Home/Federal/Federal Register/2022-26024

Proposed Rule2022-26024

Energy Conservation Program: Energy Conservation Standards for Single Package Vertical Units

Primary source

Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.

Published

December 8, 2022

Issuing agencies

Energy Department

Abstract

The Energy Policy and Conservation Act, as amended (EPCA), prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including single package vertical air conditioners (SPVACs) and single package vertical heat pumps (SPVHPs), collectively referred to as single package vertical units (SPVUs). EPCA also requires the U.S. Department of Energy (DOE) to periodically review standards. In this notice of proposed rulemaking (NOPR); notification of proposed determination (NOPD), DOE proposes to amend the current energy conservation standards for SPVUs such that the existing standard levels would be based on a new cooling efficiency metric of Integrated Energy Efficiency Ratio (IEER) for SPVACs and SPVHPs, and the current heating efficiency metric of Coefficient of Performance (COP) for SPVHPs (but without any increase in stringency), In addition, DOE has initially determined that more-stringent standards for SPVUs would not be economically justified and would not result in a significant conservation of energy. DOE also announces a public meeting to receive comment on these proposed standards and associated analyses and results.

Full Text

<html>
<head>
<title>Federal Register, Volume 87 Issue 235 (Thursday, December 8, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 235 (Thursday, December 8, 2022)]
[Proposed Rules]
[Pages 75388-75421]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-26024]

[[Page 75387]]

Vol. 87

Thursday,

No. 235

December 8, 2022

Part III

Department of Energy

-----------------------------------------------------------------------

10 CFR Part 431

Energy Conservation Program: Energy Conservation Standards for Single
Package Vertical Units; Proposed Rule

Federal Register / Vol. 87, No. 235 / Thursday, December 8, 2022 /
Proposed Rules

[[Page 75388]]

-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

10 CFR Part 431

[EERE-2019-BT-STD-0033]
RIN 1904-AE78

Energy Conservation Program: Energy Conservation Standards for
Single Package Vertical Units

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

ACTION: Notice of proposed rulemaking; notification of proposed
determination and announcement of public meeting.

-----------------------------------------------------------------------

SUMMARY: The Energy Policy and Conservation Act, as amended (EPCA),
prescribes energy conservation standards for various consumer products
and certain commercial and industrial equipment, including single
package vertical air conditioners (SPVACs) and single package vertical
heat pumps (SPVHPs), collectively referred to as single package
vertical units (SPVUs). EPCA also requires the U.S. Department of
Energy (DOE) to periodically review standards. In this notice of
proposed rulemaking (NOPR); notification of proposed determination
(NOPD), DOE proposes to amend the current energy conservation standards
for SPVUs such that the existing standard levels would be based on a
new cooling efficiency metric of Integrated Energy Efficiency Ratio
(IEER) for SPVACs and SPVHPs, and the current heating efficiency metric
of Coefficient of Performance (COP) for SPVHPs (but without any
increase in stringency), In addition, DOE has initially determined that
more-stringent standards for SPVUs would not be economically justified
and would not result in a significant conservation of energy. DOE also
announces a public meeting to receive comment on these proposed
standards and associated analyses and results.

DATES: Comments: DOE will accept comments, data, and information
regarding this NOPR/NOPD no later than February 6, 2023.
Meeting: DOE will hold a public meeting via webinar on Monday,
January 9th, 2023, from 1:00 p.m. to 4:00 p.m. See section VIII,
``Public Participation,'' for webinar registration information,
participant instructions, and information about the capabilities
available to webinar participants.
Comments regarding the likely competitive impact of the proposed
standard should be sent to the Department of Justice contact listed in
the ADDRESSES section on or before January 9, 2023. DOE notes that the
Department of Justice is required to transmit its determination
regarding the competitive impact of the proposed standard to DOE no
later than February 6, 2023. Commenters who want to have their comments
considered by DOE as part of any further rulemaking resulting from this
NOPR/NOPD also should submit such comments to DOE in accordance with
the procedures detailed in this proposal.

ADDRESSES: Interested persons are encouraged to submit comments using
the Federal eRulemaking Portal at <a href="http://www.regulations.gov">www.regulations.gov</a>, under docket
number EERE-2019-BT-STD-0033. Follow the instructions for submitting
comments. Alternatively, interested persons may submit comments,
identified by docket number EERE-2019-BT-STD-0033 and/or RIN 1904-AE78,
by any of the following methods:
Email: <a href="/cdn-cgi/l/email-protection#4d1e1d1b187f7d7c741e19090d282863292228632a223b">[email&#160;protected]</a>. Include the docket number EERE-2019-
BT-STD-0033 and/or RIN 1904-AE78 in the subject line of the message.
Postal Mail: Appliance and Equipment Standards Program, U.S.
Department of Energy, Building Technologies Office, Mailstop EE-5B,
1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone:
(202) 287-1445. If possible, please submit all items on a compact disc
(CD), in which case it is not necessary to include printed copies.
Hand Delivery/Courier: Appliance and Equipment Standards Program,
U.S. Department of Energy, Building Technologies Office, 950 L'Enfant
Plaza SW, 6th Floor, Washington, DC 20024. Telephone: (202) 287-1445.
If possible, please submit all items on a CD, in which case it is not
necessary to include printed copies.
No telefacsimiles (faxes) will be accepted. For detailed
instructions on submitting comments and additional information on this
process, see section VIII of this document (Public Participation).
Docket: The docket for this activity, which includes Federal
Register notices, comments, and other supporting documents/materials,
is available for review at <a href="http://www.regulations.gov">www.regulations.gov</a>. All documents in the
docket are listed in the <a href="http://www.regulations.gov">www.regulations.gov</a> index. However, not all
documents listed in the index may be publicly available, such as those
containing information that is exempt from public disclosure.
The docket web page can be found at: <a href="http://www.regulations.gov/search/docket?filter=EERE-2019-BT-STD-0033">www.regulations.gov/search/docket?filter=EERE-2019-BT-STD-0033</a>. The docket web page contains
instructions on how to access all documents, including public comments,
in the docket. See section VIII (Public Participation) of this document
for information on how to submit comments through <a href="http://www.regulations.gov">www.regulations.gov</a>.
EPCA requires the U.S. Attorney General to provide DOE a written
determination of whether the proposed standard is likely to lessen
competition. The U.S. Department of Justice (DOJ) Antitrust Division
invites input from market participants and other interested persons
with views on the likely competitive impact of the proposed standard.
Interested persons may contact the Antitrust Division at
<a href="/cdn-cgi/l/email-protection#4722292235203e6934332629232635233407323423282d69202831">[email&#160;protected]</a> in advance of the date specified in the
DATES section. Please indicate in the ``Subject'' line of your email
the title and Docket Number of this rulemaking.

FOR FURTHER INFORMATION CONTACT: Ms. Catherine Rivest, U.S. Department
of Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Office, EE-5B, 1000 Independence Avenue SW, Washington,
DC, 20585-0121. Telephone: (202) 586-7335. Email:
<a href="/cdn-cgi/l/email-protection#f1b081819d98909f9294a285909f9590839582a084948285989e9f82b19494df959e94df969e87">[email&#160;protected]</a>.
Mr. Eric Stas, U.S. Department of Energy, Office of the General
Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC, 20585-
0121. Telephone: (202) 586-5827. Email: <a href="/cdn-cgi/l/email-protection#4401362d276a17302537042c356a202b216a232b32">[email&#160;protected]</a>.
For further information on how to submit a comment, review other
public comments and the docket, or participate in the public meeting
webinar, contact the Appliance and Equipment Standards Program staff at
(202) 287-1445 or by email: <a href="/cdn-cgi/l/email-protection#6f2e1f1f03060e010c0a3c1b0e010b0e1d0b1c3e1a0a1c1b0600011c2f0a0a410b000a41080019">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Proposed Rule
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of the Current Energy Conservation Standards
Rulemaking for SPVUs
C. Deviation From Appendix A
III. General Discussion
A. Scope of Coverage
B. Equipment Classes
C. Test Procedure and Efficiency Metrics
D. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
E. Energy Savings
F. Economic Justification

[[Page 75389]]

1. Economic Impact on Consumers and Manufacturers
2. Savings in Operating Costs Compared to Increase in Price (LCC
and PBP)
3. Energy Savings
4. Lessening of Utility or Performance of Equipment
5. Impact of Any Lessening of Competition
6. Need for National Energy Conservation
7. Other Factors
IV. Crosswalk Analysis
V. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Equipment Classes
2. Technology Options
B. Screening Analysis
C. Engineering Analysis
1. Efficiency Analysis
a. Baseline Efficiency Levels
b. Higher Efficiency Levels
2. Cost Analysis
3. Cost-Efficiency Results
D. Markups Analysis
E. Energy Use Analysis
F. Life-Cycle Cost and Payback Period Analysis
1. Equipment Cost
2. Installation Cost
3. Annual Energy Consumption
4. Energy Prices
5. Maintenance and Repair Costs
6. Product Lifetime
7. Discount Rates
8. Energy Efficiency Distribution in the No-New-Standards Case
9. Payback Period Analysis
VI. Analytical Results and Conclusions
A. Economic Impacts on SPVU Consumers
B. Proposed Determination
1. Technological Feasibility
2. Economic Justification
3. Significant Additional Energy Savings
4. Summary
VII. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act of 1995
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
VIII. Public Participation
A. Participation in the Public Meeting Webinar
B. Procedure for Submitting Prepared General Statements for
Distribution
C. Conduct of the Public Meeting Webinar
D. Submission of Comments
E. Issues on Which DOE Seeks Comment
IX. Approval of the Office of the Secretary

I. Synopsis of the Proposed Rule

The Energy Policy and Conservation Act,\1\ as amended, Public Law
94-163 (42 U.S.C. 6291-6317, as codified) authorizes DOE to regulate
the energy efficiency of a number of consumer products and certain
industrial equipment. Title III, part C \2\ of EPCA, established the
Energy Conservation Program for Certain Industrial Equipment. (42
U.S.C. 6311-6317) This equipment includes single package vertical air
conditioners (SPVACs) and single package vertical heat pumps (SPVHPs),
collectively referred to as single package vertical units (SPVUs), the
subject of this proposed rulemaking. SPVUs are a category of commercial
package air conditioning and heating equipment. (42 U.S.C. 6311(1)(B)-
(D); 42 U.S.C. 6313(a)(10))
---------------------------------------------------------------------------

\1\ All references to EPCA in this document refer to the statute
as amended through the Energy Act of 2020, Public Law 116-260 (Dec.
27, 2020), which reflect the last statutory amendments that impact
parts A and A-1 of EPCA.
\2\ For editorial reasons, upon codification in the U.S. Code,
part C was redesignated part A-1.
---------------------------------------------------------------------------

Pursuant to EPCA, DOE must consider amending the Federal energy
efficiency standards for certain types of commercial and industrial
equipment, including the equipment at issue in this document, whenever
the Department is triggered by the American Society of Heating,
Refrigerating, and Air-Conditioning Engineers (ASHRAE) acting to amend
the standard levels or design requirements prescribed in ASHRAE
Standard 90.1, ``Energy Standard for Buildings Except Low-Rise
Residential Buildings,'' (ASHRAE Standard 90.1). (42 U.S.C.
6313(a)(6)(A)-(B)) In addition, EPCA contains an independent review
requirement for this same equipment (the 6-year-lookback review), which
requires DOE to consider the need for amended standards every six
years. To adopt standard levels more stringent than those contained in
ASHRAE Standard 90.1, DOE must have clear and convincing evidence to
show that such standards would be technologically feasible and
economically justified and would save a significant additional amount
of energy. (42 U.S.C. 6313(a)(6)(C)) DOE is conducting this proposed
rulemaking under EPCA's 6-year-lookback review authority.
The current Federal energy conservation standards for SPVUs are set
forth at title 10 of the Code of Federal Regulations (CFR), 10 CFR
431.97(d) and, as specified in 10 CFR 431.96, those standards are
denominated in terms of the cooling efficiency metric, Energy
Efficiency Ratio (EER) and the heating efficiency metric, Coefficient
of Performance (COP), and based on the rating conditions in American
National Standards Institute (ANSI)/Air-Conditioning, Heating, and
Refrigeration Institute (AHRI) Standard 390-2003, ``Performance Rating
of Single Package Vertical Air-Conditioners and Heat Pumps'' (ANSI/AHRI
390-2003). ASHRAE Standard 90.1-2019 references this same industry test
standard.
On June 24, 2021, AHRI published AHRI Standard 390-2021,
``Performance Rating of Single Package Vertical Air-Conditioners and
Heat Pumps'' (AHRI 390-2021), which supersedes ANSI/AHRI 390-2003. AHRI
390-2021, which was developed as part of an industry consensus process,
includes revisions that DOE determined improve the representativeness,
repeatability, and reproducibility of the test methods. Among other
things, AHRI 390-2021 maintains the existing efficiency metrics--EER
for cooling mode and COP for heating mode--but it also added a seasonal
efficiency metric that includes part-load cooling performance--the
Integrated Energy Efficiency Ratio (IEER). In November 2022, DOE issued
a Test Procedure Final Rule for SPVUs that amended the test procedures
for SPVUs to incorporate by reference AHRI 390-2021. As discussed in
section III.C of this document, DOE has determined that the IEER metric
is more representative of the cooling efficiency for SPVUs on an annual
basis than the current EER metric. As a result, DOE is proposing to
amend the standards for SPVUs to be based on the seasonal cooling
metric, IEER, and the existing heating metric, COP. As discussed in
section IV of this document, DOE conducted a crosswalk analysis to
develop IEER levels that are of equivalent stringency to the current
EER standard levels.\3\
---------------------------------------------------------------------------

\3\ EPCA provides that in the case of any amended test procedure
where DOE deviates from the industry test standard referenced in
ASHRAE Standard 90.1, DOE must determine, to what extent, if any,
the proposed test procedure would alter the measured energy
efficiency, measured energy use, or measured water use of the
subject ASHRAE equipment as determined under the existing test
procedure. (See 42 U.S.C 6293(e); 42 U.S.C. 6314(a)(4)(C)) DOE
refers to this as the ``crosswalk'' analysis.
---------------------------------------------------------------------------

To satisfy its review obligations under EPCA's 6-year-lookback
provision, DOE analyzed the technological feasibility of more energy-
efficient SPVUs. For those SPVUs for which DOE determined higher
standards to be technologically feasible, DOE evaluated whether higher
standards would be economically justified by conducting life-cycle cost
(LCC) and payback period (PBP)

[[Page 75390]]

analyses. As discussed in the following sections, DOE has tentatively
determined that it lacks the clear and convincing evidence required
under the statute to show that amended standards would be economically
justified. DOE did not conduct a national impact analysis to measure
the national energy savings of higher efficiency levels, because the
weighted average LCC savings were strongly negative across the four
equipment classes.
Based on the results of the analyses conducted, summarized in
section VI of this document, DOE has tentatively determined that it
lacks clear and convincing evidence that amended standards for SPVUs,
in terms of IEER and COP, that are more stringent than the current
standards for SPVUs would be economically justified. The clear and
convincing threshold is a heightened standard and would only be met
where the Secretary has an abiding conviction, based on available
facts, data, and DOE's own analyses, that it is highly probable an
amended standard would result in a significant additional amount of
energy savings, and is technologically feasible and economically
justified. See American Public Gas Association v. U.S. Dep't of Energy,
No. 20-1068, 2022 WL 151923, at *4 (D.C. Cir. Jan. 18, 2022) (citing
Colorado v. New Mexico, 467 U.S. 310, 316, 104 S.Ct. 2433, 81 L.Ed.2d
247 (1984)). DOE did not conduct the shipments analysis, manufacturer
impact analysis, and other such analyses typically conducted at the
NOPR stage due to the results of the initial analysis conducted
(discussed in further detail elsewhere in this document).
In this NOPR/NOPD, DOE is proposing to adopt standards based on
IEER and COP that are of equivalent stringency as the current DOE
energy conservation standard levels and the current standard levels
specified in ASHRAE Standard 90.1-2019. The proposed standards are
presented in Table I-1. These proposed standards, if adopted, would
apply to all SPVUs listed in Table I-1 manufactured in, or imported
into, the United States starting on the tentative compliance date of
360 days after the publication in the Federal Register of the final
rule for this rulemaking. See section VI.B of this NOPR/NOPD for a
discussion on the applicable lead-times considered to determine this
compliance date.

Table I-1--Proposed Energy Conservation Standards for SPVUs
------------------------------------------------------------------------
Equipment class Proposed standard level
------------------------------------------------------------------------
SPVAC <65,000 Btu/h...................... IEER = 12.5
SPVHP <65,000 Btu/h...................... IEER = 12.5
COP = 3.3
SPVAC >=65,000 Btu/h and <135,000 Btu/h.. IEER = 10.3
SPVHP >=65,000 Btu/h and <135,000 Btu/h.. IEER = 10.3
COP = 3.0
SPVAC >=135,000 Btu/h and <240,000 Btu/h. IEER = 11.2
SPVHP >=135,000 Btu/h and <240,000 Btu/h. IEER = 11.2
COP = 3.0
------------------------------------------------------------------------

II. Introduction

The following section briefly discusses the statutory authority
underlying this proposal, as well as some of the relevant historical
background related to the establishment of energy conservation
standards for SPVUs.

A. Authority

EPCA, Pub. L. 94-163, as amended, among other things, authorizes
DOE to regulate the energy efficiency of a number of consumer products
and certain industrial equipment. Title III, part C of EPCA, added by
Public Law 95-619, title IV, section 441(a), (42 U.S.C. 6311-6317, as
codified), established the Energy Conservation Program for Certain
Industrial Equipment, which sets forth a variety of provisions designed
to improve energy efficiency. This equipment includes SPVUs, which are
a category of small, large, and very large commercial package air
conditioning and heating equipment and the subject of this document.
(42 U.S.C. 6311(1)(B)-(D); 42 U.S.C. 6313(a)(10)) EPCA prescribed
initial standards for these products. (42 U.S.C. 6313(a)(1)-(2))
Congress updated the standards for SPVUs through amendments to EPCA
contained in the Energy Independence and Security Act of 2007 (EISA
2007), Public Law 110-140 (Dec. 19, 2007). (42 U.S.C. 6313(a)(10))
Additionally, DOE is triggered to consider amending the energy
conservation standards for certain types of commercial and industrial
equipment, including the equipment at issue in this document, whenever
ASHRAE amends the standard levels or design requirements prescribed in
ASHRAE/IES Standard 90.1, and independent of that requirement, a
separate provision of EPCA requires DOE to consider amended standards
for that equipment at a minimum, every six years. (42 U.S.C.
6313(a)(6)(A)-(C))
The energy conservation program under EPCA consists essentially of
four parts: (1) testing; (2) labeling; (3) the establishment of Federal
energy conservation standards, and (4) certification and enforcement
procedures. Relevant provisions of EPCA include definitions (42 U.S.C.
6311), energy conservation standards (42 U.S.C. 6313), test procedures
(42 U.S.C. 6314), labeling provisions (42 U.S.C. 6315), and the
authority to require information and reports from manufacturers (42
U.S.C. 6316; 42 U.S.C. 6296).
Federal energy efficiency requirements for covered equipment
established under EPCA generally supersede State laws and regulations
concerning energy conservation testing, labeling, and standards. (42
U.S.C. 6316(a) and (b); 42 U.S.C. 6297) DOE may, however, grant waivers
of Federal preemption for particular State laws or regulations, in
accordance with the procedures and other provisions set forth under
EPCA. (42 U.S.C. 6316(b)(2)(D))
Under 42 U.S.C. 6314, EPCA sets forth the criteria and procedures
DOE is required to follow when prescribing or amending test procedures
for covered equipment. EPCA requires that any test procedures
prescribed or amended under this section must be reasonably designed to
produce test results which reflect energy efficiency, energy use, or
estimated annual operating cost of a given type of covered equipment
during a representative average use cycle and requires that test
procedures not be unduly burdensome to conduct. (42 U.S.C. 6314(a)(2))
Manufacturers of covered equipment must use the Federal test procedures
as the basis for: (1) certifying to DOE that their equipment complies
with the applicable energy conservation standards adopted pursuant to
EPCA (42 U.S.C. 6316(b); 42 U.S.C. 6296), and (2) making
representations about the efficiency of that equipment (42 U.S.C.
6314(d)). Similarly, DOE uses these test procedures to determine
whether the equipment complies with relevant standards promulgated
under EPCA. The DOE test procedures for SPVUs appear at 10 CFR part
431, subpart F, appendices G and G1.
ASHRAE Standard 90.1 sets industry energy efficiency levels for
small, large, and very large commercial package air-conditioning and
heating equipment, packaged terminal air conditioners, packaged
terminal heat pumps, warm air furnaces, packaged boilers, storage water
heaters, instantaneous water heaters, and unfired hot water storage
tanks (collectively referred to as

[[Page 75391]]

``ASHRAE equipment''). For each type of listed equipment, EPCA directs
that if ASHRAE amends Standard 90.1, DOE must adopt amended standards
at the new ASHRAE efficiency level, unless DOE determines, supported by
clear and convincing evidence, that adoption of a more-stringent level
would produce significant additional conservation of energy and would
be technologically feasible and economically justified. (42 U.S.C.
6313(a)(6)(A)(ii)) Under EPCA, DOE must also review energy efficiency
standards for SPVUs every six years and either: (1) issue a notice of
determination that the standards do not need to be amended as adoption
of a more-stringent level is not supported by clear and convincing
evidence; or (2) issue a notice of proposed rulemaking including new
proposed standards based on certain criteria and procedures in
subparagraph (B) of 42 U.S.C. 6313(a)(6). (42 U.S.C. 6313(a)(6)(C))
In deciding whether a more-stringent standard is economically
justified, under either the provisions of 42 U.S.C. 6313(a)(6)(A) or 42
U.S.C. 6313(a)(6)(C), DOE must determine whether the benefits of the
standard exceed its burdens. DOE must make this determination after
receiving comments on the proposed standard, and by considering, to the
maximum extent practicable, 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 that are likely to result from the standard;
(3) The total projected amount of energy savings likely to result
directly from the standard;
(4) Any lessening of the utility or the performance of the covered
equipment likely to result from 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
standard;
(6) The need for national energy conservation; and
(7) Other factors the Secretary of Energy considers relevant.
(42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII))
Further, EPCA establishes a rebuttable presumption that an energy
conservation standard is economically justified if the Secretary finds
that the additional cost to the consumer of purchasing a product that
complies with the standard will be less than three times the value of
the energy (and, as applicable, water) savings during the first year
that the consumer will receive as a result of the standard, as
calculated under the applicable test procedure. (42 U.S.C.
6295(o)(2)(B)(iii)) However, while this rebuttable presumption analysis
applies to most commercial and industrial equipment (42 U.S.C.
6316(a)), it is not a required analysis for ASHRAE equipment (42 U.S.C.
6316(b)(1)).
EPCA also contains what is known as an ``anti-backsliding''
provision, which prevents the Secretary from prescribing any amended
standard that either increases the maximum allowable energy use or
decreases the minimum required energy efficiency of a covered product.
(42 U.S.C. 6313(a)(6)(B)(iii)(I)) Also, the Secretary may not prescribe
an amended or new standard if interested persons have established by a
preponderance of the evidence that the standard is likely to result in
the unavailability in the United States in any covered product type (or
class) of performance characteristics (including reliability),
features, sizes, capacities, and volumes that are substantially the
same as those generally available in the United States. (42 U.S.C.
6313(a)(6)(B)(iii)(II)(aa))

B. Background

1. Current Standards
In a final rule published in the Federal Register on September 23,
2015 (September 2015 Final Rule), DOE prescribed the current energy
conservation standards for SPVUs in accordance with the 3-year review
prescribed by EPCA and in response to the 2013 update to ASHRAE
Standard 90.1 (ASHRAE Standard 90.1-2013). 80 FR 57438. As part of the
September 2015 Final Rule, DOE evaluated whether more-stringent
standards for SPVUs were economically justified consistent with the
requirements in EPCA at 42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII). For four
of the six SPVU equipment classes, DOE adopted the levels specified in
ASHRAE Standard 90.1-2013. 80 FR 57438, 57439 (Sept. 23, 2015). For the
remaining two equipment classes, DOE concluded that there was clear and
convincing evidence that standards more stringent than the levels in
ASHRAE Standard 90.1-2013 were technologically feasible and
economically justified and would save a significant additional amount
of energy. Id. The current energy conservation standards are codified
at 10 CFR 431.97 and are set forth in Table II-1.

Table II-1--Federal Energy Conservation Standards for SPVUs
----------------------------------------------------------------------------------------------------------------
Compliance date:
products
Equipment type Cooling capacity Subcategory Efficiency level manufactured on
and after . . .
----------------------------------------------------------------------------------------------------------------
Single package vertical air <65,000 Btu/h..... AC EER = 11.0........ September 23,
conditioners and single package 2019.
vertical heat pumps, single-
phase and three-phase.
HP EER = 11.0........ September 23,
2019.
COP = 3.3.........
Single package vertical air >=65,000 Btu/h and AC EER = 10.0........ October 9, 2015.
conditioners and single package <135,000 Btu/h.
vertical heat pumps.
HP EER = 10.0........ October 9, 2015.
COP = 3.0.........
Single package vertical air >=135,000 Btu/h AC EER = 10.0........ October 9, 2016.
conditioners and single package and <240,000 Btu/
vertical heat pumps. h.
HP EER = 10.0........
COP = 3.0......... October 9, 2016.
----------------------------------------------------------------------------------------------------------------

ASHRAE Standard 90.1 has been updated on several occasions since
the 2013 version, the most recently being released on October 24, 2019
(i.e., ASHRAE 90.1-2019). The standard levels for SPVUs were revised in
ASHRAE 90.1-2019 to match the current DOE standard levels.

[[Page 75392]]

2. History of the Current Energy Conservation Standards Rulemaking for
SPVUs
On April 24, 2020, DOE published in the Federal Register a request
for information regarding energy conservation standards for SPVUs
(April 2020 RFI). 85 FR 22958. The April 2020 RFI solicited information
from the public to help DOE determine whether amended standards for
SPVUs would result in significant additional energy savings and whether
such standards would be technologically feasible and economically
justified. DOE received comments in response to the April 2020 RFI from
the interested parties listed in Table II-2.

Table II-2--April 2020 RFI Written Comments
----------------------------------------------------------------------------------------------------------------
Commenter(s) Abbreviation Docket No. Commenter type
----------------------------------------------------------------------------------------------------------------
Air-Conditioning, Heating, & AHRI...................... 9 Manufacturer Trade
Refrigeration Institute. Association.
Appliance Standards Awareness Project, ASAP/ACEEE................ 11 Efficiency Advocacy
American Council for an Energy- Organizations.
Efficient Economy.
GE Appliances, a Haier company.......... GE........................ 7 Manufacturer.
Institute for Policy Integrity at New NYU....................... 5 Educational Institution.
York University School of Law.
Lennox International Inc................ Lennox.................... 8 Manufacturer.
Northwest Energy Efficiency Alliance.... NEEA...................... 6 Efficiency Advocacy
Organization.
Pacific Gas and Electric Company (PG&E), CA IOUs................... 10 Utilities.
San Diego Gas and Electric (SDG&E), and
Southern California Edison (SCE);
collectively referred to as the
California Investor-Owned Utilities.
----------------------------------------------------------------------------------------------------------------

A parenthetical reference at the end of a comment quotation or
paraphrase provides the location of the item in the public record.\4\
---------------------------------------------------------------------------

\4\ The parenthetical reference provides a reference for
information located in the docket of DOE's rulemaking to develop
energy conservation standards for SPVUs. (Docket Number: EERE-2019-
BT-STD-0033, which is maintained at <a href="http://www.regulations.gov">www.regulations.gov</a>). The
references are arranged as follows: (commenter name, comment docket
ID number, page of that document).
---------------------------------------------------------------------------

The following provides an overview of the public comments received
on the April 2020 RFI. In general, AHRI recommended that DOE not amend
the current minimum energy conservation standards for SPVUs. The
commenter stated that DOE should wait until the revised edition of the
industry test procedure for SPVUs has published and has been referenced
in ASHRAE Standard 90.1. AHRI added that a crosswalk should be
developed by testing and calculation using current baseline-efficiency
SPVU equipment to establish the energy conservation standards using the
new metric. (AHRI, No. 9 at p. 6)
The CA IOUs recommended DOE investigate increasing the baseline
efficiency levels for SPVUs in conjunction with establishing standards
and test procedures that incorporate part-load performance. Based on
their analysis of DOE's Compliance Certification Database (CCD), the CA
IOUs noted that over 70 percent of products in each SPVU equipment
class are at the minimum efficiency level, but many products have
varied features and compressor configurations that are likely to
translate into differences in part-load performance. Based on this, the
CA IOUs encouraged DOE to consider shifting to a more-stringent, full-
load metric. (CA IOUs, No. 10 at p. 2)
ASAP and ACEEE commented that greater energy savings are possible
than those evaluated for the September 2015 Final Rule. ASAP and ACEEE
argued that the most-efficient SPVU models currently available have
either Energy Efficiency Ratio (EER) or COP ratings that are higher
than the max-tech levels considered in the September 2015 Final Rule.
(ASAP/ACEEE, No. 11 at pp. 1-2)
As discussed in section III.C of this document, DOE has amended its
test procedures for SPVUs to incorporate by reference the updated
industry test procedure, AHRI Standard 390-2021, ``Performance Rating
of Single Package Vertical Air-Conditioners and Heat Pumps'' (AHRI 390-
2021), which includes the existing efficiency metrics--EER for cooling
mode and COP for heating mode--but it also adds a cooling-mode seasonal
metric that includes part-load cooling performance--the IEER metric.
Accordingly, DOE is proposing to amend the energy conservation
standards for SPVUs to be based on the seasonal cooling metric, IEER,
and the existing heating metric, COP. As discussed in section IV of
this document, DOE conducted a crosswalk analysis in collaboration with
AHRI and SPVU manufacturers to translate the current SPVU standard
levels based on EER to the new metric, IEER, to establish baseline
efficiency levels for the current analysis considering the potential
for more-stringent SPVU standard levels.

C. Deviation From Appendix A

In accordance with section 3(a) of 10 CFR part 430, subpart C,
appendix A (appendix A), ``Procedures, Interpretations, and Policies
for Consideration of New or Revised Energy Conservation Standards and
Test Procedures for Consumer Products and Certain Commercial/Industrial
Equipment,'' DOE notes that it is deviating from the provision in
appendix A regarding the NOPR/NOPD stages for an energy conservation
standards rulemaking. See 86 FR 70892 (Dec. 13, 2021).
Section 8(d)(1) of appendix A states that the Department will
finalize amended test procedures 180 days prior to the close of the
comment period of a NOPR proposing new or amended standards or a notice
of proposed determination that standards do not need to be amended. For
the reasons that follow, DOE finds it necessary and appropriate to
deviate from this step in appendix A by publishing this NOPR/NOPD such
that the comment period will end before 180 days has elapsed from the
publication of the test procedure final rule. As discussed in a final
rule pertaining to Procedures, Interpretations, and Policies for
Consideration in New or Revised Energy Conservation Standards and Test
Procedures for Consumer Products and Commercial/Industrial Equipment,
the 180-day period may not always be necessary. As an example, DOE
noted

[[Page 75393]]

that it will typically use an industry test procedure as the basis for
a new DOE test procedure. If DOE adopts the industry test procedure
without modification, stakeholders should already be familiar with the
test procedure. In such cases, requiring the new test procedure to be
finalized 180 days prior to the close of the comment period for a NOPR
proposing new energy conservation standards would offer little benefit
to stakeholders while delaying DOE's promulgation of new energy
conservation standards. 86 FR 70892, 70896 (Dec. 13, 2021). In this
analogous case, DOE is deviating from the 180-day provision because it
has incorporated by reference the industry consensus test procedure for
SPVUs, AHRI 390-2021. DOE also notes that AHRI 390-2021 was published
in June 2021, so DOE expects that manufacturers are already familiar
with the test procedure.

III. General Discussion

DOE developed this proposal after considering oral and written
comments, data, and information from interested parties that represent
a variety of interests. The following discussion addresses issues
raised by these commenters.

A. Scope of Coverage

EPCA, as amended by the EISA 2007 defines ``single package vertical
air conditioner'' and ``single package vertical heat pump'' at 42
U.S.C. 6311(22) and (23), respectively. In particular, single package
vertical air conditioners can be single- or three-phase; must have
major components arranged vertically; must be an encased combination of
components; and must be intended for exterior mounting on, adjacent
interior to, or through an outside wall. Single package vertical heat
pumps are single package vertical air conditioners that use reverse
cycle refrigeration as their primary heat source and may include
secondary supplemental heating by means of electrical resistance,
steam, hot water, or gas. DOE codified the statutory definitions into
its regulations at 10 CFR 431.92. Additionally, EPCA established
initial equipment classes and energy conservation standards for SPVUs
based on cooling capacity, and for those SPVUs with a capacity less
than 65,000 Btu/h, also based on phase. (42 U.S.C. 6313(a)(10)(A)(i)-
(ii) and (v)-(vi))
DOE defines an SPVAC as air-cooled commercial package air
conditioning and heating equipment that: (1) is factory-assembled as a
single package that: (i) has major components that are arranged
vertically; (ii) is an encased combination of cooling and optional
heating components; and (iii) is intended for exterior mounting on,
adjacent interior to, or through an outside wall; (2) is powered by a
single-phase or three-phase current; (3) may contain one or more
separate indoor grilles, outdoor louvers, various ventilation options,
indoor free air discharges, ductwork, well plenum, or sleeves; and (4)
has heating components that may include electrical resistance, steam,
hot water, or gas, but may not include reverse cycle refrigeration as a
heating means. 10 CFR 431.92. Additionally, DOE defines an SPVHP as a
single package vertical air conditioner that: (1) uses reverse cycle
refrigeration as its primary heat source; and (2) may include secondary
supplemental heating by means of electrical resistance, steam, hot
water, or gas. Id. The Federal test procedures are applicable to SPVUs
with a cooling capacity less than 760,000 Btu/h. (42 U.S.C.
6311(8)(D)(ii)) DOE currently only prescribes energy conservation
standards for SPVUs less than 240,000 Btu/h (see section III.B of this
document for details).
As part of the April 2020 RFI, DOE requested commented on whether
the definitions for SPVUs should be revised. 80 FR 22958, 22961 (April
24, 2020). On that topic, AHRI commented that the definitions of SPVAC
and SPVHP generally remain appropriate and did not suggest any
modifications. (AHRI, No. 9 at p. 3)
As part of the most recent energy conservation standards rulemaking
for SPVUs, DOE published a notice of data availability in the Federal
Register on April 11, 2014 (April 2014 NODA). 79 FR 20114. In the April
2014 NODA, DOE noted that ASHRAE Standard 90.1-2013 created a new
equipment class for SPVACs and SPVHPs used in space-constrained and
replacement-only applications, with a definition for ``nonweatherized
space constrained single-package vertical unit'' and efficiency
standards for the associated equipment class. Id. at 79 FR 20121-20122.
In the April 2014 NODA, DOE tentatively concluded that there was no
need to establish a separate space-constrained class for SPVUs, given
that certain models listed by manufacturers as SPVUs, most of which
would meet the ASHRAE space-constrained definition, were being
misclassified and should have been classified as central air
conditioners (in most cases, space-constrained central air
conditioners). Id. at 79 FR 20122-20123. DOE reaffirmed this position
in the NOPR published in the Federal Register on December 30, 2014 NOPR
(December 2014 NOPR). 79 FR 78614, 78625-78627. In response to the
December 2014 NOPR, DOE received several comments from stakeholders
related to the classification of products that these commenters are
referring to as space-constrained SPVUs, the statutory definition of
SPVU, how these products are applied in the field or specified for
purchase, and whether the products warranted a separate equipment class
within SPVU. In the final rule published in the Federal Register on
September 23, 2015, DOE stated that it would consider those comments
and take appropriate action in a separate rulemaking. 80 FR 57438,
57448. In response to the April 2020 RFI, Lennox commented that this
remains an important outstanding issue for resolution in order to
ensure that current products and new entries to the market are treated
equitably. (Lennox, No. 8 at pp. 1-2)
In November 2022, DOE issued a final rule to amend the test
procedure for SPVUs (the November 2022 Test Procedure Final Rule).\5\
As part of the November 2022 Test Procedure Final Rule, DOE added
specific definitions for ``single-phase single package vertical air
conditioner with cooling capacity less than 65,000 Btu/h'' and
``single-phase single package vertical heat pump with cooling capacity
less than 65,000 Btu/h'' to explicitly delineate such equipment from
certain covered consumer products, such as central air conditioners,
based on design characteristics. DOE defined this equipment as SPVACs
and SPVHPs that are either: (1) weatherized, or (2) non-weatherized and
have the ability to provide a minimum of 400 CFM of outdoor air. As
discussed in the November 2022 Test Procedure Final Rule, single-phase
single package products with cooling capacity less than 65,000 Btu/h
not meeting these definitions would be properly classified as consumer
central air conditioners, not commercial SPVUs.
---------------------------------------------------------------------------

\5\ The November 2022 Test Procedure Final Rule is available at:
<a href="https://www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=30">https://www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=30</a>.
---------------------------------------------------------------------------

B. Equipment Classes

EISA 2007, Public Law 110-140, amended EPCA in relevant part by
establishing equipment classes and minimum energy conservation
standards for SPVUs. (42 U.S.C. 6313(a)(10)(A)) In doing so, the EISA
2007 amendments established Federal energy conservation standards for
SPVUs at levels that generally corresponded to the levels in the 2004
edition of the American Society of Heating, Refrigerating and Air-

[[Page 75394]]

Conditioning Engineers (ASHRAE) Standard 90.1, Energy Standard for
Buildings Except Low-Rise Residential Buildings (i.e., ASHRAE Standard
90.1-2004). On March 23, 2009, DOE published a final rule technical
amendment in the Federal Register that codified the statutory equipment
classes and energy conservation standards for SPVUs into DOE's
regulations in the Code of Federal Regulations (CFR) at 10 CFR 431.97.
74 FR 12058, 12073-12074. EPCA generally directs DOE to adopt the
equipment class structure for SPVUs from ASHRAE Standard 90.1. (See 42
U.S.C. 6313(a)(6)(A)(i)) For SVPUs, the current energy conservation
standards specified in 10 CFR 431.97 are based on six equipment classes
\6\ determined according to the following: (1) cooling capacity and (2)
whether the equipment is an air conditioner or a heat pump. These
equipment classes are identical to those described in ASHRAE Standard
90.1.
---------------------------------------------------------------------------

\6\ Although EPCA divided SPVACs and SPVHPs with < 65,000 Btu/h
cooling capacity into equipment classes based on the phase of the
electrical power (see 42 U.S.C. 6313(a)(10)(A)), it set the same
energy conservation standards for both single-phase and three-phase
equipment. DOE's current standards, as codified in 10 CFR 431.97,
divide SPVU equipment into six equipment classes based on the
cooling capacity and whether the equipment is an air conditioner or
a heat pump, a class structure consistent with ASHRAE Standard 90.1.

Table III-1--SPVU Equipment Classes
------------------------------------------------------------------------
Equipment class
------------------------------------------------------------------------
1...................................... SPVAC <65,000 Btu/h.
2...................................... SPVHP <65,000 Btu/h.
3...................................... SPVAC >=65,000 Btu/h and
<135,000 Btu/h.
4...................................... SPVHP >=65,000 Btu/h and
<135,000 Btu/h.
5...................................... SPVAC >=135,000 Btu/h and
<240,000 Btu/h.
6...................................... SPVHP >=135,000 Btu/h and
<240,000 Btu/h.
------------------------------------------------------------------------

C. Test Procedure and Efficiency Metrics

EPCA sets forth generally applicable criteria and procedures for
DOE's adoption and amendment of test procedures. (42 U.S.C. 6314(a))
Manufacturers of covered equipment must use these test procedures to
certify to DOE that their equipment complies with energy conservation
standards and to quantify the efficiency of their equipment. DOE's
current energy conservation standards for SPVUs are expressed in terms
of the full-load cooling metric, EER, and the heating metric, COP. (See
10 CFR 431.97(d)(3))
ASHRAE 90.1-2019 references, as the test procedure for SPVUs, ANSI/
AHRI 390-2003, which does not include a seasonal efficiency metric for
cooling mode. At the time of the April 2020 RFI, DOE's test procedure
for SPVUs also incorporated by reference ANSI/AHRI 390-2003, omitting
section 6.4. Hence, DOE's test procedure for SPVUs at that time
likewise did not include a seasonal metric that accounted for part-load
performance.
In response to the April 2020 RFI, NEEA, the CA IOUs, and ASAP/
ACEEE commented that the existing SPVUs test procedure using the full-
load EER metric does not account for the energy savings from variable-
speed fans, multi-stage compressors, electronic expansion valves, and
other technologies, and that there would likely be significant energy
savings potential if a part-load metric were to be used. (NEEA, No. 6
at p. 2; CA IOUs, No. 10 at p. 1; ASAP/ACEEE, No. 11 at pp. 1, 2) NEEA
and the CA IOUs commented that nearly 25 percent of units in the AHRI
Directory of Certified Product Performance are rated with the
integrated part-load value (IPLV) metric (in addition to EER), which
considers part-load efficiency. (NEEA, No. 6 at pp. 2-3; CA IOUs, No.
10 at pp. 1-2) NEEA commented that there is a significant range in IPLV
values for units available on the market (from approximately 13.5 to 17
IPLV), whereas EER only ranges from 11 to 12.5, with most units at the
minimum of 11 EER. (NEEA, No. 6 at pp. 2-3) NEEA, the CA IOUs, and
ASAP/ACEEE recommended that DOE should amend the test procedure for
SPVUs to consider part-load performance so as to better represent
performance during an average use cycle. (NEEA, No. 6 at p. 3; CA IOUs,
No. 10 at p. 2; ASAP/ACEEE, No. 11 at p. 1)
The CA IOUs added that while part-load performance is key to
representing an average use cycle, full-load performance is critical
for enabling utilities to effectively manage grid services. The CA IOUs
expressed support for a regulatory model in which both full-load EER
and part-load efficiency are published in the AHRI database. (CA IOUs,
No. 10 at p. 2)
AHRI and GE commented at the time of the April 2020 RFI that the
industry, in collaboration with DOE, was in the process of finalizing a
revised test procedure for SPVUs that adopts a seasonal cooling mode
metric, IEER. (AHRI, No. 9 at p. 2; GE, No. 7 at p. 2) AHRI stated that
any proposal to change the SPVU efficiency metric should be developed
through the ASHRAE Standard 90.1 process. (AHRI, No. 9 at p. 2; GE, No.
7 at p. 2)
In response to these comments, DOE notes that as part of the
November 2022 Test Procedure Final Rule, the Department amended its
test procedure for SPVUs to incorporate by reference AHRI 390-2021, the
latest version of the relevant industry standard. Among other things,
AHRI 390-2021 maintains the existing efficiency metrics--EER for
cooling mode and COP for heating mode--but it also added a seasonal
metric that includes part-load cooling performance--the IEER metric. As
part of the November 2022 Test Procedure Final Rule, DOE added a new
appendix G1 at 10 CFR part 431, subpart F, that includes the relevant
test procedure requirements for SPVUs for measuring with updated
cooling efficiency metric, IEER, and heating efficiency metric, COP.
The relevant test procedure requirements for SPVUs for measuring the
existing efficiency metrics, EER and COP were included in appendix G at
10 CFR part 431, subpart F. Beginning 360 days on or after the date of
publication of the test procedure final rule in the Federal Register,
manufacturers must use appendix G for compliance, but if manufacturers
make voluntary representations with respect to the integrated energy
efficiency ratio (IEER), such representations must be based on testing
conducted in accordance with appendix G1. All manufacturers must use
appendix G1 on and after the compliance date of any amended standards
for single packaged vertical air conditioners and single package
vertical heat pumps denominated in terms of IEER, as set forth in 10
CFR 431.97.

[[Page 75395]]

DOE notes that SPVUs often operate at part-load (i.e., less than
designed full-load capacity) in the field, depending on the application
and location. The current Federal metric for cooling efficiency, EER,
captures the system performance at a single, full-load operating point
(i.e., single outdoor air temperature). As noted in section 6.2.2 of
AHRI 390-2021, the full-load operating conditions (i.e., 95 [deg]F
outdoor air dry-bulb temperature) accounts for only 1 percent of the
time on average for SPVU applications. Hence, EER is not necessarily
representative of energy efficiency over a full cooling season. In
contrast, the IEER metric factors in the efficiency of operating at
full-load conditions when outdoor temperature is high, as well as part-
load conditions of 75-percent, 50-percent, and 25-percent of full-load
capacity at outdoor temperatures appropriate for these load levels.
This is accomplished by weighting the full- and part-load efficiencies
with a representative average amount of time operating at each loading
point. Under part-load conditions, SPVUs may cycle off/on, may operate
at lower compressor stage levels, or (if they have variable-capacity
compressors) may modulate capacity to match the cooling load. The test
conditions and weighting factors for this IEER metric in AHRI 390-2021
were developed specifically for SPVUs based on an annual building load
analysis and temperature data for buildings representative of SPVU
installations, including modular classrooms, modular offices, and
telecommunication shelters across 15 different climate zones.\7\ Based
on the weighting factors specified in section 6.2.2 of AHRI 390-2021,
SPVUs spend a significant amount of time operating at milder outdoor
air conditions with lower cooling loads. DOE's analysis also indicates
that the efficiency at the milder part-load operating conditions can be
significantly different than at the full-load operating conditions, and
efficiency also can be significantly different between single-stage and
two-stage units. The test conditions and weighting factors for the four
load levels representing 100, 75, 50, and 25 percent of full-load
capacity for SPVUs under the IEER metric are different than those used
in the IEER metric in AHRI 340/360-2019, which were developed based on
CUAC building types. For these reasons, DOE considers the IEER metric
to be representative of the cooling efficiency for SPVUs on an annual
basis, and more representative than the current EER metric.
Accordingly, DOE is proposing to amend the standards for SPVUs to be
based on the seasonal cooling metric, IEER, and the existing heating
metric, COP.
---------------------------------------------------------------------------

\7\ Based on EnergyPlus analysis developed for the previous
energy conservation standards rulemaking for SPVUs. 80 FR 57438,
57462 (Sept. 23, 2015). EnergyPlus is a whole building energy
simulation program (Available at: <a href="http://apps1.eere.energy.gov/buildings/energyplus">http://apps1.eere.energy.gov/buildings/energyplus</a>/).
---------------------------------------------------------------------------

DOE notes that the IPLV metric specified in AHRI 390-2003
integrates unit performance at each capacity step provided by the
refrigeration system. However, the IPLV tests at each capacity step are
all conducted at constant outdoor air conditions of 80 [deg]F dry-bulb
temperature and 67 [deg]F wet-bulb temperature. As discussed, the IEER
metric was developed considering climate data to reflect the outdoor
temperatures representative of different load levels. As a result, DOE
considers the IEER metric specified in AHRI 390-2021 to be more
representative of annual energy use than the IPLV metric specified in
AHRI 390-2003. DOE has determined, by clear and convincing evidence,
that AHRI 390-2021 is more representative on annual energy use than
AHRI 390-2003. As discussed, SPVUs often operate at part-load
conditions. DOE notes that the IPLV metric specified in AHRI 390-2003
integrates unit performance at each capacity step provided by the
refrigeration system. However, the IPLV tests at each capacity step are
all conducted at constant outdoor air conditions of 80 [deg]F dry-bulb
temperature and 67 [deg]F wet-bulb temperature. As discussed, the IEER
metric was developed considering climate data to reflect the outdoor
temperatures representative of different load levels. As a result, DOE
considers the IEER metric specified in AHRI 390-2021 to be more
representative of annual energy use than the IPLV metric specified in
AHRI 390-2003.
NEEA and ASAP/ACEEE commented that DOE should also amend the test
procedure for SPVUs to fully account for embedded fan energy use and
revise the external static pressure requirements to accurately reflect
field conditions. (NEEA, No. 6 at p. 1; ASAP/ACEEE, No. 11 at p. 1)
ASAP/ACEEE also commented that DOE should incorporate defrost and
reflect heating performance at lower ambient temperatures in the
heating efficiency metric. (ASAP/ACEEE, No. 11 at pp. 1, 2) DOE has
addressed all of these comments related to test procedure issues in the
November 2022 Test Procedure Final Rule.
In the November 2022 Test Procedure Final Rule, DOE determined that
it does not have sufficient information regarding the operation of fans
outside of mechanical cooling and heating modes (e.g., economizing,
ventilation), regarding the installations for SPVHPs and the frequency
of operation of defrost cycles, or regarding representative low ambient
conditions during field use that would be necessary to develop
representative testing procedures for these operating modes. DOE also
determined that that it does not have information indicating that the
current minimum ESPs are unrepresentative of field conditions.

D. Technological Feasibility

1. General
In each energy conservation standards rulemaking, DOE conducts a
screening analysis based on information gathered on all current
technology options and prototype designs that could improve the
efficiency of the products or equipment that are the subject of the
rulemaking. As the first step in such an analysis, DOE develops a list
of technology options for consideration in consultation with
manufacturers, design engineers, and other interested parties. DOE then
determines which of those means for improving efficiency are
technologically feasible. DOE considers technologies incorporated in
commercially-available products or in working prototypes to be
technologically feasible. See generally 10 CFR 431.4; 10 CFR part 430,
subpart C, appendix A, sections 6(b)(3)(i) and 7(b)(1).
After DOE has determined that particular technology options are
technologically feasible, it further evaluates each technology option
in light of the following additional screening criteria: (1)
practicability to manufacture, install, and service; (2) adverse
impacts on product utility or availability; (3) adverse impacts on
health or safety, and (4) unique-pathway proprietary technologies. See
generally 10 CFR 431.4; 10 CFR part 430, subpart C, appendix A,
sections 6(b)(3)(ii)-(v) and 7(b)(2)-(5). Section V.B of this document
discusses the results of the screening analysis for SPVUs, particularly
the designs DOE considered, those it screened out, and those that are
the basis for the standards considered in this rulemaking. For further
details on the screening analysis for this rulemaking, see chapter 4 of
the NOPR/NOPD technical support document (TSD).
2. Maximum Technologically Feasible Levels
When DOE proposes to adopt an amended energy conservation standard
for a type or class of covered equipment

[[Page 75396]]

more stringent than the level in ASHRAE Standard 90.1, the Department
must conduct the requisite analyses to show by clear and convincing
evidence that such standard would result in significant additional
conservation of energy and would be technologically feasible and
economically justified. Under such analysis, DOE determines the maximum
improvement in energy efficiency or maximum reduction in energy use
that is technologically feasible for such equipment. (See 42 U.S.C.
6313(a)(6)(A)(ii)(II)) Accordingly, in the engineering analysis, DOE
determined the maximum technologically feasible (max-tech) improvements
in energy efficiency for SPVUs, using the design parameters for the
most-efficient products available on the market or in working
prototypes. The max-tech levels that DOE determined for this rulemaking
are described in section V.C.1.b of this proposed rule and in chapter 5
of the NOPR/NOPD TSD.

E. Energy Savings

In determining whether standards for the subject equipment should
be amended, DOE would typically determine whether such standards would
result in significant additional conservation of energy, as required by
42 U.S.C. 6313(a)(6)(A)(ii)(II) and 42 U.S.C. 6313(a)(6)(C)(i).
However, as discussed in section VI of this document, DOE has
tentatively determined that amended standards for the subject equipment
would not be economically justified. Because clear and convincing
evidence of economic justification is necessary to adopt more-stringent
standards for the subject equipment, DOE has tentatively concluded that
quantification of energy savings from potential amended standards is
not necessary in the case of this proposed rulemaking.

F. Economic Justification

As noted, EPCA provides seven factors to be evaluated in
determining whether a potential amended energy conservation standard is
economically justified. (42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII)) The
following sections discuss how DOE has addressed each of those seven
factors in this NOPR/NOPD.
1. Economic Impact on Consumers and Manufacturers
For individual consumers, DOE measures the economic impact by
calculating the changes in LCC and PBP associated with new or amended
energy conservation standards for the equipment in question. These
measures are discussed further in the following section. For consumers
in the aggregate, DOE also calculates the national net present value
(NPV) of the consumer costs and benefits expected to result from
particular standards. DOE also evaluates the impacts of potential
standards on identifiable subgroups of consumers that may be affected
disproportionately by a standard. However, DOE's analysis showed
negative LCC savings for SPVUs for nearly all efficiency levels, and,
therefore, DOE is not proposing to amend standards for SPVUs, because
the Department anticipates that it would not have the clear and
convincing evidence to support amended standards more stringent that
those set forth in ASHRAE Standard 90.1. Accordingly, DOE did not
conduct a consumer subgroup analysis or a national impact analysis for
this NOPR/NOPD.
In determining the impacts of a potential standard on
manufacturers, DOE typically conducts a manufacturer impact analysis
(MIA). However, because DOE is tentatively unable to determine via
clear and convincing evidence that a more-stringent standard level
would result in significant additional conservation of energy and is
technologically feasible and economically justified, DOE decided not to
conduct an MIA. Nonetheless, DOE did examine the potential impacts of
amended energy conservation standards for SPVUs on small manufacturers
in its Regulatory Flexibility Act analysis, which is presented in
section VII.B of this NOPR/NOPD. The following section discusses
additional comments received from the April 2020 RFI regarding
manufacturer impacts and cumulative regulatory burden.
In response to the April 2020 RFI, AHRI, Lennox, and GE urged DOE
to consider the cumulative regulatory burden for heating, ventilation,
air conditioning, and refrigeration (HVACR) manufacturers. (AHRI, No. 9
at p. 2; GE, No. 7 at p. 3; Lennox, No. 8 at p. 2) AHRI, Lennox, and GE
argued that requirements for new low-GWP refrigerants will have a
significant impact on the HVAC industry, and these commenters stated
that in certain States, these requirements will take effect prior to
the compliance date of any amended standards that would be adopted by
DOE in the course of this proposed rulemaking. (AHRI, No. 9 at p. 5;
GE, No. 7 at p. 3; Lennox, No. 8 at p. 2) AHRI stated that because
nearly all of these new refrigerants have been designated flammable
(A2L), all new safety standards have been developed that address the
application of these new flammable refrigerants and subsequent leak
mitigation. (AHRI, No. 9 at p. 5) AHRI stated that DOE's analysis
should account for the challenge that manufacturers will face due to
the need to develop, test, and certify two product lines for models
with current refrigerants and new, A2L refrigerants. (Id.) AHRI and
Lennox also noted that all current equipment will need to be tested to
the new safety standard, Underwriters Laboratories/Canadian Standards
Association (UL/CSA) Standard 60335-2-40, ``Standard for Household and
Similar Electrical Appliances--Safety--Part 2-40: Particular
Requirements for Electrical Heat Pumps, Air-Conditioners and
Dehumidifiers,'' prior to its effective date of January 1, 2023. (AHRI,
No. 9 at p. 5; Lennox, No. 8 at p. 3)
In addition to the cumulative burden concerns noted with
refrigerants, AHRI stated that the industry is preparing for additional
new efficiency metrics and standard levels for residential central air
conditioners and heat pumps; small, large, and very large commercial
package air conditioners and heat pump; and air-cooled, water-cooled,
evaporatively-cooled; water-source unitary air conditioners and heat
pumps; and variable refrigerant flow equipment. (AHRI, No. 9 at p. 2)
DOE notes that a full consideration of more-stringent levels, if
undertaken, would assess manufacturer impacts, including cumulative
burden. However, in the absence of proposing more-stringent standards,
DOE has tentatively determined that the proposals set forth in this
NOPR/NOPD would not be unduly burdensome to manufacturers.
For a more complete discussion of consumer impacts, see chapter 8
of the NOPR/NOPD TSD.
2. Savings in Operating Costs Compared To Increase in Price (LCC and
PBP)
EPCA requires DOE to consider 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 of, or in the
initial charges for, or maintenance expenses of, the covered equipment
that are likely to result from a standard. (42 U.S.C.
6313(a)(6)(B)(ii)(II)) DOE conducts this comparison in its LCC and PBP
analysis.
The LCC is the sum of the purchase price of a product (including
its installation) and the operating expense (including energy,
maintenance, and repair expenditures) discounted over the lifetime of
the product. The LCC analysis requires a variety of inputs, such as
equipment prices (which includes manufacturer selling price,
distribution channel markups, and sales tax), equipment energy
consumption,

[[Page 75397]]

energy prices, maintenance and repair costs, equipment lifetime,
discount rates appropriate for consumers, and the year that compliance
with new or amended standards would be required. To account for
uncertainty and variability in specific inputs, such as equipment
lifetime and discount rate, DOE uses a distribution of values, with
probabilities attached to each value.
The PBP is the estimated amount of time (in years) it takes
consumers to recover the increased purchase cost (including
installation) of more-efficient equipment through lower operating
costs. DOE calculates the PBP by dividing the change in purchase cost
due to a more-stringent energy conservation standard by the change in
annual operating cost for the year that such standards are assumed to
take effect.
For its LCC and PBP analysis, DOE assumes that consumers will
purchase the covered equipment in the first year of compliance with new
or amended energy conservation standards. The LCC savings for the
considered efficiency levels are calculated relative to the case that
reflects projected market trends in the absence of new or amended
standards. DOE's LCC and PBP analysis is discussed in further detail in
section V.F. of this document.
For a more complete discussion of the LCC and PBP analysis, see
chapter 8 of the NOPR/NOPD TSD.
3. Energy Savings
Although significant additional conservation of energy is a
separate statutory requirement for adopting an energy conservation
standard, EPCA requires DOE, in determining the economic justification
of a standard, to consider the total projected quantity of energy
savings that are expected to result directly from the standard. (42
U.S.C. 6313(a)(6)(B)(ii)(III)) DOE is not proposing amended standards
for SPVUs due to the negative LCC savings at nearly all efficiency
levels, so, therefore, DOE did not project the total energy savings
from higher efficiency levels.
4. Lessening of Utility or Performance of Equipment
In evaluating design options and the impact of potential standard
levels, DOE evaluates potential amended energy conservation standards
that would not lessen the utility or performance of the subject
equipment. (42 U.S.C. 6313(a)(6)(B)(ii)(IV)) Because DOE is not
proposing amended standards for SPVUs, the Department has tentatively
concluded that this NOPR/NOPD would not impact the utility or
performance of such equipment.
5. Impact of Any Lessening of Competition
EPCA directs DOE to consider the impact of any lessening of
competition, as determined in writing by the Attorney General that is
likely to result from a proposed standard. (42 U.S.C.
6313(a)(6)(B)(ii)(V)) Because DOE is not proposing standards for SPVUs
more stringent than the current Federal standards for that equipment,
DOE did not transmit a copy of its proposed determination to the
Attorney General for anti-competitive review.
6. Need for National Energy Conservation
DOE also considers the need for national energy conservation in
determining whether a new or amended standard is economically
justified. (42 U.S.C. 6313(a)(6)(B)(ii)(VI)) Typically, energy savings
from proposed standards would be likely to provide improvements to the
security and reliability of the Nation's energy system, and reductions
in the demand for electricity also may result in reduced costs for
maintaining the reliability of the Nation's electricity system. DOE
conducts a utility impact analysis to estimate how potential standards
may affect the Nation's needed power generation capacity. However,
because DOE is not proposing amended standards for SPVUs that increase
stringency beyond the current Federal standard levels, the Department
did not conduct this analysis for the present rulemaking.
DOE maintains that environmental and public health benefits
associated with the more-efficient use of energy are important to take
into account when considering the need for national energy
conservation. Typically, proposed standards would be likely to result
in environmental benefits in the form of reduced emissions of air
pollutants and greenhouse gases (GHGs) associated with energy
production and use. Therefore, DOE routinely conducts an emissions
analysis to estimate how potential standards might affect these
emissions. DOE also estimates the economic value of emissions
reductions resulting from the considered TSLs (i.e., standards above
the base case). However, because DOE is not proposing amended standards
for SPVUs at levels more stringent than the current Federal standard
levels, the Department did not conduct this analysis for the present
rulemaking.
7. Other Factors
In determining whether a potential energy conservation standard is
economically justified, DOE may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6313(a)(6)(B)(ii)(VII)) To
the extent DOE identifies any relevant information regarding economic
justification that does not fit into the other categories described
previously, DOE could consider such information under ``other
factors.'' DOE did not identify any other factors in this NOPR/NOPD.

IV. Crosswalk Analysis

As discussed in section II.B.1 of this document, DOE's current
energy conservation standards for SPVUs are based on the full-load
cooling efficiency metric, EER, and the heating efficiency metric, COP.
As further discussed in section III.C of this document, DOE has amended
the Federal test procedures for SPVUs to incorporate by reference AHRI
390-2021, including the seasonal cooling efficiency metric, IEER.
Accordingly, DOE is proposing to amend the energy conservation
standards for SPVUs to rely on the IEER metric for cooling efficiency
(while retaining the COP metric for determining the heating efficiency
of SPVHPs). As explained in section III.C of this document, DOE has
tentatively determined that the IEER metric is representative of the
cooling efficiency for SPVUs in terms of both an average use cycle and
also on an annual basis, and that it is more representative than the
current EER metric.
EPCA provides that in the case of any amended test procedure for
covered ASHRAE equipment for which there is clear and convincing
evidence to support deviation from the test procedure for such
equipment referenced in ASHRAE Standard 90.1, DOE must determine, to
what extent, if any, the proposed test procedure would alter the
measured energy efficiency, measured energy use, or measured water use
of the subject ASHRAE equipment as determined under the existing test
procedure. (See 42 U.S.C 6293(e); 42 U.S.C. 6314(a)(4)(C)) If the
Secretary determines that the amended test procedure will alter the
measured efficiency or measured use, the Secretary shall amend the
applicable energy conservation standard during the rulemaking carried
out with respect to such test procedure. In such case, under the
process prescribed in EPCA, DOE is directed to measure, pursuant to the
amended test procedure, the energy efficiency or energy use of a

[[Page 75398]]

representative sample of covered products that minimally comply with
the existing standard. (See 42 U.S.C. 6293(e)(2); 42 U.S.C.
6314(a)(4)(C)) The average of such energy efficiency or energy use
determined under the amended test procedure constitutes the amended
energy conservation standard for the applicable covered products. (Id.)
Pursuant to these statutory directives, DOE conducted a
``crosswalk'' analysis to translate the current SPVU standard levels
based on EER to standard levels based on the new metric, IEER. DOE
worked with AHRI and SPVU manufacturers (collectively referred to as
the ``AHRI 390 Task Force'') to develop the crosswalk analysis, during
which, both DOE and manufacturers conducted testing of minimally-
compliant units. Pursuant to the requirements of EPCA (42 U.S.C.
6293(e)(2); 42 U.S.C. 6314(a)(4)(C)), the AHRI 390 Task Force conducted
testing on a sample of minimally-compliant SPVUs. DOE observed
instances where both single-stage and two-stage SPVUs are minimally
compliant with the current EER standards because the full-load EER
metric does not capture the benefits of part-load technologies. As
discussed in section V.C of this document, two-stage units have higher
efficiencies than single-stage units when using the seasonal IEER
metric. As a result, the sample of minimally-compliant SPVUs selected
for testing specifically focused on single-stage units, as these units
are expected to be the least efficient under the amended SPVUs test
procedure.
---------------------------------------------------------------------------

\8\ The percentage change from EER to IEER was used to ensure
that data was anonymized for presentation to the AHRI 390 Task
Force.
---------------------------------------------------------------------------

Collectively, the AHRI 390 Task Force conducted testing on 17 SPVUs
with <65,000 Btu/h cooling capacity and 2 SPVUs with >=65,000 Btu/h
cooling capacity to measure the percentage change in efficiency between
EER and IEER for each unit.\8\ The test sample included a mix of both
SPVACs and SPVHPs. Using these test data, the average percentage change
was calculated for SPVUs <65,000 Btu/h cooling capacity and >=65,000
Btu/h cooling capacity separately. Based on testing, SPVACs and SPVHPs
showed the same percentage increase from EER to IEER. These test
results are summarized in Table IV-1.

Table IV-1--AHRI 390 Crosswalk Testing Results for Minimally-Compliant,
Single-Stage SPVUs
------------------------------------------------------------------------
Average
Current percentage
Equipment class minimum EER change from
EER to IEER
------------------------------------------------------------------------
SPVU <65,000 Btu/h...................... 11 +13.4%
SPVU >=65,000 Btu/h..................... 10 +2.6%
------------------------------------------------------------------------

Based on these test results, DOE is proposing baseline IEER levels
that are 13.4 percent higher than current EER standard levels for SPVUs
<65,000 Btu/h cooling capacity and 2.6 percent higher than the current
EER standard levels for SPVUs >=65,000 and <135,000 Btu/h cooling
capacity. For SPVUs >=135,000 and <240,000 Btu/h cooling capacity, DOE
noted that there were only eight basic models currently available on
the market. Based on review of product literature, all of these larger
SPVU models operated with multiple compressor stages and staged
airflow. The testing conducted as part of the AHRI 390 Task Force
included only single stage units and, therefore, is not representative
of the baseline IEER levels for these larger SPVU units currently
available on the market. Consequently, in order to determine an
appropriate baseline IEER level for these larger SPVU equipment
classes, DOE applied the crosswalk of 2.6 percent, then applied the
percent improvement in IEER associated with moving from single-stage
compressor and airflow to multiple compressor stages and stage airflow,
consistent with the improvement used for SPVUs <135,000 Btu/h cooling
capacity (i.e., a 9.6 percent increase in IEER, see section V.C.1.b of
this document).
The proposed baseline efficiency levels for each equipment class,
denominated in terms of IEER and COP (where appliable), are presented
in Table IV-2. The methodology and results of the crosswalk analysis
are presented in detail in the chapter 5 of the NOPR/NOPD TSD.

Table IV-2--Crosswalked Baseline Efficiency Levels
------------------------------------------------------------------------
Current minimum Proposed baseline
Subcategory standard levels efficiency levels*
------------------------------------------------------------------------
SPVAC <65,000................... EER = 11.0........ IEER = 12.5.
SPVHP <65,000................... EER = 11.0........ IEER = 12.5.
COP = 3.3......... COP = 3.3.
SPVAC >=65,000 and <135,000..... EER = 10.0........ IEER = 10.3.
SPVHP >=65,000 and <135,000..... EER = 10.0........ IEER = 10.3.
COP = 3.0......... COP = 3.0.
SPVAC >=135,000 and <240,000.... EER = 10.0........ IEER = 11.2.
SPVHP >=135,000 and <240,000.... EER = 10.0........ IEER = 11.2.
COP = 3.0......... COP = 3.0.
------------------------------------------------------------------------
* Reflects translation of existing energy conservation standards using a
full-load EER cooling metric to a proposed equivalent energy
conservation standard using a seasonal IEER metric.

Issue-1: DOE requests comment on the proposed baseline IEER levels
for SPVUs, as well as comment on any aspect of its crosswalk analysis.
DOE continues to seek information which compares EER to IEER for the
SPVUs

[[Page 75399]]

that are representative of the market baseline efficiency level for all
equipment classes.

V. Methodology and Discussion of Related Comments

This section addresses the analyses DOE has performed for this
proposed rulemaking with regard to SPVUs. Separate subsections address
each component of DOE's analyses.
DOE used Python \9\-based analytical tools to estimate the impact
of the potential energy conservation standards considered as part of
this proposed rulemaking on consumers. These tools calculate the LCC
savings and PBP of potential amended or new energy conservation
standards for three consumer sectors: (1) schools, (2) offices, and (3)
telecommunications structures. The LCC and PBP inputs, outputs, and
summary tables are available for download in spreadsheet form at
<a href="https://www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=30">https://www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=30</a>. DOE did not perform any analysis beyond
the LCC, as the LCC results were negative for nearly all product
classes, and, therefore, DOE tentatively determined that an increased
standard level would not be economically justified.
---------------------------------------------------------------------------

\9\ Python is an open-source programming language. For more
information, see: <a href="http://www.python.org">www.python.org</a>.
---------------------------------------------------------------------------

A. Market and Technology Assessment

DOE develops information in the market and technology assessment
that provides an overall picture of the market for the equipment
concerned, including the purpose of the equipment, the industry
structure, manufacturers, market characteristics, and technologies used
in the equipment. This activity includes both quantitative and
qualitative assessments, based primarily on publicly-available
information. The subjects addressed in the market and technology
assessment for this rulemaking include: (1) a determination of the
scope of the rulemaking and product classes; (2) manufacturers and
industry structure; (3) existing efficiency programs; (4) shipments
information; (5) market and industry trends; and (6) technologies or
design options that could improve the energy efficiency of SPVUs. The
key findings of DOE's market assessment are summarized in the following
sections. See chapter 3 of the NOPR/NOPD TSD for further discussion of
the market and technology assessment.
1. Equipment Classes
As discussed in section III.B of this document, the current energy
conservation standards for SPVUs specified in 10 CFR 431.97 are based
on six equipment classes determined by: (1) cooling capacity and (2)
whether the equipment is an air conditioner or a heat pump.

Table V-1--Equipment Classes for SPVUs
------------------------------------------------------------------------
Equipment class
------------------------------------------------------------------------
1...................................... SPVAC <65,000 Btu/h.
2...................................... SPVHP <65,000 Btu/h.
3...................................... SPVAC >=65,000 Btu/h and
<135,000 Btu/h.
4...................................... SPVHP >=65,000 Btu/h and
<135,000 Btu/h.
5...................................... SPVAC >=135,000 Btu/h and
<240,000 Btu/h.
6...................................... SPVHP >=135,000 Btu/h and
<240,000 Btu/h.
------------------------------------------------------------------------

In response to the April 2020 RFI, AHRI commented that it does not
recommend any changes to the existing equipment classes. (AHRI, No. 9
at p. 3) DOE did not identify any performance-related features that
would justify creating a new equipment class for SPVUs. Accordingly,
DOE is proposing to maintain the existing equipment classes in this
NOPR/NOPD.
In the April 2020 RFI, DOE requested comment on the availability of
units on the market in the following equipment classes: SPVHP >=65,000
Btu/h and <135,000 Btu/h, SPVAC >=135,000 Btu/h and <240,000 Btu/h, and
SPVHP >=135,000 Btu/h and <240,000 Btu/h. 85 FR 22958, 22962 (April 24,
2020). At the time AHRI commented, that organization stated that the
largest SPVHP in the AHRI Directory is 60,000 Btu/h and that the
largest SPVAC is 146,000 Btu/h. (AHRI, No. 9 at p. 4) DOE conducted a
more recent review of DOE's Compliance Certification Database,\10\ and
Table V-2 shows the number of models listed within the DOE Compliance
Certification Database that DOE has identified for each class of SPVUs.
Based on DOE's review of equipment currently available on the market,
DOE determined that there are SPVHPs available up to 67,000 Btu/h and
SPVACs up to 180,000 Btu/h. As discussed in section I of this document,
DOE is not proposing to increase the stringency of the energy
conservation standards for any SPVUs, including SPVHP >=135,000 Btu/h
and <240,000 Btu/h.
---------------------------------------------------------------------------

\10\ DOE's Compliance Certification Database can be found at
<a href="https://www.regulations.doe.gov/certification-data/products.html#q=Product_Group_s%3A*">https://www.regulations.doe.gov/certification-data/products.html#q=Product_Group_s%3A*</a> (Last accessed Feb. 16, 2022).

Table V-2--Number of Models Under Current SPVU Equipment Classes
------------------------------------------------------------------------
Number of models
Cooling capacity range (Btu/h) -------------------------------
SPVACs SPVHPs
------------------------------------------------------------------------
<65,000................................. 467 303
>=65,000 and <135,000................... 43 2
>=135,000 and <240,000.................. 8 0
------------------------------------------------------------------------

2. Technology Options
In the technology assessment, DOE identifies technology options and
prototype designs that appear to be feasible mechanisms for improving
equipment efficiency. This assessment provides the technical background
and structure on which DOE bases its screening and engineering
analyses.

[[Page 75400]]

In the April 2020 RFI, DOE presented a preliminary list of
technology options primarily based on the technologies identified in
the most recent rulemaking for SPVUs (i.e., the September 2015 final
rule). 85 FR 22958, 22962 (April 24, 2020). In the April 2020 RFI, DOE
requested comment on the technology options listed in Table V-3
regarding their applicability to the current market and how these
technologies may impact the efficiency of SPVUs.

Table V-3--Technology Options Presented in April 2020 RFI
------------------------------------------------------------------------
Technology options
------------------------------------------------------------------------
Heat Exchanger Improvements............ Increased Frontal Coil Area.
Increased Depth of Coil.
Microchannel Heat Exchangers.
Dual Condensing Heat
Exchangers.
Indoor Blower and Outdoor Fan Improved Fan Motor Efficiency.
Improvements.
Improved Fan Blades.
Variable Speed Condenser Fan/
Motor.
Variable Speed Indoor Blower/
Motor.
Compressor Improvements................ Improved Compressor Efficiency.
Multi-Speed Compressors.
Other Improvements..................... Thermostatic Expansion Valves.
Electronic Expansion Valves.
Thermostatic Cyclic Controls.
------------------------------------------------------------------------

In response to the April 2020 RFI, AHRI and GE commented that since
the last rulemaking, there are no new technology developments for SPVUs
that are commercially available or that are not already accounted for
in the existing EER metric. (AHRI, No. 9 at p. 4; GE, No. 7 at p. 2)
AHRI added that all of the technology options presented in the April
2020 RFI (now listed in Table V-3), with the exception of increased
coil size, are incorporated in minimum-efficiency equipment and would
not increase SPVU efficiencies beyond the current levels. (AHRI, No. 9
at p. 7)
AHRI commented that in many replacement applications, the physical
size of the replacement equipment cabinet is constrained by the
original equipment size, particularly for classroom applications.
(AHRI, No. 9 at p. 4) According to AHRI, cabinets project out into the
room and are typically installed under windows, and as a result, the
dimensions are limited in height by the window, in depth by the
allowable projection into the floor space, and in length by the
footprint of the original cabinet. (AHRI, No. 9 at p. 4) Therefore,
AHRI commented that increasing heat exchanger size significantly is not
possible in these cases and that appropriate boundaries must be
established when considering increasing component sizes in the
analysis, considering ASHRAE Standard 90.1's definition for non-
weatherized space-constrained SPVU. (AHRI, No. 9 at pp. 4-5) AHRI added
that SPVU manufacturers also need to be cognizant of product noise
levels, particularly for classroom settings. AHRI stated that some
SPVUs are installed within a cabinet in the room, which typically have
sound limits, so all individual components and the combination of
components in the final product are considered very carefully to
achieve a quiet product. (AHRI, No. 9 at p. 8)
AHRI noted that SPVU manufacturers face limitations in terms of
available compressor options; scroll compressors are not available
below 17,000 Btu/h, so rotary compressors are employed. (AHRI, No. 9 at
p. 8)
As discussed in section V.C.1 of this document, DOE conducted
testing and physical teardowns on a sample of currently available SPVUs
using the amended SPVU test procedure and based on the seasonal IEER
metric. DOE supplemented this approach with a review of product
literature for currently available models. Through such efforts, DOE
identified technology options that are used in higher-efficiency
equipment. Based on this review, DOE believes that the technology
options identified for this NOPR/NOPD, as presented subsequently in
Table V-5, are consistent with existing equipment on the market (e.g.,
heat exchanger sizes, fan and fan motor types, controls, air flow) with
consideration of the installation constraints noted by AHRI. DOE notes
that where certain design options may increase cabinet sizes, DOE
considered any additional costs associated with the installation of the
equipment (e.g., transition curbs to accommodate existing wall openings
in replacement applications).
In the April 2020 RFI, DOE also noted that it did not consider
improved fin design, improved tube design, and hydrophilic coating on
fins in the engineering analysis for the previous rulemaking because
they were commonly found in most baseline and higher-efficiency SPVUs.
85 FR 22958, 22963 (April 24, 2020). AHRI commented that SPVU
manufacturers use the best commercially-available fin and tube designs
in both baseline and higher-efficiency SPVUs. AHRI stated that
hydrophilic film coating on fins are not used in SPVUs due to concern
about degradation over time. (AHRI, No. 9 at p. 6) DOE maintains that
improved fin and tube design are incorporated into baseline SPVUs and,
as a result, DOE did not consider these as technology options in this
NOPR/NOPD. DOE is unaware of publicly-available data quantifying the
impact of hydrophilic film coating on fins or whether this is used in
commercially-available equipment. As a result, DOE did not consider
hydrophilic film coating as a technology option in this NOPR/NOPD.
Microchannel Heat Exchangers
As discussed in the April 2020 RFI, DOE did not evaluate
microchannel heat exchangers for the September 2015 Final Rule
engineering analysis because there was insufficient information
regarding improvements to the overall system's energy efficiency. 85 FR
22958, 22962 (April 24, 2020); 80 FR 57438, 57455 (Sept. 23, 2015). On
this topic, AHRI and GE agreed that there is insufficient information
regarding microchannel heat exchangers impact on the overall system's
energy efficiency, and, therefore, such technology should be excluded
from the analysis. (AHRI, No. 9 at p . 5; GE, No. 7 at p. 2) GE added
that microchannel heat exchangers are of limited usefulness as a
technology option due to the constraints imposed by the architecture of
the space in which they are installed (i.e., the size of the exterior
wall and the wall openings). (GE, No. 7 at p. 2) In light of these
reasons, DOE

[[Page 75401]]

maintains that there is insufficient information regarding improvements
to the overall system's energy efficiency for microchannel heat
exchangers, and as a result, DOE did not consider them as a technology
option for further consideration.
Part-Load Technology Options
In the April 2020 RFI, DOE noted that the test procedure for SPVUs
at that time only measured efficiency at full-load steady-state
conditions, while thermostatic expansion valves (TXVs), electronic
expansion valves (EEVs), thermostatic cyclic controls, multi-speed
compressors, variable speed condenser fan/motor and variable speed
indoor blower/motor technologies only provide benefit at part-load
conditions. 85 FR 22958, 22962-22963 (April 24, 2020).
AHRI commented that changing the efficiency metric to reflect part-
load performance would change how these technology options impact the
efficiency of SPVUs. AHRI stated that it does not support the inclusion
of any technology option that does not impact efficiency using the
current DOE test procedure. (AHRI, No. 9 at p. 5) AHRI commented that
neither variable speed condenser fan/motors nor indoor blower/motors
will impact efficiency using the existing EER metric and, therefore,
should not be considered in this rulemaking. (AHRI, No. 9 at p. 5) The
commenter argued that indoor blower/fan improvements will impact unit
size, which can be problematic for space-constrained units. AHRI added
that not all products have condenser fans to improve, specifically non-
weatherized units. (Id.)
AHRI and GE commented that variable speed compressors, TXVs, and
EEVs do not provide a benefit using the existing EER metric and,
therefore, should not be considered in this rulemaking. (AHRI, No. 9 at
pp. 5-6; GE, No. 7 at p. 2) AHRI commented that in the event that DOE
amends the test procedure and efficiency metric for SPVUs to account
for part-load performance, variable speed compressors still may not be
a viable technology option due to cost and availability. AHRI and GE
noted that SPVUs are designed to accommodate a wide variety of voltages
but that currently available variable speed compressors that operate at
lower capacities are designed for residential applications and
voltages. Consequently, AHRI and GE argued that because variable speed
compressors are not available that accommodate all commercial voltages,
there is a limitation on the wide-scale adoption of variable speed
equipment. (AHRI, No. 9 at p. 6; GE, No. 7 at p. 2) In addition, AHRI
mentioned that compressor manufacturers are also working to develop
full product lines to accommodate A2L refrigerants. AHRI commented that
this effort requires significant research and design resources, so they
do not expect timely availability of variable speed compressors for the
full voltage range required for SPVUs. (AHRI, No. 9 at p. 6)
In response, as discussed in section III.C of this document, DOE
has amended its test procedure for SPVUs to include a seasonal cooling
efficiency metric that includes part-load performance, and, therefore,
the Department is proposing to consider amended energy conservation
standards based on the IEER metric in this NOPR/NOPD. As a result, DOE
considered multi-speed compressors, TXVs, EEVs, thermostatic cyclic
controls, variable speed condenser fan/motors, and variable speed
indoor blower/motors as technology options, because these technologies
improve the performance of SPVUs during part-load operation. However,
based on DOE's testing, DOE does not have sufficient test data showing
that variable-speed compressors provide a measurable improvement over
two-stage compressors. As a result, DOE only considered two-stage
compressors as a technology option for this NOPR/NOPD. DOE understands
that two-stage compressors are available for the full range of cooling
capacities for SPVUs. With regards to AHRI's comment that indoor
blower/fan improvements will impact unit size and that not all products
have condenser fans to improve, DOE notes that it considered
application of these technology options consistent with existing
equipment on the market.
Additionally, DOE is no longer considering improved compressor
efficiency as a technology option, as the Department is not aware of
any commercially-available compressors with improved efficiency that
are used in SPVUs.
Refrigerants
Nearly all SPVUs are currently designed with R-410A as the
refrigerant. The U.S. Environmental Protection Agency (EPA) Significant
New Alternatives Policy (SNAP) Program evaluates and regulates
substitutes for the ozone-depleting chemicals (such as air conditioning
refrigerants) that are being phased out under the stratospheric ozone
protection provisions of the Clean Air Act (CAA). (42 U.S.C. 7401 et
seq.) \11\ The EPA SNAP Program currently includes 31 \12\ acceptable
alternatives for refrigerants used in the new Residential and Light
Commercial Air Conditioning class of equipment (which includes
SPVUs),\13\ On May 6, 2021, the EPA published a final rule in the
Federal Register allowing the use of R-32, R-452B, R-454A, R-454B, R-
454C, and R-457A, subject to use conditions. These refrigerants may now
be used in commercial HVAC applications, but any listed available
substitute for Residential and Light Commercial Air Conditioning may be
used as a refrigerant in SPVU equipment. 86 FR 24444.
---------------------------------------------------------------------------

\11\ Additional information regarding EPA's SNAP Program is
available online at: <a href="http://www.epa.gov/ozone/snap/">www.epa.gov/ozone/snap/</a> (Last accessed July 22,
2022).
\12\ Refrigerant THR-03 is not included in this count because it
is acceptable for use only in residential window air conditioners;
Refrigerants R-1270 and R-443A were deemed unacceptable as of
January 3, 2017; Refrigerants R-417C, R427-A and R-458A are only
approved for retrofit applications.
\13\ Information available at: <a href="http://www.epa.gov/snap/substitutes-residential-and-light-commercial-air-conditioning-and-heat-pumps">www.epa.gov/snap/substitutes-residential-and-light-commercial-air-conditioning-and-heat-pumps</a>
(Last accessed July 22, 2022).
---------------------------------------------------------------------------

On December 27, 2020, the American Innovation and Manufacturing Act
of 2020 was enacted in section 103 in Division S, Innovation for the
Environment, of the Consolidated Appropriations Act, 2021 (Pub. L. 116-
260; codified at 42 U.S.C. 7675). The American Innovation and
Manufacturing Act of 2020 provides EPA specific authority to address
hydrofluorocarbons (HFC), including to: (1) phase down HFC production
and consumption of listed HFCs through an allowance allocation and
trading program; (2) establish requirements for the management of HFCs
and HFC substitutes in equipment (e.g., air conditioners); and (3)
facilitate sector-based transitions away from HFCs. (42 U.S.C. 7675(e),
(h), (i)) Under the American Innovation and Manufacturing Act of 2020,
EPA is also authorized to issue rules in response to petitions to
establish sector-based HFC restrictions. (42 U.S.C. 7675(i)(3)) On
October 14, 2021, EPA published a notice in the Federal Register which
granted ten petitions in full, including one petition by AHRI et al.,
titled ``Restrict the Use of HFCs in Residential and Light Commercial
Air Conditioners'' (AHRI petition), in which the petitioners requested
EPA to require residential and light commercial air conditioners (which
includes SPVUs) to use refrigerants with GWP of 750 or less, with such
requirement applying to these equipment manufactured after January

[[Page 75402]]

1, 2025, excluding variable refrigerant flow (VRF) equipment.\14\ 86 FR
57141. DOE is also aware that the California Air Resources Board (CARB)
finalized a rulemaking effective January 1, 2022, which prohibits the
use of refrigerants with a GWP of 750 or greater starting January 1,
2023 in several new type of air-conditioning equipment, including
SPVUs.\15\
---------------------------------------------------------------------------

\14\ Available at: <a href="http://www.regulations.gov/document/EPA-HQ-OAR-2021-0289-0011">www.regulations.gov/document/EPA-HQ-OAR-2021-0289-0011</a> (Last accessed July 22, 2022).
\15\ Available at: <a href="http://www.arb.ca.gov/rulemaking/2020/hfc2020">www.arb.ca.gov/rulemaking/2020/hfc2020</a> (Last
accessed July 22, 2022).
---------------------------------------------------------------------------

In commenting on the April 2020 RFI, ASAP/ACEEE argued that
alternatives to R410A such as R32, R452B, and R454B can improve
efficiency by at least 5 percent \16\ and that DOE should consider
alternative refrigerants in its analysis. (ASAP/ACEEE, No. 11 at p. 2)
---------------------------------------------------------------------------

\16\ See <a href="http://www.aceee.org/files/proceedings/2016/data/papers/3_406.pdf">www.aceee.org/files/proceedings/2016/data/papers/3_406.pdf</a> (Last accessed July 22, 2022).
---------------------------------------------------------------------------

In response, DOE is aware of the changing landscape of refrigerants
as they relate to SPVUs, particularly the AHRI petition that requested
the EPA to require residential and light commercial air conditioners to
use refrigerants with GWP of 750 or less, with such requirement
applying to this equipment manufactured after January 1, 2025
(excluding VRF) and that was granted by EPA on October 14, 2021. 86 FR
57141 (Oct. 14, 2021).\17\ In light of this AHRI petition which would
impact SPVUs, DOE reviewed certain SNAP-approved substitutes that met
this criterion for use of a refrigerant with GWP of 750 or less.\18\
These are listed in Table V-4.
---------------------------------------------------------------------------

\17\ After granting a petition, EPA must initiate a rulemaking
and publish a final rule within two years of the petition grant date
(i.e., by Oct. 15, 2023).
\18\ On December 29, 2021, EPA published in the Federal Register
a notification informing the public that they would not be using a
negotiated rulemaking procedure to develop a proposed rule or rules
associated with the eleven American Innovation and Manufacturing Act
of 2020 petitions (including the AHRI petition) but will instead use
the typical notice-and-comment rulemaking process. 86 FR 74080.

Table V-4--Potential Substitutes for HFCs in New Residential and Light Commercial Air Conditioning Equipment,
With GWP of 750 or Less
----------------------------------------------------------------------------------------------------------------
ASHRAE safety classification
Approved substitute GWP value Approval date \1\ \2\
----------------------------------------------------------------------------------------------------------------
R-457A................................ 140 May 6, 2021.............. A2L
R-454C................................ 150
R-454A................................ 240
R-454B................................ 470
R-32.................................. 675
R-452B................................ 700
----------------------------------------------------------------------------------------------------------------
\1\ Approved by EPA. 86 FR 24444.
\2\ ASHRAE assigns safety classifications to the refrigerants based on toxicity and flammability data. The
capital letter designates a toxicity class based on allowable exposure and the numeral denotes flammability.
For toxicity, Class A denotes refrigerants of lower toxicity, and Class B denotes refrigerants of higher
toxicity. For flammability, class 1 denotes refrigerants that do not propagate a flame when tested as per the
standard; class 2 and 2L denotes refrigerants of lower flammability; and class 3, for highly flammable
refrigerants such as the hydrocarbons.

DOE reviewed several studies \19\ to gauge the potential efficiency
improvements of the substitute refrigerants identified in Table V-4, as
compared to R-410A. Most of these studies suggested comparable
performance to R410A, with some studies showing slightly reduced
efficiency and others showing improvement as high as six percent (for
R-32). DOE notes that most of these studies were performed with drop-in
applications (where an alternate refrigerant replaces the existing
refrigerant in a system that is optimized for the existing refrigerant)
and were not performed on SPVUs specifically. It is possible that these
substitute refrigerants might show efficiencies higher than R-410A in
specific applications that have been optimized for such refrigerants.
However, given the uncertainty associated with the studies reviewed,
DOE was unable to conclude with reasonable confidence that these
refrigerants will result in a specific improvement in energy
efficiency. Therefore, DOE has tentatively decided to not consider
alternate refrigerants as a technology option for increasing SPVU
efficiency. On the other hand, DOE does not expect that the anticipated
refrigerant change will reduce SPVU efficiency. Also, as discussed in
section III.F.1 of this NOPR, because DOE is not proposing amended
standards for SPVUs that increase stringency beyond the current Federal
standard levels, DOE did not assess the cumulative regulatory burden
associated with potential refrigerant requirements.
---------------------------------------------------------------------------

\19\ See: (1) <a href="https://www.aceee.org/files/proceedings/2016/data/papers/3_406.pdf">https://www.aceee.org/files/proceedings/2016/data/papers/3_406.pdf</a>;
(2) <a href="https://core.ac.uk/download/pdf/4955522.pdf">https://core.ac.uk/download/pdf/4955522.pdf</a>;
(3) <a href="https://docs.lib.purdue.edu/iracc/1211/">https://docs.lib.purdue.edu/iracc/1211/</a>;
(4) <a href="https://docs.lib.purdue.edu/iracc/1235/">https://docs.lib.purdue.edu/iracc/1235/</a>;
(5) <a href="https://docs.lib.purdue.edu/cgi/viewcontent.cgi?article=3097&context=icec">https://docs.lib.purdue.edu/cgi/viewcontent.cgi?article=3097&context=icec</a>;
(6) <a href="https://www.optimizedthermalsystems.com/images/pdf/about/An-Evaluation-of-R32-for-the-US-HVACR-Market.pdf">https://www.optimizedthermalsystems.com/images/pdf/about/An-Evaluation-of-R32-for-the-US-HVACR-Market.pdf</a>;
(7) <a href="https://www.nature.com/articles/ncomms14476">https://www.nature.com/articles/ncomms14476</a>;
(8) <a href="https://docs.lib.purdue.edu/cgi/viewcontent.cgi?article=3089&context=iracc">https://docs.lib.purdue.edu/cgi/viewcontent.cgi?article=3089&context=iracc</a>;
(9) <a href="https://www.osti.gov/biblio/1823375">https://www.osti.gov/biblio/1823375</a>; and
(10) <a href="https://climate.emerson.com/documents/copeland-scroll-yp-compressors-designed-for-r32-en-gb-7125818.pdf">https://climate.emerson.com/documents/copeland-scroll-yp-compressors-designed-for-r32-en-gb-7125818.pdf</a>.
(All last accessed July 25, 2022).
---------------------------------------------------------------------------

NOPR/NOPD Technology Options
Based on the previous discussion, DOE identified nine technology
options for this NOPR/NOPD, presented in Table V-5, that would be
expected to improve the efficiency of SPVUs, as measured by the amended
DOE test procedure.

Table V-5--NOPR/NOPD Technology Options
------------------------------------------------------------------------
Technology options
------------------------------------------------------------------------
Heat Exchanger Improvements............ Increased Frontal Coil Area.
Increased Depth of Coil.
Dual Condensing Heat
Exchangers.
Indoor Blower and Outdoor Fan Improved Fan Motor Efficiency.
Improvements.

[[Page 75403]]

Improved Fan Blades.
Compressor Improvements................ Two-Stage Compressors.
Other Improvements..................... Thermostatic Expansion Valves.
Electronic Expansion Valves.
Thermostatic Cyclic Controls.
------------------------------------------------------------------------

Issue-2: DOE requests comment on the proposed technology options
for SPVUs. DOE also requests data on the potential improvement in IEER
and COP associated with these technology options.

B. Screening Analysis

DOE uses the following five screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:
(1) Technological feasibility. Technologies that are not
incorporated in commercial products or in working prototypes will not
be considered further.
(2) Practicability to manufacture, install, and service. If it is
determined that mass production and reliable installation and servicing
of a technology in commercial products could not be achieved on the
scale necessary to serve the relevant market at the time of the
projected compliance date of the standard, then that technology will
not be considered further.
(3) Impacts on product utility or product availability. If it is
determined that a technology would have a significant adverse impact on
the utility of the product/equipment for significant subgroups of
consumers or would result in the unavailability of any covered product
type with performance characteristics (including reliability),
features, sizes, capacities, and volumes that are substantially the
same as products generally available in the United States at the time,
it will not be considered further.
(4) Adverse impacts on health or safety. If it is determined that a
technology would have significant adverse impacts on health or safety,
it will not be considered further.
(5) Unique-Pathway Proprietary Technologies. If a design option
utilizes proprietary technology that represents a unique pathway to
achieving a given efficiency level, that technology will not be
considered further due to the potential for monopolistic concerns.
10 CFR 431.4; 10 CFR part 430, subpart C, appendix A, sections
6(b)(3) and 7(b).
In summary, if DOE determines that a technology, or a combination
of technologies, fails to meet one or more of the listed five criteria,
it will be excluded from further consideration in the engineering
analysis. The reasons for eliminating any technology are discussed in
the following sections.
After a review of each technology, DOE tentatively concludes that
all of the other identified technologies listed in Table V-5 of section
V.A.3 of this document meet all five screening criteria to be examined
further as design options in DOE's NOPR/NOPD analysis. In summary, DOE
did not screen out the following technology options:

Table V-6--Technology Options Retained for Engineering Analysis
------------------------------------------------------------------------
Technology options
------------------------------------------------------------------------
Heat Exchanger Improvements............ Increased Frontal Coil Area.
Increased Depth of Coil.
Dual Condensing Heat
Exchangers.
Indoor Blower and Outdoor Fan Improved Fan Motor Efficiency.
Improvements.
Improved Fan Blades.
Compressor Improvements................ Two-Stage Compressors.
Other Improvements..................... Thermostatic Expansion Valves.
Electronic Expansion Valves.
Thermostatic Cyclic Controls.
------------------------------------------------------------------------

DOE has initially determined that these technology options are
technologically feasible because they are being used or have previously
been used in commercially-available products or working prototypes. DOE
also finds that all of these technology options meet the other
screening criteria (i.e., practicable to manufacture, install, and
service and do not result in adverse impacts on consumer utility,
product availability, health, or safety, and are not unique-pathway
proprietary technologies). For additional details on DOE's screening
analysis, see chapter 4 of the NOPR/NOPD TSD.

C. Engineering Analysis

The purpose of the engineering analysis is to establish the
relationship between the efficiency and cost of SPVUs. There are two
elements to consider in the engineering analysis: (1) the selection of
efficiency levels to analyze (i.e., the ``efficiency analysis'') and
(2) the determination of equipment cost at each efficiency level (i.e.,
the ``cost analysis''). In determining the performance of higher-
efficiency equipment, DOE considers technologies and design option
combinations not eliminated by the screening analysis. For each
equipment class, DOE estimates the baseline cost, as well as the
incremental cost for the equipment at efficiency levels above the
baseline. The output of the engineering analysis is a set of cost-
efficiency ``curves'' that are used in downstream analyses (i.e., the
LCC and PBP analyses and the NIA).
1. Efficiency Analysis
DOE typically uses one of two approaches to develop energy
efficiency levels for the engineering analysis: (1) relying on observed
efficiency levels in the market (i.e., the efficiency-level approach),
or (2) determining the incremental efficiency improvements associated
with incorporating specific design options to a baseline model (i.e.,
the design-option approach). Using the

[[Page 75404]]

efficiency-level approach, the efficiency levels established for the
analysis are determined based on the market distribution of existing
equipment (in other words, based on the range of efficiencies and
efficiency level ``clusters'' that already exist on the market). Using
the design-option approach, the efficiency levels established for the
analysis are determined through detailed engineering calculations and/
or computer simulations of the efficiency improvements from
implementing specific design options that have been identified in the
technology assessment. DOE may also rely on a combination of these two
approaches. For example, the efficiency-level approach (based on actual
products on the market) may be extended using the design option
approach to ``gap fill'' levels (to bridge large gaps between other
identified efficiency levels) and/or to extrapolate to the max-tech
level (particularly in cases where the max-tech level exceeds the
maximum efficiency level currently available on the market).
In this rulemaking, DOE relies on a design-option approach.
Consistent with its previous rulemaking analysis, DOE focused the
analysis on representative capacities for each equipment class. Based
on market data, DOE identified representative cooling capacities for
SPVACs and SPVHPs as presented in Table V-7. More specifically, DOE
identified 36,000 Btu/h, 72,000 Btu/h, and 180,000 Btu/h as the nominal
cooling capacities representing the most models in DOE's CCD for each
SPVU equipment class.

Table V-7--SPVU Equipment Class Representative Cooling Capacities
------------------------------------------------------------------------
Equipment class Representative cooling capacity
------------------------------------------------------------------------
SPVAC and SPVHP <65,000 Btu/h......... 36,000 Btu/h.
SPVAC and SPVHP >=65,000 Btu/h and 72,000 Btu/h.
<135,000 Btu/h.
SPVAC and SPVHP >=135,000 Btu/h and 180,000 Btu/h.
<240,000 Btu/h.
------------------------------------------------------------------------

DOE initially considered the range of efficiencies available on the
market based on the data provided in DOE's CCD for SPVUs for EER and
COP, as shown in Figure V-1 and Figure V-2.
[GRAPHIC] [TIFF OMITTED] TP08DE22.000

Figure V-1 DOE SPVu EER Compliance Certification Data

[[Page 75405]]

[GRAPHIC] [TIFF OMITTED] TP08DE22.001

Figure V-2 DOE SPVu COP Compliance Certification Data

However, as discussed in section III.C of this document, DOE is now
proposing to amend the energy conservation standards for SPVUs so as to
be based on the seasonal cooling metric, IEER, and the existing heating
metric, COP. Because SPVU manufacturers currently do not report IEER,
DOE conducted testing on a sample of units that included a variety of
the design options presented in Table V-6. The results of DOE's testing
are presented in Table V-8. DOE used these test results along with
additional information gathered using reverse engineering (i.e.,
teardown) methodologies, information from manufacturer product
literature, and consideration of the range of efficiencies based on EER
in DOE's CCD, to evaluate the range of design options used for units
available on the market at different efficiencies in support of
developing efficiency levels for the NOPR/NOPD analysis. DOE
anticipates that the test results are applicable to all equipment
classes when considering the relative improvement in efficiency
associated with various design options due to the similarity in
platform design and cabinet construction for units across equipment
classes.

Table V-8--DOE Test Results
----------------------------------------------------------------------------------------------------------------
Rated cooling
Test unit Equipment class capacity (Btu/ Rated EER Tested IEER Cooling stages
h)
----------------------------------------------------------------------------------------------------------------
1 AC <65,000 Btu/h...... 35,600 11.25 12.5 1
2 AC <65,000 Btu/h...... 35,000 11 11.6 2
3 HP <65,000 Btu/h...... 36,000 11.1 12.2 1
4 AC <65,000 Btu/h...... 36,000 12.5 13.2 2
5 AC <65,000 Btu/h...... 35,000 12 17.7 2
6 HP <65,000 Btu/h...... 35,000 11 11.7 1
7 HP <65,000 Btu/h...... 33,800 11 13.7 2
8 AC <65,000 Btu/h...... 54,000 11 16.1 2
9 HP <65,000 Btu/h...... 54,000 11.2 16.8 2
10 HP <65,000 Btu/h...... 57,000 11 12.7 2
----------------------------------------------------------------------------------------------------------------

a. Baseline Efficiency Levels
For each equipment class, DOE generally selects a baseline model as
a reference point for each class, and measures any changes resulting
from potential new or amended energy conservation standards against the
baseline. The baseline model in each product/equipment class represents
the characteristics of a product/equipment typical of that class (e.g.,
capacity, physical size). Generally, a baseline model is one that just
meets current energy conservation standards and provides basic consumer
utility. If no standards are in place, the baseline is typically the
most common or least-efficient unit on the market.
As part of the April 2020 RFI, DOE requested comment on appropriate
baseline efficiency levels. 85 FR 22958, 22964 (April 24, 2020). On
this topic, AHRI commented that DOE should use the current baseline
efficiency levels for SPVACs >=135,000 and <240,000 Btu/h cooling
capacity, noting that there are only two models on the market and that
it is doubtful these two models account for significant sales volume.
(AHRI, No. 9 at p. 6)
As discussed in section IV of this document, DOE's current cooling
mode efficiency standards for SPVUs are based on the full-load metric,
EER. AHRI and DOE jointly developed a crosswalk from EER to IEER based
on testing of a sample of minimally-compliant single-stage units. DOE
considered these crosswalked IEER levels as the baseline cooling mode
efficiency levels for this analysis. For

[[Page 75406]]

heating mode for SPVHPs, DOE considered the current COP standard levels
as the baseline efficiency levels. The proposed baseline efficiency
levels are shown in Table V-9.

Table V-9--Baseline Efficiency Levels
----------------------------------------------------------------------------------------------------------------
Current EER
Equipment class standard Baseline IEER Baseline COP
levels levels levels
----------------------------------------------------------------------------------------------------------------
SPVAC <65,000 Btu/h............................................. 11.0 12.5 ..............
SPVHP <65,000 Btu/h............................................. 11.0 12.5 3.3
SPVAC >=65,000 Btu/h and <135,000 Btu/h......................... 10.0 10.3 ..............
SPVHP >=65,000 Btu/h and <135,000 Btu/h......................... 10.0 10.3 3.0
SPVAC >=135,000 Btu/h and <240,000 Btu/h........................ 10.0 11.2 ..............
SPVHP >=135,000 Btu/h and <240,000 Btu/h........................ 10.0 11.2 3.0
----------------------------------------------------------------------------------------------------------------

Based on physical teardowns of units at the baseline efficiency
levels, DOE noted that baseline units for the <65,000 Btu/h cooling
capacity equipment classes and >=65,000 and <135,000 Btu/h cooling
capacity equipment classes had a single stage of compressor operation
and indoor/outdoor fan speeds. These units used single-speed
compressors, permanent-split capacitor (PSC) outdoor fan motors with
single-stage outdoor airflow, and electronically-commutated indoor
blower motors (ECM) with single-stage indoor airflow. For the >=135,000
and <240,000 Btu/h cooling capacity equipment classes, as discussed in
section V.C.1.b of this document, DOE notes that all units available on
the market operated with multiple compressor stages and staged airflow,
using multiple compressors along with ECM indoor blowers and outdoor
fans. Therefore, DOE expects that all units on the market in this
equipment class can meet the efficiency level proposed.
Issue-3: DOE requests comment on the proposed baseline efficiency
levels and the design options associated with these levels.
b. Higher Efficiency Levels
As part of DOE's analysis, the maximum available efficiency level
is the highest-efficiency unit currently available on the market. DOE
also defines a ``max-tech'' efficiency level to represent the maximum
possible efficiency for a given product. In many cases, the max-tech
efficiency level is not commercially available because it is not
economically feasible.
In the April 2020 RFI, DOE noted that in the previous energy
conservation standards rulemaking for SPVUs for all equipment classes,
DOE determined that the max-tech efficiency was the maximum available
efficiency. Accordingly, DOE presented the maximum available efficiency
levels using the full-load EER cooling efficiency metric and COP
heating efficiency metric based on review of the DOE's CCD. DOE
requested comment on appropriate max-tech efficiency levels based on
EER and COP and the design options associated with these levels, as
well as appropriate efficiency levels based on the seasonal efficiency
metric. 85 FR 22958, 22964-22965 (April 24, 2020).
On this topic, AHRI commented that DOE should only consider
currently-available technologies based on DOE's CCD for SPVUs as max-
tech levels. AHRI stated that theoretical design-option approaches for
max-tech levels should be avoided, as it precludes stakeholders from
being able to accurately develop estimates for repair costs, predict
failure modes associated with such design options, and predict costs
associated with platform/design changes. (AHRI, No. 9 at p. 7) AHRI
further commented that using the DOE test procedure (i.e., the one
available at the time of the April 2020 RFI), the max-tech efficiency
level would be no different now than it was in DOE's 2015 standards
rulemaking analysis. AHRI asserted that one of the only design options
that would increase EER is increasing coil size, but the commenter
cautioned that there are limitations on this design option due to
constraints for through-the-wall or classroom replacement
installations. According to AHRI, the incremental and maximum available
efficiency levels and associated design options for each equipment
class using a part-load energy efficiency metric would be substantially
different than using a full-load metric, but the commenter argued that
those matters can only be evaluated properly after the revised AHRI 390
has published. (AHRI, No. 9 at p. 7) DOE notes that as discussed in
section III.C of this document, DOE is conducting this analysis with
respect to the IEER metric published in AHRI 390-2021.
The CA IOUs commented that more-efficient models (based on EER)
were added to the DOE's CCD for SPVUs since DOE's review in preparation
for the April 2020 RFI, so DOE should update the maximum available
efficiency levels. (CA IOUs, No. 10 at p. 3)
In response, for this NOPR/NOPD, DOE considered efficiency levels
based on the seasonal cooling efficiency metric that includes part-load
performance, IEER, and the heating efficiency metric, COP. For SPVUs
<65,000 Btu/h cooling capacity, DOE developed incremental IEER and COP
higher efficiency levels up to the max-tech level based on DOE's
testing of a sample of units, review of manufacturer product
literature, and consideration of the range of efficiencies observed in
DOE's CCD for SPVUs based on EER. As discussed in section V.C.2 of this
document, DOE conducted physical teardowns on the units in its test
sample. This allowed DOE to identify the design options associated with
units at different efficiencies. In selecting efficiency levels, DOE
primarily focused on the representative cooling capacity for this
equipment class of 36,000 Btu/h. DOE notes that this method does not
rely on theoretical efficiencies, per AHRI's concern.
DOE identified the first efficiency level of 13.7 IEER for SPVUs
with <65,000 Btu/h cooling capacity based on units that incorporated 2-
speed compressors and 2-stage indoor airflow and control logic to
provide staged compressor and airflow operation. In addition, DOE
observed that units at this efficiency level incorporated an increase
in indoor and outdoor heat exchanger total volume compared to baseline
efficiency units. Based on DOE's test data and review of available
product literature, DOE expects that 13.7 IEER represents the
efficiency level that can be achieved without requiring a substantial
increase in heat exchanger and cabinet redesign compared to baseline
efficiency units. For the max-tech efficiency level, DOE found that
units with tested cooling mode

[[Page 75407]]

efficiencies between 16.1 and 17.7 IEER covered both SPVACs and SPVHPs
with cooling capacities at 35,000 Btu/h and 54,000 Btu/h. DOE noted
that these units were built using the same platform/cabinet and similar
design options. To ensure that all equipment across the range of
cooling capacities within this equipment class can achieve the analyzed
efficiency level, DOE selected 16.1 IEER as the max-tech efficiency
level. DOE further noted that, in addition to the design changes to
reach efficiency level 1, units at the max-tech efficiency level also
incorporated substantially larger indoor and outdoor heat exchangers,
along with higher horsepower indoor and outdoor blower/fan motors,
which require an increase in cabinet size. DOE's findings on the
increases in heat exchanger size align with AHRI's comments on the
matter, in that at a certain point, increases in cabinet size would be
necessary to accommodate increases in heat exchanger size. For heating
mode, DOE used the rated COP values corresponding to the units in DOE's
test sample at each IEER efficiency level.
For SPVUs with >=65,000 and <135,000 Btu/h cooling capacity, DOE
applied the same design changes and the equivalent percentage increase
to reach efficiency level 1 as used for the <65,000 Btu/h cooling
capacity equipment class (i.e., a 9.6 percent increase in IEER). DOE
notes that baseline IEER units, which were units with nominal cooling
capacities of 72,000 Btu/h or less, had similar platform design and
cabinet construction as units less than 65,000 Btu/h. Based on this,
DOE preliminarily concluded that the percentage increase used for less
than 65,000 Btu/h units to reach efficiency level 1 is also applicable
to this equipment class. DOE noted that larger capacity units in this
equipment class already incorporated staged compressor and airflow
operation. As a result, DOE believes these units would be capable of
meeting efficiency level 1. Efficiency level 1 represents the max-tech
level for these two equipment classes.
For SPVUs with >=135,000 and <240,000 Btu/h cooling capacity, DOE
found that there are only a small number of basic models, all of which
were rated at the baseline EER of 10.0. Per the discussion in section
IV of this document, all of these models operate with multiple
compressor stages and staged airflow, and incorporate design options
similar to efficiency level 1 for the equipment classes with cooling
capacities less than 135,000 Btu/h. Therefore, the baseline efficiency
was assumed to be the percent improvement in IEER associated with
moving from baseline to efficiency level 1 for SPVUs <135,000 Btu/h
cooling capacity (i.e., a 9.6 percent increase in IEER). Based on DOE's
review of product literature, DOE did not have sufficient information
to justify analyzing higher efficiency levels for this equipment class.
Therefore, the baseline equipment are also the max-tech.
Table V-10 presents the efficiency levels examined for each SPVU
equipment class.

Table V-10--Incremental Efficiency Levels
----------------------------------------------------------------------------------------------------------------
Equipment class Baseline Efficiency level 1 Efficiency level 2
----------------------------------------------------------------------------------------------------------------
Representative Design Options........ Single-speed Baseline + 2-speed Efficiency level 1 +
compressor, single- compressor, staged larger indoor and
stage indoor/outdoor indoor airflow, outdoor heat
airflow, ECM indoor improved control exchangers, higher
blower motor, PSC logic, larger heat horsepower (hp) indoor
outdoor fan motor. exchangers. blower/outdoor fan
motors.
SPVAC <65,000 Btu/h.................. 12.5 IEER.............. 13.7 IEER.............. 16.1 IEER (Max-Tech).
SPVHP <65,000 Btu/h.................. 12.5 IEER/3.3 COP...... 13.7 IEER/3.3 COP...... 16.1 IEER/3.6 COP (Max-
Tech).
SPVAC >=65,000 Btu/h and <135,000 Btu/ 10.3 IEER.............. 11.2 IEER (Max-Tech)...
h.
SPVHP >=65,000 Btu/h and <135,000 Btu/ 10.3 IEER/3.0 COP...... 11.2 IEER/3.0 COP (Max-
h. Tech).
SPVAC >=135,000 Btu/h and <240,000 11.2 IEER * (Max-Tech).
Btu/h.
SPVHP >=135,000 Btu/h and <240,000 11.2 IEER/3.0 COP *
Btu/h. (Max-Tech).
----------------------------------------------------------------------------------------------------------------
* Representative design options for baseline SPVU >=135,000 Btu/h and <240,000 Btu/h are equivalent to the
design options observed at efficiency level 1 for SPVU >=65,000 Btu/h and <135,000 Btu/h.

Issue-4: DOE requests comment on the proposed incremental higher
efficiency levels for each equipment class. DOE requests data showing
the range of efficiencies based on IEER and COP available for SPVUs on
the market, as well as the design options associated with units at
different efficiency levels for each equipment class.
2. Cost Analysis
The cost analysis portion of the engineering analysis is conducted
using one or a combination of cost approaches. The selection of cost
approach depends on a suite of factors, including the availability and
reliability of public information, characteristics of the regulated
equipment, and the availability and timeliness of purchasing the
equipment on the market. The cost approaches are summarized as follows:
<bullet> Physical teardowns: Under this approach, DOE physically
dismantles commercially-available equipment, component-by-component, to
develop a detailed bill of materials for that equipment.
<bullet> Catalog teardowns: In lieu of physically deconstructing
equipment, DOE identifies each component using parts diagrams (e.g.,
available from manufacturer websites or appliance repair websites) to
develop the bill of materials for that equipment.
<bullet> Price surveys: If neither a physical nor catalog teardown
is feasible (e.g., for tightly integrated products such as fluorescent
lamps, which are infeasible to disassemble and for which parts diagrams
are unavailable) or cost-prohibitive and otherwise impractical (e.g.,
large commercial boilers), DOE conducts price surveys using publicly-
available pricing data published on major online retailer websites and/
or by soliciting prices from distributors and other commercial
channels.
In the September 2015 final rule, DOE directly analyzed one
equipment class (i.e., SPVACs <65,000 Btu/h cooling capacity), then
performed a more limited analysis of the other equipment classes based
on limited physical/virtual teardowns and scaling the results from the
analysis conducted for SPVACs with a cooling capacity less than 65,000
Btu/h. 80 FR 57438, 57459-57460 (Sept. 23, 2015). In the April 2020
RFI, DOE requested comment on whether using this same approach for the
current rulemaking is appropriate. DOE also requested comment on the
increase in manufacturing production costs (MPCs) associated with each
design option and how the costs estimated in the September 2015 final
rule have changed. 85 FR 22958, 22965-22966 (April 24, 2020).
In response to this issue raised in the April 2020 RFI, AHRI
expressed support for once again directly analyzing the SPVACs <65,000
Btu/h cooling capacity

[[Page 75408]]

equipment class and scaling the results to other equipment classes for
a future SPVU energy conservation standards rulemaking. (AHRI, No. 9 at
p. 8) The commenter suggested extending the cost-efficiency analyses
for equipment classes with models to those equipment classes without
models on the market, as was done in the previous standards rulemaking.
(AHRI, No. 9 at p. 8) AHRI also commented that the costs estimated for
each particular design options have not changed significantly since the
September 2015 Final Rule analysis. In addition, AHRI cautioned that
incorporating backward curve fans would require a total redesign of
units and would likely be the last, most expensive improvement that
manufacturers would implement. (AHRI, No. 9 at p. 7) As discussed in
section V.A.2 of this document, DOE conducted the cost-efficiency
analysis consistent with SPVU equipment available on the market. DOE
notes that backward curve fans were not necessary to achieve SPVU
performance up to the max-tech efficiency level, and as a result, DOE
did not consider that technology in its analysis.
In the present case, DOE conducted its cost analysis using physical
teardowns on units in its test sample and catalog teardowns to expand
the analysis to additional cooling capacities. Similar to the previous
rulemaking, DOE conducted physical teardowns with a focus on SPVUs with
<65,000 Btu/h cooling capacity. The resulting bill of materials
provides the basis for the MPC estimates. As discussed in section V.C.1
of this document, DOE selected a cooling capacity of 36,000 Btu/h as
the representative cooling capacity for this equipment class. DOE
developed MPC estimates for SPVACs with <65,000 Btu/h cooling capacity
based on the physical teardowns of 36,000 Btu/h units at each
efficiency level. Where necessary, DOE ensured that the MPC estimates
were based on minimally-featured equipment design so that non-
efficiency related features (e.g., economizers, dust sensors) are not
included in the cost estimates. For SPVHPs, DOE estimated the costs
based on the design differences between baseline SPVACs and SPVHPs from
the same model line. DOE assumed that this cost difference would be
applied to the baseline efficiency level and would remain constant at
incremental efficiency levels. For the remaining larger cooling
capacity equipment classes, DOE estimated the MPCs based on catalog
teardowns and information regarding the design options implemented at
each efficiency level scaled from the <65,000 Btu/h cooling capacity
equipment class, as discussed in section V.C.1.b of this document.
To account for manufacturers' non-production costs and profit
margin, DOE applies a non-production cost multiplier (the manufacturer
markup) to the MPC. The resulting manufacturer selling price (MSP) is
the price at which the manufacturer distributes a unit into commerce.
In the April 2020 RFI, DOE requested comment on whether a manufacturer
markup of 1.28, as used in September 2015 final rule, is appropriate
for SPVUs. 85 FR 22958, 22966 (April 24, 2020). On this topic, AHRI
commented that a manufacturer markup of 1.28 continues to be generally
appropriate for SPVUs. (AHRI, No. 9 at p. 8) Accordingly, DOE has
retained a manufacturer markup of 1.28 for this analysis.
Because the design options associated with each incremental
efficiency level involved increases in cabinet sizes, DOE also
estimated the incremental shipping cost at each efficiency level
separate from the MSP. More specifically, DOE estimated the per-unit
shipping costs based on the outer dimensions (including shipping
pallets) at each efficiency level, assuming the use of a typical 53-
foot straight-frame trailer with a storage volume of 4,240 cubic feet.
DOE notes that SPVAC and SPVHP at the same cooling capacity used the
same cabinet design and that the weight differential is typically small
between otherwise identical SPVACs and SPVHPs. For shipping of HVAC
equipment, the size threshold of a container is typically met before
the weight threshold. Accordingly, because SPVACs and SPVHPs use the
same cabinet size, DOE estimated the incremental shipping costs for
SPVACs and SPVHPs would be equivalent.
3. Cost-Efficiency Results
The results of the engineering analysis are reported as cost-
efficiency data (or ``curves'') in the form of IEER (and COP for
SPVHPs) versus MSP (in dollars). DOE developed separate cost-efficiency
curves for each equipment class. These results are presented in Table
V-11 through Table V-14. As discussed in section V.C.1.b of this
document, DOE did not analyze any higher efficiency levels for SPVUs
>=135,000 and <240,000 Btu/h cooling capacity, because all units
available on the market incorporate the same design features and have
the same rated efficiency. As a result, DOE is not presenting any cost-
efficiency results for this equipment class. See Chapter 5 of the NOPR/
NOPD TSD for additional detail on the engineering analysis.

Table V-11--Cost-Efficiency Results SPVACs <65,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Incremental cost ($2021)
Efficiency level --------------------------------------------------------------------------
MPC MSP Shipping
----------------------------------------------------------------------------------------------------------------
Baseline............................. ....................... ....................... .......................
EL 1................................. $296.57 $379.61 $42.67
EL 2................................. 1,261.63 1,614.88 57.01
----------------------------------------------------------------------------------------------------------------

Table V-12--Cost-Efficiency Results SPVHPs <65,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Incremental cost ($2021)
Efficiency level -----------------------------------------------
MPC MSP Shipping
----------------------------------------------------------------------------------------------------------------
Baseline........................................................ .............. .............. ..............
EL 1............................................................ $296.57 $379.61 $42.67
EL 2............................................................ 1,261.63 1,614.88 57.01
----------------------------------------------------------------------------------------------------------------

[[Page 75409]]

Table V-13--Cost-Efficiency Results SPVACs >=65,000 Btu/h and <135,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Incremental cost ($2021)
Efficiency level -----------------------------------------------
MPC MSP Shipping
----------------------------------------------------------------------------------------------------------------
Baseline........................................................ .............. .............. ..............
EL 1............................................................ $360.18 $461.03 $161.94
----------------------------------------------------------------------------------------------------------------

Table V-14--Cost-Efficiency Results SPVHPs >=65,000 Btu/h and <135,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Incremental cost ($2021)
Efficiency level -----------------------------------------------
MPC MSP Shipping
----------------------------------------------------------------------------------------------------------------
Baseline........................................................ .............. .............. ..............
EL 1............................................................ $360.18 $461.03 $161.94
----------------------------------------------------------------------------------------------------------------

Issue-5: DOE requests comment on the cost-efficiency results. In
particular, DOE requests comment on the costs associated with the
design options analyzed, as well as the shipping costs associated with
each efficiency level.

D. Markups Analysis

The markups analysis develops appropriate markups in the
distribution chain (e.g., retailer markups, distributor markups,
contractor markups) and sales taxes to convert the MSP estimates for
the subject equipment derived in the engineering analysis to consumer
prices, which are then used in the LCC and PBP analysis and in the
manufacturer impact analysis. At each step in the distribution channel,
companies mark up the price of the product to cover business costs and
profit margin.
In the September 2015 final rule (and set forth once again here),
DOE identified four distribution channels for SPVUs to describe how
this equipment passes from the manufacturer to the consumer. 80 FR
57438, 57461 (Sept. 23, 2015).
The first two distribution channels are used in the new
construction market:

Manufacturer [rarr] HVAC Distributor \20\[rarr] Modular Building
Manufacturer [rarr] Modular Building Distributor [rarr] End User
---------------------------------------------------------------------------

\20\ In the 2015 final rule, the second step in the distribution
channel was designated as HVAC Distributor or Manufacturer
Representative. Subsequently, DOE has determined that these markups
are the same, so this step in the channel is now simply referred to
as HVAC Distributor for consistency with the other HVAC product
markups.
---------------------------------------------------------------------------

Manufacturer [rarr] HVAC Distributor [rarr] Modular Building
Manufacturer [rarr] General Contractor [rarr] End User

The other two distribution channels are used in the replacement
market:

Manufacturer [rarr] HVAC Distributor [rarr] Modular Building
Distributor [rarr] End User
Manufacturer [rarr] HVAC Distributor [rarr] Mechanical Contractor
[rarr] End User

In the April 2020 RFI, DOE requested information on the existence
of any distribution channels other than the four distribution channels
identified in the September 2015 final rule. DOE also requested data on
the fraction of SPVU sales that go through each of the four identified
distribution channels, as well as the fraction of sales through any
other identified channels. DOE also requested comment on its approach
to estimating markups and any financial data available that would
assist the Department in developing markups for the various segments of
the SPVU distribution channels. 85 FR 22958, 22966 (April 24, 2020).
On this topic, AHRI and NEEA commented that there are more SPVU
distribution channels than the four identified in the September 2015
final rule, although the four from the previous rule make up the
majority of the market. AHRI and NEEA stated that SPVUs are also
commonly installed in other non-modular applications such as multi-
family housing, residential care, lodging, and other applications, and,
therefore, those distribution channels would differ from the four used
in the September 2015 final rule. (AHRI, No. 9 at p. 8; NEEA, No. 6 at
p. 3) For this reason, AHRI recommended that DOE should add the
following three distribution channels for SPVUs. (AHRI, No. 9 at p. 8)

Manufacturer [rarr] Sales Representative [rarr] HVAC Distributor [rarr]
End User
Manufacturer [rarr] End User (National Account)
Manufacturer [rarr] Sales Representative [rarr] General Contractor
[rarr] End User

AHRI did not provide the fraction of overall SPVU sales that travel
through each of these new distribution channels.
As discussed in section III.A of this document, DOE updated the
definitions pertaining to SPVUs in the November 2022 Test Procedure
Final Rule so as to distinguish between commercial SPVUs and consumer
central air conditioners. DOE notes that many of the products currently
certified as SPVUs that are marketed for multi-family and lodging
applications are being misclassified and should be properly classified
as central air conditioners. DOE understands that the distribution
channels for this equipment would be different than that of SPVUs used
in modular buildings, and the Department believes that the distribution
channels suggested by AHRI and NEEA fall in this category. To
reiterate, central air conditioners that are misclassified as SPVUs are
not included in this NOPR/NOPD, so, therefore, DOE did not adopt any of
the additional distribution channels suggested by commenters to its
analysis for this NOPR.
In summary, for this NOPR/NOPD, DOE considered the four
distribution channels shown in Table V-15. The estimated percentages of
the total sales in the new construction and replacement markets for
each of the four distribution channels is listed in the bottom row of
Table V-15.

[[Page 75410]]

Table V-15--Distribution Channels for SPVU Equipment
----------------------------------------------------------------------------------------------------------------
Channel 1 Channel 2 Channel 3 Channel 4
----------------------------------------------------------------------------------------------------------------
New construction New construction Replacement Replacement
----------------------------------------------------------------------------------------------------------------
Manufacturer......................... Manufacturer........... Manufacturer........... Manufacturer.
HVAC Distributor..................... HVAC Distributor....... HVAC Distributor....... HVAC Distributor.
Modular Building Manufacturer........ Modular Building Modular Building Mechanical Contractor.
Manufacturer. Distributor.
Modular Building Distributor......... General Contractor.....
Consumer............................. Consumer............... Consumer............... Consumer.
12.5%................................ 12.5%.................. 37.5%.................. 37.5%.
----------------------------------------------------------------------------------------------------------------

Once these distribution channels were developed, DOE developed
baseline and incremental markups for each actor in the distribution
chain. Baseline markups are applied to the price of equipment with
baseline efficiency, while incremental markups are applied to the
difference in price between baseline and higher-efficiency models (the
incremental cost increase). The incremental markup is typically less
than the baseline markup and is designed to maintain similar per-unit
operating profit before and after new or amended standards.\21\
---------------------------------------------------------------------------

\21\ Because the projected price of standards-compliant
equipment is typically higher than the price of baseline equipment,
using the same markup for the incremental cost and the baseline cost
would result in higher per-unit operating profit. While such an
outcome is possible, DOE maintains that in markets that are
reasonably competitive, it is unlikely that standards would lead to
a sustainable increase in profitability in the long run.
---------------------------------------------------------------------------

DOE updated the sources used in the September 2015 final rule to
derive markups for each step of the distribution channel with the
following sources: (1) the 2017 Annual Wholesale Trade Survey \22\ to
develop HVAC and Modular Building wholesaler markups; (2) the Air
Conditioning Contractors of America's (ACCA) ``2005 Financial Analysis
for the HVACR Contracting Industry'' \23\ and 2017 U.S. Census Bureau
economic data \24\ to develop mechanical contractor markups; (3) 2017
U.S. Census Bureau economic data for the commercial and institutional
building construction industry to develop general contractor markups;
\25\ and (4) the U.S. Census Bureau's Annual Survey of
Manufacturers.\26\ The overall markup is the product of all the markups
(baseline or incremental markups) for the different steps within a
distribution channel. Replacement channels include sales taxes, which
were calculated based on State sales tax data reported by the Sales Tax
Clearinghouse.\27\
---------------------------------------------------------------------------

\22\ U.S. Census Bureau, 2017 Annual Wholesale Trade Report,
NAICS 4236: Household Appliances and Electrical and Electronic Goods
Merchant Wholesalers (2017) (Available at: <a href="http://www.census.gov/wholesale/index.html">www.census.gov/wholesale/index.html</a>) (Last accessed June 9, 2022).
\23\ ``2005 Financial Analysis for the HVACR Contracting
Industry,'' Air Conditioning Contractors of America (2005) (Last
accessed June 9, 2022).
\24\ ``Plumbing, Heating, and Air-Conditioning Contractors.
Sector 23: 238220. Construction: Industry Series, Preliminary
Detailed Statistics for Establishments, 2017,'' U.S. Census Bureau
(2017) (Available at: <a href="https://www.census.gov/data/tables/2017/econ/economic-census/naics-sector-23.html">https://www.census.gov/data/tables/2017/econ/economic-census/naics-sector-23.html</a>) (Last accessed June 9, 2022).
\25\ ``2017 Economic Census, Construction Industry Series and
Wholesale Trade Subject Series,'' U.S. Census Bureau (Available at:
<a href="https://www.census.gov/data/tables/2017/econ/economic-census/naics-sector-23.html">https://www.census.gov/data/tables/2017/econ/economic-census/naics-sector-23.html</a>) (Last accessed June 9, 2022).
\26\ U.S. Census Bureau's Annual Survey of Manufacturers
(Available at: <a href="https://www.census.gov/programs-surveys/asm/data.html">https://www.census.gov/programs-surveys/asm/data.html</a>) (Last accessed: June 9, 2022).
\27\ Sales Tax Clearinghouse (Available at: <a href="https://thestc.com/">https://thestc.com/</a>)
(Last accessed June 9, 2022).
---------------------------------------------------------------------------

Chapter 6 of the NOPR/NOPD TSD provides details on DOE's
development of markups for SPVUs.

E. Energy Use Analysis

The purpose of the energy use analysis is to determine the annual
energy consumption of SPVUs at different efficiencies in representative
commercial buildings, and to assess the energy savings potential of
increased SPVU efficiency. The energy use analysis estimates the range
of energy use of SPVUs (unit energy consumption (UEC)) in the field
(i.e., as they are actually used by commercial consumers). The energy
use analysis provides the basis for other analyses DOE performed,
particularly assessments of the energy savings and the savings in
consumer operating costs that could result from adoption of amended or
new standards.
In the September 2015 final rule, DOE analyzed the energy
consumption of SPVUs using a whole building energy simulation approach
for three types of commercial buildings: modular offices, modular
schools, and telecommunication structures. The annual energy use was
simulated using Energy Plus.\28\ 80 FR 57438, 57462 (Sept. 23, 2015).
For this analysis, DOE developed three prototypical building models to
simulate modular offices, modular schools, and telecommunications
structures. For offices and schools, a 1,568 ft\2\ wood-frame structure
was developed with performance characteristics (lighting density,
ventilation, envelope, economizer usage) meeting the requirements of
ASHRAE Standard 90.1-2004. Schedules and load profiles were taken from
the DOE commercial reference buildings \29\ for primary schools and
small offices. For telecommunications shelters, a 240 ft\2\ precast
concrete structure was developed. These shelters were assumed to
operate with a constant thermal load of 6.86 kW (23,400 Btu/h) in all
hours of the year, thus requiring year round cooling. 80 FR 57438,
57462 (Sept. 23, 2015).
---------------------------------------------------------------------------

\28\ EnergyPlus is a whole building simulation program used to
model cooling and heating loads. (Available at: <a href="https://energyplus.net/">https://energyplus.net/</a>) (Last accessed August 15, 2022).
\29\ For more information, please refer to the DOE Commercial
Reference Buildings web pages for small offices (<a href="https://www.energy.gov/eere/downloads/reference-buildings-building-type-small-office">https://www.energy.gov/eere/downloads/reference-buildings-building-type-small-office</a>) and primary schools (<a href="https://www.energy.gov/eere/downloads/reference-buildings-building-type-primary-school">https://www.energy.gov/eere/downloads/reference-buildings-building-type-primary-school</a>).
---------------------------------------------------------------------------

In the April 2020 RFI, DOE recounted the analytical process to
determine energy use taken for the September 2015 SPVU final rule and
requested comment on using that approach in the current rulemaking, as
well as input on any necessary modifications to such approach.
On that topic, AHRI suggested that after the draft AHRI Standard
390 is adopted, DOE should conduct a simulation approach that aligns
more with an IEER analysis, rather than following the analysis for the
September 2015 final rule (based on the EER metric). AHRI supported
DOE's assumption that telecom cooling loads are constant throughout the
year, and the commenter agreed that the telecom cooling loads used in
the September 2015 final rule were reasonable. Regarding economizer
usage in telecommunications structures, AHRI commented that economizers
were assumed to be present in 50 percent of the SPVU market in the IEER
analysis, but the organization pointed out that ASHRAE Standard 90.1
and California

[[Page 75411]]

title 24 have existing and proposed economizer requirements, some by
climate zone. (AHRI, No. 9 at pp. 8-9)
In response, DOE notes that it used the same building prototypes
and loads that were used to establish the IEER metric when developing
the annual unit energy consumption of SPVUs in this NOPR. Regarding
economizers, DOE notes that the ASHRAE economizer requirements apply to
systems with cooling capacities >54,000 Btu/h.\30\ The representative
capacity for SPVUs <65,000 Btu/h in this NOPR/NOPD is 36,000 Btu/h, and
units at this capacity make up over 95 percent of SPVU shipments;
therefore, DOE did not make changes to the cooling loads (the same as
those used to develop AHRI 390), as it would have had little to no
impact on average unit energy consumption of SPVUs. California title 24
imposes economizer requirements on covered equipment, and the 2022
amendments to that law reduce the cooling capacity of the equipment
subject to those provisions to 33,000 Btu/h.\31\ DOE notes that the
cooling operating hours in southern California would be reduced by this
new building code, leading to lower UECs. Given the already very
negative LCC savings, DOE did not make adjustments to the cooling
operating hours for southern California, as a reduction in the UEC
would only reduce LCC savings further, and accordingly, it would not be
likely to change DOE's tentative decision to proceed with a
determination that more-stringent energy conservation standards for
SPVUs are not warranted at this time.
---------------------------------------------------------------------------

\30\ ANSI/ASHRAE Standard 90.1-2019, p 99.
\31\ See <a href="https://title24stakeholders.com/measures/cycle-2022/hvac-controls/">https://title24stakeholders.com/measures/cycle-2022/hvac-controls/</a>.
---------------------------------------------------------------------------

NEEA commented that DOE should update its energy use analysis to
include the deployment of SPVUs in other types of commercial buildings
beyond modular buildings. In support of its recommendation, NEEA cites
the 2019 Commercial Building Stock Assessment,\32\ a regional dataset
of commercial buildings in the Pacific Northwest, which shows that
SPVUs are used in residential care facilities, lodging facilities, and
one warehouse. (NEEA, No. 6 at p. 3) Similarly, AHRI also suggested
that DOE should add multi-family and lodging buildings in the energy
use analysis. (AHRI, No. 9 at p. 8)
---------------------------------------------------------------------------

\32\ Available at: <a href="https://neea.org/data/commercial-building-stock-assessments">https://neea.org/data/commercial-building-stock-assessments</a>.
---------------------------------------------------------------------------

As discussed in section III.A of this document, DOE updated the
definitions of SPVUs in the November 2022 Test Procedure Final Rule to
distinguish between commercial SPVUs and consumer central air
conditioners. DOE notes that many of the products currently certified
as SPVUs that are marketed for non-modular applications are being
misclassified and should be classified as central air conditioners.
Therefore, DOE did not add any further building types to the energy use
analysis for SPVUs.
In the 2015 final rule, DOE used hourly energy use simulations to
model the energy use of SPVUs in modular offices, modular schools, and
telecommunications structures.\33\ The IEER metric was developed by the
AHRI-390 committee using the load profiles from DOE's 2015 final rule
simulations in 15 cities, each representing an International Energy
Conservation Code (IECC) climate zone. For telecommunications
structures, the SPVUs were modeled both with and without economizers.
As discussed previously, the IEER metric captures the cooling
efficiency of SPVUs at four load conditions: A--100% load; B--75% load;
C--50% load, and D--25% load. DOE calculated the percentage of full
load by dividing the hourly cooling load by the design day cooling
capacity of the SPVU by building type and climate zone. DOE then binned
the hours into one of the four IEER load conditions based on the
percentage of design day load as shown in Table V-16.
---------------------------------------------------------------------------

\33\ For more detail on the hourly energy use simulations,
please refer to chapter 7 of the 2015 final rule TSD (Available at:
<a href="https://www.regulations.gov/document/EERE-2012-BT-STD-0041-0027">https://www.regulations.gov/document/EERE-2012-BT-STD-0041-0027</a>).

Table V-16--IEER Load Bins
------------------------------------------------------------------------
IEER load condition Percentage of design day
------------------------------------------------------------------------
A--100%................................... 97% to 100%.
B--75%.................................... 62.5% to 97%.
C--50%.................................... 37.5% to 62.5%.
D--25%.................................... 0 to 37.5%.
------------------------------------------------------------------------

Cooling UECs were calculated by multiplying the hours in each bin
by the estimated power and then summing the electricity use of the four
bins for each building type, in each climate zone. The baseline Heating
UECs for SPVHPs were taken from the September 2015 final rule, and from
that baseline, heating UECs for higher efficiency levels were scaled by
the change in COP.
DOE used county-level population data from the U.S. Census
Bureau,\34\ along with a Pacific Northwest Laboratory report,\35\ that
assigned a climate zone to each county in the U.S. to develop
population weighting factors for each climate zone. Next, DOE used the
county-level population data and climate zones to determine the
weighted-average UEC for each Census Division, with Census Division 9
split into two regions: (1) California and (2) the remaining States of
Census Division 9 (Washington, Oregon, Hawaii, and Alaska). The
resulting UECs represent the average SPVU cooling and heating energy
use, by building type and Census Division.
---------------------------------------------------------------------------

\34\ Available at: <a href="http://www.census.gov/data/datasets/time-series/demo/popest/2010s-counties-total.html#par_textimage_70769902">www.census.gov/data/datasets/time-series/demo/popest/2010s-counties-total.html#par_textimage_70769902</a> (Last
accessed April 1, 2022).
\35\ Available at: <a href="http://www.energy.gov/sites/prod/files/2015/10/f27/ba_climate_region_guide_7.3.pdf">www.energy.gov/sites/prod/files/2015/10/f27/ba_climate_region_guide_7.3.pdf</a>.
---------------------------------------------------------------------------

Chapter 7 of the NOPR/NOPD TSD provides details on DOE's energy use
analysis for SPVUs.

F. Life-Cycle Cost and Payback Period Analysis

DOE conducted LCC and PBP analyses to evaluate the economic impacts
on individual consumers of potential energy conservation standards for
SPVUs. The effect of new or amended energy conservation standards on
individual consumers usually involves a reduction in operating cost and
an increase in purchase cost. DOE used the following two metrics to
measure consumer impacts:
<bullet> The LCC is the total consumer expense of an appliance or
product over the life of that product, consisting of total installed
cost (manufacturer selling price, distribution chain markups, sales
tax, and installation costs) plus operating costs (expenses for energy,
maintenance, and repair). To compute the operating costs, DOE discounts
future operating costs to the time of purchase (i.e., the anticipated
year of compliance with new or amended standards) and sums them over
the lifetime of the product.
<bullet> The PBP is the estimated amount of time (in years) it
takes consumers to recover the increased purchase cost (including
installation) of a more-efficient product through lower operating
costs. DOE calculates the PBP by dividing the change in purchase cost
at higher efficiency levels by the change in annual operating cost for
the year that amended or new standards are assumed to take effect.
For any given efficiency level, DOE measures the change in LCC
relative to the LCC in the no-new-standards case, which reflects the
estimated efficiency distribution of SPVUs in the absence of new or
amended energy conservation standards. In contrast, the PBP for a given
efficiency level is measured relative to the baseline product.

[[Page 75412]]

For each considered efficiency level in each SPVU equipment class,
DOE calculated the LCC and PBP in modular schools, modular offices, and
telecom structures and then combined to develop aggregate results. As
stated previously, DOE developed a sample of SPVU users by Census
Division based on simulation data that was used to develop the IEER
metric. For each Census Division, DOE determined the average energy
consumption for an SPVU in a modular school, modular office, and
telecom structure and the appropriate electricity price. By developing
a sample of UECs by building type and Census Division, the analysis
captured the variability in energy consumption and energy prices
associated with the use of SPVUs.
Inputs to the calculation of total installed cost include the cost
of the equipment--which includes MPCs, manufacturer markups,
distributor markups, contractor markups, and sales taxes--and
installation costs. Inputs to the calculation of operating expenses
include annual energy consumption, energy prices and price projections,
repair and maintenance costs, equipment lifetimes, discount rates, and
the anticipated year that compliance with new or amended standards is
required. DOE created distributions of values for equipment lifetime,
discount rates, and sales taxes, with probabilities attached to each
value, to account for their uncertainty and variability.
The computer model DOE uses to calculate the LCC and PBP relies on
a Monte Carlo simulation to incorporate uncertainty and variability
into the analysis. The Monte Carlo simulations randomly sample input
values from the probability distributions and SPVU user samples. The
model calculated the LCC and PBP for equipment at each efficiency level
for 10,000 scenarios per simulation run. The analytical results include
a distribution of 10,000 data points showing the range of LCC savings
for a given efficiency level relative to the no-new-standards case
efficiency distribution. In performing an iteration of the Monte Carlo
simulation for a given consumer, equipment efficiency is chosen based
on its probability. If the chosen equipment efficiency is greater than
or equal to the efficiency of the standard level under consideration,
the LCC and PBP calculation reveals that an SPVU owner is not impacted
by that standard level. By accounting for SPVU owners who already
purchase more-efficient equipment, DOE avoids overstating the potential
benefits from increasing equipment efficiency.
DOE calculated the LCC and PBP for all consumers of SPVUs as if
each were to purchase a new SPVU in the expected year of required
compliance with amended standards. Amended standards would apply to
SPVUs manufactured on and after the date that is one year after the
date of publication of any new or amended standard in the Federal
Register. (See section VI.B.4 of this document for discussion of DOE's
calculation of lead time for this rulemaking.) At this time, DOE
estimates publication of a final rule for amended SPVU energy
conservation standards in 2024. Therefore, for purposes of its
analysis, DOE used 2025 as the first year of compliance with any
amended standards for SPVUs.
Table V-17 summarizes the approach and data DOE used to derive
inputs to the LCC and PBP calculations. The subsections that follow
provide further related discussion. Details of the spreadsheet model,
as well as all the inputs to the LCC and PBP analyses, are contained in
chapter 8 of the NOPR/NOPD TSD.

Table V-17--Summary of Inputs and Methods for the LCC and PBP Analysis*
------------------------------------------------------------------------
Inputs Source/method
------------------------------------------------------------------------
Equipment Cost.................... Derived by multiplying MPCs by
manufacturer, contractor, and
distributor markups and sales tax,
as appropriate. A constant price
trend was used to project equipment
costs.
Installation Costs................ Typical installation costs are
generally not expected to vary by
efficiency level; therefore, DOE
did not include installation costs
in the LCC analysis. However,
replacement installations at EL 2
for SPVUs <65,000 Btu/h require a
conversion curb, so this cost was
included at EL 2 for replacement
installations.
Annual Energy Use................. The binned hours in each IEER load
bin are multiplied by the power
consumption at each of the four
IEER load conditions.
Variability: Census Division and
Building Type
Energy Prices..................... Electricity: Based on Edison
Electric Institute data of average
and marginal prices.
Variability: Regional energy prices
by census division, with census
division 9 separated into
California and the rest of the
census division.
Energy Price Trends............... Based on AEO 2022 price projections.
Repair and Maintenance Costs...... Maintenance costs do not change by
efficiency level.
Annualized repair costs determined
using RS Means in the 2015 final
rule, costs updated to 2021 dollars
using GDP deflator. The materials
portion of annualized repair costs
scale with the increase in MPC.
Product Lifetime.................. Average: 15 years
Discount Rates.................... Commercial discount rates for
schools, industrial, offices and
utilities (telecom). The approach
involves estimating the cost of
capital of companies that purchase
SPVU equipment.
Compliance Date................... 2025
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
in the sections following the table or in chapter 8 of the NOPR/NOPD
TSD.

1. Equipment Cost
To calculate consumer equipment costs, DOE multiplied the MPCs
developed in the engineering analysis by the markups described
previously (along with sales taxes). DOE used different markups for
baseline equipment and higher-efficiency equipment, because DOE applies
an incremental markup to the increase in MSP associated with higher-
efficiency equipment.
In the September 2015 final rule, DOE explained its rationale for
using a constant price trend to project the equipment prices in the
compliance year. 80 FR 57438, 57466 (Sept. 23, 2015). DOE maintained
this approach for this NOPR/NOPD and used a constant trend for
equipment prices between 2021 (the year for which MPCs were developed)
and 2025 (the anticipated compliance year of amended standards). The
constant trend is based on a historical time series of the inflation-
adjusted (deflated) Producer Price Index (PPI) for all other
miscellaneous refrigeration and air conditioning equipment between 1990

[[Page 75413]]

and 2021.\36\ The deflated PPI does not indicate a long term upward or
downward trend, and, therefore, DOE maintained a constant price trend
for SPVUs.
---------------------------------------------------------------------------

\36\ Available at: <a href="https://www.bls.gov/ppi/">https://www.bls.gov/ppi/</a> (Last accessed March
25, 2022).
---------------------------------------------------------------------------

For more information on equipment costs, please refer to chapter 8
of the NOPR/NOPD TSD.
2. Installation Cost
Installation cost includes labor, overhead, and any miscellaneous
materials and parts needed to install the equipment. DOE determined
that the labor required for typical installation would not change by
EL, and, therefore, DOE did not include typical installation costs in
this analysis. However, DOE notes that replacement installation at EL 2
would require a conversion curb, so, therefore, an installation cost is
included for replacement installation at EL 2 for SPVUs <65,000 Btu/h.
For more information on installation costs, please refer to chapter
8 of the NOPR/NOPD TSD.
3. Annual Energy Consumption
For each Census Division and building type, DOE determined the
annual energy consumption of an SPVU at different efficiency levels
using the approach described previously in section V.E of this
document.
For more information on annual energy consumption, please refer to
chapter 7 of the NOPR/NOPD TSD.
4. Energy Prices
Because marginal electricity price reflects the cost to a consumer
of a kilowatt-hour at the highest level of consumption, it provides a
better representation than average electricity prices of the value of
saving electricity via more efficient equipment. Therefore, DOE applied
average electricity prices for the energy use of the equipment
purchased in the no-new-standards case, and marginal electricity prices
for the incremental change in energy use associated with the other
efficiency levels considered.
DOE derived electricity prices in 2021 using data from Edison
Electric Institute (EEI) Typical Bills and Average Rates reports.\37\
Based upon comprehensive, industry-wide surveys, this semi-annual
report presents typical monthly electric bills and average kilowatt-
hour costs to the customer as charged by investor-owned utilities. With
these data, DOE calculated commercial-sector electricity prices using
the methodology described in Coughlin and Beraki (2019).\38\
---------------------------------------------------------------------------

\37\ Available at: <a href="https://netforum.eei.org/eweb/DynamicPage.aspx?WebCode=COEPubSearch&pager=12">https://netforum.eei.org/eweb/DynamicPage.aspx?WebCode=COEPubSearch&pager=12</a> (Last accessed April
14, 2022).
\38\ Coughlin, K. and B. Beraki (2019) Non-residential
Electricity Prices: A Review of Data Sources and Estimation Methods.
Lawrence Berkeley National Lab. Berkeley, CA. Report No. LBNL-
2001203 (Available at: <a href="http://ees.lbl.gov/publications/non-residential-electricity-prices">ees.lbl.gov/publications/non-residential-electricity-prices</a>) (Last accessed Jan. 6, 2020).
---------------------------------------------------------------------------

DOE's methodology allows electricity prices to vary by sector and
region. For a given product, electricity prices are chosen to be
consistent with the way the consumer economic and energy use
characteristics are defined in the LCC analysis. To measure the
baseline energy cost for SPVUs, DOE used the average annual electricity
prices for large commercial customers for modular schools and offices,
and DOE used average annual electricity prices for small commercial
customers for telecommunications structures. Marginal annual
electricity prices for large commercial and small commercial customers
were used to measure the operating cost savings from higher-efficiency
SPVUs. See chapter 8 of the NOPR/NOPD TSD for details.
To estimate energy prices in future years, DOE multiplied the 2021
energy prices by the projection of annual average price changes for
each of the nine Census Divisions from the Reference Case in AEO 2022,
which has an end year of 2050.\39\ Because extended long-term price
trends are more uncertain, DOE kept the energy price constant at the
2050 level for the years after 2050.
---------------------------------------------------------------------------

\39\ EIA, Annual Energy Outlook 2022 with Projections to 2050
(Available at: <a href="http://www.eia.gov/forecasts/aeo/">www.eia.gov/forecasts/aeo/</a>) (Last accessed May 9,
2022).
---------------------------------------------------------------------------

5. Maintenance and Repair Costs
Repair costs are associated with repairing or replacing equipment
components that have failed in an appliance; maintenance costs are
associated with maintaining the proper operation of the equipment. In
the September 2015 final rule, because data were not available to
indicate how maintenance costs vary with equipment efficiency, DOE
assumed maintenance costs are constant across each EL by equipment
class. For repairs, DOE developed an annualized repair cost estimate,
using repair cost data from RS Means,\40\ assuming that a repair takes
place in year 10 and that the equipment lifetime is 15 years. DOE
scaled the materials portion of repair costs with the increase in the
average retail price to project repair costs of higher-efficiency
SPVUs. 80 FR 57438, 57466-57467 (Sept. 23, 2015). DOE used average
annualized repair costs of $173.50 for SPVUs <65,000 Btu/h and $212 for
SPVUs >65,000 and < 135,000 Btu/h in the 2015 final rule.\41\ DOE
requested comment on SPVU maintenance and repair costs in the April
2020 RFI. 85 FR 22958, 22967 (April 24, 2020).
---------------------------------------------------------------------------

\40\ RS Means CostWorks 2014, R.S. Means Company, Inc. (2013)
(Available at: <a href="http://www.meanscostworks.com/">www.meanscostworks.com/</a>) (Last accessed Feb. 27,
2014).
\41\ Technical Support Document: Energy Efficiency Program for
Commercial and Industrial Equipment: Single Package Vertical Units,
chapter 8 (Available at: <a href="https://www.regulations.gov/document/EERE-2012-BT-STD-0041-0027">https://www.regulations.gov/document/EERE-2012-BT-STD-0041-0027</a>).
---------------------------------------------------------------------------

On this topic, AHRI confirmed that maintenance costs are not likely
to differ between baseline and higher-efficiency products, but the
commenter stated that the cost for replacement parts will be higher for
higher-efficiency products. AHRI did not have any information on
failure rates and said that the repair/replace decision is usually
based on installation location (e.g., SPVUs in telecommunications
structures are more likely to be replaced, whereas SPVUs in school
systems are more likely to be repaired). (AHRI, No. 9 at p. 9)
As mentioned previously, because maintenance costs do not vary by
EL, DOE did not consider maintenance costs in this analysis. DOE
updated the annual repair cost in the September 2015 final rule to 2021
dollars using the GDP implicit price deflator \42\ and scaled the
materials portion of repair costs by the increase in MPC for higher ELs
in this NOPR/NOPD. The annualized repair cost was applied to all SPVUs
as an annual operating cost in the LCC and PBP analysis.
---------------------------------------------------------------------------

\42\ Available at: <a href="https://fred.stlouisfed.org/series/GDPDEF">https://fred.stlouisfed.org/series/GDPDEF</a>
(Last accessed May 9, 2022). A price deflator of 114.2 was used to
adjust the previous costs (in 2014$) to 2021$.
---------------------------------------------------------------------------

For more information on repair and maintenance costs, please refer
to chapter 8 of the NOPR/NOPD TSD.
6. Product Lifetime
In the September 2015 final rule, DOE used a distribution with a
minimum lifetime of 10 years and a maximum of 25 years, which yielded
an average SPVU life of 15 years. (DOE based these distribution
estimates on a review of a range of packaged cooling equipment lifetime
estimates found in published studies and online documents, because the
data did not distinguish between classes of SPVU equipment.) 80 FR
57438, 57467 (Sept. 23, 2015). DOE requested comment on this approach
in the April 2020 RFI. 85 FR 22958, 22968 (April 24, 2020).
In response, AHRI commented that the lifetime estimate from the
September 2015 final rule is reasonable,

[[Page 75414]]

and the commenter stated that it does not expect SPVU lifetime to vary
by equipment class, efficiency, or end use. (AHRI, No. 9 at p. 9)
In this NOPR/NOPD, DOE used assumed that 14.6 percent of SPVUs
would retire per year between years 11 and 15 and afterwards 2.7
percent of SPVUs would retire through year 25.
For more information on equipment lifetime, please refer to chapter
8 of the NOPR/NOPD TSD.
7. Discount Rates
DOE's method for deriving discount rates for commercial entities
views the purchase of a higher-efficiency appliance as an investment
that yields a stream of energy cost savings. DOE derived the discount
rates for the LCC analysis by estimating the cost of capital for
companies or public entities that purchase SPVUs. For private firms,
the weighted-average cost of capital (WACC) is commonly used to
estimate the present value of cash flows to be derived from a typical
company project or investment. Most companies use both debt and equity
capital to fund investments, so their cost of capital is the weighted
average of the cost to the firm of equity and debt financing, as
estimated from financial data for publicly-traded firms in the sectors
that purchase SPVUs.\43\ As discount rates can differ across
industries, DOE estimates separate discount rate distributions for a
number of aggregate sectors with which elements of the LCC building
sample can be associated.
---------------------------------------------------------------------------

\43\ Modigliani, F. and M. H. Miller, The Cost of Capital,
Corporations Finance and the Theory of Investment, American Economic
Review (1958) 48(3): pp. 261-297.
---------------------------------------------------------------------------

In this analysis, DOE estimated the cost of capital of companies
that purchase SPVU equipment. DOE used the discount rates for
healthcare and industrial sectors for the modular offices, education
sector discount rates for modular schools, and the utility sector
discount rates for telecommunications shelters.
For more information on discount rates, please refer to chapter 8
of the NOPR/NOPD TSD.
8. Energy Efficiency Distribution in the No-New-Standards Case
To accurately estimate the share of consumers that would be
affected by a potential energy conservation standard at a particular
efficiency level, DOE's LCC analysis considers the projected
distribution (market shares) of equipment efficiencies under the no-
new-standards case (i.e., the case without amended or new energy
conservation standards).
In the present case, DOE estimated the current energy efficiency
distribution of SPVUs <65,000 Btu/h in terms of IEER, with 62 percent
at the baseline, 27 percent at EL 1, and 11 percent at EL 2. For SPVUs
>65,000 and <135,000 Btu/h, DOE estimates that 53 percent of the market
is at the baseline and that 47 percent is at EL 1. The estimated market
shares for the no-new-standards case for SPVUs are shown in chapter 8
of the NOPR/NOPD TSD.
9. Payback Period Analysis
The payback period is the amount of time (expressed in years) it
takes the consumer to recover the additional installed cost of more-
efficient equipment, compared to baseline equipment, through operating
cost savings. Payback periods that exceed the life of the equipment
mean that the increased total installed cost is not recovered in
reduced operating expenses.
The PBP calculation for each efficiency level considers the change
in total installed cost of the equipment and the change in the first-
year annual operating expenditures relative to the baseline equipment.
DOE refers to this as a ``simple PBP'' because it does not consider
changes over time in operating cost savings. The PBP calculation uses
the same inputs as the LCC analysis, except that energy price trends,
repair costs, and discount rates are not used.
For more information on PBP, please refer to chapter 8 of the NOPR/
NOPD TSD.

VI. Analytical Results and Conclusions

The following section addresses the results from DOE's analyses
with respect to the considered energy conservation standards for SPVUs.
Additional details regarding DOE's analyses are contained in the NOPR/
NOPD TSD supporting this document.

A. Economic Impacts on SPVU Consumers

DOE analyzed the economic impacts of potential amended standards at
more-stringent levels on SPVU consumers by calculating the LCC savings
and the PBP at each considered EL. Inputs used for calculating the LCC
and PBP include total installed costs (i.e., equipment price plus
installation costs) and operating costs (calculated using annual energy
use, energy prices, energy price trends, repair costs, and maintenance
costs). The LCC calculation also uses product lifetime and a discount
rate. Chapter 8 of the NOPR/NOPD TSD provides detailed information on
the LCC and PBP analyses.
Table VI-1 through Table VI-4 show the LCC and PBP results for the
ELs considered in this analysis. There are no results for SPVUs >=
135,000 Btu/h and < 240,000 Btu/h because there are no efficiency
levels above the baseline. Note that the simple payback is measured
relative to the baseline product. The LCC savings are measured relative
to the efficiency distribution in the no-new-standards case in the
compliance year (see section V.F.8 of this document). The LCC savings
refer only to consumers who are affected by a standard at a given EL.
Those who already purchase a product with efficiency at or above a
given EL are not affected. Consumers for whom the LCC increases
(negative LCC savings) at a given EL experience a net cost.

Table VI-1--Average LCC and PBP Results by Efficiency Level for SPVACs <65,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Simple payback period
Efficiency level LCC savings (2021$) (years)
----------------------------------------------------------------------------------------------------------------
EL 1.......................................................... -246 12.3
EL 2.......................................................... -2,179 21.6
----------------------------------------------------------------------------------------------------------------

Table VI-2--Average LCC and PBP Results by Efficiency Level for SPVHPs <65,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Simple payback period
Efficiency level LCC savings (2021$) (years)
----------------------------------------------------------------------------------------------------------------
EL 1.......................................................... -608 30.1

[[Page 75415]]

EL 2.......................................................... -1,939 17.8
----------------------------------------------------------------------------------------------------------------

Table VI-3--Average LCC and PBP Results by Efficiency Level for SPVACs >=65,000 Btu/h and <135,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Simple payback period
Efficiency level LCC savings (2021$) (years)
----------------------------------------------------------------------------------------------------------------
EL 1.......................................................... 92 8.3
----------------------------------------------------------------------------------------------------------------

Table VI-4--Average LCC and PBP Results by Efficiency Level for SPVHPs >=65,000 Btu/h and <135,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Simple payback period
Efficiency level LCC savings (2021$) (years)
----------------------------------------------------------------------------------------------------------------
EL 1.......................................................... -703 20.7
----------------------------------------------------------------------------------------------------------------

B. Proposed Determination

EPCA specifies that for any commercial and industrial equipment
addressed under 42 U.S.C. 6313(a)(6)(A)(i), which includes SPVUs, DOE
may prescribe an energy conservation standard more stringent than the
level for such equipment in ASHRAE Standard 90.1 only if ``clear and
convincing evidence'' shows that a more-stringent standard would result
in significant additional conservation of energy and is technologically
feasible and economically justified. (42 U.S.C. 6313(a)(6)(C)(i); 42
U.S.C. 6313(a)(6)(A)(ii)(II)) The ``clear and convincing'' evidentiary
threshold applies both when DOE is triggered by ASHRAE action and when
DOE conducts a six-year-lookback rulemaking, with the latter being the
basis for the current proceeding. In light of these statutory criteria,
DOE conducted an assessment of whether the current energy conservation
standards for SPVUs should be replaced with more-stringent standards.
DOE's tentative conclusions are set forth in the paragraphs that
follow.
1. Technological Feasibility
DOE considers technologies incorporated in commercially-available
products or in working prototypes to be technologically feasible. Per
the technology options discussed in section V.A.2 of this document, DOE
has tentatively determined, based on clear and convincing evidence,
that more-stringent energy conservation standards for SPVUs would be
technologically feasible.
2. Economic Justification
In determining whether a potential energy conservation standard is
economically justified, the Secretary must determine whether the
benefits of the standard exceed its burdens by considering, to the
greatest extent practicable, the seven statutory factors discussed in
section II.A of this document. (42 U.S.C. 6313(a)(6)(A)(ii)(II); 42
U.S.C. 6313(a)(6)(B)(ii)(I)-(VII))
One of those seven factors is the savings in operating costs
throughout the estimated averag

[…truncated; see source link]

View on FederalRegister.gov →Plain-text source

Indexed from Federal Register on December 8, 2022.

This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.