2010-7608. Energy Conservation Standards for Walk-in Coolers and Walk-in Freezers: Public Meeting and Availability of the Preliminary Technical Support Document

AGENCY:

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

ACTION:

Notice of public meeting and availability of preliminary technical support document.

SUMMARY:

The U.S. Department of Energy (DOE) will hold a public meeting to discuss and receive comments on: The equipment classes that DOE plans to analyze for establishing energy conservation standards for walk-in coolers and walk-in freezers; the analytical framework, models, and tools that DOE is using to evaluate standards for this equipment; the results of preliminary analyses performed by DOE for this equipment; and the potential energy conservation standard levels derived from these analyses that DOE could consider for this equipment. In addition, DOE encourages written comments on these subjects. To inform interested parties and facilitate this process, DOE has prepared an agenda, a preliminary technical support document (preliminary TSD), and briefing materials, which are available at: http://www1.eere.energy.gov/​buildings/​appliance_​standards/​commercial/​wicf.html.

DATES:

DOE will hold a public meeting on Friday, May 14, 2010, from 9 a.m. to 5 p.m. in Washington, DC. Any person requesting to speak at the public meeting should submit such request, along with an electronic copy of the statement to be given at the public meeting, before 4 p.m., Friday, April 30, 2010. Written comments are welcome, especially following the public meeting, and should be submitted by May 20, 2010.

ADDRESSES:

The public meeting will be held at the U.S. Department of Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue, SW., Washington, DC 20585-0121. Please note that foreign nationals participating in the public meeting are subject to advance security screening procedures. If a foreign national wishes to participate in the public meeting, please inform DOE of this fact as soon as possible by contacting Ms. Brenda Edwards at [phone] so that the necessary procedures can be completed. Interested persons may submit comments, identified by docket number EERE-2008-BT-STD-0012, by any of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov Follow the instructions for submitting comments.
• E-mail: [e-mail]; Include EERE-2008-BT-STD-0012 in the subject line of the message.
• Postal Mail: Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Program, Mailstop EE-2J, Public Meeting for Walk-in Coolers and Walk-in Freezers, EERE-2008-BT-STD-0012, 1000 Independence Avenue, SW., Washington, DC 20585-0121. Telephone [phone]. Please submit one signed paper original.
• Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Program, Sixth Floor, 950 L'Enfant Plaza, SW., Washington, DC 20024. Telephone [phone]. Please submit one signed paper original.

Instructions: All submissions received must include the agency name and docket number.

Docket: For access to the docket to read background documents or a copy of the transcript of the public meeting or comments received, go to the U.S. Department of Energy, Sixth Floor, 950 L'Enfant Plaza, SW., Washington, DC 20024, [phone], between 9 a.m. and 4 p.m., Monday through Friday, except Federal holidays. Please call Ms. Brenda Edwards at [phone] for additional information regarding visiting the Resource Room.

FOR FURTHER INFORMATION CONTACT:

Direct requests for additional information to Mr. Charles Llenza, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies, EE-2J, 1000 Independence Avenue, SW., Washington, DC 20585-0121, [phone]. E-mail: [e-mail]. In the Office of General Counsel, contact Mr. Michael Kido, U.S. Department of Energy, Office of General Counsel, GC-71, 1000 Independence Avenue, SW., Washington, DC 20585, [phone]. E-mail: [e-mail].

SUPPLEMENTARY INFORMATION:

A. Statutory Authority

Title III of the Energy Policy and Conservation Act of 1975, as amended, (EPCA or the Act) sets forth a variety of provisions designed to improve energy efficiency. Part B of Title III (42 U.S.C. 6291-6309) provides for the Energy Conservation Program for Consumer Products Other Than Automobiles. The National Energy Conservation Policy Act (NECPA), Public Law 95-619, amended EPCA to add Part C of Title III, which established an energy conservation program for certain industrial equipment. (42 U.S.C. 6311-6317) (For purposes of codification in Title 42 of the U.S. Code, these parts were subsequently redesignated as Parts A and A-1, respectively, for editorial reasons.) Section 312 of the Energy Independence and Security Act of 2007 (EISA 2007) further amended EPCA by adding certain equipment to this energy conservation program, including walk-in coolers and walk-in freezers (collectively “walk-in equipment” or “walk-ins”), which are the subject of this rulemaking. (42 U.S.C. 6311(1), (20), 6313(f) and 6314(a)(9))

DOE is required to design each standard for this equipment to: (1) Achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified, and (2) result in significant conservation of energy. (42 U.S.C. 6295(o)(2)(A) and (o)(3), 42 U.S.C. 6313(f)(4)(A); see 42 U.S.C. 6295(o)(2)(A) and (o)(3)(B)) To determine whether a proposed standard is economically justified, DOE will, after receiving comments on the proposed standard, determine whether the benefits of the standard exceed its burdens to the greatest extent practicable, considering the following seven factors:

1. The economic impact of the standard on manufacturers and consumers of equipment subject to the standard;

2. The savings in operating costs throughout the estimated average life of the covered equipment in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered equipment which are likely to result from the imposition of the standard;

3. The total projected amount of energy savings likely to result directly from the imposition of the standard;

4. Any lessening of the utility or the performance of the covered equipment likely to result from the imposition of the standard;

5. The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard;

6. The need for national energy conservation; and

7. Other factors the Secretary [of Energy] considers relevant.

(See 42 U.S.C. 6295(o)(2)(B)(i); 6313(f)) For walk-ins, DOE is applying those factors in a manner consistent with its other energy conservation standards rulemakings to ascertain the maximum improvement in energy efficiency that is technologically feasible and economically justified for this equipment.

Prior to proposing a standard, DOE typically seeks public input on the analytical framework, models, and tools that DOE will use to evaluate standards for the product at issue; the results of preliminary analyses DOE performed for the product; and potential energy conservation standard levels derived from these analyses that DOE could consider. DOE is publishing this document to announce the availability of the preliminary technical support document (TSD), which details the preliminary analyses, discusses the comments on the framework document, and summarizes the preliminary results of DOE's analyses. In addition, DOE is announcing a public meeting to solicit feedback from interested parties on its analytical framework, models, and preliminary results.

B. History of Standards Rulemaking for Walk-In Coolers and Walk-In Freezers

1. Background

EPCA requires the Secretary to publish performance-based standards for walk-ins no later than January 1, 2012. The standards must apply to products manufactured beginning 3 years after the date the final rule is published unless DOE determines, by rule, that such period is inadequate. If DOE makes such a determination, DOE may establish a period of up to 5 years for the standards to become applicable. (42 U.S.C. 6313(f)(4)) To address this requirement, DOE is developing standards for walk-in coolers and walk-in freezers that achieve the maximum improvement in energy that is technologically feasible and economically justified.

In addition to requiring the promulgation of performance standards for walk-ins, EPCA also contains prescriptive standards (i.e., design requirements) for walk-in coolers and walk-in freezers manufactured on or after January 1, 2009. (42 U.S.C. 6313(f)(1)-(3)) These prescriptive standards require that walk-ins have specific components or design characteristics, each of which is intended to reduce the energy use of the equipment. DOE is not proposing to amend these requirements, but rather to develop new standards that further improve the energy efficiency of the equipment by regulating its overall energy use (i.e., performance). Manufacturers would be permitted to meet the new standards with a variety of components or designs that satisfy the prescriptive standards mandated by EPCA. Accordingly, this rulemaking would not modify any of EPCA's prescriptive standards for walk-in equipment.

Further, EPCA directs the Secretary to establish a test procedure to measure the energy use of walk-in coolers and walk-in freezers. (42 U.S.C. 6314(a)(9)(B)(i)) DOE is conducting a separate rulemaking to develop this test procedure and published a notice of proposed rulemaking (NOPR) for the test procedure on January 4, 2010. In the test procedure NOPR, DOE proposed to consider the two components that comprise a walk-in—the insulated envelope and the refrigeration system—as two separate pieces of equipment, and proposed separate test procedures for each of these components. DOE considered this approach because it received comments from interested parties stating that the two components are often produced by different manufacturers and may be assembled by a third party, and for other reasons as well. 75 FR 186 (January 4, 2010)

DOE anticipated that it would take a similar approach to performance standards for walk-ins; that is, it would create separate standards for the envelope and the refrigeration system. Thus, the preliminary analyses reflect this approach. DOE explains the approach further and addresses its implications in the preliminary TSD.

2. Current Rulemaking Process

To initiate this rulemaking, DOE prepared a framework document, “Rulemaking Framework for Walk-in Coolers and Walk-in Freezers,” that describes the procedural and analytical approaches DOE anticipated using to evaluate the establishment of energy conservation standards for walk-ins. DOE published a notice that announced both the availability of the framework document and a public meeting to discuss the proposed analytical framework for the rulemaking, and that invited written comments on the conduct of the rulemaking. 74 FR 411 (January 6, 2009). The framework document is available at: http://www1.eere.energy.gov/​buildings/​appliance_​standards/​commercial/​wicf_​framework_​document.html. DOE held the public meeting on February 4, 2009, at which it described the various rulemaking analyses DOE would conduct, such as the engineering analysis, the life-cycle cost (LCC) and payback period (PBP) analyses, and the national impact analysis (NIA); the methods for conducting them; and the relationship among the various analyses. Manufacturers, trade associations, and environmental advocates attended the meeting. The participants discussed the following major issues: Creation of separate standards for the insulated envelope and the refrigeration system of a walk-in; compliance, enforcement, and labeling provisions; test procedures; distribution channels; discount rates; monetization of emission reductions; and interpretation and enforcement of the EPCA's prescriptive requirements for walk-in equipment.

DOE developed two spreadsheets for analyzing the economic impacts of standard levels—one that calculates LCC and PBP, and one that calculates national impacts. (For the NOPR, DOE will also develop a spreadsheet that will evaluate the financial impacts on walk-in manufacturers that may result from a standard level.) DOE prepared an LCC and PBP spreadsheet that calculates results for each of the representative units analyzed. This spreadsheet includes equipment efficiency data that allows users to determine LCC savings and PBPs based on average values, and can be combined with Crystal Ball (a commercially available software program) to generate a Monte Carlo simulation, incorporating uncertainty and variability considerations. The second economic spreadsheet calculates the impacts of candidate standard levels on shipments and the national energy savings (NES) and net present value (NPV) at various standard levels. There is one national impact analysis spreadsheet for all walk-in coolers and walk-in freezers. DOE has posted both economic spreadsheets on its website for review and comment by interested parties.

Comments received since publication of the framework document have helped DOE identify and resolve issues involved in the preliminary analyses. Chapter 2 of the preliminary TSD, available at the Web link provided in the SUMMARY section of this notice, summarizes and addresses the comments received in response to the framework document.

C. Summary of the Analyses Performed by DOE

For the walk-in equipment currently under consideration, DOE conducted in-depth technical analyses in the following areas: (1) Engineering, (2) energy-use characterization, (3) markups to determine equipment price, (4) life-cycle cost and payback period, and (5) national impacts. These analyses resulted in a preliminary TSD that presents the methodology and results of each of these analyses. The preliminary TSD is available at the Web address given in the SUMMARY section of this notice. The analyses are described in more detail below.

DOE also conducted, and has included in the preliminary TSD, several other analyses that either support the five major analyses or are preliminary analyses that will be expanded in preparing the NOPR. These analyses include the market and technology assessment, the screening analysis, which contributes to the engineering analysis, and the shipments analysis, which contributes to the NIA. In addition to these analyses, DOE has begun some preliminary work on the manufacturer impact analysis and identified the methods to be used for the LCC subgroup analysis, the environmental assessment, the employment analysis, the regulatory impact analysis, and the utility impact analysis. DOE will expand on these analyses in the NOPR.

1. Engineering Analysis

The engineering analysis establishes the relationship between the manufacturer selling price and equipment efficiency DOE is evaluating for energy conservation standards. This relationship serves as the basis for cost-benefit calculations for individual consumers, manufacturers, and the nation. The engineering analysis identifies representative baseline equipment, which is the starting point for analyzing technologies that provide energy efficiency improvements. Baseline equipment refers to a model or models having features and technologies typically found in the minimum efficiency equipment currently offered for sale. The baseline model in each equipment class represents the characteristics of certain walk-in equipment. After identifying the baseline models, DOE estimated manufacturer selling prices by using a consistent methodology and pricing scheme including material and labor costs, cost of shipping and manufacturer's markups. In this way, DOE developed these so-called “manufacturer selling prices” for the baseline and more efficient designs. Later, in its Markups To Determine Installed Price analysis, DOE converts these manufacturer selling prices into installed prices. In the preliminary TSD, section 2.4 of chapter 2 and chapter 5 each provide detail on the engineering analysis and the derivation of the manufacturer selling prices.

2. Markups To Determine Installed Price

DOE derives the installed prices for equipment based on manufacturer markups, retailer markups, distributor markups, contractor markups, builder markups, and sales taxes. In deriving these markups, DOE has determined the distribution channels for equipment sales, the markup associated with each party in the distribution channels, and the existence and magnitude of differences between markups for baseline equipment (baseline markups) and for more-efficient equipment (incremental markups). DOE calculates both overall baseline and overall incremental markups based on the equipment markups at each step in the distribution channel. The overall incremental markup relates the change in the manufacturer sales price of higher efficiency models (the incremental cost increase) to the change in the retailer or distributor sales price. In the preliminary TSD, section 2.5 of chapter 2 and chapter 6 each provide detail on the estimation of markups.

3. Energy Use Characterization

The energy use characterization provides estimates of annual energy consumption for walk-in equipment, which DOE uses in the LCC and PBP analyses and the NIA. DOE developed energy consumption estimates for all of the equipment classes analyzed in the engineering analysis, as the basis for its energy use estimates. In the preliminary TSD, section 2.6 of chapter 2 and chapter 7 each provide detail on the energy use characterization.

4. Life-Cycle Cost and Payback Period Analyses

The LCC and PBP analyses determine the economic impact of potential standards on individual consumers. The LCC is the total consumer expense for equipment over the life of the equipment. The LCC analysis compares the LCCs of equipment designed to meet possible energy conservation standards with the LCCs of the equipment likely to be installed in the absence of standards. DOE determines LCCs by considering (1) Total installed cost to the purchaser (which consists of manufacturer selling price, sales taxes, distribution chain markups, and installation cost); (2) the operating expenses of the equipment (energy use and maintenance); (3) equipment lifetime; and (4) a discount rate that reflects the real consumer cost of capital and puts the LCC in present-value terms. The PBP represents the number of years needed to recover the increase in purchase price (including installation cost) of more efficient equipment through savings in the operating cost of the equipment. It is the change in total installed cost due to increased efficiency divided by the change in annual operating cost from increased efficiency. In the preliminary TSD, section 2.7 of chapter 2 and chapter 8 each provide detail on the LCC and PBP analyses.

5. National Impact Analysis

The NIA estimates the NES and the NPV of total consumer costs and savings expected to result from new standards at specific efficiency levels (referred to as candidate standard levels). DOE calculated NES and NPV for each candidate standard level for walk-in equipment as the difference between a base-case forecast (without new standards) and the standards case forecast (with standards). DOE determined national annual energy consumption by multiplying the number of units in use (by vintage) by the average unit energy consumption (also by vintage). Cumulative energy savings are the sum of the annual NES determined from 2015-2045. The national NPV is the sum over time of the discounted net savings each year, which consists of the difference between total operating cost savings and increases in total installed costs. Critical inputs to this analysis include shipments projections, retirement rates (based on estimated equipment lifetimes), and estimates of changes in shipments and retirement rates in response to changes in equipment costs due to standards. In the preliminary TSD, section 2.8 of chapter 2 and chapter 10 each provide detail on the NIA.

DOE consulted with interested parties as part of its process for conducting all of the analyses and invites further input from the public on these topics. The preliminary analytical results are subject to revision following further review and input from the public. A complete and revised TSD will be made available upon issuance of a NOPR. The final rule will contain the final analysis results and be accompanied by a final rule TSD.

DOE encourages those who wish to participate in the public meeting to obtain the preliminary TSD from DOE's website and to be prepared to discuss its contents. A copy of the preliminary TSD is available at the Web address given in the SUMMARY section of this notice. However, public meeting participants need not limit their comments to the topics identified in the preliminary TSD. DOE is also interested in receiving views concerning other relevant issues that participants believe would affect energy conservation standards for this equipment or that DOE should address in the NOPR.

Furthermore, DOE welcomes all interested parties, regardless of whether they participate in the public meeting, to submit in writing by May 20, 2010, comments and information on matters addressed in the preliminary TSD and on other matters relevant to consideration of standards for walk-in equipment.

The public meeting will be conducted in an informal, conference style. A court reporter will be present to record the minutes of the meeting. There shall be no discussion of proprietary information, costs or prices, market shares, or other commercial matters regulated by United States antitrust laws.

After the public meeting and the expiration of the period for submitting written statements, DOE will consider all comments and additional information that is obtained from interested parties or through further analyses, and it will prepare a NOPR. The NOPR will include proposed energy conservation standards for the equipment covered by the rulemaking, and members of the public will be given an opportunity to submit written and oral comments on the proposed standards.

Issued in Washington, DC, on March 29, 2010.

Cathy Zoi,

Assistant Secretary, Energy Efficiency and Renewable Energy.