus, DOE is evaluating in this 03–100, EE–RM/STD–03–200, EE–RM/
levels specified by the existing Federal rulemaking whether efficiency levels
minimum energy conservation STD–03–300, ARI, No. 26 at pp. 2–3) 16
above those contained in ASHRAE/
standards. Consequently, DOE IESNA Standard 90.1–1999 are 15 The 1987 Montreal Protocol on Substances that
identified the lowest efficiency technologically feasible and Deplete the Ozone Layer (as agreed in 1987). United
equipment currently on the market and economically justified.14 Nations Environment Programme. http://
is utilizing it as the engineering ozone.unep.org/Ratification_status/
baseline. 5. Alternative Refrigerant Analysis montreal_protocol.shtml.
16 ‘‘ARI, No. 26 at pp 2–3’’ refers (1) to a statement

DOE established engineering baseline a. R–22 that was submitted by the Air-Conditioning and
specifications for each of the equipment Refrigeration Institute and is recorded in the
In 1987, the United Nations
Resource Room of the Building Technologies
13 Full production costs include direct labor, Environment Programme (UNEP) Program in the docket under ‘‘Energy Efficiency
direct material, and direct overhead. Non- Program for Commercial and Industrial Equipment:
production costs include selling, general and 14 DOE’s estimates of potential energy savings Efficiency Standards for Commercial Heating, Air-
administrative, research and development, and from an amended energy conservation standard are Conditioning and Water Heating Equipment,’’
interest. See Chapter 5 of the TSD for more details. further discussed in section V.3. Docket Number EE–RM–STD–03–100, EE–RM–
Every manufacturer interview currently associated with compressors system performance of R–410A
confirmed that the industry is planning could increase overall system equipment. Therefore, DOE assumed the
to substitute R–410A for R–22 in PTACs performance. According to design options for the R–22 analysis
and PTHPs. Industry representatives manufacturers, some redesigns, such as previously discussed are applicable to
expressed a preference for R–410A due adding coils, re-circuiting, and the alternative refrigerant analysis. DOE
to its performance similarities to R–22 increasing the frontal heat exchanger also assumed that the corresponding
and experience with other HVAC surface area, are applicable to PTACs incremental EER improvement for each
equipment that use R–410A. Therefore, and PTHPs regardless of the refrigerant design option in the R–22 analysis
DOE performed its alternative used. However, DOE does not have would be the same in the alternative
refrigerant analysis based on the use of sufficient information to predict with refrigerant analysis. See Chapter 5 of the
R–410A. See Chapter 5 of the TSD for precision the performance benefits of TSD for additional details.
additional details. heat exchanger redesigns. Initially, DOE Similar issues existed within the
DOE identified the ‘‘max-tech’’ expects any such redesigns to result in residential, central air conditioning
efficiency levels as described in section efficiency improvements insufficient to industry. Systems utilizing R–410A
III.B.2 of today’s proposed rule. These offset the efficiency reductions resulting have been available in the residential
‘‘max-tech’’ efficiency levels are based from the switch from R–22 to R–410A. air-conditioning market for several
on currently available R–22 PTACs and Thus, DOE expects the overall system years, and DOE believes the impact of
PTHPs for a given representative cooling efficiency of R–410A PTAC and PTHP the refrigerant transition to R–410A for
capacity within a given equipment equipment will be lower than if that PTACs and PTHPs and on the
class. In order to analyze the impact of equipment used R–22, as predicted by manufacturers and purchasers of central
using R–410A in PTACs and PTHPs, manufacturer testing, ARI’s research,18 air conditioners and heat pumps will be
DOE considered the impact of using R– National Institute of Standards and similar. The residential air-conditioning
410A on PTAC components, the Technology studies,19 and as observed market is a much larger market than the
engineering analysis of past rulemakings in response to the transition from R–22 PTAC and PTHP market, and thus offers
that addressed the refrigerant phase-out, to R–410A in the residential air greater incentives for compressor
and markets in which a similar conditioning market. Optimizing the manufacturers to make the necessary
transition has occurred. heat exchanger and HVAC circuits to investments to produce more efficient
First, DOE expects that the phase-out compensate could be costly, depending R–410A compressors. Initially, DOE
of R–22 and the subsequent adoption of on whether a heat exchanger found that the R–410A compressors
R–410A refrigerants in PTACs and manufacturer needs to change the fin available for use in residential, central
PTHPs will require the redesign of the tooling, expansion, and assembly air conditioning equipment were less
sealed systems found inside the PTAC systems. efficient than their R–22 counterparts
and PTHP units. The sealed system Therefore, in this rulemaking, DOE is they were replacing. However, DOE has
consists of the indoor and outdoor heat using an overall lower system observed that residential, central air
exchangers, the compressor, refrigerant performance for PTAC and PTHP conditioning manufacturers were able to
flow-control devices, and any piping equipment with R–410A. For standard develop technologies and redesign their
that connects these components through size PTACs and PTHPs with 9,000 Btu/ equipment, so that the R–22 phase-out
which refrigerant flows during unit h cooling capacity, DOE calculated an has had little effect on system efficiency
operation. Since R–22 refrigerants have overall system performance degradation when the equipment eventually came
different operating characteristics than onto the market.
consistent with ARI estimates of 6.3
R–410A, the sealed system in a PTAC or At a minimum, DOE believes
percent.20 For standard size PTACs and
PTHP unit using R–410A will have to be manufacturers of PTAC and PTHP
PTHPs with 12,000 Btu/h cooling equipment will be able to manufacture
redesigned to optimize the unit for capacity, DOE calculated overall system
operation with R–410A. Specifically, equipment with R–410A at the
performance degradation consistent efficiency levels specified by ASHRAE/
equipment using R–410A operates at with ARI estimates of 7.6 percent.21 For
higher system pressure requiring IESNA Standard 90.1–1999. Since PTAC
non-standard size PTACs and PTHPs of and PTHP equipment utilizing R–22
stronger sealed system walls and the use all cooling capacities, DOE calculated
of different oils (i.e., R–410 equipment exists at efficiency levels well above
overall system performance degradation ASHRAE/IESNA Standard 90.1–1999,
will use POE, while R–22 equipment of 6.8 percent. See Chapter 5 of the TSD
uses mineral). In addition, R–410A DOE believes the manufacturers will be
for additional details. able to produce equipment utilizing R–
compressors must also be designed with DOE has no evidence that the
thicker and stronger compressor shells 410A at least at the efficiency levels
incremental efficiency gains from the specified by ASHRAE/IESNA Standard
and components to withstand 50 design options used in the R–22 case
percent to 60 percent more pressure 90.1–1999, even after the estimated
would have a different effect on the performance degradations from the
than R–22 compressors.17
The loss in compressor efficiency can 18 Air-Conditioning and Refrigeration Institute.
engineering analysis are applied. DOE
be overcome with optimized heat Response to ASHRAE 90.1 Continuous
has preliminarily concluded that the R–
exchanger design to a limited extent. As Maintenance Proposal on Package Terminal 410A compressors available for use in
discussed in the market and technology Equipment. May 18, 2006. PTAC and PTHP equipment could be
assessment (Chapter 3 of the TSD),
19 Payne, W., Domanski, P. A Comparison of an
less efficient than their R–22
R22 and an R410A Air Conditioner Operating at counterparts could at the time the takes
different heat exchanger redesigns not High Ambient Temperatures. National Institute of
effect, based upon manufacturer
Standards and Technology Building Environment

STD–03–200, and EE–RM–STD–03–300, as Division: Thermal Machinery Group. http:// feedback during interviews and by
comment number 26; and (2) a passage that appears www.fire.nist.gov/bfrlpubs/build02/PDF/ examining other air-conditioning
on pages 2 and 3 of that statement. b02186.pdf. (Last accessed August 2, 2007.) markets where similar refrigerant
17 Emerson Climate Technologies. R410A 20 Air-Conditioning and Refrigeration Institute.
transitions have taken place. However,
Questions. http://www.emersonclimate.com/ Response to ASHRAE 90.1 Continuous
faq_copeland.htm#R410A (Last accessed August 2, Maintenance Proposal on Package Terminal DOE is hopeful that over time
2007.) We will need to save the portion of this web Equipment. May 18, 2006. component manufacturers and PTAC
site that we rely upon for the administrative record. 21 Id. and PTHP manufacturers will be able to
overcome the degradation in system model to R–410A and used the current data (or ‘‘curves’’) in the form of MPC
efficiency caused by the switch to R– R–410A refrigerant price based upon (in dollars) versus EER, which form the
410A refrigerant. Therefore, DOE is cost estimates from refrigerant suppliers basis for other analyses in the NOPR.
continuing to analyze, the higher, R–22- and engineering interviews with DOE created cost-efficiency curves for
based, energy efficiency levels manufacturers. During engineering the six representative cooling capacities
identified in section III.B.2 as the ‘‘max- interviews, several manufacturers of within the four equipment classes of
tech’’ efficiency levels. DOE will give PTAC and PTHP equipment and several PTACs and PTHPs, as discussed in
particular attention to the PTAC and component manufacturers stated that section IV.C.2, above. DOE used the R–
PTHP efficiency levels that cannot be compressor prices would increase 410A cost-efficiency curves for all
met with current technologies and anywhere between 10 percent and 20 subsequent analyses in the NOPR. See
practices with R–410A in weighing the percent from current R–22 compressor Chapter 5 of the TSD for additional
benefits and burdens of the various prices. To incorporate manufacturers’ detail on the engineering analysis and
TSLs. Based on information received in comments, DOE assumed that complete cost-efficiency results.
public comments concerning this compressor costs would increase by 15 DOE also conducted a sensitivity
NOPR, DOE may consider and adopt in percent, which is consistent with the analysis on material prices to examine
the final rule other potential standard feedback DOE received during the the effect of spikes in metal prices that
levels that take into account the impact engineering interviews. Using the above the industry has experienced over the
of R–410A. assumptions, DOE recalculated baseline past few years. The sensitivity analysis
equipment and design option MPCs to used the annual average 2006 prices for
c. R–410A Compressor Availability
establish the cost-efficiency relationship various metals used in the
The availability of R–410A for R–410A equipment. manufacturing of PTACs and PTHPs.
compressors in a wide range of The physical differences between Chapter 5 of the TSD shows the results
efficiencies is uncertain. Several PTACs and PTHPs are mainly in the of the sensitivity analysis.
compressor manufacturers make R–22, reversing valve and other minor
7. Mapping Energy Efficiency Ratio to
PTAC and PTHP compressors of components. The results from the
Coefficient of Performance
different capacities and efficiencies for engineering and teardown analysis
standard and non-standard equipment. showed that the sum of the MPCs for DOE used the analyses detailed in the
When the market transitions to R–410A, reversing valves and other minor sections above to determine the
these manufacturers may only offer one components are constant across the relationship between cost and cooling
line of compressors for PTACs and cost-efficiency relationship for the R–22 efficiency (EER) for PTACs and PTHPs.
PTHPs. In engineering interviews, case. Therefore, DOE initially concluded DOE also performed an analysis to
compressor manufacturers said they do that the cost-efficiency relationship (i.e., determine the heating efficiency (COP)
not know if R–410A compressors will cost-efficiency curves) of PTACs is the that corresponds to the cooling
have equivalent performance to R–22 same as the cost-efficiency relationship efficiency (EER) analyzed. DOE
compressors by the 2010 date. They also of PTHPs, minus the MPCs for the reviewed the 2006 ARI directory and the
stated in interviews that they expect to reversing valve and other minor PTHP units listed. There were 675 units
offer R–410A compressors at only one components at various cooling listed, which DOE separated into two
efficiency level in the initial stages of capacities. In performing the alternative groups based on wall sleeve size
the phase-out, which could further refrigerant analysis, DOE found no (standard size and non-standard size).
reduce compressor options for PTAC evidence that the cost-efficiency DOE then selected all of the standard
and PTHP manufacturers. relationships for PTACs and PTHPs size 9,000 and 12,000 Btu/h cooling
would be any different for equipment capacity units, and all of the non-
d. R–410A Manufacturing Production standard units. Within each group, DOE
using R–410A. Therefore, DOE assumed
Cost next eliminated repetitive and
that incremental cumulative MPCs for
To derive the baseline MPCs for the PTACs and PTHPs of the same discontinued units and then constructed
R–410A PTACs and PTHPs, DOE made equipment class would be the same as a listing of the units by EER and ranked
additional cost determinations (e.g., R– in the R–22 case (i.e., that both PTACs them by COP. DOE graphed each listing
410 refrigerant pricing, R–410A and PTHPs have the same incremental (EER versus COP) and calculated the
compressor pricing, etc.) and cost-efficiency curves in the R–410A minimum, maximum, and average
incorporated them in the same cost case). To be consistent, DOE used the COPs. Table IV.5 shows the average EER
model used for the R–22 engineering same cost model as in the R–22 analysis and COP pairings for PTHPs. DOE seeks
analysis. See Chapter 5 of the TSD for to estimate MPCs of equipment at comment on the average EER and COP
additional details about component various efficiency levels in the R–410A pairings for PTHPs as shown in Table
prices using R–410A. DOE assumed a 25 analysis. Chapter 5 of the TSD provides IV.5, which DOE has identified as Issue
percent increase in heat exchanger additional details on the alternative 3 under ‘‘Issues to Which DOE Seeks
tubing thickness to account for the refrigerant analysis. Comment’’ in section VII.E of this
higher pressures of R–410A refrigerant NOPR. Additional details detailing how
based on technical journals and 6. Cost-Efficiency Results DOE arrived at the average EER and
manufacturer interviews. DOE switched The results of the engineering analysis COP pairings for PTHPs is shown in
the working refrigerant in the cost are reported as a set of cost-efficiency Chapter 5 of the TSD.
TABLE IV.5.—AVERAGE EER AND COP PAIRINGS FOR PTHPS

Equipment class Efficiency level
Standard Size PTHP—9,000 Btu/h Cooling Capacity ................ EER = 10.9 EER = 11.1 EER = 11.3 EER = 11.5 EER = 12
COP = 3.1 COP = 3.2 COP = 3.3 COP = 3.3 COP = 3.5
Standard Size PTHP—12,000 Btu/h Cooling Capacity .............. EER = 10.2 EER = 10.4 EER = 10.6 EER = 10.8 EER = 11.7
TABLE IV.5.—AVERAGE EER AND COP PAIRINGS FOR PTHPS—Continued

Non-Standard Size PTHP—11,000 Btu/h Cooling Capacity ....... EER = 9.4 EER = 9.7 EER = 10.0 EER = 10.7 EER = 11.4
D. Markups To Determine Equipment wholesalers, mechanical contractors, analysis, and then added sales taxes and
Price and/or general contractors. installation costs, to arrive at the final
The customer price of this equipment installed equipment prices for baseline
DOE understands that the price of is not generally known. Therefore, DOE and higher efficiency equipment. See
PTAC or PTHP equipment depends on developed supply chain markups in the Chapter 6 of the TSD for additional
the distribution channel the customer form of multipliers that represent details on markups. As shown in Table
uses to purchase the equipment. Typical increases above MSP and include IV.6, DOE identified four distribution
distribution channels include distribution costs. DOE applied these channels for PTACs and PTHPs to
manufacturers’ national accounts, markups (or multipliers) to the MSPs it describe how the equipment passes
developed from the engineering from the manufacturer to the customer.
TABLE IV.6.—DISTRIBUTION CHANNELS FOR PTAC AND PTHP EQUIPMENT
Channel 1 Channel 2 Channel 3 Channel 4
Manufacturer (through national ac- Manufacturer .................................... Manufacturer .................................... Manufacturer.

counts).
Wholesaler ....................................... Wholesaler ....................................... Wholesaler.
Mechanical Contractor ..................... General Contractor.
Customer ........................................... Customer .......................................... Customer .......................................... Customer.
Using Ducker Worldwide data,22 DOE percent of shipment volume) and non- approximately 17 percent of PTAC and
estimated percentages, for both the new standard size equipment (15 percent of PTHP equipment that are purchased to
construction and replacement markets, shipment volume). Of the standard size be installed in new construction, while
of the total sales in each market through equipment, 80 percent are sold for the the remaining 83 percent is assumed to
each of the four distribution channels, replacement market and 20 percent are replace existing PTAC and PTHP
as shown in Table IV.7. The entire for the new construction market. Non- equipment.
market of PTAC and PTHP equipment standard size equipment is only used in
consists of standard size equipment (85 the replacement market. This results in
TABLE IV.7.—PERCENTAGE OF PTAC AND PTHP MARKET SHARES PASSING THROUGH EACH DISTRIBUTION CHANNEL
Channel 1 Channel 2 Channel 3 Channel 4
Replacement Market ........................................................................................................ 15 25 60 0

New Construction Market ................................................................................................ 30 0 38 32
For each of the steps in the DOE developed the markups for each this markup for national accounts on an
distribution channels presented above, step of the distribution channels based assumption that the resulting national
DOE estimated a baseline markup and on available financial data. DOE based account equipment price must fall
an incremental markup. DOE defined a the wholesaler and mechanical somewhere between the MSP (i.e., a
baseline markup as a multiplier that contractor markups on the Heating, markup of 1.0) and the customer price
converts the MSP of equipment with Airconditioning & Refrigeration under a typical chain of distribution
baseline efficiency to the customer Distributors International (HARDI) 2005 (i.e., a markup of wholesaler,
purchase price for the equipment at the Profit Planning Report, Air Conditioning mechanical contractor, or general
same baseline efficiency level. An Contractors of America (ACCA), and the contractor).
incremental markup is defined as the 2002 U.S. Census Bureau financial data The overall markup is the product of
multiplier to convert the incremental for the plumbing, heating, and air all the markups (baseline or incremental
increase in MSP of higher efficiency conditioning industry.23 DOE derived markups) for the different steps within
the general contractor markups from a distribution channel plus sales tax.
equipment to the customer purchase
U.S. Census Bureau financial data for Sales taxes were calculated based on
price for the same equipment. Both
the commercial and institutional State-by-State sales tax data reported by
baseline and incremental markups are building construction sector. DOE the Sales Tax Clearinghouse. Because
only dependent on the particular estimated average markup for sales both contractor costs and sales tax vary
distribution channel and are
through national accounts to be one-half by State, DOE developed distributions

independent of the efficiency levels of of those for the wholesaler to customer of markups within each distribution
the PTACs and PTHPs. distribution channel. DOE determined channel as a function of State and
22 Ducker Worldwide, 2001. 2000 U.S. Market for Standards, 6905 Telegraph Road, Suite 300, industry is the latest version data set and was
Residential and Specialty Air Conditioning: Bloomfield Hills, Michigan 48301. issued in December 2004.
Packaged Terminal Air Conditioning. HVAC0002. 23 The 2002 U.S. Census Bureau financial data for
Final Report, March 2001. Ducker Industrial the plumbing, heating, and air conditioning
business type (e.g., large chain hotel/ the Ducker Worldwide analysis, PTAC 90.1–1999) plus five higher efficiency
motel, independent hotel, health care and PTHP units are primarily used in levels. As is to be expected, annual
facility, or office). Because the State-by- hotels/motels with less than 125 rooms energy use of PTAC and PTHP units
State distribution of PTAC and PTHP and less than 3 stories, each. Therefore, decreases as the efficiency level
units varies by business type (e.g., large DOE selected this type of hotel/motel increases from the baseline efficiency
chain hotels/motels may be more building as the representative level to the highest efficiency level
prevalent relative to independent hotels commercial building in order to assess analyzed. Additional details on the
in one part of the country than in the energy use of PTAC and PTHP units. energy use characterization analysis can
another), the National level distribution While DOE realizes that PTACs and be found in Chapter 7 of the TSD.
of the markups varies among business PTHPs are found in other building
F. Life-Cycle Cost and Payback Period
types. Additional detail on markups can types, DOE believes that, based on
Analyses
be found in Chapter 6 of the TSD. engineering judgment and consultation
with industry experts, the cooling and DOE conducted the LCC and PBP
E. Energy Use Characterization analyses to estimate the economic
heating loads of an individual room
The building energy use served by a single PTAC or PTHP unit impacts of potential standards on
characterization analysis was used to are independent of the building type in individual customers of PTACs and
assess the energy savings potential of which the room is situated. PTHPs. DOE analyzed these impacts for
PTAC and PTHP equipment at different PTACs and PTHPs, first, by calculating
efficiency levels. This analysis 2. Simulation Approach the change in customers’ LCCs likely to
accomplishes this by estimating the DOE used a whole-building hourly result from higher efficiency levels as
energy use of PTACs and PTHPs at simulation tool, DOE–2.1E, to estimate compared with the baseline efficiency
specified energy efficiency levels the energy use of PTACs and PTHPs in levels. The LCC calculation considers
through energy use simulations for key the representative hotel/motel building total installed cost (MSP, sales taxes,
commercial building types, across a for various efficiency levels and distribution chain markups, and
range of climate zones. The energy equipment classes at various climate installation cost), operating expenses
simulations yielded hourly estimates of locations within the United States. The (energy, repair, and maintenance costs),
the building energy consumption, DOE–2.1E program has a built-in PTAC/ equipment lifetime, and discount rate.
including lighting, plug, and air- PTHP module in its HVAC system DOE calculated the LCC for all
conditioning and heating equipment. components. DOE used the EIA 2003 customers as if each would purchase a
The annual energy consumption of Commercial Building Energy new PTAC or PTHP unit in the year the
PTACs and PTHPs are used in Consumption Survey (2003 CBECS) as standard takes effect. A standard
subsequent analyses including the LCC, the primary source of data, becomes effective on the date on and
PBP, and NES. supplemented by other data sources, to after which the equipment
In determining the reduction in develop the representative building size manufactured must meet or exceed the
energy consumption of PTAC and PTHP and other building characteristics for standard, which is September 30, 2012
equipment due to increased efficiency, this analysis (i.e., aspect ratio, building for this rulemaking. To compute LCCs,
DOE did not take into account a construction type, envelope DOE discounted future operating costs
rebound effect. The rebound effect characteristics, internal loads and to the time of purchase and summed
occurs when a piece of equipment, schedules, mechanical systems and them over the lifetime of the equipment.
when it is made more efficient, would equipment etc.). DOE modeled hotel/ Second, DOE analyzed the effect of
be used more intensively, so the motel guest rooms facing in all changes in installed costs and operating
expected energy savings from the orientations by rotating a symmetrical expenses by calculating the PBP of
efficiency improvement do not fully rectangular floor plan prototype potential standards relative to baseline
materialize. Since the user of the building 90 degrees to capture the efficiency levels. The PBP estimates the
equipment, e.g., the customer in a hotel/ orientation-driven changes in annual amount of time it would take the
motel room, does not pay the utility bill, energy use of the PTAC and PTHP. The customer to recover, through lower
the customer’s usage will be unaffected Ducker Worldwide analysis and other operating costs, the increment that
by increasing the efficiency. Therefore, available data estimated that PTHPs represents the increase in purchase
DOE has no basis for concluding that a represent approximately 45 percent of expense of more energy efficient
rebound effect would occur and has not the total market for packaged terminal equipment. The PBP is that change in
taken the rebound effect into affect in equipment. Therefore, DOE estimated purchase price divided by the change in
the energy use characterization. DOE the annual energy use per unit using a annual operating cost that results from
seeks comment on the rebound effect for PTHP as well as a PTAC in each climate the standard. DOE expresses this period
the PTAC and PTHP customer and location. DOE assumed that generally in years. Similar to the LCC, the PBP is
DOE’s assumption that the rebound the building would use a PTAC or PTHP based on the total installed cost and the
effect is not applicable to this industry. unit. DOE calculated the weighted- operating expenses. However, unlike the
DOE identified this as Issue 4 under average annual energy use for each LCC, only the first year’s operating
‘‘Issues on Which DOE Seeks Comment’’ PTAC and PTHP equipment class in expenses are considered in the
in section VII.E of this NOPR. See each State through the population calculation of the PBP. Because the PBP
Chapter 7 of the TSD for additional weighting of the representative climate does not account for changes in
details. location(s) within the state. DOE further operating expense over time or the time
aggregated the energy use at the State value of money, it is also referred to as
1. Building Type level to national average energy use a simple PBP.

PTAC and PTHP units generally are using the 2000 Census population data, DOE conducted the LCC and PBP
used in hotel/motel rooms, health care published by the U. S. Census Bureau. analyses using a spreadsheet model
facilities (e.g., assisted living homes, DOE estimated the annual energy use developed in Microsoft Excel. When
nursing homes etc.), small offices, or for each equipment class at the baseline combined with Crystal Ball (a
any application that requires individual efficiency level (i.e., the efficiency level commercially available software
zone heating and cooling. According to specified by ASHRAE/IESNA Standard program), the LCC and PBP model
generates a Monte Carlo simulation to facilities, which, similar to the large distributions using a simulation based
perform the analyses by incorporating chain hotel, has a relative low financing on Monte Carlo analysis methods, in
uncertainty and variability costs. The fourth type is called ‘‘office’’ which certain key inputs to the analysis
considerations in certain of the key and applies to small office buildings consist of probability distributions
parameters as discussed below. The that are occupied by offices of non- rather than single-point values.
results of DOE’s LCC and PBP analyses hospital medical professionals such as Therefore, the outcomes of the Monte
are summarized in section V.B.1.a physicians and dentists which, DOE Carlo analysis can also be expressed as
below and described in detail in TSD believes, has the fewest financing probability distributions. As a result, the
Chapter 8. options, and as a result, the highest Monte Carlo analysis produces a range
costs. DOE derived the financing costs
1. Approach of LCC and PBP results. A distinct
based on data from the Damodaran
Recognizing that each business that advantage of this type of approach is
Online site.24
uses PTAC and PTHP equipment is The LCC analysis used the estimated that DOE can identify the percentage of
unique, DOE analyzed variability and annual energy use for each PTAC or customers achieving LCC savings or
uncertainty by performing the LCC and PTHP unit as described in section IV.E, attaining certain PBP values due to an
PBP calculations for four types of energy use characterization. Energy use increased efficiency level, in addition to
businesses, each of which tends to have of PTACs and PTHPs is sensitive to the average LCC savings or average PBP
different costs of financing because of climate, so it varies by State within the for that efficiency level.
the nature of the business. The first type United States. Aside from energy use,
of business is a ‘‘large chain’’ hotel or 2. Life-Cycle Cost Inputs
other important factors influencing the
motel, which, DOE believes, has access LCC and PBP analyses include energy For each efficiency level analyzed, the
to a wide range of financing options and prices, installation costs, equipment LCC analysis requires input data for the
thus a relative low financing costs. The distribution markups, and sales tax. At total installed cost of the equipment, its
second type is an ‘‘independent’’ hotel the National level, the LCC spreadsheets operating cost, and the discount rate.
or motel, which is not affiliated with a explicitly modeled both the uncertainty Table IV.8 summarizes the inputs and
national chain, which has fewer and the variability in the model’s
key assumptions used to calculate the
financing options and thus a relative inputs, using probability distributions
high financing costs. A third type of customer economic impacts of all
based on the shipment of PTAC and
business is called ‘‘health care’’ and energy efficiency levels analyzed in this
PTHP equipment to different States.
includes nursing homes, as well as As mentioned above, DOE generated rulemaking. A more detailed discussion
assisted living and long-term care LCC and PBP results as probability of the inputs follows.
TABLE IV.8.—SUMMARY OF INPUTS AND KEY ASSUMPTIONS USED IN THE LCC AND PBP ANALYSES
Inputs Description
Affecting Installed Costs
Equipment Price ................................................. Derived by multiplying MSP (from the engineering analysis) by wholesaler markups and con-
tractor markups plus sales tax (from markups analysis). Used the probability distribution for
the different markups to describe their variability.
Installation Cost .................................................. Includes installation labor, installer overhead, and any miscellaneous materials and parts, de-
rived from RS Means CostWorks 2007.
Affecting Operating Costs
Annual Energy Use ............................................. Derived from whole-building hourly energy use simulation for PTACs or PTHPs in a represent-
ative hotel/motel building in various climate locations (from energy use characterization anal-
ysis). Used annual electricity use per unit. Used the probability distribution to account for
which State a unit will be shipped to, which in turn affects the annual energy use.
Electricity Price ................................................... Calculated average commercial electricity price in each State, as determined from EIA data for
2006. Used the AEO2007 forecasts to estimate the future electricity prices. Used the prob-
ability distribution for the electricity price.
Maintenance Cost ............................................... Annual maintenance cost did not vary as a function of efficiency.
Repair Cost ......................................................... Estimated the annualized repair cost for baseline efficiency PTAC and PTHP equipment as
$15, based on costs of extended warranty contracts for PTACs and PTHPs and further dis-
cussed in Chapter 8 of the TSD. Assumed that repair costs would vary in direct proportion
with the MSP at higher efficiency levels because it generally costs more to replace compo-
nents that are more efficient.
Affecting Present Value of Annual Operating Cost Savings
Equipment Lifetime ............................................. Used the probability distribution of lifetimes, with mean lifetime for each of four equipment
classes assumed to be 10 years based on literature reviews and consultation with industry
experts.
Discount Rate ..................................................... Mean real discount rates ranging from 5.7 percent for owners of health care facilities to 8.2
percent for independent hotel/motel owners. Used the probability distribution for the discount
rate.
Date Standards Become Effective ..................... September 30, 2012 (four years after the publication of the final rule).
24 Damodaran Online. Leonard N. Stern School of www.stern.nyu.edu/adamodar/New_Home_Page/

Business, New York University: http:// data.html. January 2006.
TABLE IV.8.—SUMMARY OF INPUTS AND KEY ASSUMPTIONS USED IN THE LCC AND PBP ANALYSES—Continued
Inputs Description
Analyzed Efficiency Levels
Analyzed Efficiency Levels ................................. Baseline efficiency levels (ASHRAE/IESNA Standard 90.1–1999) and five higher efficiency lev-
els for six equipment classes (DOE also considered levels that were combinations of effi-
ciency levels for PTACs and PTHPs).
a. Equipment Prices labor rates associated with the type of DOE decided not to develop marginal
The price of a PTAC or PTHP reflects crew required to install the equipment. electricity prices from the tariff-based
the application of distribution channel Specifically, RS Means provides person- electricity price model in this
markups and the addition of sales tax to hour and labor rate data for the rulemaking. Instead, DOE used average
the MSP. As described in section IV.C installation of ‘‘Unitary Air effective commercial electricity prices at
above, DOE determined manufacturing Conditioning Equipment,’’ which the State level from EIA data for 2006.
costs for a set of six cooling capacities includes PTAC and PTHP equipment. This approach captured a wide range of
of equipment representing all Labor rates vary significantly from commercial electricity prices across the
equipment classes. To derive the region to region of the country and the Untied States. Furthermore, DOE
manufacturing costs for other sizes of RS Means data provide the necessary recognized that different kinds of
PTACs and PTHPs, DOE scaled the costs information to capture this regional businesses typically use electricity in
from these six cooling capacities. For variability. RS Means provides cost different amounts at different times of
the LCC and PBP analyses and indices that reflect the labor rates for the day, week, and year, and therefore
subsequent analyses in today’s 295 cities in the United States. Several face different effective prices. To make
rulemaking, DOE used the cities in all 50 States and the District of this adjustment, DOE used EIA’s 2003
manufacturing costs as developed in the Columbia are identified in the RS Means CBECS data set to identify the average
Engineering Analysis for PTAC and data. DOE incorporated these cost prices paid by the four kinds of
PTHP equipment utilizing R–410A. indices into the analysis to capture businesses in this analysis and
Each baseline MSP is the price variation in installation cost, depending compared them with the average prices
charged by manufacturers to either a on the location of the customer. DOE paid by all commercial customers.26
wholesaler/distributor or very large calculated the installation cost by The ratios of prices paid by the four
customer for equipment meeting a multiplying the number of person-hours types of businesses to the national
baseline efficiency. Each standard-level by the applicable labor rate. DOE average commercial prices seen in the
MSP increase is the change in MSP assumed the installation costs are fixed 2003 CBECS were used as multipliers to
associated with producing equipment at for each equipment class and adjust the average commercial 2006
an efficiency level above the baseline. independent of the efficiency of the price data from EIA.
DOE developed MSP, which increases equipment. DOE weighted the prices paid by each
as a function of efficiency level for each business in each State by the estimated
c. Annual Energy Use
of the six representative capacities. sales of PTACs and PTHPs to each
Refer to Chapter 5 of the TSD for details. DOE estimated the electricity business type to obtain a weighted-
The markup is the percentage increase consumed by the PTAC and PTHP average national electricity price. The
in price as the PTAC and PTHP equipment based on the energy use State/business type weights reflect the
equipment passes through the characterization as described previously probabilities that a given PTAC or PTHP
distribution channel. As discussed in section IV.E. DOE used a whole- unit shipped will be operated with a
earlier, distribution chain markups are building hourly simulation tool to given electricity price. To account for
based on one of four distribution estimate the energy use in a this variability, DOE used a probability
channels, as well as whether the representative hotel/motel building for distribution for not only which State the
equipment is being purchased for the different efficiency levels and equipment is shipped to, but also to
new construction market or to replace equipment classes at various climate determine which business type would
existing equipment. Probability locations within the United States. DOE purchase the equipment and therefore,
distributions were used for the different aggregated the average annual energy what electricity price they would pay.
distribution channel markups to use per unit at the State level by The effective prices (2006$) range from
describe their variability. DOE applying a population-weighting factor approximately 5.5 cents per kWh to
developed markups for both the for each examined climate location approximately 23.2 cents per kWh. The
standard size and non-standard size within a State. Details of the annual development and use of State-average
PTAC and PTHP equipment as energy use calculations can be found in electricity prices by business type are
explained in section IV.D above. TSD Chapter 7. described in more detail in Chapter 8 of
d. Electricity Prices the TSD.
b. Installation Costs The electricity price trend provides
DOE derived installation costs for The applicable electricity prices are the relative change in electricity prices
PTACs and PTHPs from data provided needed to convert the electric energy for future years out to the year 2042.
in RS Means CostWorks 2007 (RS savings into energy cost savings. Estimating future electricity prices is
Means).25 RS Means provides estimates Because of the wide variation in difficult, especially considering that
on the person-hours required to install electricity consumption patterns, there are efforts in many States
PTAC and PTHP equipment and the wholesale costs, and retail rates across throughout the country to restructure
the country, it is important to consider
25 R.S. Means Company, Inc. 2007. RS Means regional differences in electricity prices. 26 EIA’s 2003 CBECS is the most recent version
CostWorks 2007. Kingston, Massachusetts. In order to simplify the NOPR analysis, of the data set.
the electricity supply industry. DOE g. Equipment Lifetime hotel/motel chains and health care
applied the AEO2007 reference case as DOE defines equipment lifetime as chains drawn from a database of 7,319
the default scenario and extrapolated the age when a PTAC or PTHP unit is U.S. companies given on the
the trend in values from the years 2020 retired from service. DOE reviewed Damodaran Online website. This
to 2030 of the forecast to establish prices available literature and consulted with database includes most of the publicly
in the years 2030 to 2042. This method manufacturers in order to establish traded companies in the United States.
of extrapolation is in line with methods Based on this database, DOE calculated
typical equipment lifetimes. The
currently being used by the EIA to the weighted average after-tax discount
literature and experts consulted offered
forecast fuel prices for the Federal rate for PTAC and PTHP purchases,
a wide range of typical equipment
Energy Management Program. DOE adjusted for inflation, as 5.71 percent for
lifetimes. Individuals with previous
provides a sensitivity analysis of the large hotel chains and 5.65 percent for
experience in manufacturing or
LCC savings and PBP results to future health care (nursing homes and assisted
distribution of PTACs and PTHPs
electricity price scenarios using both the living facilities). The cost of capital for
suggested a typical lifetime of 5 to 15
AEO2007 high-growth and low-growth independent hoteliers, and small office
years. Some experts suggested that the
forecasts in Chapter 8 of the TSD. companies with more limited access to
lifetime could be even lower because of
capital is more difficult to determine.
e. Maintenance Costs the daily or continuous use of the Individual credit-worthiness varies
Maintenance costs are the costs to the equipment and neglect of maintenance considerably, and some franchisees
customer of maintaining equipment such as cleaning the heat exchangers or have access to the financial resources of
operation. Maintenance costs include replacing the air filters. Previously, DOE the franchising corporation. However,
services such as cleaning heat- used a 15-year lifetime for PTACs and personal contacts with a sample of
exchanger coils and changing air filters. PTHPs in the 2000 Screening Analysis commercial bankers yielded an estimate
DOE was not able to identify publicly based on data from ASHRAE’s 1995 for the small operator weighted cost of
available data on annual maintenance Handbook of HVAC Applications. capital of about 200 to 300 basis points
costs per unit. DOE estimated annual Stakeholders commented on the 2000 (2 percent to 3 percent) higher than the
routine maintenance costs for PTAC and Screening Analysis and suggested DOE rates for larger hotel chains. Therefore,
PTHP equipment at $50 per year per use the 10-year lifetime assumption DOE used a central value equal to the
unit. Some manufacturers interviewed rather than 15-year lifetime to more weighted average of discount rate for
for the manufacturer impact analysis accurately reflect the life and usage large hotel chains plus 2.5 percent for
indicated verbally that this assumption characteristics of this equipment.27 66 independent hotel/motels and the same
was reasonable. Because data were not FR 3336, 3349[0]. Therefore, based on adder was used to the discount rate for
available to indicate how maintenance the information it gathered, DOE large nursing home/assisted care
costs vary with equipment efficiency, concluded that a typical lifetime of 10 companies to derive an estimate for
DOE thus determined to use this years is appropriate for PTAC and PTHP small office buildings. As a result, DOE
preventative maintenance costs that equipment. Furthermore, DOE modeled calculated the weighted average after-
remain constant as equipment efficiency the lifetime of PTAC and PTHP tax discount rate for PTAC and PTHP
is increased. equipment as a Weibull statistical purchases, adjusted for inflation, as 8.21
distribution with an average lifetime of percent for independent hotels and 8.15
f. Repair Costs 10 years and a maximum lifetime of 20 percent for small offices (medical and
The repair cost is the cost to the years. Chapter 3 of the TSD contains a dental offices). The discount rate is
customer for replacing or repairing discussion of equipment lifetime, and another key variable for which DOE
components that have failed in the TSD Chapter 8 discusses how used a probability distribution in the
PTAC and PTHP equipment. DOE equipment life is modeled in the LCC LCC and PBP analyses. TSD Chapter 8
estimated the annualized repair cost for analysis. contains the detailed calculations on the
baseline efficiency PTAC and PTHP discount rate.
equipment as $15, based on costs of h. Discount Rate
extended warranty contracts PTACs and The discount rate is the rate at which 3. Payback Period
PTHPs. DOE determined that repair future expenditures are discounted to DOE also determined the economic
costs would increase in direct establish their present value. DOE impact of potential standards on
proportion with increases in equipment estimated the discount rate by customers by calculating the PBP of the
prices, because the price of PTAC and estimating the cost of capital for TSLs relative to a baseline efficiency
PTHP equipment increases with its purchasers of PTAC and PTHP level. The PBP measures the amount of
efficiency and DOE recognizes that equipment. Most purchasers use both time it takes the commercial customer to
complexity for repair will increase as debt and equity capital to fund recover the assumed higher purchase
the efficiency of equipment increases. investments. Therefore, for most expense of more energy efficient
DOE specifically seeks comment on purchasers, the discount rate is the equipment through lower operating
its estimation for the repair costs, as weighted average cost of debt and equity costs. Similar to the LCC, the PBP is
well as the installation and maintenance financing, or the weighted-average cost based on the total installed cost and the
costs. In particular, DOE is interested in of capital (WACC), less the expected operating expenses and is calculated as
how the installation, maintenance, and inflation. a range of payback periods, depending
repair costs may change with the use of To estimate the WACC of PTAC and on the probability distributions of the
R–410A refrigerant in 2010 because PTHP equipment purchasers, DOE used two key inputs (i.e., the supply chain
DOE’s estimates are based on data from a sample of companies including large markups and where the unit is likely to
the field for equipment using R–22. See be shipped to). However, unlike for the
Chapter 8 of the TSD for additional 27 U.S. Department of Energy, Office of Energy LCC, in the calculation of the PBP, by
information. DOE identified this as Efficiency and Renewable Energy. ‘‘Energy definition, DOE considered only the
Efficiency Program for Commercial and Industrial
Issue 5 under ‘‘Issues on Which DOE Equipment: Efficiency Standards for Commercial
first year’s operating expenses. Because
Seeks Comment’’ in section VII.E of this Heating, Air Conditioning and Water Heating the PBP does not take into account
NOPR. Equipment; Final Rule’’. January 2001. changes in operating expense over time
or the time value of money, it is also total energy savings for each TSL, DOE spaces include noise, increased
referred to as a simple payback period. first calculated the national site energy installation costs, high use of electric
Additional details of the PBP can be consumption (i.e., the energy directly resistance heating, and their limitation
found in Chapter 8 of the TSD. consumed by the units of equipment in of being able to provide cooling to only
operation) for PTACs or PTHPs for each perimeter spaces. These considerations
G. National Impact Analysis—National
year, beginning with the expected make the packaged terminal equipment,
Energy Savings and Net Present Value
effective date of the standards (2012), in general, not the first choice for
Analysis
for the base case forecast and the adding cooling to other non-conditioned
The national impacts analysis standards case forecast. Second, DOE building spaces. Therefore, DOE did not
evaluates the impact of a proposed determined the annual site energy assume a rebound effect in the present
standard from a national perspective savings, consisting of the difference in NOPR analysis.
rather than from the customer site energy consumption between the To estimate NPV, DOE calculated the
perspective represented by the LCC. base case and the standards case. Third, net impact as the difference between
This analysis assesses the NES, and the DOE converted the annual site energy total operating cost savings (including
NPV (future amounts discounted to the savings into the annual amount of electricity, repair, and maintenance cost
present) of total commercial customer energy saved at the source of electricity savings) and increases in total installed
costs and savings, which are expected to generation (the source energy), using a costs (which consists of MSP, sales
result from amended standards at site-to-source conversion factor. Finally, taxes, distribution chain markups, and
specific efficiency levels. For each TSL, DOE summed the annual source energy installation cost). DOE calculated the
DOE calculated the NPV, as well as the savings from 2012 to 2042 to calculate NPV of each TSL over the life of the
NES, as the difference between a base the total NES for that period. DOE equipment, using the following three
case forecast (without amended performed these calculations for each steps. First, DOE determined the
standards) and the standards case (with TSL considered in this rulemaking. difference between the equipment costs
amended standards). The NES refers to DOE considers whether a rebound under the TSL case and the base case in
cumulative energy savings from 2012 effect is applicable in its NES analysis. order to obtain the net equipment cost
through 2042. The NPV refers to A rebound effect occurs when an increase resulting from the TSL. Second,
cumulative monetary savings. DOE increase in equipment efficiency leads DOE determined the difference between
calculated net monetary savings in each to an increased demand for its service. the base case operating costs and the
year relative to the base case as the EIA in its NEMS model assumes a TSL operating costs, in order to obtain
difference between total operating cost certain elasticity factor to account for an the net operating cost savings from the
savings and increases in total installed increased demand for service due to the TSL. Third, DOE determined the
cost. Cumulative savings are the sum of increase in cooling (or heating) difference between the net operating
the annual NPV over the specified efficiency. EIA refers to this as an cost savings and the net equipment cost
period. DOE accounted for operating efficiency rebound.28 For the increase in order to obtain the net
cost savings until 2062; that is, until all commercial cooling equipment market, savings (or expense) for each year. DOE
the equipment installed through 2042 is there are two ways that a rebound effect then discounted the annual net savings
retired. could occur: (or expenses) to the year 2008 for PTACs
1. An increased use of the cooling and PTHPs bought on or after 2012 and
1. Approach
equipment within the commercial summed the discounted values to
Over time, in the standards case, provide the NPV of a TSL. An NPV
buildings they are installed in.
equipment that is more efficient 2. Additional instances of cooling a greater than zero shows net savings (i.e.,
gradually replaces less efficient commercial building where it was not the TSL would reduce customer
equipment. This affects the calculation being cooled before. expenditures relative to the base case in
of both the NES and NPV, both of which The first instance does not occur for present value terms). An NPV that is
are a function of the total number of the PTAC and PTHP equipment that are less than zero indicates that the TSL
units in use and their efficiencies, and typically used in guest rooms of hotel/ would result in a net increase in
thus are dependent on annual motel buildings, and patient rooms in customer expenditures in present value
shipments and equipment lifetime, hospitals and health care clinics since terms.
including changes in shipments and these buildings are already being To make the analysis more accessible
retirement rates in response to changes operated and conditioned 24 hours a and transparent to all stakeholders, DOE
in equipment costs due to standards. day and seven days a week. used an MS Excel spreadsheet model to
Both calculations start by using the Furthermore, the guest or the patient in calculate the energy savings and the
estimate of shipments, and the quantity these rooms has no incentive to use the national economic costs and savings
of units in service, that are derived from equipment more or less, because they do from amended standards. In addition,
the shipments model. not pay the electricity bills. the TSD (chapter 10) and other
With regard to estimating the NES, Additionally, DOE feels that the documentation on the website that DOE
because more efficient PTACs and PTAC and PTHP equipment would not provides during the rulemaking help
PTHPs gradually replace less efficient significantly penetrate into previously explain the models and how to use
ones, the energy per unit of capacity un-cooled building spaces. The existing them, and stakeholders can review
used by the PTACs and PTHPs in market for this equipment is specialized DOE’s analyses by changing various
service gradually decreases in the to lodging type applications where the input quantities within the spreadsheet.
standards case relative to the base case. Unlike the LCC analysis, the NES
equipment serves both a cooling and
DOE calculated the NES by subtracting spreadsheet does not use distributions
heating need for a small room on the
energy use under a standards scenario for inputs or outputs. DOE examined
perimeter of a building. Drawbacks for
from energy use in a base-case scenario. sensitivities by applying different
installing these equipment in other
Unit energy savings for each scenarios. DOE used the NES
equipment class are the same weighted- 28 EIA, 2007. Assumptions to the Annual Energy spreadsheet to perform calculations of
average values as calculated in the LCC Outlook 2007. accessed at http://www.eia.doe.gov/ energy savings and NPV, using the
and PBP spreadsheet. To estimate the oiaf/aeo/assumption/index.html annual energy consumption and total
installed cost data from the LCC (2) market segments; (3) equipment analysis, DOE presumed that the
analysis. DOE forecasted the energy retirements; and (4) equipment ages. shipments do not change in response to
savings, energy cost savings, equipment The shipments model assumes that, in the changing TSLs.
costs, and NPV of benefits for each of each year, each existing PTAC or PTHP
Table IV.9 shows the forecasted
equipment classes from 2012 through either ages by one year or breaks down,
shipments for the different equipment
2042. The forecasts provided annual and that equipment that breaks down is
classes of PTACs and PTHPs for the
and cumulative values for all four replaced. In addition, new equipment
can be shipped into new commercial baseline efficiency level (ASHRAE/
output parameters as described above.
building floor space, and old equipment IESNA Standard 90.1–1999) for selected
2. Shipments Analysis can be removed through demolitions. years from 2012 to 2042. As equipment
An important element in the estimate Historical shipments are critical to the purchase price increases with
of the future impact of a standard is development of the shipments model, efficiency, generally a drop in
equipment shipments. DOE developed since DOE used the historical data to shipments would be expected. Although
shipments projections under a base case calibrate the model. DOE’s primary there is a provision in the shipments
and each of the standards cases using a source of historical data for shipments analysis spreadsheet for a change in
shipments model. DOE used the of PTACs and PTHPs was the shipment shipments as the efficiency increases
standards case shipments projection data provided by ARI. ARI provided and the equipment becomes more
and, in turn, the standards case DOE with shipments data for 10 years expensive, DOE has no basis for
equipment stock to determine the NES. (1997–2006), which allowed DOE to concluding that such a change would
The shipments portion of the allocate sales of equipment to the occur as the efficiency of PTACs and
spreadsheet model forecasts PTAC and different equipment classes. The PTHPs increases. Therefore, DOE
PTHP shipments from 2012 to 2042. The shipments data is summarized in presumed that total shipments do not
details of the shipment projections are Chapter 3 of the TSD. change with TSL and that the effect of
given in chapter 10 of the TSD. Although there is a provision in the the standards would be to shift the
DOE developed shipments forecasts spreadsheet for a change in projected percentage mix of shipments from lower
by accounting for: (1) The growth in the shipments in response to efficiency to higher efficiencies. Table IV.9 also
building stock of hotel/motel, health level increases, DOE has no information shows the cumulative shipments for
care and office buildings that are the with which to calibrate such a PTAC and PTHP equipment from 2012
primary end users of PTACs and PTHPs; relationship. Therefore, for the NOPR to 2042.
TABLE IV.9.—SHIPMENTS FORECAST FOR BASE CASE PTAC AND PTHP EQUIPMENT
Thousands of units shipped by year and equipment class
Cumulative
Equipment shipments
2012 2015 2020 2025 2030 2035 2040 2042 (2012–
2042)
Standard Size PTACs .............................................................. 242 249 266 286 307 333 361 373 9,256
Standard Size PTHPs .............................................................. 181 186 199 214 230 249 270 279 6,918
Non-Standard Size PTACs ...................................................... 17 16 15 13 12 11 10 9 398
Non-Standard Size PTHPs ...................................................... 13 12 11 10 9 8 7 7 300
Total .................................................................................. 453 464 490 522 558 600 648 668 16,873
DOE also uses the shipments equipment class. DOE then adapted a For the base case, DOE assumed that,
estimates developed above as an input cost-based method used in the NEMS to absent amended standards, forecasted
to the MIA, discussed in section IV.I. estimate market shares for each market shares would remain frozen at
Chapter 10 of the TSD provides equipment class by TSL. Then, from the 2012 efficiency levels until the end
additional details on the shipments those market shares and projections of of the forecast period (30 years after the
forecasts. shipments by equipment class, DOE effective date—the year 2042). DOE
extrapolated future equipment realized that this prediction may have
3. Base Case and Standards Case
efficiency trends both for a base case the effect of causing DOE to
Forecasted Distribution of Efficiencies
scenario and standards case scenarios. overestimate the savings associated with
The annual energy consumption of a The difference in equipment efficiency the TSLs discussed in this notice since
PTAC or PTHP unit is directly related between the base case and standards historical data indicated PTACs and
to the efficiency of the unit. Thus, DOE cases was the basis for determining the PTHP equipment efficiencies or relative
forecasted shipment-weighted average reduction in per-unit annual energy equipment class preferences may
equipment efficiencies that, in turn, consumption that could result from change voluntarily over time. Therefore,
enabled a determination of the amended standards. There is, however, DOE seeks comment on this assumption
shipment-weighted annual energy the refrigerant phase-out issue that also and the potential significance of any
consumption values for the base case affects the equipment efficiency. DOE overestimate of savings. In particular,
and each TSL analyzed. DOE based recognizes that the industry has been DOE requests data that would enable it
shipment-weighted average efficiency able to meet the ASHRAE/IESNA to better characterize the likely
trends for PTAC and PTHP equipment Standard 90.1–1999 efficiency levels increases in efficiency that would occur
on first converting the 2005 PTAC and with R–22 as the primary refrigerant, over the 30-year analysis period absent
PTHP equipment shipments by but is waiting to switch to R–410A as adoption of either the standards
equipment class into market shares by the primary refrigerant starting in 2010. proposed, or the TSLs considered, in
this rule. DOE identified this as Issue 6 electric resistance heating. DOE time, due to projected changes in
under ‘‘Issues to Which DOE Seeks identified this as Issue 8 under ‘‘Issues electricity generation sources (i.e., the
Comment’’ in section VII.E of this on Which DOE Seeks Comment’’ in power plant types projected to provide
NOPR. section VII.E of this NOPR. electricity to the country).
For each of the TSLs analyzed, DOE
4. National Energy Savings and Net To discount future impacts, DOE
used a ‘‘roll-up’’ scenario to establish
Present Value follows OMB guidance in the selection
the market shares by efficiency level for
the year that standards become effective The PTAC and PTHP equipment stock of seven percent and three percent in
(i.e., 2012). Information available to at any point in time is the total number evaluating the impacts of regulations. In
DOE suggests that the efficiencies of of PTACs and PTHPs purchased or selecting the discount rate
equipment in the base case that did not shipped from previous years that have corresponding to a public investment,
meet the standard level under survived until that point. The NES OMB directs agencies to use ‘‘the real
consideration would ‘‘roll-up’’ to meet spreadsheet, through the use of the Treasury borrowing rate on marketable
the standard level. In addition, available shipments model, keeps track of the securities of comparable maturity to the
information suggests that all equipment total number of PTAC and PTHP units period of analysis.’’ Office of
efficiencies in the base case that were shipped each year. For purposes of the Management and Budget (OMB)
above the standard level under NES and NPV analyses, DOE assumes Circular No. A–94, ‘‘Guidelines and
consideration would not be affected. that retirements follow a Weibull Discount Rates for Benefit-Cost Analysis
DOE specifically seeks input on its distribution with a 10-year mean of Federal Programs,’’ dated October 29,
basis for the NES-forecasted base case lifetime. Retired units are not replaced 1992, section 8.c.1. The seven percent
distribution of efficiencies and its until 2042. For units shipped in 2042, rate is an estimate of the average before-
prediction on how amended energy any units still remaining at the end of tax rate of return on private capital in
conservation standards impact the 2062 are retired. the United States economy, and reflects
distribution of efficiencies in the The national annual energy the returns to real estate and small
standards case. DOE identified this as consumption is the product of the business capital as well as corporate
Issue 7 under ‘‘Issues on Which DOE annual unit energy consumption and capital. DOE used this discount rate to
Seeks Comment’’ in section VII.E of this the number of PTAC and PTHP units of approximate the opportunity cost of
NOPR. each vintage. This approach accounts capital in the private sector, since recent
In addition, DOE specifically seeks for differences in unit energy OMB analysis has found the average rate
comment on whether DOE’s adoption of consumption from year to year. In of return on capital to be near this rate.
higher amended energy conservation determining national annual energy In addition, DOE used the 3 percent rate
standard levels would be likely to cause consumption, DOE initially calculated to capture the potential effects of
the PTAC and PTHP customers to shift the annual energy consumption at the
standards on private customers’
to using other, less efficient type of site (i.e., electricity in kWh consumed
consumption (e.g., through higher prices
equipment. Acknowledging over 80 by the PTAC and PTHP unit). DOE then
for equipment and purchase of reduced
percent of PTAC and PTHP equipment calculated primary energy consumption
from site energy consumption by amounts of energy). This rate represents
are sold for the replacement market,
DOE believes it is unlikely that PTAC applying a marginal site-to-source the rate at which ‘‘society’’ discounts
and PTHP equipment users would conversion factor to account for losses future consumption flows to their
switch to other type of equipment due associated with the generation, present value. This rate can be
to the additional installation cost caused transmission, and distribution of approximated by the real rate of return
by this potential switching. However, electricity. on long-term government debt (e.g.,
DOE recognizes that potential The site-to-source conversion factor is yield on Treasury notes minus annual
equipment switching from PTHPs to a a multiplier used for converting site rate of change in the Consumer Price
combination of PTACs and electric energy consumption, expressed in kWh, Index), which has averaged about 3
resistance heating might occur if DOE into primary or source energy percent on a pre-tax basis for the last 30
were to adopt a standard level for consumption, expressed in quads years. Table IV.10 summarizes the
PTHPs significantly higher than the (quadrillion Btu). The site-to-source inputs to the NES spreadsheet model
proposed standard level for PTACs. conversion factor accounts for losses in along with a brief description of the data
DOE specifically seeks input on whether electricity generation, transmission, and sources. The results of DOE’s NES and
disparity in the proposed standards for distribution. DOE obtained these NPV analysis are summarized in section
PTACs and PTHPs is likely to cause the conversion factors using the NEMS V.B.3 below and described in detail in
PTHP customers to shift to PTACs with model. The conversion factors vary over TSD Chapter 11.
TABLE IV.10.—SUMMARY OF NES AND NPV MODEL INPUTS

Inputs Description
Shipments .................................................................... Annual shipments from shipments model (see Chapter 10 of the TSD).
Effective Date of Standard .......................................... September 2012.
Base Case Efficiencies ................................................ Distribution of base case shipments by efficiency level.
Standard Case Efficiencies ......................................... Distribution of shipments by efficiency level for each standards case. Standards case an-
nual shipment-weighted market shares remain the same as in the base case and each
standard level for all efficiencies above the TSL. All other shipments are at the TSL ef-
ficiency.
Annual Energy Use per Unit ........................................ Annual national weighted-average values are a function of efficiency level (Chapter 7 of
the TSD).
Total Installed Cost per Unit ........................................ Annual weighted-average values are a function of efficiency level (Chapter 8 of the
TSD).
TABLE IV.10.—SUMMARY OF NES AND NPV MODEL INPUTS—Continued

Inputs Description
Repair Cost per Unit .................................................... Annual weighted-average values increase with manufacturer’s cost level (Chapter 8 of
the TSD).
Maintenance Cost per Unit .......................................... Annual weighted-average value equals $50 (Chapter 8 of the TSD).
Escalation of Electricity Prices .................................... 2007 EIA AEO forecasts (to 2030) and extrapolation for beyond 2030 (Chapter 8 of the
TSD).
Electricity Site-to-Source Conversion Factor ............... Conversion factor varies yearly and is generated by EIA’s NEMS* model. Includes the
impact of electric generation, transmission, and distribution losses.
Discount Rate .............................................................. 3 percent and 7 percent real.
Present Year ................................................................ Future costs are discounted to year 2008.
* Chapter 14 on the utility impact analysis provides more detail on NEMS model.
H. Life-Cycle Cost Sub-Group Analysis engineering analysis and shipments industry based on the market and
In analyzing the potential impact of forecasts. The key GRIM output is the technology assessment prepared for this
new or amended standards on industry net present value. Different sets rulemaking. Before initiating the
customers, DOE evaluates the impact on of assumptions (scenarios) will produce detailed impact studies, DOE collected
identifiable groups (i.e., subgroups) of different results. The qualitative part of information on the present and past
customers, such as different types of the MIA addresses factors such as structure and market characteristics of
businesses, which may be equipment characteristics, the PTAC and PTHP industry. The
disproportionately affected by a national characteristics of particular firms, and information DOE collected at that time
standard level. For this rulemaking, market and equipment trends, and included market share, equipment
DOE identified small businesses as a includes assessment of the impacts of shipments, markups, and cost structure
PTAC and PTHP customer subgroup standards on sub-groups of for various manufacturers. The industry
that could be disproportionately manufacturers. The complete MIA is profile includes further detail on
affected, and examined the impact of outlined in Chapter 13 of the TSD. equipment characteristics, estimated
proposed standards on this group. DOE conducted the MIA for PTACs manufacturer market shares, the
DOE determined the impact on this and PTHPs in three phases. Phase 1, financial situation of manufacturers,
PTAC and PTHP customer sub-group Industry Profile, consisted of preparing trends in the number of firms, the
using the LCC spreadsheet model. DOE an industry characterization, including market, and equipment characteristics
conducted the LCC and PBP analysis for data on market share, sales volumes and of the PTAC and PTHP industry.
both PTAC and PTHP customers. The trends, pricing, employment, and The industry profile included a top
standard LCC and PBP analysis financial structure. Phase 2, Industry down cost analysis of PTAC and PTHP
(described in section IV.F) includes Cash Flow, focused on the industry as manufacturers that DOE used to derive
various types of businesses occupying a whole. In this phase, DOE used the cost and preliminary financial inputs for
commercial buildings that use PTAC GRIM to prepare an industry-cash-flow the GRIM (e.g., revenues; material,
and PTHP equipment. The LCC analysis. Using publicly available labor, overhead, and depreciation
spreadsheet model allows for the information developed in Phase 1, DOE expenses; selling, general, and
identification of one or more subgroups adapted the GRIM’s generic structure to administrative expenses (SG&A); and
of businesses, which can then be perform an analysis of PTAC and PTHP research and development (R&D)
analyzed by sampling only each such energy conservation standards. In Phase expenses). DOE also used public sources
subgroup. The results of DOE’s LCC 3, Subgroup Impact Analysis, DOE of information to further calibrate its
subgroup analysis are summarized in conducted interviews with initial characterization of the industry,
section V.B.1.c below and described in manufacturers representing the majority including SEC 10–K reports, Standard &
detail in TSD Chapter 12. of domestic PTAC and PTHP sales. This Poor’s (S&P) stock reports, and
I. Manufacturer Impact Analysis group included large and small corporate annual reports.
manufacturers of both standard and
1. Overview b. Phase 2, Industry Cash Flow Analysis
non-standard size PTACs and PTHPs,
DOE performed an MIA to estimate providing a representative cross-section Phase 2 of the MIA focused on the
the financial impact of higher energy of the industry. During these interviews, financial impacts of amended energy
conservation standards on both DOE discussed engineering, conservation standards on the industry
manufacturers of standard size PTACs manufacturing, procurement, and as a whole. Higher energy conservation
and PTHPs and manufacturers of non- financial topics specific to each standards can affect a manufacturer’s
standard size PTACs and PTHPs, and to company and also obtained each cash flow in three distinct ways,
calculate the impact of such standards manufacturer’s view of the industry as resulting in: (1) A need for increased
on employment and manufacturing a whole. The interviews provided investment; (2) higher production costs
capacity. The MIA has both quantitative valuable information DOE used to per unit; and (3) altered revenue by
and qualitative aspects. The quantitative evaluate the impacts of an amended virtue of higher per-unit prices and
part of the MIA relies on the GRIM, an energy conservation standard on changes in sales values. To quantify
industry-cash-flow model customized manufacturers’ cash flows, these impacts in Phase 2 of the MIA,
for this rulemaking. The GRIM inputs manufacturing capacities, and DOE performed separate cash flow
are information regarding the industry employment levels. analyses, using the GRIM, on the part of
cost structure, shipments, and revenues. the industry that manufactures standard
a. Phase 1, Industry Profile
This includes information from many of size PTACs and PTHPs and on the part
the analyses described above, such as In Phase 1 of the MIA, DOE prepared of the industry that manufactures non-
manufacturing costs and prices from the a profile of the PTAC and PTHP standard size equipment. In performing
these analyses, DOE used the financial GRIM and to isolate key issues and those DOE conducted as part of the
values derived during Phase 1 and the concerns. engineering analysis. The interviews
shipment scenarios used in the NES DOE also evaluated the impact of the provided valuable information that DOE
analyses. energy conservation standards on the used to evaluate the impacts of
manufacturing impacts of small amended energy conservation standards
c. Phase 3, Sub-Group Impact Analysis on manufacturers’ cash flows,
businesses. Small businesses, as defined
Using average cost assumptions to by the SBA for the PTAC and PTHP manufacturing capacities, and
develop an industry-cash-flow estimate manufacturing industry, are employment levels.
is not adequate for assessing differential manufacturing enterprises with 750 or
a. Issues
impacts among subgroups of fewer employees. DOE shared the
manufacturers. For example, small interview guides with small According to all manufacturers
manufacturers, niche players, or manufacturers and tailored specific interviewed, the biggest concern relating
manufacturers exhibiting a cost questions for small PTAC and PTHP to this rulemaking is the EPA mandated
structure that largely differs from the manufacturers. See Chapter 13 of the phase-out of the HCFC refrigerants that
industry average could be more TSD for details. are used in current PTAC and PTHP
negatively affected. DOE used the equipment. Every manufacturer
2. Government Regulatory Impact Model interviewed stated that it intends to
results of the industry characterization
Analysis switch from the current R–22 refrigerant
analysis (in Phase 1) to group
manufacturers that exhibit similar As mentioned above, DOE uses the to R–410A refrigerant in PTAC and
characteristics. GRIM to quantify changes in cash flow PTHP equipment, regardless of
that result in a higher or lower industry equipment class. All manufacturers
DOE established two sub-groups for
value. The GRIM analysis uses a interviewed expect to be affected by the
the MIA corresponding to the two types
standard, annual-cash-flow analysis that refrigerant phase-out for the following
of PTAC and PTHP equipment and
incorporates manufacturer prices, reasons:
manufacturers, i.e., manufacturers of • Availability of R–410A refrigerant
standard size equipment and manufacturing costs, shipments, and
industry financial information as inputs compressors—All of the manufacturers
manufacturers of non-standard size interviewed stated their concern that
equipment. The standard size PTAC and and models changes in costs,
distribution of shipments, investments, only a small number of compressors
PTHP market is mostly domestically utilizing R–410A refrigerant are or will
owned with manufacturing facilities and associated margins that would
result from new or amended regulatory be available before the R–22 refrigerant
located outside of the United States, must be replaced in 2010. Furthermore,
where as the non-standard size PTAC conditions (in this case, standard
levels). The GRIM spreadsheet uses a not all current cooling capacities
and PTHP market is mostly available in R–22 refrigerant
domestically owned with manufacturing number of inputs to arrive at a series of
annual cash flows, beginning with the compressors are or will be available in
facilities located inside of the United R–410A refrigerant versions. In
States. There has been a recent trend of base year of the analysis, 2007, and
continuing to 2042. DOE calculated addition, not all voltages currently
foreign owned, foreign operated offered by some manufacturers of PTAC
companies to enter the standard size INPVs by summing the stream of annual
discounted cash flows during this and PTHP equipment are or will be
PTAC and PTHP market and sell available in an R–410A refrigerant
equipment within the United States. period.
DOE used the GRIM to calculate cash version. All manufacturers noted that
Based on the identification of these the small size of their industry gives
two sub-groups, DOE prepared two flows using standard accounting
principles and to compare changes in them little to no leverage to encourage
different interview guides—one for compressor manufacturers to develop
standard size PTAC and PTHP INPV between a base case and different
TSLs (the standards cases). Essentially, R–410A refrigerant compressors for
manufacturers and one for non-standard them.
the difference in INPV between the base
size PTAC and PTHP manufacturers. • Compressor performance
These interview guides were used to case and a standards case represents the
degradation—According to all
tailor the GRIM to address unique financial impact of the amended energy
manufacturers of PTAC and PTHP
financial characteristics of conservation standards on
equipment, R–410A refrigerant
manufacturers of each equipment size. manufacturers. DOE collected this
compressors currently on the market
DOE interviewed companies from each information from a number of sources,
have at least a 0.8 to 1.0 EER compressor
subgroup, including small and large including publicly available data and
performance degradation relative to the
companies, subsidiaries and interviews with several manufacturers.
R–22 refrigerant compressors that they
independent firms, and public and See Chapter 13 of the TSD for details.
are intended to replace. The degradation
private corporations. The purpose of the 3. Manufacturer Interviews in compressor performance can be
meetings was to develop an As part of the MIA, DOE discussed attributed to several factors including a
understanding of how manufacturer potential impacts of amended energy reduction in displacement, increase in
impacts vary with the TSLs. During the conservation standards with complexity, necessity of increase in
course of the MIA, DOE interviewed manufacturers responsible for a majority strength of the compressor shell, and
manufacturers representing the majority of PTAC and PTHP sales. The use of non-mineral oils. As a result,
of domestic PTAC and PTHP sales. manufacturers interviewed manufacture some manufacturers anticipate difficulty
Many of these same companies also 90 percent of the standard size PTACs initially meeting even the ASHRAE/
participated in interviews for the and PTHPs and over 50 percent of the IESNA Standard 90.1–1999 efficiency
engineering analysis. However, the MIA non-standard size PTACs and PTHPs.29 levels with R–410A-based units.
interviews broadened the discussion • Increase in manufacturing costs—
These interviews were in addition to
from primarily technology-related issues All manufacturers expect their PTAC
to include business related topics. One 29 DOE contacted other non-standard size and PTHP equipment manufacturing
objective was to obtain feedback from manufacturers as part of the MIA, but they did not costs to increase as the sealed-system
industry on the assumptions used in the wish to participate in the MIA process. portions of the equipment are upgraded
to handle the higher system pressures equipment. Manufacturers stated that analysis, the GRIM used both the NES
associated with R–410A refrigerant. In these types of units are often sold on shipments forecasts and a modified
addition to an increase in demand as custom order to replace version referred to as the R–410A
manufacturing cost to accommodate existing equipment with the same wall shipments forecasts for both standard
higher working pressures associated sleeve dimensions. The comments assert size and non-standard size PTACs and
with R–410A refrigerant and increased that if DOE adopts the ASHRAE PTHPs from 2007 to 2042. Total
refrigerant and compressor costs, definitions of standard and non- shipments forecasted by the NES for the
manufacturers are concerned about the standard units, it will force a small base case in 2012 are shown in Table
anticipated drop in compressor volume of non-standard sleeve size IV.11 and are further discussed in this
efficiency, which would cause them to equipment to meet higher efficiency section of today’s notice. DOE allocated
incorporate some level of redesign into levels, intended for standard size to the closest representative cooling
their R–410A refrigerant equipment to equipment, which these units are capacity, in the appropriate equipment
help offset this degradation and would physically unable to meet because of class, any shipments forecasted by the
further increase manufacturing costs. physical constraints due to the NES of equipment that was not within
All manufacturers noted that cost- equipment size. Further, some one of the representative cooling
recovery is very difficult in this industry manufacturers estimated that up to half capacities. For example, the total PTAC
due to intense price competition. of their equipment lines could be or PTHP shipments with a cooling
Multiple United States-based eliminated if DOE chooses to adopt capacity less than 10,000 Btu/h for
manufacturers noted the entry of ASHRAE’s delineations of equipment standard size equipment are included
foreign-based competitors as a source classes.30 with the 9,000 Btu/h representative
for the intense price competition. Second, the EPA mandated R–22 cooling capacity.
• Combination of regulations—All refrigerant phase-out date (January 1,
manufacturers anticipate that the 2010) and the anticipated effective date TABLE IV.11.—TOTAL NES-
combination of the R–22 refrigerant of the DOE amended energy FORECASTED SHIPMENTS IN 2012
phase-out and possible amendment of conservation standards rulemaking
Federal energy conservation standards (September 2012) are a concern for all Total
manufacturers. All manufacturers stated Equipment class
will lead the industry to reduce the (cooling capacities) industry
scope of equipment offered. In addition, that, because of the gap between these shipments*
several manufacturers anticipate as a dates, as well as the fact that DOE does
not expect to promulgate its rule until Standard Size PTACs (9,000
result of the three factors just discussed, Btu/h) ..................................... 97,900
shifts in market share, consolidation September 30, 2008, each manufacturer
Standard Size PTHPs (9,000
within the industry, and/or the will have to make a separate Btu/h) ..................................... 76,500
departure of marginal manufacturers development effort to comply with each Standard Size PTACs (12,000
from the business. of these regulations. Most manufacturers Btu/h) ..................................... 144,100
Other manufacturing issues include stated that there could be some gains if Standard Size PTHPs (12,000
the delineation of non-standard size each is able to combine its efforts to Btu/h) ..................................... 104,400
equipment classes and the timing of the comply with the conversion to R–410A Non-Standard Size PTACs ....... 17,100
regulations. First, manufacturers of non- refrigerant and amended minimum Non-Standard Size PTHPs ....... 12,900
standard size PTACs and PTHPs energy conservation standards. Most * Estimates rounded to the nearest hundred.
anticipate that, if the ASHRAE/IESNA manufacturers were uncertain, however,
Standard 90.1–1999 equipment class of the magnitude of the anticipated DOE also estimated, in the shipments
definition (i.e., equipment with wall benefit from any such combined effort. analysis, the distribution of efficiencies
sleeve dimensions less than 16 inches b. Government Regulatory Impact Model in the base case for PTACs and PTHPs.
high and less than 42 inches wide) is Scenarios and Key Inputs (See Chapter 10 of the TSD.) Table IV.12
adopted by DOE, a significant portion of shows one example of the distribution
the equipment they currently offer for i. Base Case Shipments Forecast of efficiencies in the base case for
replacement purposes will be The GRIM estimates manufacturer standard size PTACs with a cooling
misclassified as new construction. For revenues based on total-unit-shipment capacity of 9,000 Btu/h plus those with
example, a PTAC or PTHP unit with one forecasts and the distribution of these cooling capacities allocated to this
of its wall sleeve dimensions less than values by EER. Changes in the efficiency category. The distribution of efficiencies
the 16 inches high and 42 inches wide mix at each standard level are a key in the base case for other equipment
would be classified as standard size driver of manufacturer finances. For this classes shown in Chapter 10 of the TSD.
TABLE IV.12.—NES DISTRIBUTION OF SHIPMENTS IN THE BASE CASE FOR STANDARD SIZE PTACS WITH COOLING
CAPACITIES LESS THAN 10,000 BTU/H
TSL Baseline TSL 1, 2, 4 TSL 3 TSL 5 TSL 6 TSL 7
(EER) 10.6 10.9 11.1 11.3 11.5 12.0
Distribution of Shipments (%) .......................................... 19.2 18.0 17.2 16.4 15.6 13.5
During the course of the MIA comment on the NES shipment manufacturers were in general
interviews, DOE asked manufacturers to forecasts. For all equipment classes, agreement with the NES total shipment
30 DOE understands that ARI has submitted a Addendum t to ASHRAE/IESNA Standard 90.1– September 2008, when DOE must issue a final rule
continuous maintenance proposal to modify the 2007. As further discussed in section IV.A.2 above, on this rulemaking, DOE proposes to incorporate
definitions of non-standard size PTACs and PTHPs, if ASHRAE is able to adopt Addendum t to the modified definition into its final rule.
which was subsequently approved by ASHRAE as ASHRAE/IESNA Standard 90.1–2007 prior to
results. However, their views differed DOE considered manufacturers’ degradation in system performance that
on the impacts of the refrigerant phase- concerns with the NES shipments the engineering analysis estimates will
out on the distribution of efficiencies in forecast and derived an alternative occur in 2010 (i.e., effective date for the
the base case. shipments forecast (referred to as the R–22 refrigerant phase-out).
Many manufacturers commented that ‘‘R–410A-shipments forecast’’). Several DOE assumed that manufacturers
the NES shipments forecast did not manufacturers interviewed stated that with equipment that would fall below
adequately account for the reduction in total shipments for both standard and ASHRAE/IESNA Standard 90.1–1999
efficiency resulting from the refrigerant non-standard size equipment would not levels with a drop-in redesign would
phase-out. Manufacturers believe there be affected by the R–22 refrigerant nevertheless modify such equipment so
will be a system performance phase-out. Therefore, DOE assumed that that it would achieve at least these
degradation as characterized in the the total industry shipments forecasted baseline efficiency levels. As an
engineering analysis. In particular, in the shipment analysis would not example of the impact of the refrigerant
manufacturers commented that they change due to the refrigerant phase-out phase-out on the distribution of
were planning to implement R–410A (i.e., DOE assumed the total shipments efficiencies in the base case, Table IV.13
refrigerant as a ‘‘drop-in’’ redesign to of equipment with R–410A refrigerant illustrates the change in the distribution
meet the initial 2010 deadline. In a would be equal to the total shipments of of efficiencies for standard size PTACs
drop-in redesign, manufacturers would equipment with R–22 refrigerant as with a cooling capacity of 9,000 Btu/h
continue to use the current basic R–22 forecasted by the NES). Furthermore, from 2009 to 2010. DOE is seeking
design for the PTAC or PTHP DOE assumed that, for both standard comment about the distribution of
equipment, and only replace and non-standard size PTACs and efficiencies in the R–410A base case for
compressors, refrigerant and make other PTHPs, the distributions by efficiencies each of the representative cooling
minor adjustments. would shift in accordance with the capacities.
TABLE IV.13.—R–410A DISTRIBUTION OF EFFICIENCIES AS FORECASTED BY THE NES AND AS FORECASTED BY THE R–
410A-SHIPMENT FORECAST
TSL Baseline TSL 1, 2, 4 TSL 3 TSL 5 TSL 6 TSL 7
(EER) 10.6 10.9 11.1 11.3 11.5 12.0
NES Distribution of Shipments (%) ................................. 19.2 18.0 17.2 16.4 15.6 13.5
R–410A-Shipments Forecast Distribution of Shipments
(%) ................................................................................ 70.9 15.6 0 13.5 0 0
ii. Standards Case Shipments Forecast refrigerant phase-out, and the standards R–410A refrigerant conversion costs and
case INPV at each TSL. the costs associated with amended
For each standards case, DOE DOE learned from interviews with energy conservation standards, so that it
assumed that shipments at efficiencies manufacturers that the majority of could examine the effects of different
below the projected minimum standard manufacturers offer only one equipment cost recovery scenarios.
levels were most likely to roll up to line. A single equipment line means that After discussions with manufacturers,
those efficiency levels in response to an there is no markup strategy used to DOE analyzed two distinct R–410A base
increase in energy conservation differentiate a lower efficiency piece of case and amended energy conservation
standards. This scenario assumes that equipment from a premium piece of standards markup scenarios: (1) The flat
demand for high efficiency equipment is equipment. Through its analysis of the markup scenario, and (2) the partial cost
a function of its price without regard to PTAC and PTHP industry, DOE also recovery markup scenario. The flat
the standard level. In addition, DOE learned that prices of a PTAC and a markup scenario can also be
assumed that manufacturers would not PTHP made by the same manufacturer characterized as the ‘‘preservation of
be able to manufacture equipment at the same cooling capacity do not gross margin percentage’’ scenario.
higher than TSL 5 or TSL 6 depending demand different pricing strategies. Under this scenario, DOE applied,
on equipment class for R–410A Therefore, for the R–22 base case across all TSLs, a single uniform ‘‘gross
equipment using today’s technology. industry cash flow analysis, DOE margin percentage’’ markup that DOE
For TSLs above TSL 5 or TSL 6 assumed a flat markup for all equipment believes represents the current markup
depending on equipment class, DOE regardless of whether it is a PTAC or for manufacturers in the PTAC and
assumed one hundred percent of the PTHP and regardless of cooling PTHP industry. This flat markup
products would be manufactured at the capacity. scenario implies that, as production
efficiency levels specified by the TSL. During interviews, many costs increase with efficiency, the
See Chapter 13 for additional details. manufacturers stated that they have not absolute dollar markup will also
iii. R–410A Base Case and Amended been able to recover fully the increased increase. DOE calculated that the non-
Energy Conservation Standards Markup costs from increased metals prices. production cost markup, which consists
Scenarios Instead, manufacturers were only able to of SG&A expenses, R&D expenses,
recover a percentage of the full increase interest, and profit, is 1.29. This markup
The PTAC and PTHP manufacturer in manufacturing production cost. Many is consistent with the one DOE used in
impact analysis is explicitly structured manufacturers believe a similar the engineering analysis and GRIM
to account for the cumulative burden of situation would happen as a result of analysis for the base case. The implicit
sequential refrigerant and amended both the R–22 refrigerant phase-out and assumption behind the ‘‘partial cost
energy conservation standards. This amended energy conservation recovery’’ scenario is that the industry
section describes the markup scenarios standards. Therefore, DOE made can pass-through only part of its
DOE used to calculate the base case different assumptions about how regulatory-driven increases in
INPV after implementation of the R–22 manufacturers could recoup both production costs to consumers in the
form of higher prices. DOE implemented existing plants, warehouses, tooling, national input/output structural
this markup scenario in the GRIM by and equipment. From the interviews, matrices, using data from the United
setting the non-production cost markups DOE was able to estimate what portion States Department of Commerce’s 1997
at each TSL to yield an increase in MSP of existing manufacturing assets needed Benchmark United States table.31 The
equal to half the increase in production to be replaced and/or reconfigured, and ImSET model estimates changes in
cost. These markup scenarios what additional manufacturing assets employment, industry output, and wage
characterize the markup conditions were required to manufacture the higher income in the overall United States
described by manufacturers, and reflect efficiency equipment. In most cases, economy resulting from changes in
the range of market responses DOE projects that, as standard levels for expenditures in the various sectors of
manufacturers expect as a result of the PTACs and PTHPs increase, the the economy. DOE estimated changes in
R–22 phase-out and the amended energy proportion of existing assets that expenditures using the NES
conservation standards. See Chapter 13 manufacturers would have to replace spreadsheet. ImSET then estimated the
of the TSD for additional details of the would also increase. Additional net national indirect employment
markup scenarios. information on the estimated equipment impacts of potential PTAC and PTHP
conversion and capital conversion costs equipment efficiency standards on
iv. Equipment and Capital Conversion
is set forth in Chapter 13 of the TSD. employment by sector.
Costs
J. Employment Impact Analysis The ImSET input/output model
Energy conservation standards suggests the proposed PTAC and PTHP
typically cause manufacturers to incur Employment impact is one of the efficiency standards could increase the
one-time conversion costs to bring their factors that DOE considers in selecting net demand for labor in the economy;
production facilities and equipment a standard. Employment impacts the gains would most likely be very
designs into compliance with the include direct and indirect impacts. small relative to total national
amended standards. For the purpose of Direct employment impacts are any employment. DOE therefore concludes
the MIA, DOE classified these one-time changes in the number of employees for only that the proposed PTAC and PTHP
conversion costs into two major groups; PTAC and PTHP manufacturers, their standards are likely to produce
equipment conversion and capital suppliers, and related service firms. employment benefits that are sufficient
conversion costs. Equipment conversion Indirect impacts are those changes of to offset fully any adverse impacts on
expenses are one-time investments in employment in the larger economy that employment in the PTAC and PTHP
research, development, testing, and occur due to the shift in expenditures industry. For more details on the
marketing, focused on making and capital investment that is caused by
employment impact analysis, see
equipment designs comply with the the purchase and operation of more
Chapter 15 of the TSD.
new energy conservation standard. efficient PTAC and PTHP equipment.
Capital conversion expenditures are The MIA in this rulemaking addresses K. Utility Impact Analysis
one-time investments in property, plant, only the employment impacts on The utility impact analysis estimates
and equipment to adapt or change manufacturers of PTACs and PTHPs, the effects of reduced energy
existing production facilities so that i.e., the direct employment impacts (See consumption due to improved
new equipment designs can be Chapter 13 of the TSD); this section equipment efficiency on the utility
fabricated and assembled. describes other, primarily indirect, industry. This utility analysis consists
DOE assessed the R&D expenditures employment impacts. of a comparison between forecast results
manufacturers would be required to Indirect employment impacts from
for a case comparable to the AEO2007
make at each TSL. It obtained financial PTAC and PTHP standards consist of
Reference Case and forecasts for policy
information through manufacturer the net jobs created or eliminated in the
interviews and compiled the results in national economy, other than in the cases incorporating each of the PTAC
an aggregated form to mask any manufacturing sector being regulated, as and PTHP TSLs.
proprietary or confidential information a consequence of (1) reduced spending DOE analyzed the effects of proposed
from any one manufacturer. For both by end users on energy (electricity, standards on electric utility industry
standard size and non-standard size gas—including liquefied petroleum generation capacity and fuel
PTACs and PTHPs at each TSL, DOE gas—and oil); (2) reduced spending on consumption using a variant of the
considered a number of manufacturer new energy supply by the utility EIA’s NEMS. NEMS, which is available
responses. DOE estimated the total industry; (3) increased spending on the in the public domain, is a large, multi-
equipment conversion expenditures by purchase price of new PTACs and sectoral, partial-equilibrium model of
gathering the responses received during PTHPs; and (4) the effects of those three the United States energy sector. EIA
the manufacturer interviews, then factors throughout the economy. DOE uses NEMS to produce its AEO, a
weighted these data by market share for expects the net monetary savings from widely recognized baseline energy
each industry and, finally, extrapolated standards to be redirected to other forms forecast for the United States. DOE used
each manufacturer’s R&D expenditures of economic activity. DOE also expects a variant known as NEMS–BT.
for each product. these shifts in spending and economic DOE conducted the utility analysis as
DOE also evaluated the level of activity to affect the demand for labor. policy deviations from the AEO2007,
capital conversion costs manufacturers In developing this proposed rule, DOE applying the same basic set of
would incur to comply with amended estimated indirect national employment assumptions. The utility analysis
energy conservation standards. It impacts using an input/output model of reported the changes in installed
prepared preliminary estimates of the the United States economy, called capacity and generation—by fuel type—
capital investments required using the ImSET (Impact of Sector Energy that result for each TSL, as well as
manufacturing cost model. DOE then Technologies) developed by DOE’s changes in end-use electricity sales.
used the manufacturer interviews to Building Technologies Program. ImSET Chapter 14 of the TSD provides details
gather additional data on the level of is a personal-computer-based, 31 Lawson, Ann M., Kurt S. Bersani, Mahnaz
capital investment required at each TSL. economic-analysis model that Fahim-Nader, and Jiemin Guo. 2002. ‘‘Benchmark
Manufacturers explained how different characterizes the interconnections Input-Output Accounts of the U.S. Economy, 1997,’’
TSLs impacted their ability to use among 188 sectors of the economy as Survey of Current Business, December, pp. 19–117.
of the utility analysis methods and costs of complying with regulatory caps 2. ASHRAE/IESNA Standard 90.1–1999
results. on emissions. Labeling Requirement
L. Environmental Analysis M. Discussion of Other Issues ASHRAE/IESNA Standard 90.1–1999
established separate categories for
DOE has prepared a draft 1. Effective Date of the Proposed PTACs and PTHPs based on standard
Environmental Assessment (EA) Amended Energy Conservation and non-standard size wall sleeve
pursuant to the National Environmental Standards dimensions. Further, it described
Policy Act and the requirements under standard size units as being for new
42 U.S.C. 6295(o)(2) to determine the Generally, covered equipment to construction and non-standard size
environmental impacts of the proposed which a new or amended energy units as being for replacement purposes.
standards. (42 U.S.C. 6316(a)) As part of conservation standard applies must In addition, ASHRAE Standard 90.1–
the environmental analysis, DOE comply with the standard if they are 1999 includes a labeling requirement in
calculated the reduction in power plant manufactured or imported on or after a order to differentiate between new
emissions of CO2, NOX and mercury specified date. Section construction and replacement
(Hg), using the NEMS–BT computer 342(a)(6)(A)(ii)(II) of EPCA directs DOE equipment. Specifically, under
model. The EA has been integrated into to ‘‘establish an amended uniform ASHRAE/IESNA Standard 90.1–1999, to
Chapter 16 of the TSD. The analyses do national standard for [PTACs and be considered a non-standard size unit
not include the estimated reduction in PTHPs] at the minimum level for each (i.e., replacement), PTACs and PTHPs
power plant emissions of SO2 because, effective date specified in the amended must have a sleeve size less than 16
as discussed below, any such reduction ASHRAE Standard 90.1 [–1999 for inches high and less than 42 inches
resulting from an energy conservation wide, and be labeled as being for
PTACs and PTHPs], unless the Secretary
standard would not affect the overall replacement applications only. DOE
determines, by rule published in the
level of SO2 emissions in the United believes ASHRAE included a labeling
States. Federal Register and supported by clear
and convincing evidence, that adoption requirement for PTACs and PTHPs to
The NEMS–BT is run similarly to the help deter less efficient, non-standard
of a uniform national standard more
AEO2007 NEMS, except that PTAC and size equipment from being used for new
PTHP energy usage is reduced by the stringent than such amended ASHRAE/
IESNA Standard 90.1 [–1999 for PTACs construction.
amount of energy (by fuel type) saved Section 344 of EPCA provides the
due to the TSLs. DOE obtained the and PTHPs] would result in significant
Secretary with the authority to establish
inputs of national energy savings from additional conservation of energy and is
labeling rules for certain commercial
the NES spreadsheet model. For the technologically feasible and equipment, including PTACs and
environmental analysis, the output is economically justified.’’ (42 U.S.C. PTHPs. (42 U.S.C. 6315(e)) Section 344
the forecasted physical emissions. The 6313(a)(6)(A)(ii)(II)) In today’s NOPR, of EPCA directs the Secretary to
net benefit of the standard is the DOE is proposing to adopt a rule consider labeling rules which: (1)
difference between emissions estimated prescribing energy conservation Indicate the energy efficiency of the
by NEMS–BT and the AEO2007 standards higher than the efficiency equipment on the permanent nameplate
Reference Case. The NEMS–BT tracks levels contained in ASHRAE/IESNA attached to such equipment or on other
CO2 emissions using a detailed module Standard 90.1–1999. EPCA states that nearby permanent marking; (2)
that provides results with a broad any such standards ‘‘shall become prominently display the energy
coverage of all sectors and inclusion of effective for products manufactured on efficiency of the equipment in new
interactive effects. or after a date which is four years after equipment catalogs used by the
In the case of SO2, the Clean Air Act the date such rule is published in the manufacturer to advertise the
Amendments of 1990 set an emissions Federal Register.’’ (42 U.S.C. equipment; and (3) include such other
cap on all power generation. The 6313(a)(6)(D)) DOE has applied this markings as the Secretary determines
attainment of this target, however, is four-year implementation period to necessary solely to facilitate
flexible among generators and is determine the effective date of any enforcement of the standards
enforced by applying market forces, energy conservation standard prescribed established for such equipment. (42
using emissions allowances and by this rulemaking. Thus, since DOE U.S.C. 6315(e)) In addition, section 344
tradable permits. As a result, accurate expects to issue a final rule in this of EPCA states that the Secretary shall
simulation of SO2 trading tends to imply proceeding in September 2008 32, the not promulgate labeling rules for any
that the effect of energy conservation rule would apply to products class of industrial equipment, including
standards on physical emissions will be PTACs and PTHPs, unless DOE has
manufactured on or after September
near zero because emissions will always determined that:
2012, four years from the date of
be at, or near, the ceiling. Thus, there is • Labeling in accordance with this
virtually no real possible SO2 publication of the final rule. Thus, DOE
section is technologically and
environmental benefit from electricity calculated the LCCs and PBPs for all economically feasible with respect to
savings as long as there is enforcement customers as if each one purchased a such class;
of the emissions ceilings. However, new PTAC or PTHP in 2012. • Significant energy savings will
although there may not be an actual likely result from such labeling; and
reduction in SO2 emissions from 32 This rulemaking is subject to a Consent Decree • Labeling in accordance with this
electricity savings, there still may be an filed with the U.S. District Court for the Southern section is likely to assist consumers in
economic benefit from reduced demand District of New York to settle the consolidated cases making purchasing decisions.
for SO2 emission allowances. Electricity of State of New York, et al. v. Bodman, and Natural (42 U.S.C. 6315(h)).
Resources Defense Council, Inc., et al., (Civ. 7807
savings decrease the generation of SO2 At this time, DOE is uncertain of the
(JES) and Civ. 7808 (JES) (S.D.N.Y consolidated
emissions from power production, and December 6, 2005)), under which DOE is required
types of energy use or efficiency
consequently can decrease the need to to publish a final rule for amended energy information commercial customers and
purchase or generate SO2 emissions conservation standards for PTACs and PTHPs by owners of PTACs and PTHPs would
allowance credits. This decreases the September 30, 2008. find useful for making purchasing
decisions. Before DOE can establish type of information and other dimensions are equal. DOE maintained
labeling rules, it must first ascertain requirements or factors it should the 0.7 EER decrement established by
whether the above-referenced criteria consider in developing a proposed ASHRAE/IESNA Standard 90.1–1999
are met. DOE will work with the Federal labeling rule for PTACs and PTHPs. between the standard size equipment
Trade Commission and other with cooling capacities of 9,000 Btu/h
stakeholders to determine the types of V. Analytical Results and 12,000 Btu/h. TSL 7 is the
information and the forms (e.g., labels, A. Trial Standard Levels maximum technologically feasible
fact sheets, or directories) that would be (‘‘max tech’’) level for each class of
most useful for commercial customers Table V.1 presents the baseline equipment as discussed in section
and owners of PTACs and PTHPs. DOE efficiency level and the efficiency level III.B.2, above. TSLs 2 and 4 combine
preliminarily believes that a label on of each TSL analyzed for standard size different efficiency pairings between
PTAC and PTHP equipment indicating and non-standard size PTACs and PTACs and PTHPs. In other words, DOE
the equipment class would be useful for PTHPs subject to today’s proposed rule. examined the impacts of amended
enforcement of both the energy The baseline efficiency levels energy conservation standards when
conservation standards as well as the correspond to the efficiency levels PTACs and PTHPs are required to meet
building codes and would assist States specified by the energy efficiency different efficiency levels. For TSL 2,
and other stakeholders in determining equations in ASHRAE/IESNA Standard DOE combined TSL 1 for PTACs and
which application correlates to a given 90.1–1999. TSLs 1, 3, 5, 6 represent TSL 3 for PTHPs. For TSL 4, DOE
PTAC or PTHP (based upon size). DOE matched pairs of efficiency levels for the combined TSL 1 for PTACs and TSL 5
anticipates proposing labeling three representative cooling capacities for PTHPs. These two combination
requirements for PTAC and PTHP of PTACs and PTHPs. The efficiency levels serve to maximize LCC savings,
equipment in a separate rulemaking. levels for PTACs and PTHPs with the while recognizing the differences in
DOE invites public comment on the same cooling capacity and wall sleeve LCC results for PTACs and PTHPs.
TABLE V.1.—STANDARD SIZE AND NON-STANDARD SIZE PTACS AND PTHPS BASELINE EFFICIENCY LEVELS AND TSLS
Baseline
(ASHRAE/ TSL 7
Equipment class Efficiency metric IESNA Stand- TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 Max-
(cooling capacity) ard 90.1– Tech
1999)
Standard Size PTAC 9,000 EER .................................... 10.6 10.9 10.9 11.1 10.9 11.3 11.5 12.0
Btu/h.
Standard Size PTAC 12,000 EER .................................... 9.9 10.2 10.2 10.4 10.2 10.6 10.8 11.5
Btu/h.
Non-Standard Size PTAC EER .................................... 8.6 9.4 9.4 9.7 9.4 10.0 10.7 11.2
11,000 Btu/h.
Standard Size PTHP 9,000 EER .................................... 10.4 10.9 11.1 11.1 11.3 11.3 11.5 12.0
Btu/h.
COP .................................... 3.0 3.1 3.2 3.2 3.3 3.3 3.3 3.5
Standard Size PTHP 12,000 EER .................................... 9.7 10.2 10.4 10.4 10.6 10.6 10.8 11.7
Btu/h.
COP .................................... 2.9 3.0 3.1 3.1 3.1 3.1 3.1 3.3
Non-Standard PTHP 11,000 EER .................................... 8.5 9.4 9.7 9.7 10.0 10.0 10.7 11.4
Btu/h.
COP .................................... 2.6 2.8 2.8 2.8 2.9 2.9 2.9 2.9
As stated in the engineering analysis efficiency levels for PTACs and PTHPs passing through the EER values for
(see Chapter 5 of this TSD), current with a cooling capacity greater than or 9,000 Btu/h and 12,000 Btu/h for
Federal energy conservation standards equal to 7,000 Btu/h and less than or standard size PTACs and PTHPs. More
and the efficiency levels specified by equal to 15,000 Btu/h for each details describing how DOE determined
ASHRAE/IESNA Standard 90.1–1999 equipment class. To derive the the energy efficiency equations for each
for PTACs and PTHPs are a function of standards (i.e., efficiency level as a TSL are found in Chapter 9 of the TSD.
the equipment’s cooling capacity. Both function of cooling capacity), DOE Table V.2 and Table V.3 identify the
the Federal energy conservation plotted the representative cooling energy efficiency equations for each TSL
standards and the efficiency standards capacities and the corresponding for standard size PTACs and PTHPs.
in ASHRAE/IESNA Standard 90.1–1999 efficiency levels for each TSL. DOE then
are based on equations to calculate the calculated the equation of the line
TABLE V.2.—ENERGY-EFFICIENCY EQUATIONS (EER AS A FUNCTION OF COOLING CAPACITY) BY TSL FOR STANDARD
SIZE PTACS
Standard size** PTACs Energy efficiency equation*
Baseline ASHRAE/IESNA Standard 90.1–1999 ............................................................... EER = 12.5¥(0.213 × Cap†/1000)

TSL 1 ................................................................................................................................. EER = 13.0¥(0.233 × Cap†/1000)
TSL 2 ................................................................................................................................. EER = 13.0¥(0.233 × Cap†/1000)
TSL 3 ................................................................................................................................. EER = 13.2¥(0.233 × Cap†/1000)
TSL 4 ................................................................................................................................. EER = 13.0¥(0.233 × Cap†/1000)
SIZE PTACS—Continued
Standard size** PTACs Energy efficiency equation*
TSL 5 ................................................................................................................................. EER = 13.4¥(0.233 × Cap†/1000)

TSL 6 ................................................................................................................................. EER = 13.6¥(0.233 × Cap†/1000)
TSL 7 ................................................................................................................................. EER = 13.5¥(0.167 × Cap†/1000)
* For equipment rated according to the DOE test procedure, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled
products and evaporatively-cooled products and at 85 °F entering water temperature for water cooled products.
† Cap means cooling capacity in Btu/h at 95 °F outdoor dry-bulb temperature.
SIZE PTHPS
Standard size** PTHPs Energy efficiency equation*
Baseline ASHRAE/IESNA Standard 90.1–1999 ............................................................... EER = 12.3¥(0.213 × Cap†/1000)

COP = 3.2¥(0.026 × Cap†/1000)
TSL 1 ................................................................................................................................. EER = 13.0¥(0.233 × Cap†/1000)
COP = 3.6¥(0.046 × Cap†/1000)
TSL 2 ................................................................................................................................. EER = 13.2¥(0.233 × Cap†/1000)
COP = 3.6¥(0.044 × Cap†/1000)
TSL 3 ................................................................................................................................. EER = 13.2¥(0.233 × Cap†/1000)
COP = 3.6¥(0.044 × Cap†/1000)
TSL 4 ................................................................................................................................. EER = 13.4¥(0.233 × Cap†/1000)
COP = 3.7¥(0.053 × Cap†/1000)
TSL 5 ................................................................................................................................. EER = 13.4¥(0.233 × Cap†/1000)
COP = 3.7¥(0.053 × Cap†/1000)
TSL 6 ................................................................................................................................. EER = 13.6¥(0.233 × Cap†/1000)
COP = 3.8¥(0.053 × Cap†/1000)
TSL 7 ................................................................................................................................. EER = 12.9¥(0.100 × Cap†/1000)
COP = 4.1¥(0.074 × Cap†/1000)
products and evaporatively-cooled products and at 85 °F entering water temperature for water cooled products. All COP values must be rated at
47 °F outdoor dry-bulb temperature for air-cooled products, and at 70 °F entering water temperature for water-source heat pumps.
For non-standard size PTACs and determine the energy efficiency Chapter 9 of the TSD. Table V.4 and
PTHPs, DOE used the ASHRAE/IESNA equations corresponding to each TSL. Table V.5 identify the energy efficiency
Standard 90.1–1999 equation slope and More details describing how DOE equations for each TSL for non-standard
the representative cooling capacity (i.e., determined the energy efficiency size PTAC and PTHP.
11,000 Btu/h cooling capacity) to equations for each TSL are found in
TABLE V.4—ENERGY-EFFICIENCY EQUATIONS (EER AS A FUNCTION OF COOLING CAPACITY) BY TSL FOR NON-STANDARD
SIZE PTACS
Non-standard size** PTACs Energy efficiency equation*
Baseline ASHRAE/IESNA Standard 90.1–1999 ............................................................... EER = 10.9 ¥ (0.213 × Cap†/1000)

TSL 1 ................................................................................................................................. EER = 11.7 ¥ (0.213 × Cap†/1000)
TSL 2 ................................................................................................................................. EER = 11.7 ¥ (0.213 × Cap†/1000)
TSL 3 ................................................................................................................................. EER = 12.0 ¥ (0.213 × Cap†/1000)
TSL 4 ................................................................................................................................. EER = 11.7 ¥ (0.213 × Cap†/1000)
TSL 5 ................................................................................................................................. EER = 12.3 ¥ (0.213 × Cap†/1000)
TSL 6 ................................................................................................................................. EER = 13.0 ¥ (0.213 × Cap†/1000)
TSL 7 ................................................................................................................................. EER = 13.5 ¥ (0.213 × Cap†/1000)
products and evaporatively-cooled products and at 85 °F entering water temperature for water cooled products.
TABLE V.5—ENERGY-EFFICIENCY EQUATIONS (EER AS A FUNCTION OF COOLING CAPACITY) BY TSL FOR NON-STANDARD
SIZE PTHPS
Non-standard size** PTHPs Energy efficiency equation*
Baseline ASHRAE/IESNA Standard 90.1–1999 ............................................................... EER = 10.8 ¥ (0.213 × Cap†/1000)

COP = 2.9 ¥ (0.026 × Cap†/1000)
TSL 1 ................................................................................................................................. EER = 11.7 ¥ (0.213 × Cap†/1000)
COP = 3.1 ¥ (0.026 × Cap†/1000)
TSL 2 ................................................................................................................................. EER = 12.0 ¥ (0.213 × Cap†/1000)
COP = 3.1 ¥ (0.026 × Cap†/1000)
TSL 3 ................................................................................................................................. EER = 12.0 ¥ (0.213 × Cap†/1000)
COP = 3.1 ¥ (0.026 × Cap†/1000)
TSL 4 ................................................................................................................................. EER = 12.3 ¥ (0.213 × Cap†/1000)
COP = 3.1 ¥ (0.026 × Cap†/1000)
TSL 5 ................................................................................................................................. EER = 12.3 ¥ (0.213 × Cap†/1000)
COP = 3.1 ¥ (0.026 × Cap†/1000)
TSL 6 ................................................................................................................................. EER = 13.0 ¥ (0.213 × Cap†/1000)
COP = 3.2 ¥ (0.026 × Cap†/1000)
TSL 7 ................................................................................................................................. EER = 13.7 ¥ (0.213 × Cap†/1000)
COP = 3.2 ¥ (0.026 × Cap†/1000)
products and evaporatively-cooled products and at 85 °F entering water temperature for water cooled products. All COP values must be rated at
47 °F outdoor dry-bulb temperature for air-cooled products, and at 70 °F entering water temperature for water-source heat pumps.
For PTACs and PTHPs with cooling 1999 for calculating the EER and COP of are reported in Tables V.6 through V.11
capacity less than 7,000 Btu/h, DOE equipment with cooling capacities below. The first three outputs are the
determined the EERs using a cooling smaller than 7,000 Btu/h and larger than proportion of PTAC and PTHP
capacity of 7,000 Btu/h in the 15,000 Btu/h. purchases where the purchase of a
efficiency-capacity equations. For standard-compliant piece of equipment
B. Economic Justification and Energy
PTACs and PTHPs with a cooling would create a net LCC increase, no
Savings
capacity greater than 15,000 Btu/h impact, or a net LCC savings for the
cooling capacity, DOE determined the 1. Economic Impacts on Commercial customer. The fourth output is the
EERs using a cooling capacity of 15,000 Customers average net LCC savings from standard-
Btu/h in the efficiency-capacity a. Life-Cycle Cost and Payback Period compliant equipment. Finally, the fifth
equations. This is the same method output is the average PBP for the
established in the Energy Policy Act of DOE’s LCC and PBP analyses customer investment in standard-
1992 and provided in ASHRAE 90.1– provided five outputs for each TSL that compliant equipment.
TABLE V.6.—SUMMARY LCC AND PBP RESULTS FOR STANDARD SIZE PTAC WITH A COOLING CAPACITY OF
9,000 BTU/H
Trial standard level
1 2 3 4 5 6 7
EER .......................................................................................................................... 10.9 10.9 11.1 10.9 11.3 11.5 12

PTAC with Net LCC Increase (%) ........................................................................... 11 11 23 11 35 47 65
PTAC with No Change in LCC (%) ......................................................................... 81 81 63 81 46 29 14
PTAC with Net LCC Savings (%) ............................................................................ 8 8 14 8 19 23 22
Mean LCC Savings* ($) ........................................................................................... 0 0 0 0 (2) (4) (13)
Mean PBP (years) ................................................................................................... 11.6 11.6 12.5 11.6 13.2 14.0 16.0
*Numbers in parentheses indicate negative LCC savings, i.e., an increase in LCC.
TABLE V.7.—SUMMARY LCC AND PBP RESULTS FOR STANDARD SIZE PTHP WITH A COOLING CAPACITY OF
9,000 BTU/H
1 2 3 4 5 6 7
EER ................................................................................................................................ 10.9 11.1 11.1 11.3 11.3 11.5 12

PTHP with Net LCC Increase (%) ................................................................................. 4 6 6 8 8 15 20
PTHP with No Change in LCC (%) ............................................................................... 81 64 64 47 47 30 14
PTHP with Net LCC Savings (%) .................................................................................. 15 30 30 45 45 55 66
Mean LCC Savings ($) .................................................................................................. 13 23 23 32 32 30 40
Mean Payback Period (years) ....................................................................................... 4.5 4.0 4.0 3.9 3.9 4.5 4.8
TABLE V.8.—SUMMARY LCC AND PBP RESULTS FOR STANDARD SIZE PTAC WITH A COOLING CAPACITY OF
12,000 BTU/H
1 2 3 4 5 6 7
EER ................................................................................................................... 10.2 10.2 10.4 10.2 10.6 10.8 11.5

PTAC with Net LCC Increase (%) .................................................................... 13 13 25 13 41 54 75
PTAC with No Change in LCC (%) .................................................................. 80 80 62 80 44 28 12
PTAC with Net LCC Savings (%) ..................................................................... 7 7 13 7 15 18 13
Mean LCC Savings* ($) .................................................................................... (1) (1) (3) (1) (7) (11) (36)
Mean PBP (years) ............................................................................................ 13.0 13.0 13.9 13.0 14.8 15.9 19.8
*Numbers in parentheses indicate negative savings, i.e., an increase in LCC.
TABLE V.9.—SUMMARY LCC AND PBP RESULTS FOR STANDARD SIZE PTHP WITH A COOLING CAPACITY OF
12,000 BTU/H
1 2 3 4 5 6 7
EER ................................................................................................................... 10.2 10.4 10.4 10.6 10.6 10.8 11.7

PTHP with Net LCC Increase (%) .................................................................... 5 7 7 15 15 27 45
PTHP with No Change in LCC (%) .................................................................. 80 62 62 45 45 28 12
PTHP with Net LCC Savings (%) ..................................................................... 15 31 31 40 40 45 43
Mean LCC Savings ($) ..................................................................................... 15 26 26 22 22 18 8
Mean PBP (years) ............................................................................................ 4.9 4.4 4.4 5.3 5.3 6.1 7.5
TABLE V.10.—SUMMARY LCC AND PBP RESULTS FOR NON-STANDARD SIZE PTACS WITH A COOLING CAPACITY OF
11,000 BTU/H
1 2 3 4 5 6 7
EER ................................................................................................................... 9.4 9.4 9.7 9.4 10 10.7 11.2

PTAC with Net LCC Increase (%) .................................................................... 3 3 9 3 16 33 48
PTAC with No Change in LCC (%) .................................................................. 80 80 62 80 44 27 12
Mean LCC Savings ($) ..................................................................................... 27 27 31 27 33 26 12
Mean PBP (years) ............................................................................................ 4.2 4.2 4.9 4.2 5.7 7.8 9.6
TABLE V.11.—SUMMARY LCC AND PBP RESULTS FOR NON-STANDARD SIZE PTHPS WITH A COOLING CAPACITY OF
11,000 BTU/H
Trial Standard level
1 2 3 4 5 6 7
EER ................................................................................................................... 9.4 9.7 9.7 10 10 10.7 11.4

PTHP with Net LCC Increase (%) .................................................................... 0 2 2 3 3 14 29
PTHP with No Change in LCC (%) .................................................................. 81 62 62 45 45 27 12
Mean LCC Savings ($) ..................................................................................... 61 66 66 81 80 74 53
Mean PBP (years) ............................................................................................ 2.0 2.6 2.6 2.8 2.8 4.2 5.8
For PTACs and PTHPs with a cooling cooling capacity greater than 15,000 analysis results for the representative
capacity less than 7,000 Btu/h, DOE Btu/h, DOE established the proposed cooling capacities are provided in
established the proposed energy energy conservation standards using a Section V.A of today’s notice.
conservation standards using a cooling cooling capacity of 15,000 Btu/h in the
b. Life-Cycle Cost Sub-Group Analysis
capacity of 7,000 Btu/h in the proposed proposed efficiency-capacity equation.
efficiency-capacity equation. DOE Further, for PTACs and PTHPs with a Using the LCC spreadsheet model,
believes the LCC and PBP impacts for cooling capacity greater than 15,000 DOE determined the impact of the TSLs
equipment in this category will be Btu/h, DOE believes the impacts will be on the following customer subgroup:
similar to the impacts of the 9,000 Btu/ similar to units with a cooling capacity small businesses. Table V.12 shows the
h units because the MSP and usage of 12,000 Btu/h. More details explaining mean LCC savings from proposed
characteristics are in a similar range. how DOE developed the proposed energy conservation standards, and
Similarly, for PTACs and PTHPs with a energy efficiency equations based on the Table V.13 shows the mean payback
period (in years) for this subgroup. More subgroup analysis and results can be
detailed discussion on the LCC found in Chapter 12 of the TSD.
TABLE V.12.—MEAN LIFE-CYCLE COST SAVINGS FOR PTAC OR PTHP EQUIPMENT PURCHASED BY LCC SUB-GROUPS
(2006$)
TSL TSL TSL TSL TSL TSL TSL
Equipment class (cooling capacity) 1 2 3 4 5 6 7
Standard Size PTAC (9,000 Btu/h) ................................................... ($1) ($1) ($2) ($1) ($4) ($7) ($17)
Standard Size PTHP (9,000 Btu/h) ................................................... 10 19 19 26 26 23 30
Standard Size PTAC (12,000 Btu/h) ................................................. (2) (2) (5) (2) (9) (15) (42)
Standard Size PTHP (12,000 Btu/h) ................................................. 11 20 20 16 16 11 (4)
Non-Standard Size PTAC .................................................................. 22 22 25 22 26 16 1
Non-Standard Size PTHP .................................................................. 53 56 56 69 69 60 37
*Numbers in parentheses indicate negative savings.
TABLE V.13.—MEAN PAYBACK PERIOD FOR PTAC OR PTHP EQUIPMENT PURCHASED BY LCC SUB-GROUPS (YEARS)
TSL TSL TSL TSL TSL TSL TSL
Equipment class (cooling capacity) 1 2 3 4 5 6 7
Standard Size PTAC (9,000 Btu/h) ................................................................. 11.5 11.5 12.4 11.5 13.2 13.9 15.9
Standard Size PTHP (9,000 Btu/h) ................................................................. 4.5 4.0 4.0 3.9 3.9 4.5 4.8
Standard Size PTAC (12,000 Btu/h) ............................................................... 12.9 12.9 13.8 12.9 14.7 15.7 19.7
Standard Size PTHP (12,000 Btu/h) ............................................................... 4.9 4.4 4.4 5.2 5.2 6.1 7.5
Non-Standard Size PTAC ................................................................................ 4.2 4.2 4.9 4.2 5.7 7.8 9.5
Non-Standard Size PTHP ................................................................................ 2.0 2.6 2.6 2.8 2.8 4.2 5.8
For PTACs and PTHPs with a cooling Btu/h, DOE believes the impacts will be PTHP manufacturers. (See TSD, Chapter
capacity less than 7,000 Btu/h, DOE similar to units with a cooling capacity 13.)
believes that the LCC and PBP impacts of 12,000 Btu/h. See chapter 5 of the
TSD for how we selected representative a. Industry Cash Flow Analysis Results
for equipment in this category will be
similar to the impacts of the 9,000 Btu/ capacities that were analyzed. i. Standard Size PTACs and PTHPs
h units because the MSP and usage 2. Economic Impacts on Manufacturers Table V.14 and Table V.15 show the
characteristics are in a similar range.
DOE performed an MIA to estimate MIA results for each TSL using both
Similarly, for PTACs and PTHPs with a
the impact of amended energy markup scenarios described above for
cooling capacity greater than 15,000 conservation standards on PTAC and standard size PTACs and PTHPs.33
TABLE V.14.—MANUFACTURER IMPACT ANALYSIS FOR STANDARD SIZE PTACS AND PTHPS UNDER THE FLAT MARKUP
SCENARIO
R–410A full cost recovery with amended energy standards full recovery of increased cost

Units Base
case 1 2 3 4 5 6 7
INPV .............................................. (2006$ millions) ............................. 305 305 303 306 300 308 304 314
Change in INPV ............................ (2006$ millions) ............................. .......... (0) (2) 1 (5) 3 (1) 9
(%) ................................................ .......... ¥0.1 ¥0.8 0.2 ¥1.5 0.9 ¥0.2 3.1
R–410A Equipment Conversion (2006$ millions) ............................. 14.0 ............ ............ .......... ............ .......... ............ ..........
Expenses *.
R–410A Capital Conversion Ex- (2006$ millions) ............................. 7.0 ............ ............ .......... ............ .......... ............ ..........
penses *.
Amended Energy Conservation (2006$ millions) ............................. .......... 4.4 7.2 6.1 10.3 7.0 13.1 17.5
Standards Equipment Conver-
sion Expenses.
Amended Energy Conservation (2006$ millions) ............................. .......... 3.4 5.6 4.7 7.9 5.4 10.1 13.5
Standards Capital Conversion
Expenses.
Total Investment Required ** (2006$ millions) ............................. .......... 28.8 33.8 31.9 39.2 33.4 44.3 52.2
* Equipment conversion expenses and capital conversion expenses for converting PTACs and PTHPs to R–410A are made in 2009 and ac-
counted for in the base case.
** Total investment calculates both the equipment conversion expenses and the capital investments necessary for both converting PTACs and
PTHPs to R–410A and complying with amended energy conservation standards.
33 The MIA estimates the impacts on standard of cooling capacities (i.e., the MIA results in Tables on manufacturers of equipment from all 6 standard
size manufacturers of equipment in the entire range V.15 and V.16 take into consideration the impacts size equipment classes).
TABLE V.15.—MANUFACTURER IMPACT ANALYSIS FOR STANDARD SIZE PTACS AND PTHPS UNDER THE PARTIAL COST
RECOVERY MARKUP SCENARIO
R–410A base case full cost recovery with amended energy standards partial cost recovery

Base
Units case 1 2 3 4 5 6 7
INPV ........................................... (2006$ millions) ......................... 305 268 257 250 249 236 210 139
Change in INPV .......................... (2006$ millions) ......................... .......... (37) (48) (55) (56) (69) (95) (166)
(%) ............................................. .......... ¥12.1 ¥15.7 ¥18.1 ¥18.3 ¥22.7 ¥31.2 ¥54.5
R–410A Equipment Conversion (2006$ millions) ......................... 14.0 ............ ............ ............ ............ ............ ............ ............
Expenses *.
R–410A Capital Conversion Ex- (2006$ millions) ......................... 7.0 ............ ............ ............ ............ ............ ............ ............
penses *.
Amended Energy Conservation (2006$ millions) ......................... .......... 4.4 7.2 6.1 10.3 7.0 13.1 17.5
Standards Equipment Conver-
sion Expenses.
Amended Energy Conservation (2006$ millions) ......................... .......... 3.4 5.6 4.7 7.9 5.4 10.1 13.5
Standards Capital Conversion
Expenses.
Total Investment Required ** (2006$ millions) ......................... .......... 28.8 33.8 31.9 39.2 33.4 44.3 52.2
For the results shown above, DOE conform to the amended energy though TSL 2 requires efficiency levels
examined only the impacts of amended conservation standards. DOE expects that are different for PTACs and PTHPs,
energy conservation standards on the the lower end of the impacts to be there are small differences between the
INPV. The results shown assume that reached, which indicates that industry EER values for a given capacity in sleeve
manufacturers are able to recover all of revenues and costs are not significantly size, which will minimize the amount of
costs associated with the conversion to negatively impacted as long as redesign manufacturers will have to
R–410A refrigerant, which allows DOE manufacturers are able to recover fully undertake to modify their product lines.
to examine the impacts of the refrigerant the increase in manufacturer production DOE expects the impacts of TSL 2 on
phase-out separately in the cumulative cost from the customer. manufacturers of standard size PTACs
regulatory burden analysis. DOE also At TSL 2, the impact on INPV and will be greater than TSL 1, but the
estimated the impacts of amended cash flow would be similar to TSL 1 and magnitude of impacts largely depends
energy conservation standards when dependent on whether manufacturers on the ability of manufacturers to
manufacturers were only able to recover are able to recover fully the increases in recover fully the increase in MPC from
part of the costs associated with the MPCs from the customer. DOE the customer and minimize the level of
conversion to R–410A and presented the estimated the impacts in INPV at TSL 2 redesign between the two efficiency
results in the TSD. See Chapter 13 of the to range from ¥$2 million up to ¥$48 levels.
TSD for a complete summary of results million, or a change in INPV of ¥0.8 At TSL 3, the impact on INPV and
including the cumulative regulatory percent up to ¥15.7 percent. At this cash flow continues to vary depending
burden analysis. level, the industry cash flow decreases on the manufacturers and their ability to
At TSL 1, the impact on INPV and by approximately 33 percent, to $8 pass on increases in MPCs to the
cash flow varies greatly depending on million, compared to the base case value customer. DOE estimated the impacts in
the manufacturers and their ability to of $12 million in the year leading up to INPV at TSL 3 to range from
pass on increases in MPCs to the the standards. Up to 75 percent of approximately positive $1 million to
customer. DOE estimated the impacts in PTACs and up to 50 percent of PTHPs ¥$55 million, or a change in INPV of
INPV at TSL 1 to range from less than being sold are already at or above this 0.2 percent to ¥18.1 percent. At this
¥$1 million up to ¥$37 million, or a level using R–22 refrigerant. Similar to level, the industry cash flow decreases
change in INPV of negative 0.1 percent TSL 1 for PTACs, manufacturers whose by approximately 33 percent, to $8
up to negative 12.1 percent. At this equipment does not fall below the million, compared to the base case value
level, the industry cash flow decreases efficiency levels specified by TSL 1 after of $12 million in the year leading up to
by approximately 25 percent, to $9 the refrigerant phase-out will not have the standards. Currently the bulk of the
million, compared to the base case value to make additional modifications to equipment being sold is already at or
of $12 million in the year leading up to their product lines to conform to TSL 2. above this level using R–22 refrigerant.
the standards. Since more than 75 For PTHPs, the required higher level of DOE does not expect industry revenues
percent of PTAC and PTHP market is at efficiency will cause some manufactures and costs to be impacted significantly as
or above the efficiency levels specified to make additional modifications to long as standard size PTAC and PTHP
by TSL 1 using the R–22 refrigerant, their product lines to conform to the manufacturers are able the increase in
those manufacturers that do not fall amended energy conservation manufacturer production cost from the
below the efficiency levels specified by standards. These additional plant and customer. The positive INPV value is
TSL 1 after the refrigerant phase-out product modifications are estimated in explained by increases in MSP due to
will not have to make additional the capital and product conversion costs higher costs of R–410A equipment,
modifications to their product lines to shown in Tables V.14 and V. 15. Even which DOE assumed under this scenario
that manufacturers would be able to At TSL 5, DOE estimated the impacts engineering analysis. If manufacturers
recover fully the investments needed for in INPV to range from approximately $3 do not have the ability to integrate a
conversion to R–410A. See Chapter 13 million up to ¥$69 million, or a change high efficiency R–410A compressor into
of the TSD for additional details of each in INPV of approximately 1 percent up the PTACs and PTHPs, the impacts
markup scenario. to ¥22.7 percent. At this level, the could be greater than characterized by
At TSL 4, DOE estimated the impacts industry cash flow decreases by DOE’s MIA analysis.
in INPV to range from approximately approximately 33 percent, to $8 million, At TSL 7 (max tech), DOE estimated
compared to the base case value of $12 the impacts in INPV to range from $9
¥$5 million to ¥$56 million, or a
million in the year leading up to the million up to ¥$166 million, or a
change in INPV of ¥1.5 percent up to
standards. As with TSL 4, standard size change in INPV of approximately 3
¥18.3 percent. At this level, the
PTAC and PTHP manufacturers percent up to ¥54.5 percent. At this
industry cash flow decreases by
continue to have a hard time fully level, the industry cash flow decreases
approximately 50 percent, to $6 million,
passing on larger increases in MPCs to by approximately 92 percent, to $1
compared to the base case value of $12 the customer. At TSL 5, manufacturers
million in the year leading up to the million, compared to the base case value
stated their concerns over the ability to of $12 million in the year leading up to
standards. At higher TSLs, be able to produce both PTACs and
manufacturers have a harder time fully the standards. At higher TSLs,
PTHPs by the effective date of the
passing on larger increases in MPCs to manufacturers have a harder time fully
standard utilizing R–410A refrigerant.
the customer. At to TSL 4, passing on larger increases in MPCs to
Using the performance degradations
manufacturers are concerned about the customer, and therefore
from the engineering analysis, TSL 5
whether they will be able to produce manufacturers expect the higher end of
would correspond to the ‘‘max-tech’’
PTHPs, by the effective date of the the range of impacts to be reached (i.e.,
efficiency levels for both PTACs and
standard, that use R–410A refrigerant. a drop of 31.2 percent in INPV).
PTHPs using R–410A unless higher
Using the performance degradations Currently, there is only one model being
efficiency compressors enter the market
from the engineering analysis, TSL 4 for manufactured at these efficiency levels,
prior to the effective date of an amended
PTHPs using R–410A would correspond which uses R–22 refrigerant. Most
energy conservation standard. Based on
to the ‘‘max-tech’’ efficiency levels for information submitted by industry, the manufacturers did not provide DOE
PTHPs unless higher efficiency majority of manufacturers would require with projected equipment conversion
compressors enter the market prior to a complete redesign of their equipment. costs or capital conversion costs at this
the effective date of an amended energy Thus, DOE believes it is likely that the level, since they could not conceive of
conservation standard. Based on higher range of the impacts could be what designs using R–410A might
information submitted by industry, reached. achieve this efficiency level. The
manufacturers would be required to At TSL 6, DOE estimated the impacts industry would experience an increase
redesign completely their PTHP in INPV to range from ¥$1 million up in net present value if it were able to
equipment lines. Since most to ¥$95 million, or a change in INPV fully pass through to customers the
manufacturers only manufacture one of approximately ¥0.2 percent up to increase in production costs associated
product line, and combine their R&D ¥31.2 percent. At this level, the with meeting new amended energy
efforts for PTACs and PTHPs into one industry cash flow decreases by conservation standards. However, there
design, manufacturers would likely approximately 66 percent, to $4 million, is a risk of very large negative impacts
choose to redesign their entire compared to the base case value of $12 if manufacturers’ expectations are
equipment offering. Similar to TSL 1, million in the year leading up to the realized about reducing profit margins.
for PTACs, manufacturers that do not standards. At higher TSLs, During the interviews, manufacturers
fall below TSL 1 after the refrigerant manufacturers have a harder time fully expressed disbelief at the possibility of
phase-out will not have to make passing on larger increases in MPCs to manufacturing an entire equipment line
additional modifications to their PTAC the customer, and therefore at the max-tech levels using R–410A
equipment lines to conform to TSL 4. manufacturers expect the higher end of refrigerant.
Due to the disparity between efficiency the range of impacts to be reached (i.e., ii. Non-Standard Size PTACs and
levels of standard size PTACs and a drop of 31.2 percent in INPV). TSL 6 PTHPs
PTHPs specified by TSL 4, DOE initially requires the production of standard size
believes that it is more likely that the PTACs and PTHPs using R–410A that Table V.16 and Table V.17 shows the
higher end of the range of impacts could are not currently available on the market MIA results for each TSL using both
be reached (i.e., a drop of 18.3 percent today assuming the system performance markup scenarios described above for
in INPV). degradations estimated in the non-standard size PTACs and PTHPs.34
TABLE V.16.—MANUFACTURER IMPACT ANALYSIS FOR NON-STANDARD SIZE PTACS AND PTHPS UNDER FULL COST
RECOVERY MARKUP SCENARIO

Base
Units case 1 2 3 4 5 6 7
INPV ............................... (2006$ millions) ............. 28 25 22 23 18 21 18 16

Change in INPV ............. (2006$ millions) ............. .......... (2) (5) (4) (9) (7) (9) (11)
(%) ................................. .......... ¥7.7 ¥18.5 ¥15.7 ¥34.2 ¥24.6 ¥32.9 ¥40.6
34 The MIA estimates the impacts on non- results in Tables V.15 and V.16 take into equipment from all 6 non-standard size equipment
standard size manufacturers of equipment in the consideration the impacts on manufacturers of classes).
entire range of cooling capacities (i.e., the MIA
TABLE V.16.—MANUFACTURER IMPACT ANALYSIS FOR NON-STANDARD SIZE PTACS AND PTHPS UNDER FULL COST
RECOVERY MARKUP SCENARIO—Continued

Base
Units case 1 2 3 4 5 6 7
R–410A Equipment Con- (2006$ millions) ............. 0.6 ............ ................ ................ ................ ................ ................ ................
version Expenses *.
R–410A Capital Conver- (2006$ millions) ............. 7.0 ............ ................ ................ ................ ................ ................ ................
sion Expenses *.
Amended Energy Con- (2006$ millions) ............. .......... 2.5 6.3 5.6 10.6 8.8 11.9 15.0
servation Standards
Equipment Conversion
Expenses.
Amended Energy Con- (2006$ millions) ............. .......... 1.3 2.2 1.9 3.5 2.6 3.2 3.9
servation Standards
Capital Conversion Ex-
penses.
Total Investment Re- (2006$ millions) ............. .......... 11.4 16.1 15.1 21.7 18.9 22.7 26.5
quired **.
TABLE V.17.—MANUFACTURER IMPACT ANALYSIS FOR NON-STANDARD SIZE PTACS AND PTHPS UNDER THE PARTIAL
COST RECOVERY MARKUP SCENARIO
R–410A Base case full cost recovery with amended energy standards partial cost recovery

Base
Units case 1 2 3 4 5 6 7
INPV ............................. (2006$ millions) ........... 28 23 20 20 15 17 13 7

Change in INPV ............ (2006$ millions) ........... .......... (4) (7) (7) (12) (10) (15) (21)
(%) ............................... .......... ¥14.8 ¥26.9 ¥25.7 ¥43.9 ¥37.5 ¥53.4 ¥74.7
R–410A Equipment (2006$ millions) ........... 0.6 ................ ................ ................ ................ ................ ................ ................
Conversion Ex-
penses *.
R–410A Capital Conver- (2006$ millions) ........... 7.0 ................ ................ ................ ................ ................ ................ ................
sion Expenses *.
Amended Energy Con- (2006$ millions) ........... .......... 2.5 6.3 5.6 10.6 8.8 11.9 15.0
servation Standards
Equipment Conver-
sion Expenses.
Amended Energy Con- (2006$ millions) ........... .......... 1.3 2.2 1.9 3.5 2.6 3.2 3.9
servation Standards
Capital Conversion
Expenses.
Total Investment (2006$ millions) ........... .......... 11.4 16.1 15.1 21.7 18.9 22.7 26.5
Required **.
For the results shown above, DOE of results including the cumulative than half of the equipment being sold is
examined only the impacts of amended regulatory burden analysis. already at or above this level using R–
energy conservation standards on the At TSL 1, DOE estimated the impacts 22 refrigerant, those manufacturers that
INPV. The results shown assume that in INPV to range from less than ¥$2 do not fall below TSL 1 using R–410A
manufacturers are able to recover all of million up to ¥$4 million, or a change refrigerant will not have to make
costs associated with the conversion to in INPV of ¥7.7 percent up to ¥14.8 additional modifications to their
R–410A refrigerant, which allows DOE percent. At this level, the industry cash product lines to conform to the
to examine the impacts of the refrigerant flow decreases by approximately 50 amended energy conservation
phase-out separately in the cumulative percent, $1 million, compared to the standards. At TSL 1, the results of the
regulatory burden analysis. See Chapter base case value of $2 million in the year analysis show the least impact on
13 of the TSD for a complete summary leading up to the standards. Since more manufacturers.
At TSL 2, DOE estimated the impacts ¥$2 million, compared to the base case percent of their equipment lines to be
in INPV to range from ¥$5 million up value of $2 million in the year leading misclassified. Consequently, this
to ¥$7 million, or a change in INPV of up to the standards. Using the equipment would be required to meet
¥18.5 percent up to ¥26.9 percent. At performance degradations from the the higher energy conservation
this level, the industry cash flow engineering analysis, TSL 5 for PTACs standards for standard size equipment,
decreases by approximately 150 percent, and PTHPs would correspond to the which manufacturers do not believe is
¥$1 million, compared to the base case ‘‘max-tech’’ efficiency levels for PTHPs attainable with non-standard size
value of $2 million in the year leading unless higher efficiency compressors equipment. If manufacturers’
up to the standards. At this level, the enter the market prior to the effective expectations were reached with a
majority of the industry is impacted. At date of an amended energy conservation declining equipment offering, the INPV
higher TSLs, manufacturers have a standard. and cash flow impacts of the declining
harder time fully passing on larger At TSL 6, DOE estimated the impacts industry as estimated by the MIA would
increases in MPCs to the customer, thus in INPV to range from ¥$9 million up be further negatively affected.
manufacturers expect the higher end of to ¥$15 million, or a change in INPV
the range of impacts to be reached (i.e., of ¥32.9 percent up to ¥53.4 percent. b. Cumulative Regulatory Burden
a drop of 26.9 percent in INPV). At this level, the industry cash flow While any one regulation may not
At TSL 3, DOE estimated the impacts decreases by approximately 300 percent, impose a significant burden on
in INPV to range from ¥$4 million up ¥$4 million, compared to the base case manufacturers, the combined effects of
to ¥$7 million, or a change in INPV of value of $2 million in the year leading several impending regulations may have
¥15.7 percent up to ¥25.7 percent. At up to the standards. serious consequences for some
this level, the industry cash flow At TSL 5 and 6, manufacturers stated
manufacturers, groups of manufacturers,
decreases by approximately 150 percent, their concerns over the ability to be able
or an entire industry. Assessing the
¥$1 million, compared to the base case to produce this equipment by the
impact of a single regulation may
value of $2 million in the year leading effective date of the standard utilizing
overlook this cumulative regulatory
up to the standards. At higher TSLs, R–410A. Based on information
burden.
manufacturers continue to have a hard submitted by industry, manufacturers
time fully passing on larger increases in would require a complete redesign of As previously mentioned, all PTAC
MPCs to the customer, thus their non-standard PTAC and PTHP and PTHP manufacturers believe that
manufacturers expect the higher end of platforms. Many manufacturers stated the refrigerant phase-out will be the
the range of impacts to be reached (i.e., they would be unwilling to redesign biggest external burden on
a drop of 25.7 percent in INPV). completely non-standard size manufacturers. DOE took all comments
Manufacturers stated that the level of re- equipment because of the small size of and concerns into consideration and
design required to manufacture all the the market and the declining sales. examined different impacts the
equipment lines and cooling capacity Manufacturers also commented non- refrigerant phase-out would have on
ranges would be so extensive that they standard size PTACs and PTHPs are standard and non-standard size PTAC
would consider not investing the time, manufactured to order based on unique and PTHP industries. DOE first
research, or development efforts building designs for replacement examined the possible impacts on INPV
necessary to make equipment utilizing applications. Therefore, manufacturers from converting current production of
R–410A at TSL 3. did not see the advantage to completely R–22 equipment into R–410A
At TSL 4, DOE estimated the impacts redesigning non-standard size PTACs equipment. DOE then examined the
in INPV to range from ¥$9 million up and PTHPs in small and declining possible impacts of amended energy
to ¥$12 million, or a change in INPV market. conservation standards on the R–410A
of ¥34.2 percent up to ¥43.9 percent. At TSL 7, DOE estimated the impacts base case. In other words, DOE
At this level, the industry cash flow in INPV to range from ¥$11 million up examined the cumulative impacts of
decreases by approximately 250 percent, to ¥$21 million, or a change in INPV both R–410A conversion and
¥$3 million, compared to the base case of ¥40.6 percent up to ¥74.7 percent. compliance with the proposed energy
value of $2 million in the year leading At this level, the industry cash flow conservation standards (see Chapter 13
up to the standards. At TSL 4, decreases by approximately 350 percent, of the TSD). Table V.18 and Table V.19
manufacturers stated their concerns ¥$5 million, compared to the base case show the changes in INPV because of
over the ability to be able to produce value of $2 million in the year leading conversion to R–410A in 2012 on the
PTHPs by the effective date of the up to the standards. During their MIA base case (i.e., the shipments forecast in
standard utilizing R–410A refrigerant. interviews, all manufacturers stated that the absence of amended mandatory
Using the performance degradations this level is simply not achievable with energy conservation standards beyond
from the engineering analysis, TSL 4 for current technologies after the refrigerant the levels in ASHRAE/IESNA Standard
PTHPs would correspond to the ‘‘max- phase-out. In addition, some 90.1–1999). For the results presented in
tech’’ efficiency levels for PTHPs unless manufacturers would not provide the two tables below, DOE assumed
higher efficiency compressors enter the equipment conversion cost or capital manufacturers would be able to cover
market prior to the effective date of an conversion costs at this level, since they fully any increase in manufacturing
amended energy conservation standard. could not conceive what designs might costs associated with the conversion to
Based on information submitted by reach this efficiency level. R–410A in 2010. DOE also estimated the
industry, manufacturers would be Lastly, non-standard size impacts on the base case from the R–
required to redesign completely their manufacturers stated great concern over 410A conversion if manufacturers were
PTHP equipment lines. the amplification of impacts if not able to recover fully the increases in
At TSL 5, DOE estimated the impacts ASHRAE/IESNA Standard 90.1–1999 MPCs and displayed the results in
in INPV to range from ¥$7 million up definitions are adopted by DOE and Chapter 13 of the TSD. In general, if
to ¥$10 million, or a change in INPV their equipment lines are reduced. manufacturers were not able to recover
of ¥24.6 percent up to ¥37.5 percent. Several manufacturers believe the fully the increases in MPC because of
At this level, the industry cash flow ASHRAE/IESNA Standard 90.1–1999 the R–410A conversion, the impacts on
decreases by approximately 200 percent, definitions would cause up to 50 the base case would be amplified.
TABLE V.18.—CHANGES IN INDUSTRY NET PRESENT VALUE FOR STANDARD SIZE PTACS AND PTHPS FROM R–410A
CONVERSION
Energy conservation standards
flat markup
Change in INPV
TSL from base case
INPV
$MM %
$MM Change
Base Case (R–22 only) ....................................................................................................................................... 298 ................ ................

Base Case (R–22 with R–410A Conversion) ...................................................................................................... 305 7 2.3%
TABLE V.19.—CHANGES IN INDUSTRY NET PRESENT VALUE FOR NON-STANDARD SIZE PTACS AND PTHPS FROM R–
410A CONVERSION
Energy conservation standards
flat markup
Change in INPV
TSL from base case
INPV
$MM %
$MM Change
Base Case (R–22 only) ....................................................................................................................................... 32 ................ ................

Base Case (R–22 with R–410A Conversion) ...................................................................................................... 28 (4) ¥12.5%
c. Impacts on Employment needed to perform these functions, and real terms over time. Table V.20 and
DOE estimated industry-wide labor incorporated these estimates into the Table V.21 provide DOE’s estimate of
expenditures based on the engineering GRIM, which projects labor the changes in labor measured as the
analysis. Coil fabrication; tube cutting expenditures annually. Under the change in labor expenditures for
and soldering; electronic connection GRIM, total labor expenditures are a standard and non-standard size PTACs
assembly; package assembly; testing and function of the labor intensity in and PTHPs in 2012, the date DOE
packing of the completed PTAC or manufacturing equipment, the sales expects the amended energy
PTHP represent the bulk of the labor. volume, and the unit cost of labor (i.e., conservation standard to become
DOE estimated the amount of labor the wage rate), which remains fixed in effective, compared to the base case.
TABLE V.20.—PROJECTED CHANGE IN LABOR EXPENDITURES, STANDARD SIZE PTACS AND PTHPS (2012)
Trial standard levels
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7
+1.9% ....................................................................................................................... +2.4% +3.0% +2.9% +4.3% +5.7% +11.5%
TABLE V.21.—PROJECTED CHANGE IN LABOR EXPENDITURES, NON-STANDARD SIZE PTACS AND PTHPS (2012)
+1.8% ........................................................................................................................... +2.2% +2.7% +2.6% +3.7% +7.3% +11.6%
Based on these results, DOE expects their concerns, throughout the change the fundamental assembly of the
no significant discernable direct interviews, about increasing offshore equipment. However, manufacturers
employment impacts among standard competition entering the market over anticipate some minimal changes to the
and non-standard size PTAC and PTHP the past five years. assembly line due to the conversion to
manufacturers for TSL1 through TSL 7. R–410A refrigerant. Because of the
d. Impacts on Manufacturing Capacity
This conclusion is independent of any properties of R–410A refrigerant, the
conclusions regarding employment According to the majority of standard assembly line will need to give special
impacts in the broader United States and non-standard size PTAC and PTHP attention to creating vacuums within
economy, which are documented in manufacturers, amended energy each unit’s chambers, and additional
Chapter 15 of the TSD. This conclusion conservation standards will not assembly will be needed if the number
also ignores the possible relocation of significantly affect the manufacturer’s of fan motors increases. DOE believes
domestic employment to lower-labor- production capacity. Any necessary manufacturers will be able to maintain
cost countries. Manufacturers stated redesign of PTACs and PTHPs will not production capacity levels and continue
to meet market demand under amended DOE evaluated the impact of amended 3. National Impact Analysis
energy conservation standards. energy conservation standards on small a. Amount and Significance of Energy
businesses, as defined by the SBA for Savings
e. Impacts on Subgroups of
the PTAC and PTHP manufacturing
Manufacturers Table V.22 shows the forecasted
industry as manufacturing enterprises
with 750 or fewer employees. DOE national energy savings for all the
As discussed above, using average equipment classes of PTACs and PTHPs
cost assumptions to develop an industry shared the interview guides with small
at each of the TSLs. DOE estimated the
cash flow estimate is not adequate for PTAC and PTHP manufacturers and
national energy savings using the
assessing differential impacts among tailored specific questions for these
AEO2007 energy price forecast. The
subgroups of manufacturers. Small manufacturers. During DOE’s interviews table also shows the magnitude of the
manufacturers, niche players, or with small manufacturers, they energy savings if the savings are
manufacturers exhibiting a cost provided information, which suggested discounted at rates of 7 percent and 3
structure that differs largely from the that the impacts of standards on them percent. Each TSL considered in this
industry average could be affected would not differ from impacts on larger rulemaking would result in significant
differently. DOE used the results of the companies within the industry. (See energy savings, and the amount of
industry characterization to group TSD, Chapter 13.) savings increases with higher energy
manufacturers exhibiting similar conservation standards. (See TSD,
characteristics. Chapter 11.)
TABLE V.22.—SUMMARY OF CUMULATIVE NATIONAL ENERGY SAVINGS FOR PTACS AND PTHPS (ENERGY SAVINGS FOR
UNITS SOLD FROM 2012 TO 2042)
Primary national energy savings (quads)
(sum of all equipment classes)
3% Dis- 7% Dis-
Undiscounted counted counted
1 ................................................................................................................................................... 0.008 0.005 0.002

2 ................................................................................................................................................... 0.014 0.008 0.004
3 ................................................................................................................................................... 0.017 0.009 0.004
4 ................................................................................................................................................... 0.019 0.010 0.005
5 ................................................................................................................................................... 0.027 0.014 0.007
6 ................................................................................................................................................... 0.038 0.021 0.010
7 ................................................................................................................................................... 0.086 0.046 0.023
DOE reports both undiscounted and TABLE V.23.—SUMMARY OF CUMU- TABLE V.24.—SUMMARY OF CUMU-
discounted values of energy savings. LATIVE NET PRESENT VALUE FOR LATIVE NET PRESENT VALUE FOR
There is evidence that each TSL that is PTACS PTHPS—Continued
more stringent than the corresponding
level in ASHRAE/IESNA Standard 90.1– NPV* (billion 2006$) Trial NPV* (billion 2006$)
1999 results in additional energy Trial stand- standard
ard level 7% discount 3% discount 7% discount 3% discount
savings, ranging from 0.008 quads to rate rate
level rate rate
0.086 quads for TSLs 1 through 7. For
example, the estimated energy savings 1 ................ $0.000 $0.005 7 ................ (0.001) 0.074
for TSL 4 is equivalent to the electricity 2 ................ 0.000 0.005
3 ................ (0.001) 0.007 * Numbers in parentheses indicate negative
used annually by approximately 4,000 NPV, i.e., a net cost.
motels.35 4 ................ 0.000 0.005
5 ................ (0.006) 0.005 Use of a 3 percent discount rate
b. Net Present Value 6 ................ (0.014) (0.000) increases the present value of future
7 ................ (0.066) (0.071) equipment-purchase costs and operating
The NPV analysis is a measure of the cost savings. Because annual operating
* Numbers in parentheses indicate negative
cumulative benefit or cost of standards NPV, i.e., a net cost. cost savings in later years grow at a
to the Nation. Tables V.23 and V.24 faster rate than annual equipment
provide an overview of the NPV results. TABLE V.24.—SUMMARY OF CUMU- purchase costs, use of a 3 percent
LATIVE NET PRESENT VALUE FOR discount rate increases the NPV at most
PTHPS TSLs. (See TSD, Chapter 11.)
c. Impacts on Employment
NPV* (billion 2006$)
Trial DOE develops estimates of the
standard 7% discount 3% discount indirect employment impacts of
level
rate rate proposed standards in the economy in

1 ................ $0.006 $0.021
general. As discussed above, DOE
2 ................ 0.014 0.043 expects energy conservation standards
35 Energy Information Agency. http:// 3 ................ 0.014 0.043 for PTACs and PTHPs to reduce energy
www.eia.doe.gov/emeu/cbecs/cbecs2003/ 4 ................ 0.016 0.056 bills for commercial customers, and the
detailed_tables_2003/2003set1/2003pdf/b1.pdf. 5 ................ 0.016 0.056 resulting net savings to be redirected to
June 2006. 6 ................ 0.010 0.052 other forms of economic activity. DOE
also realizes that these shifts in prior to September 2008, DOE proposes emissions in the United States due to
spending and economic activity could to incorporate the modified definition in the caps on power plant emissions of
affect the demand for labor. To estimate the final rule to help alleviate SO2.
these effects, DOE used an input/output manufacturers concerns about reduced The impact of these NOX emissions
model of the U.S. economy using BLS product availability. will be affected by the Clean Air
data (as described in section IV.J). (See Interstate Rule (CAIR) issued by the U.S.
5. Impact of Any Lessening of Environmental Protection Agency on
TSD, Chapter 15.) Competition
This input/output model suggests the March 10, 2005.36 70 FR 25162 (May 12,
proposed PTAC and PTHP energy EPCA directs DOE to consider any 2005). CAIR will permanently cap
lessening of competition that is likely to
conservation standards are likely to emissions of NOX in 28 eastern States
result from standards. It directs the
increase the net demand for labor in the and the District of Columbia. As with
Attorney General to determine in
economy. Neither the BLS data nor the SO2 emissions, a cap on NOX emissions
input/output model used by DOE writing the impact, if any, of any means that equipment energy
lessening of competition likely to result
includes the quality or wage level of the conservation standards are not likely to
jobs. As shown in Table V.25, DOE from a proposed standard. (42 U.S.C. have a physical effect on NOX emissions
6316(a); 42 U.S.C. 6295(o)(2)(B)(i)(V))
estimates that net indirect employment in States covered by the CAIR caps.
impacts from a proposed PTAC and To assist the Attorney General in Therefore, while the emissions cap may
making such a determination, DOE has
PTHP standards are likely to be very mean that physical emissions
provided the Department of Justice
small. The net increase in jobs is so reductions in those States will not result
(DOJ) with copies of this notice and the
small that it would be imperceptible in from standards, standards could
TSD for review. DOE found that
national labor statistics and might be produce an environmental-related
numerous foreign manufacturers have
offset by other, unanticipated effects on economic benefit in the form of lower
employment. entered the standard size PTAC and prices for emissions allowance credits.
PTHP market over the past several However, as with SO2 allowance prices,
TABLE V.25.—NET NATIONAL CHANGE years. DOE believes this will continue to DOE does not plan to monetize this
happen in this market regardless of the benefit for those States because the
IN INDIRECT EMPLOYMENT, JOBS IN
proposed standard level chosen. impact on the NOX allowance price
2042 from any single energy conservation
6. Need of the Nation To Conserve
Energy standard is likely to be small and highly
Net national change in jobs
Trial uncertain. DOE seeks comment on how
(number of jobs)
standard Increasing the energy efficiency of it might value NOX emissions for the 22
level PTACs and PTHPs promotes the
PTACs PTHPs States not covered under CAIR.
Nation’s energy security by reducing With regard to mercury emissions,
1 ................ 11 20 overall demand for energy, and thus DOE is able to report an estimate of the
2 ................ 11 40 reducing the Nation’s reliance on physical quantity changes in mercury
3 ................ 24 40 foreign sources of energy. Reduced
4 ................ 11 62 demand also may improve the reliability
emissions associated with an energy
5 ................ 44 62 conservation standard. Based on the
of the Nation’s electricity system, NEMS–BT modeling, Hg emissions
6 ................ 69 82
7 ................ 147 195 particularly during peak-load periods. generally decline out to 2020 or 2025.
As a measure of this reduced demand, However, there is a slight Hg increase by
4. Impact on Utility or Performance of DOE expects the proposed standards to 2030, depending on the TSL level and
Equipment eliminate the need for the construction the equipment type. These changes in
of new power plants with Hg emissions, as shown in Table V.26,
In performing the engineering approximately 81 megawatts (MW) are extremely small, i.e., none of the
analysis, DOE considered design electricity generation capacity in 2042. changes come close to approaching a 1
options that would not lessen the utility Enhanced energy efficiency also percent change in annual emissions.
or performance of the individual classes produces environmental benefits. The The NEMS–BT model accounts for a
of equipment. (42 U.S.C. 6316(a); 42 expected energy savings from higher wide variety of factors. One possible
U.S.C. 6295(o)(2)(B)(i)(IV)) As presented [PTAC and PTHP] standards will reduce reason for the Hg emissions increase
in section III.D.4, of this notice, DOE the emissions of air pollutants and could be due to emissions banking. The
concluded that none of the efficiency greenhouse gases associated with fossil NEMS–BT model assumed that power
levels proposed for standard size and fuel use as well as other energy-related plant operators would be permitted to
non-standard size equipment in this environmental impacts. Table V.26 bank emission allowances from years in
notice will reduce the utility or shows cumulative CO2, NOX, and Hg which they release fewer emissions than
performance of PTACs and PTHPs emissions reductions for all the [PTAC the maximum permitted. Power plant
except the small fraction of the market and PTHP] equipment classes over the operators may then release more
that is potentially misclassified under forecast period. The cumulative CO2, emissions than permitted by their
ASHRAE/IESNA Standard 90.1–1999. NOX and Hg emission reductions range allowances in a later year.
PTAC and PTHP manufacturers up to 6.13 Mt, 0.53 kt, and ¥0.04 t, The NEMS–BT model assumed that
currently offer equipment that meet or respectively, for PTACs and 6.94 Mt, these emissions would be subject to
exceed the proposed standard levels. As 0.40 kt, and ¥0.03 t, respectively, for EPA’s Clean Air Mercury Rule 37
detailed in section IV.A.2 above, DOE PTHPs. In Chapter 16 of the TSD, DOE (CAMR), which would permanently cap
recognizes ARI’s concerns regarding reports annual changes in CO2, NOX and emissions of mercury for new and
non-standard size equipment and the Hg emissions attributable to each TSL. existing coal-fired plants in all States by
possible misclassification under the As discussed in section IV.L, DOE does 2010. Similar to SO2 and NOX, DOE
definitions established by ASHRAE/ not report SO2 emissions reduction from assumed that under such system, energy
IESNA Standard 90.1–1999. If ASHRAE power plants because such reduction
is able to adopt Addendum t to from an energy conservation standard 36 See http://www.epa.gov/cleanairinterstaterule/.
ASHRAE/IESNA Standard 90.1–2007 would not affect the overall level of SO2 37 70 FR 28606 (May 18, 2005).
conservation standards would result in considered that valuation of such which the Court, among other actions,
no physical effect on these emissions, impact from any single energy vacated the CAMR referenced above.
but would be expected to result in an conservation standard would likely be Accordingly, DOE is considering
environmental-related economic benefit small and highly uncertain. whether changes are needed to its plan
in the form of a lower price for On February 8, 2008, the U.S. Court for addressing the issue of mercury
emissions allowance credits. DOE’s plan of Appeals for the District of Columbia emissions in light of the D.C. Circuit’s
for addressing analysis does not include Circuit (D.C. Circuit) issued its decision decision. DOE invites public comment
monetizing the benefits of reduced in State of New Jersey, et al. v. on addressing mercury emissions in this
mercury emissions, because DOE Environmental Protection Agency,38 in rulemaking.
TABLE V.26.—SUMMARY OF EMISSIONS REDUCTIONS FOR [PTAC AND PTHP] (CUMULATIVE REDUCTIONS FOR EQUIPMENT
SOLD FROM 2012 TO 2042)
Emissions reductions for PTACs*
CO2 (Mt) ............................................................................... 0.50 0.50 1.06 0.50 1.83 2.95 6.13
NOX (kt) ............................................................................... 0.04 0.04 0.09 0.04 0.16 0.26 0.53
Hg (t) .................................................................................... 0.00 0.00 -0.01 0.00 -0.01 -0.02 -0.04
Emissions reductions for PTHPs*
CO2 (Mt) ............................................................................... 0.73 1.49 1.49 2.19 2.19 3.00 6.94
NOX (kt) ............................................................................... 0.04 0.08 0.08 0.12 0.12 0.13 0.40
Hg (t) .................................................................................... 0.00 -0.01 -0.01 -0.01 -0.01 -0.02 -0.03
* Negative values indicate emission increases.
DOE is considering taking into value of CO2 emissions, DOE used the consumer costs savings: The estimated
account a monetary benefit of CO2 estimates identified by the study cited year-by-year reductions in CO2
emission reductions associated with this in Summary for Policymakers prepared emissions were converted into monetary
rulemaking. During the preparation of by Working Group II of the IPCC’s values ranging from the $0 and $14 per
its most recent review of the state of Fourth Assessment Report to estimate ton. These estimates were based on an
climate science, the Intergovernmental the potential monetary value of the CO2 assumption of no benefit to an average
Panel on Climate Change (IPCC) reductions likely to result from the benefit value reported by the IPCC.39
identified various estimates of the standards under consideration in this The resulting annual values were then
present value of reducing carbon- rulemaking. discounted over the life of the affected
dioxide emissions by one ton over the To put the potential monetary benefits appliances to the present using both 3
life that these emissions would remain from reduced CO2 emissions into a form percent and 7 percent discount rates.
in the atmosphere. The estimates that is likely to be most useful to The resulting estimates of the potential
reviewed by the IPCC spanned a range decision makers and stakeholders, DOE range of net present value benefits
of values. In the absence of a consensus used the same methods used to associated with the reduction of CO2
on any single estimate of the monetary calculate the net present value of emissions are reflected in Table V.27.
TABLE V.27.—PRELIMINARY ESTIMATES OF SAVINGS FROM CO2 EMISSIONS REDUCTIONS UNDER CONSIDERED PTACS
AND PTHP TRIAL STANDARD LEVELS
Value of estimated CO2

Estimated CO2 (Mt) emission reductions
PTAC TSL emission reductions based on IPCC range
(million $)
1 .............................................................................................................................................. 0.50 0 to 7.00

2 .............................................................................................................................................. 0.50 0 to 7.00
3 .............................................................................................................................................. 1.06 0 to 14.84
4 .............................................................................................................................................. 0.50 0 to 7.00
5 .............................................................................................................................................. 1.83 0 to 25.62
6 .............................................................................................................................................. 2.95 0 to 41.3
7 .............................................................................................................................................. 6.13 0 to 85.82
38 No. 05–1097, 2008 WL 341338, at *1 (D.C. Cir. This translates into about $12 per ton of carbon several years on either side of 2000, the estimate is
Feb. 8, 2008). dioxide. The literature review (Tol 2005) from often treated as year 2000 dollars. Updating that
39 According to the IPCC, the mean social cost of which this mean was derived did not report the estimate to 2007 dollars yields a SCC of $14 per ton
carbon (SCC) reported in studies published in peer- year in which these dollars are denominated. of carbon dioxide.
reviewed journals was U.S. $43 per ton of carbon. However, since the underlying studies spanned
TABLE V.27.—PRELIMINARY ESTIMATES OF SAVINGS FROM CO2 EMISSIONS REDUCTIONS UNDER CONSIDERED PTACS
AND PTHP TRIAL STANDARD LEVELS—CONTINUED
Value of estimated CO2

Estimated CO2 (Mt) emission reductions
PTHP TSL emission reductions based on IPCC range
(million $)
1 .............................................................................................................................................. 0.73 0 to 10.22

2 .............................................................................................................................................. 1.49 0 to 26.64
3 .............................................................................................................................................. 1.49 0 to 26.64
4 .............................................................................................................................................. 2.19 0 to 30.66
5 .............................................................................................................................................. 2.19 0 to 30.66
6 .............................................................................................................................................. 3.00 0 to 42.00
7 .............................................................................................................................................. 6.94 0 to 97.16
DOE relied on the average of the IPCC 7. Other Factors evidence’’ shows that a more stringent
reported estimate as an upper bound on standard ‘‘would result in significant
The Secretary of Energy, in
the benefits resulting from reducing additional conservation of energy and is
determining whether a standard is
each metric ton of U.S. CO2 emissions. technologically feasible and
economically justified, may consider
It is important to note that the estimate economically justified.’’ (42 U.S.C.
any other factors that he/she deems to
of the upper bound value represents the 6313(a)(6)(A)(ii)(II)).
be relevant. (42 U.S.C. 6316 (a); 42
value of worldwide impacts from In selecting the proposed energy
U.S.C. 6295(o)(2)(B)(i)(VI)) The
potential climate impacts caused by CO2 conservation standards for PTACs and
Secretary has decided to consider the
emissions, and are not confined to PTHPs for consideration in today’s
impacts of setting different amended
impacts likely to occur within the U.S. notice of proposed rulemaking, DOE
energy conservation standards for
In contrast, most of the other estimates started by examining the maximum
PTACs and PTHPs (i.e., setting an
of costs and benefits of increasing the technologically feasible levels, and
amended standard level for a given
efficiency of PTACs and PTHPs in this determined whether those levels were
PTAC cooling capacity, which would be
proposal include only the economic economically justified. Upon finding the
significantly different from the amended
values of impacts that would be maximum technologically feasible
standard level for a PTHP with the same
experienced in the U.S. For example, in levels not to be justified, DOE analyzed
cooling capacity). In addition, DOE also
determining impacts on manufacturers, the next lower TSL to determine
considered the uncertainties associated
DOE generally does not consider whether that level was economically
with the impending refrigerant phase-
impacts that occur solely outside of the justified. DOE repeated this procedure
out in 2010, including equipment
U.S. Consequently, as DOE considers a until it identified a TSL that was
availability, compressor availability,
monetary value for CO2 emission economically justified.
and the available efficiencies of R–410A
reductions, the value might be restricted To aid the reader as DOE discusses
PTACs and PTHPs.
to a representation of those cost/benefits the benefits and/or burdens of each TSL,
likely to be experienced in the United C. Proposed Standard Table V.28 presents a summary of
States. Currently, there are no estimated quantitative analysis results for each
1. Overview
values for the U.S. benefits likely to TSL based on the assumptions and
result from CO2 emission reductions. EPCA, at 42 U.S.C. methodology discussed above. This
However, DOE expects that, if such 6313(a)(6)(A)(ii)(II), specifies that, for table presents the results or, in some
values were developed, DOE would use any commercial and industrial cases, a range of results, for each TSL,
those U.S. benefit values, and not world equipment addressed in section and will aid the reader in the discussion
benefit values, in its analysis. DOE 342(a)(6)(A)(i) of EPCA, 42 U.S.C. of costs and benefits of each TSL. The
further expects that, if such values were 6313(a), DOE may prescribe an energy range of values reported in this table for
developed, they would be lower than conservation standard more stringent industry impacts represents the results
comparable global values. DOE invites than the level for such equipment in for the different markup scenarios that
public comment on the above ASHRAE/IESNA Standard 90.1, as DOE used to estimate manufacturer
discussion of CO2. amended, only if ‘‘clear and convincing impacts.
TABLE V.28.—SUMMARY OF RESULTS BASED UPON THE AEO2007 ENERGY PRICE FORECAST *
Primary energy saved (quads) .............................. 0.008 0.014 0.017 0.019 0.027 0.038 0.086
7% Discount rate ................................................... 0.002 0.004 0.004 0.005 0.007 0.010 0.023
3% Discount rate ................................................... 0.005 0.008 0.009 0.010 0.014 0.021 0.046
Generation capacity reduction (GW) ** .................. 0.042 0.062 0.081 0.081 0.141 0.209 0.461
NPV (2006$ billion):
7% Discount rate ............................................ $0.007 $0.014 $0.013 $0.017 $0.010 ($0.004) ($0.067)
3% Discount rate ............................................ $0.026 $0.049 $0.050 $0.061 $0.061 $0.052 $0.003
Industry impacts:
Industry NPV (2006$ million) .......................... (2)–(41) (8)–(55) (4)–(62) (14)–(68) (4)–(80) (10)–(110) (2)–(187)
Industry NPV (% Change) .............................. (1)–(12) (2)–(17) (1)–(19) (4)–(20) (1)–(24) (3)–(33) (1)–(56)
Cumulative emissions impacts†:
CO2 (Mt) .......................................................... 1.24 1.99 2.55 2.69 4.02 5.95 13.07
NOX (kt) .......................................................... 0.08 0.12 0.17 0.16 0.28 0.39 0.93
TABLE V.28.—SUMMARY OF RESULTS BASED UPON THE AEO2007 ENERGY PRICE FORECAST *—Continued
Hg (t) ............................................................... 0.00 ¥0.01 ¥0.02 ¥0.01 ¥0.02 ¥0.04 ¥0.07

Mean LCC savings * (2006$):
Standard Size PTAC, 9,000 Btu/h .................. 0 0 (0) 0 (2) (4) (13)
Standard Size PTHP, 9,000 Btu/h .................. 13 23 23 32 32 30 40
Standard Size PTAC, 12,000 Btu/h ................ (1) (1) (3) (1) (6) (11) (36)
Standard Size PTHP, 12,000 Btu/h ................ 14 26 26 22 22 18 8
Non-Standard Size PTAC ............................... 27 27 31 27 33 26 12
Non-Standard Size PTHP ............................... 61 66 66 81 81 74 53
Mean PBP (years):
Standard Size PTAC, 9,000 Btu/h .................. 11.6 11.6 12.5 11.6 13.2 14.0 16.0
Standard Size PTHP, 9,000 Btu/h .................. 4.5 4.0 4.0 3.9 3.9 4.5 4.8
Standard Size PTAC, 12,000 Btu/h ................ 13.0 13.0 13.9 13.0 14.8 15.9 19.8
Standard Size PTHP, 12,000 Btu/h ................ 4.9 4.4 4.4 5.3 5.3 6.1 7.5
Non-Standard Size PTAC ............................... 4.2 4.2 4.9 4.2 5.7 7.8 9.6
Non-Standard Size PTHP ............................... 2.0 2.6 2.6 2.8 2.8 4.2 5.8
LCC Results:
Standard Size PTAC, 9,000 Btu/h
Net Cost (%) ............................................ 11.7 11.7 23.5 11.7 35.4 47.5 64.8
No Impact (%) ......................................... 80.8 80.8 62.8 80.8 45.5 29.1 13.5
Net Benefit (%) ........................................ 7.5 7.5 13.8 7.5 19.1 23.4 21.6
Standard Size PTHP, 9,000 Btu/h
Net Cost (%) ............................................ 4.0 6.2 6.2 8.0 8.0 14.7 19.7
No Impact (%) ......................................... 81.2 63.7 63.7 46.7 46.7 30.2 14.4
Net Benefit (%) ........................................ 14.9 30.1 30.1 45.3 45.3 55.2 65.9
Standard Size PTAC, 12,000 Btu/h
Net Cost (%) ............................................ 12.9 12.9 25.7 12.9 40.8 54.3 74.7
No Impact (%) ......................................... 80.1 80.1 61.6 80.1 44.1 27.6 12.1
Net Benefit (%) ........................................ 7.0 7.0 12.7 7.0 15.1 18.1 13.2
Standard Size PTHP, 12,000 Btu/h
Net Cost (%) ............................................ 4.9 7.2 7.2 15.0 15.0 26.7 44.8
No Impact (%) ......................................... 80.2 62.1 62.1 44.6 44.6 27.9 12.1
Net Benefit (%) ........................................ 14.8 30.7 30.7 40.5 40.5 45.4 43.0
Non-Standard Size PTAC
Net Cost (%) ............................................ 3.4 3.4 8.8 3.4 16.3 32.9 48.1
No Impact (%) ......................................... 80.2 80.2 61.6 80.2 43.8 26.9 12.5
Net Benefit (%) ........................................ 16.4 16.4 29.6 16.4 39.9 40.2 39.4
Non-Standard Size PTHP
Net Cost (%) ............................................ 0.2 1.9 1.9 2.8 2.8 13.8 28.9
No Impact (%) ......................................... 80.9 62.4 62.4 44.6 44.6 27.4 12.4
Net Benefit (%) ........................................ 18.9 35.7 35.7 52.7 52.7 58.8 58.7
* Parentheses indicate negative (¥) values. For LCCs, a negative value means an increase in LCC by the amount indicated.
** Change in installed generation capacity by the year 2042 based on AEO2007 Reference Case.
† CO emissions impacts include physical reductions at power plants. NO emissions impacts include physical reductions at power plants as
2 X
well as production of emissions allowance credits where NOX emissions are subject to emissions caps. SO2 emissions impacts include physical
reductions at households only.
In addition to the quantitative results, 2. Conclusion are projected to lose on average $21
DOE also considered other factors that (2006$) over the life of the product and
might affect economic justification. DOE First, DOE considered TSL 7, the max- purchasers of PTHPs would save on
took into consideration the EPA tech level. TSL 7 would likely save average $26 (2006$). DOE estimates LCC
mandated refrigerant phase-out and its 0.086 quads of energy through 2042, an increases for 70 percent of customers in
effect on PTAC and PTHP equipment amount DOE considers significant. the Nation that purchase a standard size
efficiency, which concern both standard Discounted at seven percent, the PTAC, and for 34 percent of customers
size and non-standard size PTACs and projected energy savings through 2042 in the Nation that purchase a standard
PTHPs. In addition, DOE considered the would be 0.023 quads. For the Nation as size PTHP. DOE also estimates LCC
uniqueness of the PTAC and PTHP a whole, DOE projects that TSL 7 would increases for 48 percent of customers in
industry, that is, manufacturers of non- result in a net decrease of $67 million the Nation that purchase a non-standard
standard size equipment. In particular, in NPV, using a discount rate of seven size PTAC, and for 29 percent of
DOE considered the declining percent. The emissions reductions at customers in the Nation that purchase a
shipments of this equipment, the small TSL 7 are 13.07 Mt of CO2 and 0.93 kt non-standard size PTHP. The mean
size segment of the industry (both of NOX. Total generating capacity in payback period of each standard size
relative to the rest of the PTAC and 2042 is estimated to decrease compared PTAC equipment classes at TSL 7 is
PTHP industry and in absolute terms), to the reference case by 0.461 gigawatts projected to be substantially longer than
and the differential impacts of potential (GW) under TSL 7. the mean lifetime of the equipment.
amended energy conservation standards At TSL 7, DOE projects that the The projected change in industry
on non-standard size manufacturers average PTAC customer will experience value (INPV) ranges from a decrease of
when compared to standard size an increase in LCC for all standard size $2 million to a decrease of $187 million.
manufacturers. equipment classes. Purchasers of PTACs For PTACs and PTHPs, the impacts are
driven primarily by the assumptions PTAC, on average, would experience an upon PTAC customers. In addition, DOE
regarding the ability to pass on larger increase in LCC of $8, while the believes at TSL 6, the benefits of energy
increases in MPCs to the customer. customer for a standard size PTHP, on savings and emissions impacts would be
Currently, there is only one product line average, would experience a decrease in outweighed by the large impacts on
being manufactured at TSL 7 efficiency LCC of $23. In addition, the customer manufacturers’ INPV. Finally, DOE is
levels, and it uses R–22 refrigerant, as for a non-standard size PTAC, on concerned that manufacturers may be
discussed in section III.B.2 above. DOE average, would experience a decrease in unable to offer the full capacity range of
believes that PTAC and PTHP LCC of $26, while the customer for a equipment utilizing R–410A by the
manufacturers will eventually be able to non-standard size PTHP, on average, effective date of the amended energy
design and produce R–410A equipment would experience a decrease in LCC of conservation standards.
at TSL 7, based on manufacturers’ $74. At TSL 6, DOE projects that the Next, DOE considered TSL 5. DOE
response to the residential central air average PTAC customer for a standard projects that TSL 5 would save 0.027
conditioners refrigerant phase-out and size PTAC will experience an increase quads of energy through 2042, an
amended energy conservation in LCC in each equipment class. In amount DOE considers significant.
standards. However, DOE has not addition, the mean payback period of Discounted at seven percent, the
initially been able to identify each standard size PTAC equipment projected energy savings through 2042
technologies and design approaches for class at TSL 6 is projected to be would be 0.007 quads. For the Nation as
R–410A units to meet these higher substantially longer than the mean a whole, DOE projects TSL 5 to result
levels in the absence of a high efficiency lifetime. in net savings in NPV of $10 million,
compressor. At TSL 7, DOE recognizes At TSL 6, the projected change in using a discount rate of seven percent,
the risk of very large negative impacts INPV ranges between a loss of $10 and $61 million, using a discount rate
if manufacturers’ expectations about million and a loss of $110 million. For of three percent. The estimated
reduced profit margins are realized. In manufacturers of non-standard size emissions reductions are 4.02 Mt of CO2
particular, if the high end of the range equipment alone, DOE estimated a and 0.28 kt of NOX. Total generating
of impacts is reached as DOE expects, decrease in the collective value of the capacity in 2042 under TSL 5 would
TSL 7 could result in a net loss of 56 industry to range from 33 percent to 53 likely decrease by 0.141 GW.
percent in INPV to the PTAC and PTHP percent. The magnitude of projected
At TSL 5, DOE projects that the
industry. impacts is still largely determined,
average customer for standard size
After carefully considering the however, by the manufacturers’ ability
PTAC will experience an increase in
analysis and weighing the benefits and to pass on larger increases in MPC to the
LCC in each equipment classes.
burdens of TSL 7, the Secretary has customer. Thus, the potential INPV
Purchasers of PTACs are projected to
reached the following initial conclusion: decrease of $110 million assumes DOE’s
lose on average $5 (2006$) over the life
At TSL 7, even if manufacturers projections of partial cost recovery as
of the product and purchasers of PTHPs
overcome the barriers to produce R–410 described in Chapter 13 of the TSD. In
would save on average $26 (2006$).
equipment by the effective date of an addition, at TSL 6 the impending
amended energy conservation standard, refrigerant phase-out could have a DOE estimates LCC savings for 39
the benefits of energy savings and significant impact on manufacturers. percent of customers of standard size
emissions reductions would be Currently, both standard size and non- PTACs, and for 12 percent of customers
outweighed by the potential multi- standard size PTACs and PTHPs using of standard size PTHPs. LCC increases
million dollar negative net economic R–22 refrigerant are available on the are estimated for 16 percent of
cost to the Nation, the economic burden market at TSL 6 efficiency levels. But, customers of non-standard size PTACs,
on consumers, and the large capital if the performance degradations that and for 3 percent of customers of non-
conversion costs that could result in a DOE estimated in the engineering standard size PTHPs. The mean payback
reduction in INPV for manufacturers. analysis for R–410A equipment prove to period for each standard size PTAC
Next, DOE considered TSL 6. Primary be valid, manufacturers might be unable equipment class at TSL 6 is projected to
energy savings is estimated at 0.038 to produce R–410A equipment at these be substantially longer than the mean
quads of energy through 2042, which levels unless high efficiency R–410A lifetime of the equipment.
DOE considers significant. Discounted compressors become available. The The projected change in INPV ranges
at seven percent, the energy savings absence of such compressors would between a loss of $4 million and a loss
through 2042 would be 0.010 quads. For likely mean that the negative financial of $80 million. For manufacturers of
the Nation as a whole, DOE projects that impacts of TSL 6 would be greater than non-standard size equipment alone,
TSL 6 would result in a net decrease of characterized by DOE’s MIA analysis. DOE projects their collective industry
$4 million in NPV, using a discount rate Even though the ability of value would decrease by 25 percent to
of seven percent. The emissions manufacturers to produce equipment 38 percent. Just as with TSL 6 and 7, the
reductions are projected to be 5.95 Mt utilizing R–410A is greater at TSL 6 projected impacts continue to be driven
of CO2 and 0.39 kt of NOX. Total than at TSL 7, DOE anticipates that it primarily by the manufacturers’ ability
generating capacity in 2042 under TSL would still be difficult for to pass on increases in MPCs to the
6 is estimated to decrease by 0.209 GW. manufacturers to produce standard size customer. The loss of $80 million
At TSL 6, DOE found the impacts of and non-standard size PTACs and assumes DOE’s projections of partial
amended energy conservation standards PTHPs at TSL 6 in the full range of cost recovery as described in Chapter 13
on customers of PTACs would likely capacities available today due to the of the TSD. TSL 5 requires the
differ significantly from their impacts physical size constraints imposed by the production of standard size and non-
on PTHP customers. While only 22 wall sleeve dimensions. standard size PTACs and PTHPs using
percent of customers of standard size While DOE recognizes the increased R–410A that would have efficiencies
PTHPs would likely have an LCC economic benefits to the nation that equivalent to the ‘‘max tech’’ efficiency
increase at TSL 6, a majority of could result from TSL 6, DOE concludes levels with R–410A applying the
customers of standard size PTACs (52 that the benefits of a Federal standard at degradations estimated in the
percent) would have LCC increase at TSL 6 would still be outweighed by the engineering analysis in the absence of a
this TSL. A customer for a standard size economic burden that would be placed high efficiency compressor.
After carefully considering the At TSL 4, DOE projects that the driven primarily by the manufacturers’
analysis and weighing the benefits and average PTAC or PTHP customer would ability to pass on increases in MPCs to
burdens, the Secretary has concluded experience LCC savings. Purchasers of the customer. The loss of $68 million
that, at TSL 5, the benefits of energy standard size PTACs, on average, have assumes DOE’s projections of partial
savings and emissions reductions would LCC increase of $1 (2006$) over the life cost recovery as described in Chapter 13
be outweighed by the potential multi- of the product and purchasers of PTHPs of the TSD. TSL 4 requires the
million dollar net economic cost to the would save on average $26 (2006$). production of standard size and non-
Nation, the economic burden on PTAC DOE estimates LCC savings for 12 standard size PTACs at TSL 1 efficiency
consumers as compared with PTHP percent of customers in the Nation that levels and PTHPs at TSL 5 efficiency
customers, and the large capital purchase a standard size PTAC, and for levels. Thus, TSL 4 requires the
conversion costs that could result in a 12 percent of customers in the Nation production of standard size and non-
reduction in INPV for manufacturers. that purchase a standard size PTHP. standard size PTHPs using R–410A that
DOE estimates LCC increases for 3 would have efficiencies equivalent to
Next, DOE considered TSL 4. For TSL percent of customers in the Nation that
4, DOE combined TSL 1 for PTACs and the ‘‘max tech’’ efficiency levels with R–
purchase a non-standard size PTAC, and 410A applying the degradations
TSL 5 for PTHPs. This combination of for 3 percent of customers in the Nation
efficiency levels serves to maximize estimated in the engineering analysis in
that purchase a non-standard size PTHP. the absence of a high efficiency
LCC savings, while recognizing the For both standard size and non-standard
differences in LCC results for PTACs compressor.
size PTACs and PTHPs, the remainder
and PTHPs. DOE projects that TSL 4 of customers would experience either a After considering the analysis and
would save 0.019 quads of energy decrease or no change in LCC. DOE also weighing the benefits and the burdens,
through 2042, an amount DOE considers projects that the mean payback period of DOE tentatively concludes that the
significant. Discounted at seven percent, each standard size PTAC equipment benefits of a TSL 4 standard outweigh
the projected energy savings through class at TSL 4 would be substantially the burdens. In particular, the Secretary
2042 would be 0.005 quads. For the longer than the mean lifetime of the concludes that TSL 4 saves a significant
Nation as a whole, DOE projects that equipment. amount of energy and is technologically
TSL 4 would result in net savings in The projected change in INPV ranges feasible and economically justified.
NPV of $17 million, using a discount between a loss of $14 million and a loss Therefore, DOE today proposes to adopt
rate of seven percent, and $61 million, of $68 million. For manufacturers of the energy conservation standards for
using a discount rate of three percent. non-standard size equipment alone, PTACs and PTHPs at TSL 4. Table V.29
The estimated emissions reductions are DOE projects their collective industry demonstrates the proposed energy
2.69 Mt of CO2 and 0.16 kt of NOX. Total value would decrease by 34 percent to conservation standards for all
generating capacity in 2042 under TSL 44 percent. Just as with TSL 5, 6, and equipment classes of PTACs and PTHPs,
4 would likely increase by 0.081 GW. 7, the projected impacts continue to be including all cooling capacities.
TABLE V.29.—PROPOSED ENERGY CONSERVATION STANDARDS FOR PTACS AND PTHPS

Equipment class Proposed energy conservation stand-
ards*
PTAC ..................... Standard Size** ..................................... < 7,000 Btu/h ........................................ EER = 11.4
≥7,000 Btu/h and ≤15,000 Btu/h .......... EER = 13.0 ¥ (0.233 × Cap††)
>15,000 Btu/h ....................................... EER = 9.5
Non-Standard Size† .............................. <7,000 Btu/h ......................................... EER = 10.2
≥ 7,000 Btu/h and ≤ 15,000 Btu/h ........ EER = 11.7¥(0.213 × Cap††)
> 15,000 Btu/h ...................................... EER = 8.5
PTHP ..................... Standard Size** ..................................... < 7,000 Btu/h ........................................ EER = 11.8, COP = 3.3
COP = 3.7¥(0.053 × Cap††)
> 15,000 Btu/h ...................................... EER = 9.9, COP = 2.9
Non-Standard Size† < 7,000 Btu/h ........................................ EER = 10.8, COP = 3.0
COP = 3.1¥(0.026 × Cap††)
> 15,000 Btu/h ...................................... EER = 9.1, COP = 2.8
* Forequipment rated according to the DOE test procedure (ARI Standard 310/380–2004), all energy efficiency ratio (EER) values must be
rated at 95° F outdoor dry-bulb temperature for air-cooled equipment and evaporatively-cooled equipment and at 85° F entering water tempera-
ture for water cooled equipment. All coefficient of performance (COP) values must be rated at 47° F outdoor dry-bulb temperature for air-cooled
equipment, and at 70° F entering water temperature for water-source heat pumps.
†† Cap means cooling capacity in thousand British thermal units per hour (Btu/h) at 95° F outdoor dry-bulb temperature.
As noted, TSL 4 would require PTHPs the engineering analysis. Therefore, for PTACs and PTHPs, DOE solicits
to meet the same efficiency levels as DOE strongly encourages stakeholders comment on potential equipment
specified in TSL 5. DOE believes that to scrutinize closely the analyses and switching as discussed in section IV.G.3
these efficiency levels are equivalent to other information presented with this of today’s notice. In particular, DOE is
the expected ‘‘max tech’’ efficiency notice, and to comment on the viability interested in receiving comment on
levels for equipment utilizing R–410A of this standard level. In addition, since whether: (1) Evidence shows that
applying the degradations estimated in TSL 4 requires different efficiency levels equipment switching is likely and
would likely negate the energy savings problem that it intends to address that could expect the energy efficiency for
from setting a standard at different warrant new agency action, as well as PTACs and PTHPs to be more or less
efficiency levels for PTHPs and PTACs; assess the significance of that problem, randomly distributed across key
and (2) such evidence warrants DOE to enable assessment of whether any variables such as energy prices and
adoption of some other TSL level or the new regulation is warranted. Executive usage levels. However, since data are
ASHRAE/IESNA Standard 90.1–1999 Order 12866, § 1(b)(1). not available on how such equipment is
efficiency levels rather than TSL 4 for DOE’s preliminary analysis suggests purchased, DOE seeks detailed data on
the final rule. that much of the hospitality industry the distribution of energy efficiency
Aside from the considerations segment using PTAC and PTHP levels for both new construction and
discussed above, DOE is also concerned equipment tends to be small hotels or replacement markets. DOE plans to use
about the unique nature of the non- motels. DOE believes that these small these data to test the extent to which
standard size segment of the PTAC and hotels and motels tend to be purchasers of this equipment behave as
PTHP industry. At TSL 4, non-standard individually owned and operated, and if they are unaware of the costs
size manufacturers are expected to lose lack corporate direction in terms of associated with their energy
from $9 million to $12 million in INPV, energy policy. The transaction costs for consumption. In the case of the PTHP
which is a reduction in 34 percent to 44 these smaller owners or operators to equipment with multiple heating
percent. Many manufacturers stated research, purchase, and install optimum systems (reverse cycle and electric
they would be unwilling to redesign efficiency equipment are too high to resistance), estimating the energy
completely non-standard size make such action commonplace. DOE consumption from component level
equipment because of the small size of believes that there is a lack of changes is even more complex. DOE
the market and the declining sales. In information and/or information found energy efficiency and energy cost
supporting this assertion, manufacturers processing capability about energy savings are not the primary drivers of
also pointed out that non-standard size efficiency opportunities in the PTAC the hotel and motel business. Instead,
PTACs and PTHPs are manufactured to and PTHP market available to hotel or hotel and motel operators work on a
order based on unique building designs motel owners. Unlike residential fixed budget and are primarily
for replacement applications. In heating and air conditioning products, concerned with providing clean and
addition, manufacturers expressed great PTACs and PTHPs are not included in comfortable rooms to the customers to
concern that negative impacts would be energy labeling programs such as the ensure customer satisfaction. If
amplified if DOE were to adopt the Federal Trade Commission’s energy consumer satisfaction decreases, hotel
ASHRAE/IESNA Standard 90.1–1999 labeling program. Furthermore, the or motel owners may incur increased
equipment class delineations, and their energy use of PTACs and PTHPs is transaction costs, thus preventing access
equipment lines were reduced. Several dependent on climate and the to capital to finance energy efficiency
manufacturers believe the ASHRAE/ equipment usage and, as such, is not investment.
IESNA Standard 90.1–1999 delineations readily available for the owners or
operators to make a decision on whether A related issue is the problem of
would cause up to 50 percent of their asymmetric information (one party to a
equipment lines to be misclassified, and improving the energy efficiency of
PTAC and PTHP equipment is cost- transaction has more and better
be subject to standard levels they could information than the other) and/or high
not meet with resulting decline in effective. DOE seeks data on the
efficiency levels of existing PTAC and transactions costs (costs of gathering
equipment offerings. If these concerns information and effecting exchanges of
were realized, the negative INPV and PTHP equipment in use by building
type (e.g., hotel, motel, small office goods and services) among the PTAC
cash flow impacts on the declining and PTHP equipment customers. In the
industry would be even greater than building, nursing home facility, etc.),
electricity price (and/or geographic case of PTACs and PTHPs, in many
estimated by the MIA. DOE is cases, the party responsible for the
particularly interested in receiving region of the country) and installation
type (i.e., new construction or equipment purchase may not be the one
comments on the differential impacts on who pays the cost to operate it. For
replacement).
non-standard size manufacturers and on example, PTAC and PTHP equipment
DOE recognizes that PTACs and
whether DOE should adopt lower are also used in nursing homes and
PTHPs are not purchased in the same
minimum efficiency levels (e.g., TSL 1, manner as regulated appliances that are medical office buildings where the
TSL 2, or TSL 3) for non-standard size sold in retail stores, e.g., room air builder or complex owner often makes
PTAC and PTHP equipment in the final conditioners. When purchased by the decisions about PTACs and PTHPs
rule. end user, PTACs and PTHPs are more without input from tenants nor do they
VI. Procedural Issues and Regulatory likely purchased through contractors offer options to tenants to upgrade them.
Review and builders that perform the Furthermore, DOE believes the tenant
installation. The Air-Conditioning and typically pays the utility bills. If there
A. Review Under Executive Order 12866 Refrigeration Institute (ARI) Directory of were no transactions costs, it would be
Today’s regulatory action has been Certified Product Performance includes in the builder or complex owners’
determined to be a significant regulatory PTACs and PTHPs and provides the interest to install equipment the tenants
action under Executive Order 12866, energy efficiency and capacity would choose on their own. For
‘‘Regulatory Planning and Review.’’ 58 information on PTACs and PTHPs example, a tenant who knowingly faces
FR 51735 (October 4, 1993). produced by participating higher utility bills from low-efficiency
Accordingly, this action was subject to manufacturers. DOE seeks comment on equipment would expect to pay less in
review under the Executive Order by the the experience with this directory and rent, thereby shifting the higher utility
Office of Information and Regulatory the extent to which the information it cost back to the complex owner.
Affairs at the Office of Management and provides leads to more informed However, this information is not
Budget (OMB). choices, specifically given how such costless, and it may not be in the
The Executive Order requires that equipment are purchased. interest of the tenant to take the time to
each agency identify in writing the To the extent, there is potentially a develop it, or, in the case of the complex
specific market failure or other specific substantial information problem, one owner who installs less efficient
equipment, to convey that information DOE invites comments on the weight alternatives to this regulation; (3) a
to the tenant. that should be placed on these factors in quantitative comparison of the impacts
To the extent that asymmetric DOE’s determination of the maximum of the alternatives; and (4) the national
information and/or high transaction energy efficiency level at which the total economic impacts of the proposed
costs are problems, one would expect to benefits are likely to exceed the total standard.
find certain outcomes with respect to burdens resulting from an amended The RIA calculates the effects of
PTAC and PTHP efficiency. For DOE standard. feasible policy alternatives to PTAC and
example, other things being equal, one DOE conducted a regulatory impact PTHP amended energy conservation
would not expect to see higher rents for analysis (RIA) and, under the Executive standards, and provides a quantitative
office complexes with high efficiency Order, was subject to review by the comparison of the impacts of the
equipment. Alternatively, one would Office of Information and Regulatory alternatives. DOE evaluated each
expect higher energy efficiency in rental Affairs (OIRA) in the OMB. DOE alternative in terms of its ability to
units where the rent includes utilities presented to OIRA for review the draft achieve significant energy savings at
compared to those where the tenant proposed rule and other documents
reasonable costs, and compared it to the
pays the utility bills separately. DOE prepared for this rulemaking, including
effectiveness of the proposed rule. DOE
seeks data that might enable it to the RIA, and has included these
analyzed these alternatives using a
conduct tests of market failure. documents in the rulemaking record.
In addition, this rulemaking is likely series of regulatory scenarios as input to
They are available for public review in
to yield certain ‘‘external’’ benefits the NES Shipments Model for PTACs
the Resource Room of the Building
resulting from improved energy and PTHPs, which it modified to allow
Technologies Program, 950 L’Enfant
efficiency of PTACs and PTHPs that are inputs for these measures.
Plaza, SW., 6th Floor, Washington, DC
not captured by the users of such 20024, (202) 586–9127, between 9 a.m. DOE identified the following major
equipment. These include both and 4 p.m., Monday through Friday, policy alternatives for achieving
environmental and energy security except Federal holidays. increased PTAC and PTHP energy
related externalities that are not The RIA is contained in the TSD efficiency:
reflected in energy prices, such as prepared as a separate report for the • No new regulatory action;
reduced emissions of greenhouse gases. rulemaking. The RIA consists of: (1) A • Commercial customer rebates;
With regard to environmental statement of the problem addressed by
externalities, the emissions reductions this regulation, and the mandate for • Commercial customer tax credits;
in today’s proposed rule are projected to government action; (2) a description and • Voluntary energy-efficiency
be 2.7 Mt of CO2 and 0.16 kt of NOX. analysis of the feasible policy targets—ENERGY STAR;
TABLE VI.1.—NON-REGULATORY ALTERNATIVES TO STANDARDS
Net present value**

Energy (billion 2006$)
Policy alternatives savings*
(quads) 7% Dis- 3% Dis-
count rate count rate
No New Regulatory Action ...................................................................................................................... 0.000 0.000 0.000

Commercial Customer Rebates .............................................................................................................. 0.006 0.003 0.017
Commercial Customer Tax Credits ......................................................................................................... 0.010 0.007 0.032
Voluntary Energy-Efficiency Targets—ENERGY STAR .......................................................................... 0.017 0.013 0.057
Today’s Standards at TSL 4 .................................................................................................................... 0.019 0.016 0.061
* Energy savings are in source quads.
** Net present value is the value in the present of a time series of costs and savings. DOE determined the net present value from 2012 to
2062 in billions of 2006$.
The net present value amounts shown energy. By definition, no new regulatory program involved a rebate program that
in Table VI.1 refer to the NPV for action yields zero (0) energy savings and was nominally patterned after existing
commercial customers. The costs to the a net present value of zero dollars. rebate programs currently offered by
government of each policy (such as Financial Incentives Policies. DOE several utilities.
rebates or tax credits) are not included considered several scenarios in which Commercial Customer Rebates. DOE
in the costs for the NPV since, on the Federal government would provide modeled the impact of the customer
balance, customers are both paying for some form of financial incentive. It rebate policy by determining the
(through taxes) and receiving the studied two types of incentives: tax increased customer participation rate
benefits of the payments. The following credits and rebates. Tax credits could be due to the rebates (i.e., the percent
paragraphs discuss each of the policy granted to customers who purchase high increase in customers purchasing high-
alternatives listed in Table VI.1. (See efficiency PTAC and PTHP equipment. efficiency equipment). It then applied
TSD, Regulatory Impact Analysis.) Alternatively, the government could the resulting increase in market share of
No new regulatory action. The case in issue tax credits to manufacturers or efficient units to the NES spreadsheet
which no regulatory action is taken with customers to offset costs associated with model to estimate the resulting NES and
regard to PTACs and PTHPs constitutes producing or purchasing high-efficiency NPV with respect to the base case.
the ‘‘base case’’ (or ‘‘No Action’’) equipment. For this analysis, only a After reviewing several utility rebate
scenario. In this case, between the years customer tax credit, patterned after programs currently in place (see Chapter
2012 and 2042, PTACs and PTHPs are provision in the EPACT of 2005, was 3 of the TSD), DOE decided to pattern
expected to use 2.63 quads of primary considered. The second incentive a potential national rebate program after
a program now undertaken by Xcel fraction of the cost between the baseline (b) A rebate paying 50 percent of the
Energy. Xcel Energy is a large utility unit and TSL 1 would be rebated as for incremental price difference between
that provides service to eight Western higher incremental efficiency levels. A the baseline efficiency level and the
and Midwestern states. A small public base payment for any unit exceeding a particular TSL.
utility in Minnesota, Shakopee Public minimum efficiency was also assumed
As an example comparison, the rebate
Utilities, offers a similar rebate program. to be paid to commercial or industrial
application form for Xcel Energy shows
Under these programs, commercial customers applying for the rebate. The
specific provisions of the rebate the calculation for 9,000 Btu/h PTAC
and industrial businesses buying PTACs with an EER of 11.0. This unit would
assumed for PTAC equipment were:
can receive a base payment of $7.50 per (a) $10.00 per ton for units rated receive a rebate of $39.37 under Xcel
ton for units rated at 9.20 EER and $1.25 above the ASHRAE/IESNA Standard Energy’s program. Under the provisions
per ton for every incremental increase of 90.1–1999 efficiency levels. of the National rebate program
0.1 EER above base requirements. When (b) A rebate paying 25 percent of the constructed for this analysis, a 9,000
compared against the incremental retail incremental price difference between Btu/h PTHP unit at TSL 2 (EER = 11.1)
costs of higher efficiency PTACs shown the baseline efficiency level and the would receive a rebate of $38.97.
in Chapter 8 of the TSD, the rebates particular TSL.
generally range between 17 and 23 Using the method described in
For PTHP equipment, the rebate
percent of the incremental cost beyond Chapter 10 of the TSD to estimate
programs offered by Xcel Energy and
TSL 1. Because the baseline (ASHRAE/ Shakopee Public Utilities double the market shares, a new distribution of
IESNA Standard 90.1–1999) efficiency payment for incremental efficiency sales by efficiency level (corresponding
standards are above 9.2 EER for all above the baseline (from $1.25 to $2.50 to the various TSLs) was computed. The
equipment, it is more difficult to assess per ton per 0.1 increments in the EER). rebates elicit greater purchases of higher
an appropriate level of the rebate for Following that pattern, the provisions efficiency equipment that lower the
equipment just above the baseline assumed for the PTHP equipment were: overall average annual energy
(specifically, at TSL 1) used in this (a) $10.00 per ton for units rated consumption per unit. The changes in
NOPR. For purposes of this analysis, it above the ASHRAE/IESNA Standard shipment-weighted annual energy
was assumed that the same incremental 90.1–1999 efficiency levels. consumption are shown in Table VI.2.
TABLE VI.2.—SHIPMENT-WEIGHTED AVERAGE ANNUAL ENERGY CONSUMPTION PER UNIT FOR CUSTOMER REBATE
PROGRAM
ASHRAE/IESNA
Representative standard 90.1– Customer Percent
Equipment classes cooling capacity 1999 (base case) rebate change
(Btu/h) kWh/yr
Standard Size PTAC ....................................................................................... 9,000 1,012 1,007 ¥0.46

12,000 1,277 1,271 ¥0.49
Standard Size PTHP ....................................................................................... 9,000 1,984 1,974 ¥0.49
12,000 2,379 2,366 ¥0.54
Non-Standard Size PTAC ................................................................................ 11,000 1,556 1,549 ¥0.42
Non-Standard Size PTHP ................................................................................ 11,000 2,505 2,499 ¥0.23
The rebate program lowers the retail cooling equipment. For many of these shares of current sales of PTAC and
cost to the customer, but must be products, the tax credit is equal to the PTHP equipment. This same algorithm
financed by tax revenues. From a 10 percent of the retail cost, limited to was used to estimate the impact of the
societal point of view, the installed cost specific dollar levels. For example, to tax credit upon the shares of equipment
at any efficiency level does not change receive the tax credit for energy efficient by efficiency (as before, the discrete
with the rebate policy; it simply windows, the windows need to meet the efficiency levels correspond to the
transfers part of the cost from the requirements of the 2000 IECC and TSLs).
customer to tax payers as a whole. Thus, updated versions of the IECC published
for calculation of total cost of since 2000. As for the rebate policy, the method
equipment, the revised estimates of The 10 percent customer tax credits described in Chapter 11 of the TSD was
sales by efficiency level are multiplied were assumed to apply to all PTAC used to estimate the change in market
by the pre-rebate costs (i.e., identical to equipment above the baseline efficiency shares that may result from a 10 percent
those in the base case). (ASHRAE/IESNA Standard 90.1–1999). tax credit. A new distribution of sales by
Commercial Customer Tax Credits. The credits were assumed to apply only efficiency level (corresponding to the
DOE assumed a (commercial or to the retail cost of the equipment and various TSLs) was computed. The tax
industrial) customer tax credit that is not to any additional costs related to credits elicit greater purchases of higher
patterned after the tax credits that were installation. efficiency equipment that lower the
created in EPACT 2005. EPACT 2005 The 10 percent cost tax credit leads to overall average annual energy
provided tax credits to customers who increased shares of sales of equipment consumption per unit. The changes in
purchase and install specific products with efficiencies above the baseline. In shipment-weighted annual energy
such as energy efficient windows, Chapter 11, a market allocation consumption are shown in Table VI.3.
insulation, doors, roofs, and heating and algorithm is used to estimate market
TABLE VI.3.—SHIPMENT-WEIGHTED AVERAGE ANNUAL ENERGY CONSUMPTION PER UNIT FOR CUSTOMER TAX CREDIT
PROGRAM
ASHRAE/IESNA
Representative Customer
standard 90.1– Percent
Equipment classes cooling capacity tax credit
1999 (base case) change
(Btu/h) (10%)
kWh/yr
Standard Size PTAC ....................................................................................... 9,000 1,012 1,005 ¥0.68

12,000 1,277 1,269 ¥0.65
Standard Size PTHP ....................................................................................... 9,000 1,984 1,971 ¥0.64
12,000 2,379 2,364 ¥0.63
Non-Standard Size PTAC ................................................................................ 11,000 1,556 1,544 ¥0.78
Non-Standard Size PTHP ................................................................................ 11,000 2,505 2,487 ¥0.73
DOE assumed that a policy for manufacture and promote compliant market shares of ENERGY STAR
national voluntary energy efficiency (labeled) equipment and for customers equipment would increase by a
targets would be administered through to purchase labeled equipment. As yet, minimum of 20 percent as compared to
the Federal government’s ENERGY no specific criteria have been the base case. The revised market shares
STAR voluntary program conducted by established as to the specific efficiency of sales by efficiency translate into
the Environmental Protection Agency levels that would qualify PTAC or PTHP percentage increases (above the base
(EPA) and DOE. EPA and DOE qualify equipment to receive an ENERGY STAR case) in the average EER for future
energy efficient products as those that label. Most types of appliances and shipments.
exceed Federal minimum standards by equipment in the ENERGY STAR
a specified amount, or if no Federal program must be 10 percent or more Because this is a voluntary program,
standard exists, exhibit selected energy efficient than the prevailing National without specific financial incentives,
saving features. Generally, the ENERGY efficiency standard. For the purpose of some method must be developed to
STAR program works to recognize the modeling PTACs and PTHPs, DOE has generate the market distribution of
top quartile of the products on the assumed that TSL 3 is a reasonable equipment with various efficiencies that
market, meaning that approximately 25 estimate of where an ENERGY STAR would result from an ENERGY STAR
percent of products on the market meet qualifying efficiency level may be program. As for the financial incentive
or exceed the ENERGY STAR levels. established. programs, the market shares algorithm
Although an ENERGY STAR program The promotional activities of the described in Chapter 11 of the TSD was
for PTACs and PTHPs does not exist, ENERGY STAR program are directed employed. For each equipment class,
DOE is in the process of developing toward increasing the sales of qualifying the overall increase in the sales-
such a program. The program is equipment over time. For purposes of weighted efficiency achieved in this
designed to encourage manufacturers to this analysis, DOE assumed that the manner is shown in Table VI.4.
TABLE VI.4.—SHIPMENT-WEIGHTED AVERAGE ANNUAL ENERGY CONSUMPTION PER UNIT FOR A FUTURE ENERGY STAR
PROGRAM
ASHRAE/IESNA
Representative standard 90.1– ENERGY Percent
Equipment cooling capacity 1999 (base case) STAR level change
kWh/yr
Standard Size PTAC .......................................................................................... 9,000 Btu/h ....... 1,012 1,006 ¥0.64%
12,000 Btu/h ..... 1,277 1,271 ¥0.50%
Standard Size PTHP .......................................................................................... 9,000 Btu/h ....... 1,984 1,958 ¥1.32%
12,000 Btu/h ..... 2,379 2,353 ¥1.09%
Non-Standard Size PTAC ................................................................................... 11,000 Btu/h ..... 1,556 1,532 ¥1.52%
Non-Standard Size PTHP ................................................................................... 11,000 Btu/h ..... 2,505 2,463 ¥1.68%
Early Replacement Incentives. Early through equipment manufacturers, temporary surge in PTAC and PTHP
replacement refers to the replacement of customer incentives, incentives to sales in the early 2000s further reduces
PTAC/PTHP equipment before the end utilities, market behavior research, and the potential for an effective early
of their useful lives. The purpose of this building regulations. replacement program.
policy is to retrofit or replace old, While cost effective opportunities to Bulk Government Purchases. In this
inefficient equipment with high install units that are more efficient exist policy alternative, bulk government
efficiency units. DOE studied the on a limited basis, DOE determined that purchases refers to Federal, State, and
feasibility of a Federal program to a Federal early replacement program is local governments being encouraged to
promote early replacement of not economically justified because the purchase equipment meeting the energy
appliances and equipment under market for PTAC and PTHP equipment conservation standards. The motivations
EPACT 1992. In this study, DOE is relatively small and narrow. for this policy are that (1) aggregating
identified Federal policy options for Moreover, the savings are not likely to public sector demand could provide a
early replacement that include a direct be significantly higher than those market signal to manufacturers and
national program, replacement of achieved by a voluntary program such vendors that some of their largest
Federally-owned equipment, promotion as ENERGY STAR program. A customers seek suppliers with
equipment that meet an efficiency target American Industry Classification conservation standards as the larger
at good prices, and (2) this could induce System (NAICS) code and industry manufacturers. In addition, the small
‘‘market pull’’ impacts through the description. PTAC and PTHP manufacturer of non-standard size
effects of manufacturers and vendors manufacturing is classified under equipment particularly stated its
achieving economies of scale for high NAICS 333415. concern for the equipment class
efficiency equipment. As with the early The PTAC and PTHP industry is misclassification within ASHRAE/
retirement policy, bulk government characterized by both domestic and IESNA Standard 90.1–1999, which is
purchases may provide cost effective international manufacturers. Standard detailed in sections IV.A.2 and V.C of
opportunities to install more efficient size PTACs and PTHPs are primarily today’s notice. DOE found no significant
equipment on a limited basis, however manufactured abroad with the exception differences in the R&D emphasis or
it was concluded that a widespread bulk of one domestic PTAC and PTHP marketing strategies between small
purchase program was not economically manufacturer. Non-standard size PTACs business manufacturers and large
justified. This is because the segment/ and PTHPs are primarily manufactured manufacturers. Therefore, for the classes
share of the market that would be domestically by a handful of comprised primarily of small
affected by a bulk government purchase manufacturers. Consolidation within the businesses, DOE believes the GRIM
program is a small portion of an already PTAC and PTHP industry has reduced analysis, which models each equipment
relatively small market, as most of the the number of parent companies that class separately, is representative of the
shipments/sales are to non- manufacture similar equipment under small businesses affected by standards.
governmental customers. different affiliates and labels. Prior to The qualitative and quantitative GRIM
Energy Conservation Standards (TSL issuing this notice of proposed results are summarized in section V.B.2
4). DOE proposes to adopt the energy rulemaking, DOE interviewed two small of today’s notice.
conservation levels listed in section V.C. businesses affected by the rulemaking. DOE reviewed the standard levels
As indicated in the paragraphs above, DOE also obtained information about considered in today’s notice of proposed
none of the alternatives DOE examined small business impacts while rulemaking under the provisions of the
would save as much energy as the interviewing manufacturers that exceed Regulatory Flexibility Act and the
proposed standards. In addition, several the small business size threshold of 750 procedures and policies published on
of the alternatives would require new employees. February 19, 2003. Based on the
enabling legislation, such as customer DOE reviewed ARI’s Applied foregoing, DOE determined that it
tax credits, since authority to carry out Directory of Certified Product cannot certify that these proposed
those alternatives does not presently Performance (2006) and created a list of energy conservation standard levels, if
exist. every manufacturer that had certified promulgated, would have no significant
equipment ratings in the directory. DOE economic impact on a substantial
B. Review Under the Regulatory also asked stakeholders and ARI number of small entities. DOE made this
Flexibility Act/Initial Regulatory representatives within the PTAC and determination because of the potential
Flexibility Analysis PTHP industry if they were aware of any impacts that the proposed energy
The Regulatory Flexibility Act (5 other small manufacturers. DOE then conservation standard levels under
U.S.C. 601 et seq.) requires preparation looked at publicly available data and consideration for standard size and non-
of an initial regulatory flexibility contacted manufacturers, where needed, standard size PTACs and PTHPs would
analysis for any rule that by law must to determine if they meet the SBA’s have on the manufacturers, including
be proposed for public comment, unless definition of a small manufacturing the small businesses, which
the agency certifies that the rule, if facility and have their manufacturing manufacture them. Consequently, DOE
promulgated, will not have a significant facilities located within the United has prepared an initial regulatory
economic impact on a substantial States. Based on this analysis, DOE flexibility analysis (IRFA) for this
number of small entities. As required by estimates that there are two small rulemaking. The IRFA describes
Executive Order 13272, ‘‘Proper manufacturers of PTACs and PTHPs. Of potential impacts on small businesses
Consideration of Small Entities in these two manufacturers, one of them associated with standard size and non-
Agency Rulemaking,’’ 67 FR 53461 operates manufacturing facilities within standard size PTAC and PTHP design
(August 16, 2002), DOE published the United States. The one domestic and manufacturing.
procedures and policies on February 19, manufacturer solely produces non- The potential impacts on standard
2003, to ensure that the potential standard equipment. DOE, then, size and non-standard size PTAC and
impacts of its rules on small entities are contacted both small manufacturers. It PTHP manufacturers are discussed in
properly considered during the subsequently conducted two on-site the following sections. DOE has
rulemaking process. 68 FR 7990. DOE interviews with small manufacturers, transmitted a copy of this IRFA to the
has made its procedures and policies one standard size manufacturer and one Chief Counsel for Advocacy of the Small
available on the Office of General non-standard size manufacturer, to Business Administration for review.
Counsel’s Web site: http:// determine if there are differential
www.gc.doe.gov. impacts on these companies that may 1. Reasons for the Proposed Rule
Small businesses, as defined by the result from amended energy Part A–1 of Title III of EPCA
Small Business Administration (SBA) conservation standards. addresses the energy efficiency of
for the PTAC and PTHP manufacturing DOE found that, in general, small certain types of commercial and
industry, are manufacturing enterprises manufacturers have the same concerns industrial equipment. (42 U.S.C. 6311–
with 750 employees or fewer. DOE used as large manufacturers regarding 6317) It contains specific mandatory
the small business size standards amended energy conservation energy conservation standards for
published on January 31, 1996, as standards. DOE summarized the key commercial PTACs and PTHPs. (42
amended, by the SBA to determine issues for standard size and non- U.S.C. 6313(a)(3)) EPACT 1992, Public
whether any small entities would be standard size manufacturers in section Law 102–486, also amended EPCA with
required to comply with the rule. 61 FR IV.I.3 of today’s notice. Both respect to PTACs and PTHPs, providing
3286 and codified at 13 CFR part 121. manufacturers echoed the same definitions in section 122(a), test
The size standards are listed by North concerns regarding amended energy procedures in section 122(b), labeling
provisions in section 122(c), and the 3. Description and Estimated Number of the other TSLs besides the one being
authority to require information and Small Entities Regulated considered today, TSL 4. These
reports from manufacturers in section By researching the standard size and alternative TSLs and their associated
122(e).40 DOE publishes today’s NOPR non-standard size PTAC and PTHP impacts on small business are discussed
pursuant to Part A–1. The PTAC and market, developing a database of in the subsequent paragraphs. In
PTHP test procedures appear at Title 10 manufacturers, and conducting addition to the other TSLs considered,
CFR section 431.96. interviews with manufacturers (both the TSD associated with this proposed
EPCA established Federal energy large and small), DOE was able to rule includes a report referred to in
conservation standards that generally estimate the number of small entities section VI.A in the preamble as the
correspond to the levels in ASHRAE/ that would be regulated under a regulatory impact analysis (RIA—
IESNA Standard 90.1, as in effect on proposed energy conservation standard. discussed earlier in this report and in
October 24, 1992 (ASHRAE/IESNA DOE estimates that, of the 4 domestic detail in the TSD). This report discusses
Standard 90.1–1989), for each type of manufacturers it has identified as the following policy alternatives: (1) No
covered equipment listed in section making residential PTACs and PTHPs, new regulatory action, (2) financial
342(a) of EPCA, including PTACs and one is known to be a small business. See incentives policies, (3) voluntary energy
PTHPs. (42 U.S.C. 6313(a)) For each Chapter 12 of the TSD for further efficiency targets—ENERGY STAR, (4)
type of equipment, EPCA directed that discussion about the methodology used early replacement incentives, and (5)
if ASHRAE/IESNA Standard 90.1 is in DOE’s manufacturer impact analysis bulk government purchases. The energy
amended, DOE must adopt an amended and its analysis of small-business savings and beneficial economic
standard at the new level in ASHRAE/ impacts. impacts of these regulatory alternatives
IESNA Standard 90.1, unless clear and are one to two orders of magnitude
convincing evidence supports a 4. Description and Estimate of smaller than those expected from the
determination that adoption of a more Compliance Requirements standard levels under consideration.
stringent level as a national standard Potential impacts on manufacturers, The entire non-standard size PTAC
would produce significant additional including small businesses, come from and PTHP industry has such low
energy savings and be technologically impacts associated with standard size shipments that no designs are produced
feasible and economically justified. (42 and non-standard size design and at high volume. There is little
U.S.C. 6313(a)(6)(A)(ii)(II)) In manufacturing. The margins and/or repeatability of designs, so small
accordance with these statutory criteria, market share of manufacturers, businesses can competitively produce
DOE is proposing in today’s notice to including small businesses, in the many non-standard size PTAC and
amend the energy conservation standard size and non-standard size PTHP designs. The PTAC and PTHP
standards for PTACs and PTHPs by PTAC and PTHP industry could be industry as a whole primarily has
raising the efficiency levels for this negatively impacted in the long term by experience producing equipment with
equipment above the efficiency levels the standard levels under consideration efficiencies that would comply with the
specified by ASHRAE/IESNA Standard in this notice of proposed rulemaking, ASHRAE/IESNA Standard 90.1–1999
90.1–1999. specifically TSL 4. At TSL 4, as opposed baseline. In addition, the standard-size
to lower TSLs, small manufacturers PTAC and PTHP industry produces a
2. Objectives of, and Legal Basis For, the
would have less flexibility in choosing significant number of units that would
Proposed Rule
a design path. However, as discussed comply with efficiency levels above the
For each type of equipment, EPCA under subsection 6 (Significant baseline using R–22 refrigerant. All
directed that if ASHRAE/IESNA alternatives to the rule) below, DOE manufacturers, including small
Standard 90.1 is amended, DOE must expects that the differential impact on businesses, would have to develop
adopt an amended standard at the new small, standard and non-standard size designs to enable compliance to higher
level in ASHRAE/IESNA Standard 90.1, PTAC and PTHP manufacturers (versus TSLs, with the expected Environmental
unless clear and convincing evidence large businesses) would be smaller in Protection Agency mandated alternative
supports a determination that adoption moving from TSL 1 to TSL 2 than it refrigerant requirement to take affect in
of a more stringent level as a national would be in moving from TSL 3 to TSL 2010. Development costs would be more
standard would produce significant 4. The rationale for DOE’s expectation is burdensome to small businesses.
additional energy savings and be best discussed in a comparative context Product redesign costs tend to be fixed
technologically feasible and and is therefore elaborated upon in and do not scale with sales volume.
economically justified. (42 U.S.C. subsection 6 (Significant alternatives to Thus, small businesses would be at a
6313(a)(6)(A)(ii)(II)) To determine the rule). As discussed in the relative disadvantage at higher TSLs
whether economic justification exists, introduction to this IRFA, DOE expects because research and development
DOE reviews comments received and that the differential impact associated efforts would be on the same scale as
conducts analysis to determine whether with PTAC and PTHP design and those for larger companies, but these
the economic benefits of the proposed manufacturing on small, non-standard expenses would be recouped over
standard exceed the burdens to the size and standard size businesses would smaller sales volumes.
greatest extent practicable, taking into be negligible. At TSL 4, manufacturers stated their
consideration seven factors set forth in concerns over the ability to be able to
42 U.S.C. 6295(o)(2)(B) (see Section II.B 5. Duplication, Overlap, and Conflict produce PTHPs by the future effective
of this preamble). (42 U.S.C. 6316(a)) With Other Rules and Regulations date of the standard using R–410A
Further information concerning the DOE is not aware of any rules or refrigerant. Using the performance
background of this rulemaking is regulations that duplicate, overlap, or degradations from the engineering
provided in Chapter 1 of the TSD. conflict with the rule being considered analysis, TSL 4 for PTHPs would
today. correspond to the ‘‘max-tech’’ efficiency
40 These requirements are codified in Part A–1 of
levels for PTHPs unless higher
Title III of EPCA, as amended, 42 U.S.C. 6311–6316, 6. Significant Alternatives to the Rule efficiency compressors enter the market
and Title 10 of the Code of Federal Regulations, Part
431 (10 CFR Part 431) at 10 CFR 431.92, 431.96, The primary alternatives to the prior to the effective date of an amended
431.97, and subparts U and V. proposed rule considered by DOE are energy conservation standard. At TSL 4
and above, DOE estimates that the Act of 1969 (42 U.S.C. 4321 et seq.), the requirements: (1) Eliminate drafting
majority of manufacturers would be regulations of the Council on errors and ambiguity; (2) write
negatively impacted, especially non- Environmental Quality (40 CFR parts regulations to minimize litigation; and
standard size manufacturers. Based on 1500–1508), and DOE’s regulations for (3) provide a clear legal standard for
information submitted by industry, compliance with the National affected conduct rather than a general
manufacturers would require a complete Environmental Policy Act (10 CFR part standard and promote simplification
redesign of their non-standard PTAC 1021). The EA has been incorporated and burden reduction. Section 3(b) of
and PTHP platforms’ higher TSLs. They into the TSD; the environmental impact Executive Order 12988 specifically
did not see the advantage to completely analyses are contained primarily in requires that Executive agencies make
redesigning non-standard size PTACs Chapter 16 for that document. Before every reasonable effort to ensure that the
and PTHPs in small and declining issuing the final rule for PTACs and regulation: (1) Clearly specifies the
market and would not be willing to PTHPs, DOE will consider public preemptive effect, if any; (2) clearly
redesign completely non-standard size comments and, as appropriate, issue the specifies any effect on existing Federal
equipment because of the small size of final EA. Based on the EA, DOE will law or regulation; (3) provides a clear
the market and the declining sales. determine whether to issue a finding of legal standard for affected conduct
Manufacturers also commented non- no significant impact or prepare an while promoting simplification and
standard size PTACs and PTHPs are environmental impact statement for this burden reduction; (4) specifies the
manufactured to order based on unique rulemaking. retroactive effect, if any; (5) adequately
building designs for replacement defines key terms; and (6) addresses
E. Review Under Executive Order 13132
applications. This concern was echoed other important issues affecting clarity
by all manufacturers, not just small Executive Order 13132, ‘‘Federalism,’’ and general draftsmanship under any
business manufacturers. 64 FR 43255 (August 4, 1999) imposes guidelines issued by the Attorney
The primary difference between TSL certain requirements on agencies General. Section 3(c) of Executive Order
3 and TSL 4 from the manufacturers’ formulating and implementing policies 12988 requires Executive agencies to
viewpoint is that at TSL 3 both PTACs or regulations that preempt State law or review regulations in light of applicable
and PTHPs have to conform to the same, that have federalism implications. The standards in section 3(a) and section
higher efficiency levels at a given Executive Order requires agencies to 3(b) to determine whether they are met
capacity. TSL 4 would require examine the constitutional and statutory or it is unreasonable to meet one or
manufacturers to design PTHPs at authority supporting any action that more of them. DOE has completed the
higher efficiency levels than that of would limit the policymaking discretion required review and determined that, to
PTACs at the same cooling capacity. of the States and to assess carefully the the extent permitted by law, this
The differences in efficiencies between necessity for such actions. The proposed rule meets the relevant
PTACs and PTHPs could negatively Executive Order also requires agencies standards of Executive Order 12988.
affect the margins or decrease the to have an accountable process to
ensure meaningful and timely input by G. Review Under the Unfunded
market share of small businesses
State and local officials in the Mandates Reform Act of 1995
because manufacturers would
potentially need to design separate development of regulatory policies that Title II of the Unfunded Mandates
platforms of PTACs and PTHPs. Each have federalism implications. On March Reform Act of 1995 (Pub. L. 104–4)
platform would require significant 14, 2000, DOE published a statement of (UMRA) requires each Federal agency to
capital for research and development policy describing the intergovernmental assess the effects of Federal regulatory
that small business may not readily consultation process it will follow in the actions on State, local, and Tribal
have as their large competitors. development of such regulations. 65 FR governments and the private sector. For
Chapter 12 of the TSD contains more 13735. DOE has examined today’s a proposed regulatory action likely to
information about the impact of this proposed rule and has determined that result in a rule that may cause the
rulemaking on manufacturers. DOE it does not have a substantial direct expenditure by State, local, and Tribal
interviewed two small businesses effect on the States, on the relationship governments, in the aggregate, or by the
affected by this rulemaking (see also between the national government and private sector of $100 million or more
section IV.F.1 above). DOE also obtained the States, or on the distribution of in any one year (adjusted annually for
information about small business power and responsibilities among the inflation), section 202 of UMRA requires
impacts while interviewing various levels of government. EPCA a Federal agency to publish a written
manufacturers that exceed the small governs and prescribes Federal statement that estimates the resulting
business size threshold of 750 preemption of State regulations as to costs, benefits, and other effects on the
employees. energy conservation for the equipment national economy. (2 U.S.C. 1532(a),(b))
that is the subject of today’s proposed The UMRA also requires a Federal
C. Review Under the Paperwork rule. States can petition DOE for agency to develop an effective process
Reduction Act exemption from such preemption to the to permit timely input by elected
This rulemaking will impose no new extent, and based on criteria, set forth in officers of State, local, and Tribal
information or record keeping EPCA. (42 U.S.C. 6297(d) and governments on a proposed ‘‘significant
requirements. Accordingly, Office of 6316(b)(2)(D)) No further action is intergovernmental mandate,’’ and
Management and Budget clearance is required by Executive Order 13132. requires an agency plan for giving notice
not required under the Paperwork and opportunity for timely input to
F. Review Under Executive Order 12988 potentially affected small governments
Reduction Act. (44 U.S.C. 3501 et seq.)
With respect to the review of existing before establishing any requirements

D. Review Under the National regulations and the promulgation of that might significantly or uniquely
Environmental Policy Act new regulations, section 3(a) of affect small governments. On March 18,
DOE has prepared a draft Executive Order 12988, ‘‘Civil Justice 1997, DOE published a statement of
environmental assessment (EA) of the Reform,’’ 61 FR 4729 (February 7, 1996) policy on its process for
impacts of the proposed rule, pursuant imposes on Federal agencies the general intergovernmental consultation under
to the National Environmental Policy duty to adhere to the following UMRA (62 FR 12820) (also available at
http://www.gc.doe.gov). The proposed any successor order; and (2) is likely to at the beginning of this notice of
rule published today contains neither an have a significant adverse effect on the proposed rulemaking. The public
intergovernmental mandate nor a supply, distribution, or use of energy, or meeting will be held at the U.S.
mandate that may result in expenditure (3) is designated by the Administrator of Department of Energy, Forrestal
of $100 million or more in any year, so OIRA as a significant energy action. For Building, Room 1E–245, 1000
these requirements do not apply. any proposed significant energy action, Independence Avenue, SW.,
the agency must give a detailed Washington, DC, 20585–0121. To attend
H. Review Under the Treasury and
statement of any adverse effects on the public meeting, please notify Ms.
General Government Appropriations Brenda Edwards at (202) 586–2945.
energy supply, distribution, or use
Act, 1999 Foreign nationals visiting DOE
should the proposal be implemented,
Section 654 of the Treasury and and of reasonable alternatives to the Headquarters are subject to advance
General Government Appropriations action and their expected benefits on security screening procedures, requiring
Act, 1999 (Pub. L. 105–277) requires energy supply, distribution, and use. a 30-day advance notice. Any foreign
Federal agencies to issue a Family Today’s regulatory action would not national wishing to participate in the
Policymaking Assessment for any rule have a significant adverse effect on the meeting should advise DOE of this fact
that may affect family well-being. This supply, distribution, or use of energy as soon as possible by contacting Ms.
rule would not have any impact on the and, therefore, is not a significant Brenda Edwards to initiate the
autonomy or integrity of the family as energy action. Accordingly, DOE has not necessary procedures.
an institution. Accordingly, DOE has prepared a Statement of Energy Effects. B. Procedure for Submitting Requests To
concluded that it is not necessary to
L. Review Under the Information Speak
prepare a Family Policymaking
Assessment. Quality Bulletin for Peer Review Any person who has an interest in
On December 16, 2004, OMB, in today’s notice, or who is a
I. Review Under Executive Order 12630 representative of a group or class of
consultation with the Office of Science
DOE has determined, under Executive and Technology (OSTP), issued its persons that has an interest in these
Order 12630, ‘‘Governmental Actions ‘‘Final Information Quality Bulletin for issues, may request an opportunity to
and Interference with Constitutionally Peer Review’’ (Bulletin). 70 FR 2664 make an oral presentation. Such persons
Protected Property Rights,’’ 53 FR 8859 (January 14, 2005). The Bulletin may hand-deliver requests to speak,
(March 18, 1988), that this regulation establishes that certain scientific along with a computer diskette or CD in
would not result in any taking that information shall be peer reviewed by WordPerfect, Microsoft Word, PDF, or
would require compensation under the qualified specialists before it is text (ASCII) file format to the address
Fifth Amendment to the United States disseminated by the Federal shown in the ADDRESSES section at the
Constitution. government, including influential beginning of this notice of proposed
scientific information related to agency rulemaking between the hours of 9 a.m.
J. Review Under the Treasury and and 4 p.m., Monday through Friday,
General Government Appropriations regulatory actions. The purpose of the
bulletin is to enhance the quality and except Federal holidays. Requests may
Act, 2001 also be sent by mail or e-mail to:
credibility of the Government’s
The Treasury and General scientific information. Under the Brenda.Edwards@ee.doe.gov.
Government Appropriations Act, 2001 Bulletin, the energy conservation Persons requesting to speak should
(44 U.S.C. 3516 note) provides for standards rulemakings analyses are briefly describe the nature of their
agencies to review most disseminations ‘‘influential scientific information.’’ The interest in this rulemaking and provide
of information to the public under Bulletin defines ‘‘influential scientific a telephone number for contact. DOE
guidelines established by each agency information’’ as ‘‘scientific information requests persons selected to be heard to
pursuant to general guidelines issued by the agency reasonably can determine submit an advance copy of their
OMB. OMB’s guidelines were published will have, or does have, a clear and statements by 4 p.m., April 21, 2008. At
at 67 FR 8452 (February 22, 2002), and substantial impact on important public its discretion, DOE may permit any
DOE’s guidelines were published at 67 policies or private sector decisions.’’ 70 person who cannot supply an advance
FR 62446 (October 7, 2002). DOE has FR 2667 (January 14, 2005). copy of their statement to participate, if
reviewed today’s notice under the OMB In response to OMB’s Bulletin, DOE that person has made advance
and DOE guidelines and has concluded conducted formal in-progress peer alternative arrangements with the
that it is consistent with applicable reviews of the energy conservation Building Technologies Program. The
policies in those guidelines. standards development process and request to give an oral presentation
analyses and has prepared a Peer should ask for such alternative
K. Review Under Executive Order 13211
Review Report pertaining to the energy arrangements.
Executive Order 13211, ‘‘Actions
Concerning Regulations That conservation standards rulemaking C. Conduct of Public Meeting
Significantly Affect Energy Supply, analyses. The ‘‘Energy Conservation DOE will designate a DOE official to
Distribution, or Use,’’ 66 FR 28355 (May Standards Rulemaking Peer Review preside at the public meeting and may
22, 2001) requires Federal agencies to Report’’ dated February 2007 has been use a professional facilitator to aid
prepare and submit to the Office of disseminated and is available at the discussion. The meeting will not be a
Information and Regulatory Affairs following Web site: http:// judicial or evidentiary-type public
(OIRA) at OMB, a Statement of Energy www.eere.energy.gov/buildings/ hearing, but DOE will conduct it in
Effects for any proposed significant appliance_standards/peer_review.html. accordance with 5 U.S.C. 553 and
energy action. A ‘‘significant energy DOE on June 28–29, 2005. section 336 of EPCA, 42 U.S.C. 6306. A
action’’ is defined as any action by an VII. Public Participation court reporter will be present to record
agency that promulgated or is expected the proceedings and prepare a
to lead to promulgation of a final rule, A. Attendance at Public Meeting transcript. DOE reserves the right to
and that: (1) Is a significant regulatory The time and date of the public schedule the order of presentations and
action under Executive Order 12866, or meeting are listed in the DATES section to establish the procedures governing
the conduct of the public meeting. After RM/STD–2007–BT–STD–0012 and/or 5. Estimation for the installation,
the public meeting, interested parties RIN 1904–AB44, and wherever possible maintenance, and repair costs. In
may submit further comments on the carry the electronic signature of the particular, DOE is interested in how the
proceedings as well as on any aspect of author. Absent an electronic signature, installation, maintenance, and repair
the rulemaking until the end of the comments submitted electronically costs may change with the
comment period. must be followed and authenticated by implementation of R–410A refrigerant
The public meeting will be conducted submitting the signed original paper in 2010 because DOE’s estimates are
in an informal, conference style. DOE document. No telefacsimiles (faxes) will based on R–22 data from the field.
will present summaries of comments be accepted. 6. The prediction and the potential
received before the public meeting, According to 10 CFR 1004.11, any significance of the overestimate in
allow time for presentations by person submitting information that he energy savings due to the assumption
participants, and encourage all or she believes to be confidential and that forecasted market shares of PTACs
interested parties to share their views on exempt by law from public disclosure and PTHPs at each efficiency level
issues affecting this rulemaking. Each should submit two copies: one copy of considered in the NOPR would remain
participant will be allowed to make a the document including all the frozen beginning in 2012 until the end
prepared general statement (within time information believed to be confidential, of the forecast period (30 years after the
limits determined by DOE), before the and one copy of the document with the effective date—the year 2042). In
discussion of specific topics. DOE will information believed to be confidential particular, DOE requests data that
permit other participants to comment deleted. DOE will make its own would enable it to better characterize
briefly on any general statements. determination about the confidential the likely increases in efficiency that
At the end of all prepared statements status of the information and treat it would occur over the 30-year analysis
on a topic, DOE will permit participants according to its determination. period in the absence of this rule (i.e.,
to clarify their statements briefly and Factors of interest to DOE when the distribution of efficiency levels in
comment on statements made by others. evaluating requests to treat submitted absence of standards is assumed to be
Participants should be prepared to information as confidential include: (1) constant).
answer questions by DOE and by other A description of the items; (2) whether 7. The NES-forecasted base case
participants concerning these issues. and why such items are customarily distribution of efficiencies after the
DOE representatives may also ask treated as confidential within the refrigerant phaseout and its prediction
questions of participants concerning industry; (3) whether the information is on how amended energy conservation
other matters relevant to this generally known by or available from standards impact the distribution of
rulemaking. The official conducting the other sources; (4) whether the efficiencies in the standards case.
public meeting will accept additional information has previously been made 8. Whether amended energy
comments or questions from those available to others without obligation conservation standards will result in
attending, as time permits. The concerning its confidentiality; (5) an PTAC and PTHP customers shifting to
presiding official will announce any explanation of the competitive injury to other, less efficient equipment types.
further procedural rules or modification the submitting person which would 9. The NES shipments forecasts of
of the above procedures that may be result from public disclosure; (6) when total shipments for standard size and
needed for the proper conduct of the such information might lose its non-standard size equipment. In
public meeting. confidential character due to the addition, the distribution of standard
DOE will make the entire record of passage of time; and (7) why disclosure size equipment being placed into new
this proposed rulemaking, including the of the information would be contrary to construction buildings versus replacing
transcript from the public meeting, the public interest. existing units.
available for inspection at the U.S. 10. The proposed standard level, TSL
Department of Energy, Forrestal E. Issues on Which DOE Seeks Comment 4, for standard size PTACs and PTHPs
Building, Resource Room of the DOE is particularly interested in and non-standard size PTACs and
Building Technologies Program, 950 receiving comments and views of PTHPs.
L’Enfant Plaza, SW., 6th Floor, interested parties concerning the 11. Whether DOE should consider
Washington, DC 20024, (202) 586–9127, following issues: either a higher or a lower TSL,
between 9 a.m. and 4 p.m., Monday 1. Addendum t to ASHRAE/IESNA including the ASHRAE/IESNA Standard
through Friday, except Federal holidays. Standard 90.1–2007 (i.e., ARI’s 90.1–1999 baseline efficiency levels, in
Any person may buy a copy of the continuous maintenance proposal on the final rule due to the magnitude of
transcript from the transcribing reporter. PTACs and PTHPs), which proposes the impacts and the cumulative
changes to the non-standard regulatory burdens of the R–22
D. Submission of Comments
delineations in ASHRAE/IESNA phaseout.
DOE will accept comments, data, and Standard 90.1–1999. As explained in 12. The proposal to adopt TSL 4
information regarding the proposed rule section IV.C.2, of this preamble, DOE which requires different efficiency
before or after the public meeting, but proposes to incorporate the modified levels for PTACs and PTHPs, DOE is
no later than the date provided at the definitions in Addendum t in the final interested in receiving comment on
beginning of this notice of proposed rule if ASHRAE adopts Addendum t potential equipment switching as
rulemaking. Please submit comments, prior to September 2008. discussed in section IV.G.3 of today’s
data, and information electronically. 2. The approach to extrapolate the notice (i.e., will TSL 4 cause PTHP
Send them to the following e-mail engineering analysis to cooling customers to shift to less efficient
address: ptac_hp@ee.doe.gov. Submit capacities for which complete analysis PTACs).

electronic comments in WordPerfect, was not performed. 13. The unique impacts on the non-
Microsoft Word, PDF, or text (ASCII) file 3. The EER and COP pairings for standard size equipment and
format and avoid the use of special PTHPs based on current ARI product manufacturers. In particular, the
characters or any form of encryption. directory information. consideration of a lower TSL for non-
Comments in electronic format should 4. The rebound effect for the PTAC standard size PTACs and PTHPs due to
be identified by the docket number EE– and PTHP industry. the unique market and potentially
substantial impacts. For example, at Federal Regulations, part 431 is inches high, or greater than or equal to
TSL 4, non-standard size manufacturers proposed to be amended to read as set 42 inches wide.
are expected to lose from $9 million to forth below. * * * * *
$12 million in INPV, which is a
reduction in 34 percent to 44 percent. In PART 431—ENERGY EFFICIENCY 3. Section 431.97 of Subpart F is
addition, whether the ASHRAE/IESNA PROGRAM FOR CERTAIN amended by revising paragraph (a),
Standard 90.1–1999 delineations for COMMERCIAL AND INDUSTRIAL including Tables 1 and 2, and by adding
standard and non-standard size units EQUIPMENT a new paragraph (c) to read as follows:
would result in equipment lines being
1. The authority citation for part 431 § 431.97 Energy efficiency standards and
misclassified and unavailable.
continues to read as follows: their effective dates.
14. The above-discussed approach for
labeling of PTACs and PTHPs. Authority: 42 U.S.C. 6291–6317. (a) All small or large commercial
Specifically, DOE invites comments on package air-conditioning and heating
the types of energy use information and 2. Section 431.92 of Subpart F is
equipment manufactured on or after
format consumers would find useful on amended by adding in alphabetical
order new definitions for ‘‘Non-standard January 1, 1994 (except for large
a PTAC or PTHP label. commercial package air-conditioning
size’’ and ‘‘Standard size,’’ to read as
VIII. Approval of the Office of the follows: and heating equipment, for which the
Secretary effective date is January 1, 1995), and
§ 431.92 Definitions concerning before January 1, 2010 in the case of the
The Secretary of Energy has approved commercial air conditioners and heat
publication of this proposed rule. air-cooled equipment covered by the
pumps.
standards in paragraph (b), must meet
List of Subjects in 10 CFR Part 431 * * * * * the applicable minimum energy
Administrative practice and Non-standard size means a packaged efficiency standard level(s) set forth in
procedure, Energy conservation, terminal air conditioner or packaged Tables 1 and 2 of this section. Each
Household appliances. terminal heat pump with wall sleeve packaged terminal air conditioner or
Issued in Washington, DC, on March 28,
dimensions less than 16 inches high and packaged terminal heat pump
2008. less than 42 inches wide. manufactured on or after January 1,
Alexander A. Karsner, * * * * * 1994, and before September 30, 2012,
Assistant Secretary, Energy Efficiency and Standard size means a packaged must meet the applicable minimum
Renewable Energy. terminal air conditioner or packaged energy efficiency standard level(s) set
For the reasons set forth in the terminal heat pump with a wall sleeve forth in Tables 1 and 2 of this section.
preamble, chapter II of title 10, Code of dimension greater than or equal to 16
TABLE 1 TO § 431.97.—MINIMUM COOLING EFFICIENCY LEVELS

Efficiency level1
Product Category Cooling capacity Sub-category Products manufac- Products manufac-

tured until October tured on and after
29, 2003 October 29, 2003
Small Commercial Air Cooled, 3 Phase <65,000 Btu/h ........... Split System .............. SEER = 10.0 ............. SEER = 10.0.
Packaged Air Condi- Single Package ......... SEER = 9.7 ............... SEER = 9.7.
tioning and Heating
Equipment.
Air Cooled ................. ≥65,000 Btu/h and All .............................. EER = 8.9 ................. EER = 8.9.
<135,000 Btu/h.
Water Cooled Evapo- <17,000 Btu/h ........... AC ............................. EER = 9.3 ................. EER = 12.1.
ratively Cooled, HP ............................. EER = 9.3 ................. EER = 11.2.
and Water-Source. ≥17,000 Btu/h and AC ............................. EER = 9.3 ................. EER = 12.1.
<65,000 Btu/h. HP ............................. EER = 9.3 ................. EER = 12.0.
≥65,000 Btu/h and AC ............................. EER = 10.5 ............... EER = 11.5.2
<135,000 Btu/h. HP ............................. EER = 10.5 ............... EER = 12.0.
Large Commercial Air Cooled ................. ≥135,000 Btu/h and All .............................. EER = 8.5 ................. EER = 8.5.
Packaged Air Condi- <240,000 Btu/h.
tioning and Heating
Equipment.
Water-Cooled and ≥135,000 Btu/h and All .............................. EER = 9.6 ................. EER = 9.6.3
Evaporatively <240,000 Btu/h.
Cooled.
Packaged Terminal Air All .............................. <7,000 Btu/h ............. All .............................. EER = 8.88 ............... EER = 8.88.
Conditioners and
Heat Pumps.
≥7,000 Btu/h and ................................... EER = 10.0¥(0.16 × EER = 10.0¥(0.16 ×
≤15,000 Btu/h capacity [in kBtu/h capacity [in kBtu/h
at 95°F outdoor at 95°F outdoor
dry-bulb tempera- dry-bulb tempera-

ture]). ture]).
>15,000 Btu/h ........... ................................... EER = 7.6 ................. EER = 7.6
1 Forequipment rated according to the ARI standards, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled prod-
ucts and evaporatively-cooled products and at 85 °F entering water temperature for water-cooled products. For water-source heat pumps rated
according to the ISO standard, EER must be rated at 30 °C (86 °F) entering water temperature.
2 Deduct 0.2 from the required EER for units with heating sections other than electric resistance heat.
3 Effective 10/29/2004, the minimum value became EER = 11.0.
TABLE 2 TO § 431.97.—MINIMUM HEATING EFFICIENCY LEVELS

Efficiency level 1
Product Category Cooling capacity Sub-category Products manufac- Products manufac-

tured until October tured on and after
29, 2003 October 29, 2003
Small Commercial Air Cooled, 3 Phase <65,000 Btu/h ........... Split System .............. HSPF = 6.8 ............... HSPF = 6.8.
Packaged Air Condi- Single Package ......... HSPF = 6.6 ............... HSPF = 6.6.
tioning and Heating
Equipment.
Water-Source ............ <135,000 Btu/h ......... Split System and Sin- COP = 3.8 ................. COP = 4.2.
gle Package.
Air Cooled ................. ≥65,000 Btu/h and All .............................. COP = 3.0 ................. COP = 3.0.
≤135,000 Btu/h.
Large Commercial Air Cooled ................. ≥135,000 Btu/h and Split System and Sin- COP = 2.9 ................. COP = 2.9.
Packaged Air Condi- <0,000 Btu/h. gle Package.
tioning and Heating
Equipment.
Packaged Terminal All .............................. All .............................. All .............................. COP = 1.3+(0.16 × COP = 1.3+(0.16 ×
Heat Pumps. the applicable min- the applicable min-
imum cooling EER imum cooling EER
prescribed in Table prescribed in Table
1—Minimum Cool- 1—Minimum Cool-
ing Efficiency Lev- ing Efficiency Lev-
els). els).
1 For units tested by ARI standards, all COP values must be rated at 47° F outdoor dry-bulb temperature for air-cooled products, and at 70° F
entering water temperature for water-source heat pumps. For heat pumps tested by the ISO Standard 13256–1, the COP values must be ob-
tained at the rating point with 20° C (68° F) entering water temperature.
* * * * * pump manufactured on or after Energy Efficiency Ratio and Coefficient

(c) Each packaged terminal air September 30, 2012, shall have an of Performance no less than:
conditioner or packaged terminal heat
Equipment Category Cooling capacity Efficiency level *
Packaged Terminal Air Standard Size ............. <7,000 Btu/h .................................................... EER = 11.4
Conditioner. ≥7,000 Btu/h and ≤15,000 Btu/h EER = 13.0—(0.233 × Cap **)
>15,000 Btu/h EER = 9.5
Non-Standard Size ..... <7,000 Btu/h .................................................... EER = 10.2
≥7,000 Btu/h and ≤15,000 Btu/h EER = 11.7—(0.213 × Cap **)
>15,000 Btu/h EER = 8.5
Packaged Terminal Standard Size ............. <7,000 Btu/h .................................................... EER = 11.8
Heat Pump. COP = 3.3
COP = 3.7—(0.053 × Cap **)
>15,000 Btu/h EER = 9.9
COP = 2.9
Non-Standard Size ..... <7,000 Btu/h .................................................... EER = 10.8
COP = 3.0
COP = 3.1—(0.026 × Cap **)
>15,000 Btu/h EER = 9.1
COP = 2.8
* For equipment rated according to the DOE test procedure, all EER values must be rated at 95° F outdoor dry-bulb temperature for air-cooled
products and evaporatively-cooled products and at 85° F entering water temperature for water cooled products. All COP values must be rated at
47° F outdoor dry-bulb temperature for air-cooled products, and at 70° F entering water temperature for water-source heat pumps.
** Cap means cooling capacity in thousand British thermal units per hour (Btu/h) at 95° F outdoor dry-bulb temperature.
[FR Doc. E8–6907 Filed 4–4–08; 8:45 am]

BILLING CODE 6450–01–P

Department of Energy: Monday, April 7, 2008

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10 CFR Part 431

DEPARTMENT OF ENERGY STD–0012 and/or Regulation Identifier B. Authority

1. Overview 7. Other Factors conservation standards for certain

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

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

>15,000 Btu/h .................................... EER = 9.1

Equipment Cooling capacity

PTAC .................................... < 7,000 Btu/h ................................................................... EER = 8.88

> 15,000 Btu/h EER = 7.6

PTAC ................................................... Standard Size† ................................................................................................. 9,000 12.0 EER

PTHP ................................................... Standard Size† ................................................................................................. 9,000 12.0 EER

C. Energy Savings 2. Significance of Savings 1. Economic Impact on Manufacturers

manufacturers to offer various PTACs standard equipment, or ‘‘Replacement’’

Equipment Category Cooling capacity

PTAC ......................................... Standard Size* ................................................. < 7,000 Btu/h

PTHP ......................................... Standard Size* ................................................. < 7,000 Btu/h

7 Air-Conditioning and Refrigeration Institute.

Continuous Maintenance Proposal on Package

Equipment Category Cooling capacity

≥ 7,000 Btu/h and ≤ 15,000 Btu/h

Equipment Category Cooling capacity

PTAC ......................................... Standard Size* ................................................. < 7,000 Btu/h

6313(a)(6)(A)(ii)) If Addendum t is not

TABLE IV.4.—REPRESENTATIVE COOLING CAPACITIES FOR THE ENGINEERING ANALYSIS

PTAC ....................................................................................... Standard Size* ........................................................................ 9,000

12 ARI provided DOE shipments data from 2000

for the 2000 Screening Analysis and shipments data

16 ‘‘ARI, No. 26 at pp 2–3’’ refers (1) to a statement

Standards and Technology Building Environment

TABLE IV.5.—AVERAGE EER AND COP PAIRINGS FOR PTHPS

Equipment class Efficiency level

TABLE IV.5.—AVERAGE EER AND COP PAIRINGS FOR PTHPS—Continued

Manufacturer (through national ac- Manufacturer .................................... Manufacturer .................................... Manufacturer.

Replacement Market ........................................................................................................ 15 25 60 0

through national accounts to be one-half by State, DOE developed distributions

1. Building Type level to national average energy use a simple PBP.

Affecting Installed Costs

Affecting Operating Costs

Affecting Present Value of Annual Operating Cost Savings

24 Damodaran Online. Leonard N. Stern School of www.stern.nyu.edu/adamodar/New_Home_Page/

Analyzed Efficiency Levels

TABLE IV.10.—SUMMARY OF NES AND NPV MODEL INPUTS

TABLE IV.10.—SUMMARY OF NES AND NPV MODEL INPUTS—Continued

Standard size** PTACs Energy efficiency equation*

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

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

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

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

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

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

EER .......................................................................................................................... 10.9 10.9 11.1 10.9 11.3 11.5 12

EER ................................................................................................................................ 10.9 11.1 11.1 11.3 11.3 11.5 12

EER ................................................................................................................... 10.2 10.2 10.4 10.2 10.6 10.8 11.5

EER ................................................................................................................... 10.2 10.4 10.4 10.6 10.6 10.8 11.7

EER ................................................................................................................... 9.4 9.4 9.7 9.4 10 10.7 11.2

EER ................................................................................................................... 9.4 9.7 9.7 10 10 10.7 11.4

Trial standard level

Trial standard level

Trial standard level

INPV ............................... (2006$ millions) ............. 28 25 22 23 18 21 18 16

Trial standard level

Trial standard level