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Rule2023-10287

Energy Conservation Program: Energy Conservation Standards for Room Air Conditioners

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Published

May 26, 2023

Effective

July 25, 2023

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 room air conditioners. EPCA also requires the U.S. Department of Energy ("DOE") to periodically determine whether more-stringent, standards would be technologically feasible and economically justified, and would result in significant energy savings. In this final rule, DOE is adopting amended energy conservation standards for room air conditioners. It has determined that the amended energy conservation standards for these products would result in significant conservation of energy, and are technologically feasible and economically justified.

Full Text

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<title>Federal Register, Volume 88 Issue 102 (Friday, May 26, 2023)</title>
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[Federal Register Volume 88, Number 102 (Friday, May 26, 2023)]
[Rules and Regulations]
[Pages 34298-34364]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-10287]

[[Page 34297]]

Vol. 88

Friday,

No. 102

May 26, 2023

Part III

Department of Energy

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10 CFR Parts 429 and 430

Energy Conservation Program: Energy Conservation Standards for Room Air
Conditioners; Final Rule

Federal Register / Vol. 88 , No. 102 / Friday, May 26, 2023 / Rules
and Regulations

[[Page 34298]]

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DEPARTMENT OF ENERGY

10 CFR Parts 429 and 430

[EERE-2014-BT-STD-0059]
RIN 1904-AD97

Energy Conservation Program: Energy Conservation Standards for
Room Air Conditioners

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

ACTION: Final rule.

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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 room air
conditioners. EPCA also requires the U.S. Department of Energy
(``DOE'') to periodically determine whether more-stringent, standards
would be technologically feasible and economically justified, and would
result in significant energy savings. In this final rule, DOE is
adopting amended energy conservation standards for room air
conditioners. It has determined that the amended energy conservation
standards for these products would result in significant conservation
of energy, and are technologically feasible and economically justified.

DATES: The effective date of this rule is July 25, 2023. Compliance
with the amended standards established for room air conditioners in
this final rule is required on and after May 26, 2026.

ADDRESSES: The docket for this rulemaking, which includes Federal
Register notices, public meeting attendee lists and transcripts,
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 information that is exempt
from public disclosure.
The docket web page can be found at <a href="http://www.regulations.gov/docket??D=EERE-2014-BT-STD-0059">www.regulations.gov/docket??D=EERE-2014-BT-STD-0059</a>. The docket web page contains
instructions on how to access all documents, including public comments,
in the docket.
For further information on how to review the docket, contact the
Appliance and Equipment Standards Program staff at (202) 287-1445 or by
email: <a href="/cdn-cgi/l/email-protection#f6b786869a9f97989593a58297989297849285a7839385829f999885b69393d8929993d8919980">[email&#160;protected]</a>.

FOR FURTHER INFORMATION CONTACT: Mr. Lucas Adin, 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) 287-5904. Email: <a href="/cdn-cgi/l/email-protection#69281919050008070a0c3a1d08070d081b0d1a381c0c1a1d0006071a290c0c470d060c470e061f">[email&#160;protected]</a>.
Ms. Sarah Butler, U.S. Department of Energy, Office of the General
Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121.
Telephone: (202) 586-1777. Email: <a href="/cdn-cgi/l/email-protection#1043716271783e5265647c75625078613e747f753e777f66">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Final Rule
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits and Costs
D. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for Room Air Conditioners
III. General Discussion
A. Product Classes and Scope of Coverage
B. Test Procedure
C. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
D. Energy Savings
1. Determination of Savings
2. Significance of Savings
E. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and Consumers
b. Savings in Operating Costs Compared to Increase in Price (LCC
and PBP)
c. Energy Savings
d. Lessening of Utility or Performance of Products
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
2. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Scope of Coverage and Product Classes
2. Technology Options
a. Alternative Refrigerants
b. Product Weight
B. Screening Analysis
1. Screened-Out Technologies
2. Remaining Technologies
C. Engineering Analysis
1. Efficiency Analysis
a. Baseline Efficiency/Energy Use
b. Higher Efficiency Levels
2. Cost Analysis
3. Cost-Efficiency Relationship
4. Consumer Utility
D. Markups Analysis
E. Energy Use Analysis
F. Life-Cycle Cost and Payback Period Analysis
1. Product Cost
2. Installation Cost
3. Annual Energy Consumption
a. Rebound Effect
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
G. Shipments Analysis
H. National Impact Analysis
1. Product Efficiency Trends
2. National Energy Savings
3. Net Present Value Analysis
I. Consumer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model and Key Inputs
a. Manufacturer Production Costs
b. Shipments Projections
c. Product and Capital Conversion Costs
d. Manufacturer Markup Scenarios
3. Discussion of MIA Comments
K. Emissions Analysis
1. Air Quality Regulations Incorporated in DOE's Analysis
L. Monetizing Emissions Impacts
1. Monetization of Greenhouse Gas Emissions
a. Social Cost of Carbon
b. Social Cost of Methane and Nitrous Oxide
2. Monetization of Other Emissions Impacts
M. Utility Impact Analysis
N. Employment Impact Analysis
V. Analytical Results and Conclusions
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
a. Life-Cycle Cost and Payback Period
b. Consumer Subgroup Analysis
c. Rebuttable Presumption Payback
2. Economic Impacts on Manufacturers
a. Industry Cash Flow Analysis Results
b. Direct Impacts on Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Subgroups of Manufacturers
e. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value of Consumer Costs and Benefits
c. Indirect Impacts on Employment
4. Impact on Utility or Performance of Products
5. Impact of Any Lessening of Competition
6. Need of the Nation To Conserve Energy
7. Other Factors
8. Summary of Economic Impacts
C. Conclusion
1. Benefits and Burdens of TSLs Considered for Room Air
Conditioner Standards
2. Annualized Benefits and Costs of the Adopted Standards
VI. Cooling Capacity Verification
VII. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act

[[Page 34299]]

C. Review Under the Paperwork Reduction Act
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. Information Quality
M. Congressional Notification
VIII. Approval of the Office of the Secretary

I. Synopsis of the Final Rule

The Energy Policy and Conservation Act, Public Law 94-163, as
amended (``EPCA''),\1\ authorizes DOE to regulate the energy efficiency
of a number of consumer products and certain industrial equipment. (42
U.S.C. 6291-6317) Title III, Part B of EPCA \2\ established the Energy
Conservation Program for Consumer Products Other Than Automobiles. (42
U.S.C. 6291-6309) These products include room air conditioners, the
subject of this final rule.
---------------------------------------------------------------------------

\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 B was redesignated Part A.
---------------------------------------------------------------------------

Pursuant to EPCA, any new or amended energy conservation standard
must be designed to achieve the maximum improvement in energy
efficiency that DOE determines is technologically feasible and
economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new
or amended standard must result in significant conservation of energy.
(42 U.S.C. 6295(o)(3)(B)) EPCA also provides that not later than 6
years after issuance of any final rule establishing or amending a
standard, DOE must publish either a notice of determination that
standards for the product do not need to be amended, or a notice of
proposed rulemaking including new proposed energy conservation
standards (proceeding to a final rule, as appropriate). (42 U.S.C.
6295(m))
In accordance with these and other statutory provisions discussed
in this document, DOE is adopting amended energy conservation standards
for room air conditioners. The adopted standards, which are expressed
in the amount of cooling provided per amount of energy consumed,
measured in British thermal units per watt-hour (``Btu/Wh'') are shown
in Table I.1. These standards apply to all room air conditioners listed
in Table I.1 and manufactured in, or imported into, the United States
starting on May 26, 2026.

Table I.1--Energy Conservation Standards for Room Air Conditioners
[Compliance starting May 26, 2026]
------------------------------------------------------------------------
Combined energy
Equipment class efficiency ratio
(CEER) (Btu/Wh)
------------------------------------------------------------------------
1. Without reverse cycle, with louvered sides, and 13.1
less than 6,000 British thermal units per hour
(``Btu/h'').........................................
2. Without reverse cycle, with louvered sides and 13.7
6,000 to 7,900 Btu/h................................
3. Without reverse cycle, with louvered sides and 16.0
8,000 to 13,900 Btu/h...............................
4. Without reverse cycle, with louvered sides and 16.0
14,000 to 19,900 Btu/h..............................
5a. Without reverse cycle, with louvered sides and 13.8
20,000 to 27,900 Btu/h..............................
5b. Without reverse cycle, with louvered sides and 13.2
28,000 Btu/h or more................................
6. Without reverse cycle, without louvered sides, and 12.8
less than 6,000 Btu/h...............................
7. Without reverse cycle, without louvered sides and 12.8
6,000 to 7,900 Btu/h................................
8a. Without reverse cycle, without louvered sides and 14.1
8,000 to 10,900 Btu/h...............................
8b. Without reverse cycle, without louvered sides and 13.9
11,000 to 13,900 Btu/h..............................
9. Without reverse cycle, without louvered sides and 13.7
14,000 to 19,900 Btu/h..............................
10. Without reverse cycle, without louvered sides and 13.8
20,000 Btu/h or more................................
11. With reverse cycle, with louvered sides, and less 14.4
than 20,000 Btu/h...................................
12. With reverse cycle, without louvered sides, and 13.7
less than 14,000 Btu/h..............................
13. With reverse cycle, with louvered sides, and 13.7
20,000 Btu/h or more................................
14. With reverse cycle, without louvered sides, and 12.8
14,000 Btu/h or more................................
15. Casement-Only.................................... 13.9
16. Casement-Slider.................................. 15.3
------------------------------------------------------------------------

A. Benefits and Costs to Consumers

Table I.2 summarizes DOE's evaluation of the economic impacts of
the adopted standards on consumers of room air conditioners, as
measured by the average life-cycle cost (``LCC'') savings and the
simple payback period (``PBP'').\3\ The average LCC savings are
positive for all product classes, and the PBP is less than the average
lifetime of room air conditioners, which is estimated to be 9.3 years
(see section IV.F of this document).
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\3\ The average LCC savings refer to consumers that are affected
by a standard and are measured relative to the efficiency
distribution in the no-new-standards case, which depicts the market
in the compliance year in the absence of new or amended standards
(see section IV.F.9 of this document). The simple PBP, which is
designed to compare specific efficiency levels, is measured relative
to the baseline product (see section IV.C of this document).

Table I.2--Impacts of Adopted Energy Conservation Standards on Consumers of Room Air Conditioners
----------------------------------------------------------------------------------------------------------------
Average LCC Simple payback
Room air conditioner product class savings (2021$) period (years)
----------------------------------------------------------------------------------------------------------------
1. Without reverse cycle, with louvered sides, and less than 6,000 Btu/h.. 65 0.8
2. Without reverse cycle, with louvered sides and 6,000 to 7,900 Btu/h.... 72 1.5
3. Without reverse cycle, with louvered sides and 8,000 to 13,900 Btu/h... 100 2.9

[[Page 34300]]

4. Without reverse cycle, with louvered sides and 14,000 to 19,900 Btu/h.. 92 3.0
5a. Without reverse cycle, with louvered sides and 20,000 Btu/h to 27,900 148 2.5
Btu/h....................................................................
5b. Without reverse cycle, with louvered sides and 28,000 Btu/h or more... 284 2.3
8a. Without reverse cycle, without louvered sides and 8,000 to 10,900 Btu/ 84 3.2
h........................................................................
8b. Without reverse cycle, without louvered sides and 11,000 to 13,900 Btu/ 119 2.4
h........................................................................
9. Without reverse cycle, without louvered sides and 14,000 to 19,900 Btu/ 165 2.9
h........................................................................
11. With reverse cycle, with louvered sides, and less than 20,000 Btu/h... 134 3.2
12. With reverse cycle, without louvered sides, and less than 14,000 Btu/h 124 2.6
16. Casement-Slider....................................................... 84 4.0
----------------------------------------------------------------------------------------------------------------

DOE's analysis of the impacts of the adopted standards on consumers
is described in section IV.F of this document.

B. Impact on Manufacturers

The industry net present value (``INPV'') is the sum of the
discounted cash flows to the industry from the announcement of the
standard through the end of the analysis period (2023-2055). Using a
real discount rate of 7.2 percent, DOE estimates that the INPV for
manufacturers of room air conditioners in the case without amended
standards is $1.20 billion.\4\ Under the adopted standards, DOE
estimates the change in INPV to range from -4.8 percent to 7.1 percent,
which is approximately -$57.7 million to $85.6 million. In order to
bring products into compliance with amended standards, it is estimated
that industry will incur total conversion costs of $24.8 million.
---------------------------------------------------------------------------

\4\ All monetary values in this document are expressed in 2021
dollars.
---------------------------------------------------------------------------

DOE's analysis of the impacts of the adopted standards on
manufacturers is described in sections IV.J and V.B.2 of this document.

C. National Benefits and Costs

DOE's analyses indicate that the adopted energy conservation
standards for room air conditioners would save a significant amount of
energy. Relative to the case without amended standards, the lifetime
energy savings for room air conditioners purchased in the 30-year
period that begins in the anticipated year of compliance with the
amended standards (2026-2055), amount to 1.41 quadrillion British
thermal units (``Btu''), or quads.\5\ This represents a savings of 12
percent relative to the energy use of these products in the case
without amended standards (referred to as the ``no-new-standards
case'').
---------------------------------------------------------------------------

\5\ The quantity refers to full-fuel-cycle (FFC) energy savings.
FFC energy savings includes the energy consumed in extracting,
processing, and transporting primary fuels (i.e., coal, natural gas,
petroleum fuels), and, thus, presents a more complete picture of the
impacts of energy efficiency standards. For more information on the
FFC metric, see section IV.H.1 of this document.
---------------------------------------------------------------------------

The cumulative net present value (``NPV'') of total consumer
benefits of the standards for room air conditioners ranges from $5.39
billion (at a 7-percent discount rate) to $11.46 billion (at a 3-
percent discount rate). This NPV expresses the estimated total value of
future operating-cost savings minus the estimated increased product
costs for room air conditioners purchased in 2026-2055.
In addition, the adopted standards for room air conditioners are
projected to yield significant environmental benefits. DOE estimates
that the standards will result in cumulative emission reductions (over
the same period as for energy savings) of 48.5 million metric tons
(``Mt'') \6\ of carbon dioxide (``CO<INF>2</INF>''), 20.1 thousand tons
of sulfur dioxide (``SO<INF>2</INF>''), 74.2 thousand tons of nitrogen
oxides (``NO<INF>X</INF>''), 325.6 thousand tons of methane
(``CH<INF>4</INF>''), 0.5 thousand tons of nitrous oxide
(``N<INF>2</INF>O''), and 0.1 tons of mercury (``Hg'').\7\ The
estimated cumulative reduction in CO<INF>2</INF> emissions through 2030
amounts to 4.4 Mt, which is equivalent to the emissions resulting from
the annual electricity use of more than 856,000 homes.
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\6\ A metric ton is equivalent to 1.1 short tons. Results for
emissions other than CO<INF>2</INF> are presented in short tons.
\7\ DOE calculated emissions reductions relative to the no-new-
standards-case, which reflects key assumptions in the Annual Energy
Outlook 2022 (``AEO2022''). AEO2022 represents current Federal and
state legislation and final implementation of regulations as of the
time of its preparation. See section IV.K of this document for
further discussion of AEO2022 assumptions that effect air pollutant
emissions.
---------------------------------------------------------------------------

DOE estimates the value of climate benefits from a reduction in
greenhouse gases (GHG) using four different estimates of the social
cost of CO<INF>2</INF> (``SC-CO<INF>2</INF>''), the social cost of
methane (``SC-CH<INF>4</INF>''), and the social cost of nitrous oxide
(``SC-N<INF>2</INF>O''). Together these represent the social cost of
GHG (SC-GHG).\8\ DOE used interim SC-GHG values developed by an
Interagency Working Group on the Social Cost of Greenhouse Gases
(IWG).\9\ The derivation of these values is discussed in section IV.L.1
of this document. For presentational purposes, the climate benefits
associated with the average SC-GHG at a 3-percent discount rate are
estimated to be $2.51 billion. DOE does not have a single central SC-
GHG point estimate and it emphasizes the importance and value of
considering the benefits calculated using all four sets of SC-GHG
estimates.
---------------------------------------------------------------------------

\8\ On March 16, 2022, the Fifth Circuit Court of Appeals (No.
22-30087) granted the Federal Government's emergency motion for stay
pending appeal of the February 11, 2022, preliminary injunction
issued in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a
result of the Fifth Circuit's order, the preliminary injunction is
no longer in effect, pending resolution of the Federal Government's
appeal of that injunction or a further court order. Among other
things, the preliminary injunction enjoined the defendants in that
case from ``adopting, employing, treating as binding, or relying
upon'' the interim estimates of the social cost of greenhouse
gases--which were issued by the Interagency Working Group on the
Social Cost of Greenhouse Gases on February 26, 2021--to monetize
the benefits of reducing greenhouse gas emissions. As reflected in
this rule, DOE has reverted to its approach prior to the injunction
and presents monetized greenhouse gas abatement benefits where
appropriate and permissible under law.
\9\ See Interagency Working Group on Social Cost of Greenhouse
Gases, Technical Support Document: Social Cost of Carbon, Methane,
and Nitrous Oxide. Interim Estimates Under Executive Order 13990,
Washington, DC, February 2021 (``February 2021 SC-GHG TSD'').
<a href="http://www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf">www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf</a>.
---------------------------------------------------------------------------

DOE estimated the monetary health benefits of SO<INF>2</INF> and
NO<INF>X</INF> emissions reductions, using benefit per ton estimates
from the scientific literature, as discussed in section IV.L of this
document. DOE estimated the present value of the health benefits would
be $2.02 billion using a 7-percent discount rate, and $4.39 billion
using a 3-percent

[[Page 34301]]

discount rate.\10\ DOE is currently only monetizing (for SO<INF>2</INF>
and NO<INF>X</INF>) fine particulate matter (``PM<INF>2.5</INF>'')
precursor health benefits and (for NO<INF>X</INF>) ozone precursor
health benefits, but will continue to assess the ability to monetize
other effects such as health benefits from reductions in direct
PM<INF>2.5</INF> emissions.
---------------------------------------------------------------------------

\10\ DOE estimates the economic value of these emissions
reductions resulting from the considered TSLs for the purpose of
complying with the requirements of Executive Order 12866.
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Table I.3 summarizes the economic benefits and costs expected to
result from the adopted standards for room air conditioners. There are
other important unquantified effects, including certain unquantified
climate benefits, unquantified public health benefits from the
reduction of toxic air pollutants and other emissions, unquantified
energy security benefits, and distributional effects, among others.

Table I.3--Summary of Economic Benefits and Costs of Adopted Energy
Conservation Standards for Room Air Conditioners
------------------------------------------------------------------------
Billion $2021
------------------------------------------------------------------------
3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings..................... 14.63
Climate Benefits *.................................. 2.51
Health Benefits **.................................. 4.39
-------------------
Total Benefits [dagger]......................... 21.54
Consumer Incremental Product Costs [Dagger]......... 3.17
-------------------
Net Benefits.................................... 18.37
------------------------------------------------------------------------
7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings..................... 7.46
Climate Benefits * (3% discount rate)............... 2.51
Health Benefits **.................................. 2.02
-------------------
Total Benefits [dagger]......................... 12.00
Consumer Incremental Product Costs [Dagger]......... 2.08
-------------------
Net Benefits.................................... 9.92
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with room
air conditioners shipped in 2026-2055. These results include benefits
to consumers which accrue after 2055 from the products shipped in 2026-
2055.
* Climate benefits are calculated using four different estimates of the
social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
(SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
discount rates; 95th percentile at 3 percent discount rate) (see
section IV.L of this document). Together these represent the global SC-
GHG. For presentational purposes of this table, the climate benefits
associated with the average SC-GHG at a 3 percent discount rate are
shown, but DOE does not have a single central SC-GHG point estimate.
On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087)
granted the Federal Government's emergency motion for stay pending
appeal of the February 11, 2022, preliminary injunction issued in
Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of
the Fifth Circuit's order, the preliminary injunction is no longer in
effect, pending resolution of the Federal Government's appeal of that
injunction or a further court order. Among other things, the
preliminary injunction enjoined the defendants in that case from
``adopting, employing, treating as binding, or relying upon'' the
interim estimates of the social cost of greenhouse gases--which were
issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits of
reducing greenhouse gas emissions. As reflected in this rule, DOE has
reverted to its approach prior to the injunction and presents
monetized greenhouse gas abatement benefits where appropriate and
permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX
and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
precursor health benefits and (for NOX) ozone precursor health
benefits, but will continue to assess the ability to monetize other
effects such as health benefits from reductions in direct PM2.5
emissions. See section IV.L of this document for more details.
[dagger] Total and net benefits include those consumer, climate, and
health benefits that can be quantified and monetized. For presentation
purposes, total and net benefits for both the 3-percent and 7-percent
cases are presented using the average SC-GHG with 3-percent discount
rate, but DOE does not have a single central SC-GHG point estimate.
DOE emphasizes the importance and value of considering the benefits
calculated using all four sets of SC-GHG estimates.
[Dagger] Costs include incremental equipment costs as well as
installation costs.

The benefits and costs of the standards can also be expressed in
terms of annualized values. The monetary values for the total
annualized net benefits are (1) the reduced consumer operating costs,
minus (2) the increase in product purchase prices and installation
costs, plus (3) the value of climate and health benefits of emission
reductions, all annualized.\11\
---------------------------------------------------------------------------

\11\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2022, the year
used for discounting the NPV of total consumer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(e.g., 2020 or 2030), and then discounted the present value from
each year to 2022. Using the present value, DOE then calculated the
fixed annual payment over a 30-year period, starting in the
compliance year, that yields the same present value.
---------------------------------------------------------------------------

The national operating cost savings are domestic private U.S.
consumer monetary savings that occur as a result of purchasing the
covered products and are measured for the lifetime of room air
conditioners shipped in 2026-2055. The benefits associated with reduced
emissions achieved as a result of the adopted standards are also
calculated based on the lifetime of room air conditioners shipped in
2026-2055. Total benefits for both the 3-percent and 7-percent cases
are presented using the average GHG social costs with 3-percent
discount rate. Estimates of SC-GHG values are presented for all four
discount rates in section V.B.6 of this document.
Table I.4 presents the total estimated monetized benefits and costs
associated with the standard, expressed in terms of

[[Page 34302]]

annualized values. The results under the primary estimate are as
follows.
Using a 7-percent discount rate for consumer benefits and costs and
health benefits from reduced NO<INF>X</INF> and SO2 emissions, and the
3-percent discount rate case for climate benefits from reduced GHG
emissions, the estimated cost of the standards adopted in this rule is
$205.2 million per year in increased equipment costs, while the
estimated annual benefits are $736.9 million in reduced equipment
operating costs, $140.1 million in climate benefits, and $199.9 million
in health benefits. In this case, the net benefit would amount to
$871.7 million per year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the standards is $176.8 million per year in increased
equipment costs, while the estimated annual benefits are $815.8 million
in reduced operating costs, $140.1 million in climate benefits, and
$244.8 million in health benefits. In this case, the net benefit would
amount to $1,023.9 million per year.

Table I.4--Annualized Benefits and Costs of Adopted Standards for Room Air Conditioners
----------------------------------------------------------------------------------------------------------------
Million 2021$/year
-----------------------------------------------
Low-net- High-net-
Primary benefits benefits
estimate estimate estimate
----------------------------------------------------------------------------------------------------------------
3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 815.8 784.9 851.9
Climate Benefits *.............................................. 140.1 137.6 142.5
Health Benefits **.............................................. 244.8 240.6 248.9
-----------------------------------------------
Total Benefits [dagger]..................................... 1,200.6 1,163.2 1,243.3
Consumer Incremental Product Costs [Dagger]..................... 176.8 199.0 152.2
-----------------------------------------------
Net Benefits................................................ 1,023.9 964.1 1,091.1
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 736.9 712.3 765.4
Climate Benefits * (3% discount rate)........................... 140.1 137.6 142.5
Health Benefits **.............................................. 199.9 196.8 203.0
-----------------------------------------------
Total Benefits [dagger]..................................... 1,076.9 1,046.7 1,111.0
Consumer Incremental Product Costs [Dagger]..................... 205.2 227.0 181.0
-----------------------------------------------
Net Benefits................................................ 871.7 819.7 930.0
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with room air conditioners shipped in 2026-2055.
These results include benefits to consumers which accrue after 2057 from the products shipped in 2028-2057.
The Primary, Low Net Benefits, and High Net Benefits Estimates utilize projections of energy prices from the
AEO2022 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition,
incremental equipment costs reflect a medium decline rate in the Primary Estimate, a low decline rate in the
Low Net Benefits Estimate, and a high decline rate in the High Net Benefits Estimate. The methods used to
derive projected price trends are explained in sections IV.F.1 and IV.H.3 of this document. Note that the
Benefits and Costs may not sum to the Net Benefits due to rounding.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this
document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG
at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point
estimate, and it emphasizes the importance and value of considering the benefits calculated using all four
sets of SC-GHG estimates. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the
Federal Government's emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction
issued in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the
preliminary injunction is no longer in effect, pending resolution of the Federal Government's appeal of that
injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in
that case from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the
social cost of greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. As
reflected in this rule, DOE has reverted to its approach prior to the injunction and presents monetized
greenhouse gas abatement benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
(for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.5 emissions. The health benefits are presented at real discount rates of 3 and 7 percent. See section IV.L
of this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total
and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
percent discount rate, but the Department does not have a single central SC-GHG point estimate.
[Dagger] Costs include incremental equipment costs as well as installation costs.

DOE's analysis of the national impacts of the adopted standards is
described in sections IV.H, IV.K, and IV.L of this document.

D. Conclusion

DOE concludes that the standards adopted in this final rule
represent the maximum improvement in energy efficiency that is
technologically feasible and economically justified, and would result
in the significant conservation of energy. Specifically, with regards
to technological feasibility products achieving these standard levels
are already commercially available for all product classes covered by
this rule. As for economic justification, DOE's analysis shows that the
benefits of the standards exceed, to a great extent, the burdens of the
standards.
Using a 7-percent discount rate for consumer benefits and costs and
NO<INF>X</INF> and SO<INF>2</INF> reduction benefits, and a 3-percent
discount rate case for GHG social costs, the estimated cost of the
standards for room air conditioners is

[[Page 34303]]

$205.2 million per year in increased product costs, while the estimated
annual benefits are $736.9 million in reduced product operating costs,
$140.1 million in climate benefits, and $199.9 million in health
benefits. The net benefit amounts to $871.7 million per year.
The significance of energy savings offered by a new or amended
energy conservation standard cannot be determined without knowledge of
the specific circumstances surrounding a given rulemaking.\12\ For
example, some covered products and equipment have most of their energy
consumption occur during periods of peak energy demand. The impacts of
these products on the energy infrastructure can be more pronounced than
products with relatively constant demand. Accordingly, DOE evaluates
the significance of energy savings on a case-by-case basis.
---------------------------------------------------------------------------

\12\ Procedures, Interpretations, and Policies for Consideration
in New or Revised Energy Conservation Standards and Test Procedures
for Consumer Products and Commercial/Industrial Equipment, 86 FR
70892, 70901 (Dec. 13, 2021).
---------------------------------------------------------------------------

As previously mentioned, the standards are projected to result in
estimated national energy savings of 1.41 quad FFC, the equivalent of
the primary annual energy use of 15 million homes. In addition, they
are projected to reduce CO<INF>2</INF> emissions by 48.5 Mt. Based on
these findings, DOE has determined the energy savings from the standard
levels adopted in this final rule are ``significant'' within the
meaning of 42 U.S.C. 6295(o)(3)(B). A more detailed discussion of the
basis for these conclusions is contained in the remainder of this
document and the accompanying TSD.

II. Introduction

The following section briefly discusses the statutory authority
underlying this final rule, as well as some of the relevant historical
background related to the establishment of standards for room air
conditioners.

A. Authority

EPCA authorizes DOE to regulate the energy efficiency of a number
of consumer products and certain industrial equipment. Title III, Part
B of EPCA established the Energy Conservation Program for Consumer
Products Other Than Automobiles. These products include room air
conditioners, the subject of this document. (42 U.S.C. 6292(a)(2)) EPCA
prescribed energy conservation standards for these products (42 U.S.C.
6295(c)(1)), and directs DOE to conduct future rulemakings to determine
whether to amend these standards. (42 U.S.C. 6295(c)(2)) EPCA further
provides that, not later than 6 years after the issuance of any final
rule establishing or amending a standard, DOE must publish either a
notice of determination that standards for the product do not need to
be amended, or a NOPR including new proposed energy conservation
standards (proceeding to a final rule, as appropriate). (42 U.S.C.
6295(m)(1))
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 specifically include
definitions (42 U.S.C. 6291), test procedures (42 U.S.C. 6293),
labeling provisions (42 U.S.C. 6294), energy conservation standards (42
U.S.C. 6295), and the authority to require information and reports from
manufacturers (42 U.S.C. 6296).
Federal energy efficiency requirements for covered products
established under EPCA generally supersede State laws and regulations
concerning energy conservation testing, labeling, and standards. (42
U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of Federal
preemption in limited instances for particular State laws or
regulations, in accordance with the procedures and other provisions set
forth under EPCA. (See 42 U.S.C. 6297(d))
Subject to certain criteria and conditions, DOE is required to
develop test procedures to measure the energy efficiency, energy use,
or estimated annual operating cost of each covered product. (42 U.S.C.
6295(o)(3)(A) and 42 U.S.C. 6295(r)) Manufacturers of covered products
must use the prescribed DOE test procedure as the basis for certifying
to DOE that their products comply with the applicable energy
conservation standards adopted under EPCA and when making
representations to the public regarding the energy use or efficiency of
those products. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use
these test procedures to determine whether the products comply with
standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)) The DOE test
procedures for room air conditioners appear at title 10 of the Code of
Federal Regulations (``CFR''), part 430, subpart B, appendix F.
DOE must follow specific statutory criteria for prescribing new or
amended standards for covered products, including room air
conditioners. Any new or amended standard for a covered product must be
designed to achieve the maximum improvement in energy efficiency that
the Secretary of Energy determines is technologically feasible and
economically justified. (42 U.S.C. 6295(o)(2)(A) and (o)(3)(B))
Furthermore, DOE may not adopt any standard that would not result in
the significant conservation of energy. (42 U.S.C. 6295(o)(3))
Moreover, DOE may not prescribe a standard (1) for certain products,
including room air conditioners, if no test procedure has been
established for the product, or (2) if DOE determines by rule that the
standard is not technologically feasible or economically justified. (42
U.S.C. 6295(o)(3)(A)-(B)) In deciding whether a proposed standard is
economically justified, DOE must determine whether the benefits of the
standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make
this determination after receiving comments on the proposed standard,
and by considering, to the greatest extent practicable, the following
seven statutory factors:

(1) The economic impact of the standard on manufacturers and
consumers of the products subject to the standard;
(2) The savings in operating costs throughout the estimated
average life of the covered products in the type (or class) compared
to any increase in the price, initial charges, or maintenance
expenses for the covered products that are likely to result from the
standard;
(3) The total projected amount of energy (or as applicable,
water) savings likely to result directly from the standard;
(4) Any lessening of the utility or the performance of the
covered products 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 and water conservation; and
(7) Other factors the Secretary of Energy (``Secretary'')
considers relevant.

(42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))

Further, EPCA, as codified, establishes a rebuttable presumption
that a standard is economically justified if the Secretary finds that
the additional cost to the consumer of purchasing a product complying
with an energy conservation standard level will be less than three
times the value of the energy savings during the first year that the
consumer will receive as a result of the standard, as calculated under
the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii))
EPCA, as codified, also contains what is known as an ``anti-
backsliding'' provision, which prevents the Secretary from prescribing
any amended standard

[[Page 34304]]

that either increases the maximum allowable energy use or decreases the
minimum required energy efficiency of a covered product. (42 U.S.C.
6295(o)(1)) 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.
6295(o)(4))
Additionally, EPCA specifies requirements when promulgating an
energy conservation standard for a covered product that has two or more
subcategories. DOE must specify a different standard level for a type
or class of products that has the same function or intended use if DOE
determines that products within such group (A) consume a different kind
of energy from that consumed by other covered products within such type
(or class); or (B) have a capacity or other performance-related feature
which other products within such type (or class) do not have and such
feature justifies a higher or lower standard. (42 U.S.C. 6295(q)(1)) In
determining whether a performance-related feature justifies a different
standard for a group of products, DOE must consider such factors as the
utility to the consumer of such a feature and other factors DOE deems
appropriate. Id. Any rule prescribing such a standard must include an
explanation of the basis on which such higher or lower level was
established. (42 U.S.C. 6295(q)(2))
Finally, pursuant to the amendments contained in the Energy
Independence and Security Act of 2007 (EISA 2007), Public Law 110-140,
any final rule for new or amended energy conservation standards
promulgated after July 1, 2010, is required to address standby mode and
off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE
adopts a standard for a covered product after that date, it must, if
justified by the criteria for adoption of standards under EPCA (42
U.S.C. 6295(o)), incorporate standby mode and off mode energy use into
a single standard, or, if that is not feasible, adopt a separate
standard for such energy use for that product. (42 U.S.C.
6295(gg)(3)(A)-(B)) DOE's current test procedures and standards for
room air conditioners address standby mode and off mode energy use, as
do the amended standards adopted in this final rule.

B. Background

1. Current Standards
DOE prescribed the current energy conservation standards in a
direct final rule published on April 21, 2011 (``April 2011 Direct
Final Rule''), which apply to room air conditioners manufactured on and
after April 21, 2014. 76 FR 22454. These standards are set forth in
DOE's regulations at 10 CFR 430.32(b) and are repeated in Table II.1.

Table II.1--Federal Energy Efficiency Standards for Room Air
Conditioners
------------------------------------------------------------------------
Minimum CEER
Room air conditioner product class (Btu/Wh)
------------------------------------------------------------------------
1. Without reverse cycle, with louvered sides, and less 11.0
than 6,000 Btu/h.......................................
2. Without reverse cycle, with louvered sides and 6,000 11.0
to 7,999 Btu/h.........................................
3. Without reverse cycle, with louvered sides and 8,000 10.9
to 13,999 Btu/h........................................
4. Without reverse cycle, with louvered sides and 14,000 10.7
to 19,999 Btu/h........................................
5a. Without reverse cycle, with louvered sides and 9.4
20,000 Btu/h to 27,999 Btu/h...........................
5b. Without reverse cycle, with louvered sides and 9.0
28,000 Btu/h or more...................................
6. Without reverse cycle, without louvered sides, and 10.0
less than 6,000 Btu/h..................................
7. Without reverse cycle, without louvered sides and 10.0
6,000 to 7,999 Btu/h...................................
8a. Without reverse cycle, without louvered sides and 9.6
8,000 to 10,999 Btu/h..................................
8b. Without reverse cycle, without louvered sides and 9.5
11,000 to 13,999 Btu/h.................................
9. Without reverse cycle, without louvered sides and 9.3
14,000 to 19,999 Btu/h.................................
10. Without reverse cycle, without louvered sides and 9.4
20,000 Btu/h or more...................................
11. With reverse cycle, with louvered sides, and less 9.8
than 20,000 Btu/h......................................
12. With reverse cycle, without louvered sides, and less 9.3
than 14,000 Btu/h......................................
13. With reverse cycle, with louvered sides, and 20,000 9.3
Btu/h or more..........................................
14. With reverse cycle, without louvered sides, and 8.7
14,000 Btu/h or more...................................
15. Casement-Only....................................... 9.5
16. Casement-Slider..................................... 10.4
------------------------------------------------------------------------

2. History of Standards Rulemaking for Room Air Conditioners
EPCA prescribed initial energy conservation standards for room air
conditioners and further directed DOE to conduct two cycles of
rulemakings to determine whether to amend these standards. (42 U.S.C.
6295(c)(1)-(2)) DOE completed the first of these rulemaking cycles on
September 24, 1997, by adopting amended performance standards for room
air conditioners manufactured on or after October 1, 2000. 62 FR 50122.
Additionally, DOE completed a second rulemaking cycle to amend the
standards for room air conditioners by issuing the April 2011 Direct
Final Rule, in which DOE prescribed the current energy conservation
standards for room air conditioners manufactured on or after April 21,
2014. 76 FR 22454 (April 21, 2011). DOE subsequently published a final
rule amending the compliance date for the current room air conditioner
standards to June 1, 2014. 76 FR 52852 (Aug. 24, 2011). In a separate
document, also published on August 24, 2011, DOE confirmed the adoption
of these energy conservation standards in a notice of effective date
and compliance dates for the April 2011 Direct Final Rule. 76 FR 52854.
As part of the current analysis, on June 18, 2015, DOE prepared a
Request for Information (``June 2015 RFI''), which solicited
information from the public to help DOE determine whether amended
standards for room air conditioners would result in a significant
amount of additional energy savings and whether those standards would
be technologically feasible and economically justified.\13\ 80 FR
34843.
---------------------------------------------------------------------------

\13\ Pursuant to amendments to appendix A to 10 CFR part 430,
subpart C (``appendix A''), DOE generally will issue an early
assessment request for information announcing that DOE is
considering initiating a rulemaking proceeding. Section 6(a)(1) of
appendix A; see also 85 FR 8626, 8637 (Feb. 14, 2020) and 86 FR
70892 (Dec. 13, 2021). Section 6(a)(2) of appendix A provides that
if the DOE determines it is appropriate to proceed with a
rulemaking, the preliminary stages of a rulemaking to issue or amend
an energy conservation standard that DOE will undertake will be a
Framework Document and Preliminary Analysis, or an advance notice of
proposed rulemaking. Because this rulemaking was already in progress
at the time the relevant amendments to appendix A were published,
DOE did not reinitiate the entire rulemaking process. Additionally,
the June 2015 RFI presented the issues, analyses, and processes
relevant to consideration of amended standards for room air
conditioners.

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

[[Page 34305]]

DOE published a notice of public meeting and availability of the
preliminary technical support document (``TSD'') on June 17, 2020
(``June 2020 Preliminary Analysis''). 85 FR 36512.
Comments received following the publication of the June 2020
Preliminary Analysis helped DOE identify and resolve issues related to
the subsequent NOPR analysis.\14\ DOE published a notice of proposed
rulemaking on April 7, 2022 (``April 2022 NOPR''). 87 FR 20608. DOE
subsequently held a public meeting on May 3, 2022, to discuss and
receive comments on the NOPR. The NOPR TSD that presented the
methodology and results of the NOPR analysis is available at:
<a href="http://www.regulations.gov/document/EERE-2014-BT-STD-0059-0030">www.regulations.gov/document/EERE-2014-BT-STD-0059-0030</a>.
---------------------------------------------------------------------------

\14\ Comments are available at <a href="http://www.regulations.gov/document/EERE-2014-BT-STD-0059-0031/comment">www.regulations.gov/document/EERE-2014-BT-STD-0059-0031/comment</a>.
---------------------------------------------------------------------------

DOE received 17 written comments in response to the April 2022 NOPR
from the interested parties listed in Table II.2.

Table II.2--April 2022 NOPR Written Comments
----------------------------------------------------------------------------------------------------------------
Comment No. in
Commenter(s) Abbreviation the docket Commenter type
----------------------------------------------------------------------------------------------------------------
A. Krishna \1\..................... Krishna.............. 32 Individual.
Anonymous Individual............... University of 34 Individual.
Massachusetts
Amherst Student.
L. Adelman......................... University of 35 Individual.
Massachusetts
Amherst Student.
G. Larsen.......................... University of 37 Individual.
Massachusetts
Amherst Student.
People's Republic of China......... P.R. China........... 39 Government.
Treua Inc. (DBA Gradient).......... Gradient............. 40 Manufacturer.
New York State Energy Research and NYSERDA.............. 41 Efficiency Organization.
Development Authority.
Center for Law and Social Policy... CLASP................ 42 Efficiency Organization.
Association of Home Appliance AHAM................. 43 Trade Association.
Manufacturers.
Friedrich Air Conditioning......... Friedrich............ 44 Manufacturer.
Appliance Standards Awareness Joint Commenters..... 45 Efficiency Organizations.
Project (ASAP), American Council
for an Energy-Efficient Economy
(ACEEE), CLASP, Consumer
Federation of America (CFA),
National Consumer Law Center
(NCLC).
Consumer Federation of America CFA and NCLC......... 46 Efficiency Organizations.
(CFA), National Consumer Law
Center (NCLC).
Pacific Gas and Electric Company California IOUs...... 47 Utilities.
(PG&E), San Diego Gas and Electric
(SDG&E), Southern California
Edison (SCE).
Keith Rice......................... Rice................. 48 Individual.
GE Appliances...................... GEA.................. 49 Manufacturer.
Northwest Energy Efficiency NEEA and NWPCC....... 50 Efficiency Advocates.
Alliance (NEEA), Northwest Power
and Conservation Council (NWPCC).
Center for Climate and Energy Climate Commenters... 51 Efficiency Advocate Group.
Solutions (C2ES), Institute for
Policy Integrity (IPI), Natural
Resources Defense Council (NRDC),
Sierra Club, Union of Concerned
Scientists.
----------------------------------------------------------------------------------------------------------------
\1\ The comment submitted by this individual did not pertain to room air conditioners.

A parenthetical reference at the end of a comment quotation or
paraphrase provides the location of the item in the public record.\15\
---------------------------------------------------------------------------

\15\ The parenthetical reference provides a reference for
information located in the docket of DOE's rulemaking to develop
energy conservation standards for room air conditioners. (Docket No.
EERE-2014-BT-STD-0059, 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).
---------------------------------------------------------------------------

III. General Discussion

DOE developed this final rule 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. Product Classes and Scope of Coverage

When evaluating and establishing energy conservation standards, DOE
divides covered products into product classes by the type of energy
used or by capacity or other performance-related features that justify
differing standards. In making a determination whether a performance-
related feature justifies a different standard, DOE must consider such
factors as the utility of the feature to the consumer and other factors
DOE determines are appropriate. (42 U.S.C. 6295(q)) DOE's NOPR analysis
indicated that the current room air conditioner products classes are
still appropriate. For further discussion and responses to comments
received regarding product classes see section IV.A.1 of this document.

B. Test Procedure

EPCA sets forth generally applicable criteria and procedures for
DOE's adoption and amendment of test procedures. (42 U.S.C. 6293)
Manufacturers of covered products must use these test procedures to
certify to DOE that their product complies with energy conservation
standards and to quantify the efficiency of their product. DOE's
current energy conservation standards for room air conditioners are
expressed in terms of combined energy efficiency ratio (CEER), in Btu/
Wh. (See 10 CFR 430.32(b) and 10 CFR part 430, subpart B, appendix F.)

C. 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

[[Page 34306]]

working prototypes to be technologically feasible. Sections 6(b)(3)(i)
and 7(b)(1) of appendix A to 10 CFR part 430, subpart C (``appendix
A'').
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.
Section 7(b)(2)-(5) of appendix A. Section IV.B of this document
discusses the results of the screening analysis for room air
conditioners, particularly the designs DOE considered, those it
screened out, and those that are the basis for the standards considered
in this final rule. For further details on the screening analysis for
this rulemaking, see chapter 4 of the final rule technical support
document (``TSD'').
2. Maximum Technologically Feasible Levels
When DOE proposes to adopt an amended standard for a type or class
of covered product, it must determine the maximum improvement in energy
efficiency or maximum reduction in energy use that is technologically
feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the
engineering analysis, DOE determined the maximum technologically
feasible (``max-tech'') improvements in energy efficiency for room air
conditioners, 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
IV.C of this final rule and in chapter 5 of the final rule TSD.

D. Energy Savings

1. Determination of Savings
For each trial standard level (``TSL''), DOE projected energy
savings from application of the TSL to room air conditioners purchased
in the 30-year period that begins in the year of compliance with the
amended standards (2026-2055).\16\ The savings are measured over the
entire lifetime of products purchased in the 30-year analysis period.
DOE quantified the energy savings attributable to each TSL as the
difference in energy consumption between each standards case and the
no-new-standards case. The no-new-standards case represents a
projection of energy consumption that reflects how the market for a
product would likely evolve in the absence of amended energy
conservation standards.
---------------------------------------------------------------------------

\16\ DOE also presents a sensitivity analysis that considers
impacts for products shipped in a 9-year period.
---------------------------------------------------------------------------

DOE used its national impact analysis (``NIA'') spreadsheet models
to estimate national energy savings (``NES'') from potential amended
standards for room air conditioners. The NIA spreadsheet model
(described in section IV.H of this document) calculates energy savings
in terms of site energy, which is the energy directly consumed by
products at the locations where they are used. For electricity, DOE
reports national energy savings in terms of primary energy savings,
which is the savings in the energy that is used to generate and
transmit the site electricity. For natural gas, the primary energy
savings are considered to be equal to the site energy savings. DOE also
calculates NES in terms of FFC energy savings. The FFC metric includes
the energy consumed in extracting, processing, and transporting primary
fuels (i.e., coal, natural gas, petroleum fuels), and thus presents a
more complete picture of the impacts of energy conservation
standards.\17\ DOE's approach is based on the calculation of an FFC
multiplier for each of the energy types used by covered products or
equipment. For more information on FFC energy savings, see section
IV.H.2 of this document.
---------------------------------------------------------------------------

\17\ The FFC metric is discussed in DOE's statement of policy
and notice of policy amendment. 76 FR 51282 (Aug. 18, 2011), as
amended at 77 FR 49701 (Aug. 17, 2012).
---------------------------------------------------------------------------

2. Significance of Savings
To adopt any new or amended standards for a covered product, DOE
must determine that such action would result in significant energy
savings. (42 U.S.C. 6295(o)(3)(B))
The significance of energy savings offered by a new or amended
energy conservation standard cannot be determined without knowledge of
the specific circumstances surrounding a given rulemaking. For example,
the United States has now rejoined the Paris Agreement on February 19,
2021. As part of that agreement, the United States has committed to
reducing GHG emissions in order to limit the rise in mean global
temperature.\18\ As such, energy savings that reduce GHG emission have
taken on greater importance. Additionally, some covered products and
equipment have most of their energy consumption occur during periods of
peak energy demand. The impacts of these products on the energy
infrastructure can be more pronounced than products with relatively
constant demand. In evaluating the significance of energy savings, DOE
considers differences in primary energy and FFC effects for different
covered products and equipment when determining whether energy savings
are significant. FFC effects include the energy consumed in electricity
production (depending on load shape), in distribution and transmission,
and in extracting, processing, and transporting primary fuels (i.e.,
coal, natural gas, petroleum fuels), and thus present a more complete
picture of the impacts of energy conservation standards. Accordingly,
DOE evaluates the significance of energy savings on a case-by-case
basis, taking into account the significance of cumulative FFC national
energy savings, the cumulative FFC emissions reductions, and the need
to confront the global climate crisis, among other factors.
---------------------------------------------------------------------------

\18\ See E.O. 14008, 86 FR 7619 (Feb. 1, 2021) (``Tackling the
Climate Crisis at Home and Abroad'').
---------------------------------------------------------------------------

As stated, the standard levels adopted in this final rule are
projected to result in national energy savings of 1.41 quad, the
equivalent of the electricity use of 15 million homes in one year. They
are projected to reduce CO<INF>2</INF> emissions by 48.5 Mt. Based on
these findings, DOE has determined the energy savings from the standard
levels adopted in this final rule are ``significant'' within the
meaning of 42 U.S.C. 6295(o)(3)(B).

E. Economic Justification

1. Specific Criteria
As noted previously, EPCA provides seven factors to be evaluated in
determining whether a potential energy conservation standard is
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)(VII)) The
following sections discuss how DOE has addressed each of those seven
factors in this final rule.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of potential amended standards on
manufacturers, DOE conducts a manufacturer impact analysis (``MIA''),
as discussed in section IV.J of this document. DOE first uses an annual
cash-flow approach to determine the quantitative impacts. This step
includes both a short-term assessment--based on the cost and capital
requirements during the period between when a regulation is issued and
when entities must comply with the regulation--and a long-term
assessment over a 30-year period. The industry-wide impacts analyzed
include (1) INPV, which values the industry on the basis of expected
future cash flows;

[[Page 34307]]

(2) cash flows by year; (3) changes in revenue and income; and (4)
other measures of impact, as appropriate. Second, DOE analyzes and
reports the impacts on different types of manufacturers, including
impacts on small manufacturers. Third, DOE considers the impact of
standards on domestic manufacturer employment and manufacturing
capacity, as well as the potential for standards to result in plant
closures and loss of capital investment. Finally, DOE takes into
account cumulative impacts of various DOE regulations and other
regulatory requirements on manufacturers.
For individual consumers, measures of economic impact include the
changes in LCC and payback period (``PBP'') associated with new or
amended standards. These measures are discussed further in the
following section. For consumers in the aggregate, DOE also calculates
the national net present value 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.
b. 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 product 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 product
that are likely to result from a standard. (42 U.S.C.
6295(o)(2)(B)(i)(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 cost (including energy,
maintenance, and repair expenditures) discounted over the lifetime of
the product. The LCC analysis requires a variety of inputs, such as
product prices, product energy consumption, energy prices, maintenance
and repair costs, product lifetime, and discount rates appropriate for
consumers. To account for uncertainty and variability in specific
inputs, such as product 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 a more-efficient product through lower operating
costs. DOE calculates the PBP by dividing the change in purchase cost
due to a more-stringent standard by the change in annual operating cost
for the year that standards are assumed to take effect.
For its LCC and PBP analysis, DOE assumes that consumers will
purchase the covered products in the first year of compliance with new
or amended standards. The LCC savings for the considered efficiency
levels (``EL'') 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
IV.F of this document.
c. Energy Savings
Although significant 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 energy savings that are expected to result
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As
discussed in section IV.H of this document, DOE uses the NIA
spreadsheet models to project national energy savings.
d. Lessening of Utility or Performance of Products
In establishing product classes, and in evaluating design options
and the impact of potential standard levels, DOE evaluates potential
standards that would not lessen the utility or performance of the
considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data
available to DOE, the standards adopted in this document would not
reduce the utility or performance of the products under consideration
in this rulemaking.
e. 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 standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It
also directs the Attorney General to determine the impact, if any, of
any lessening of competition likely to result from a standard and to
transmit such determination to the Secretary within 60 days of the
publication of a proposed rule, together with an analysis of the nature
and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)) To assist the
Department of Justice (``DOJ'') in making such a determination, DOE
transmitted copies of its proposed rule and the NOPR TSD to the
Attorney General for review, with a request that the DOJ provide its
determination on this issue. In its assessment letter responding to
DOE, DOJ concluded that the proposed energy conservation standards for
room air conditioners are unlikely to have a significant adverse impact
on competition. DOE is publishing the Attorney General's assessment at
the end of this final rule.
f. Need for National Energy Conservation
DOE also considers the need for national energy and water
conservation in determining whether a new or amended standard is
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy
savings from the adopted standards are likely to provide improvements
to the security and reliability of the Nation's energy system.
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
standards may affect the Nation's needed power generation capacity, as
discussed in section IV.M of this document.
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. The adopted standards are 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. DOE conducts an emissions analysis to estimate how
potential standards may affect these emissions, as discussed in section
IV.J.3 of this document; the estimated emissions impacts are reported
in section V.B.6 of this document. DOE also estimates the economic
value of emissions reductions resulting from the considered TSLs, as
discussed in section IV.L of this document.
g. Other Factors
In determining whether an energy conservation standard is
economically justified, DOE may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(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.''

[[Page 34308]]

2. Rebuttable Presumption
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a
rebuttable presumption that an energy conservation standard is
economically justified if the additional cost to the consumer of a
product that meets the standard is less than three times the value of
the first year's energy savings resulting from the standard, as
calculated under the applicable DOE test procedure. DOE's LCC and PBP
analyses generate values used to calculate the effect potential amended
energy conservation standards would have on the payback period for
consumers. These analyses include, but are not limited to, the 3-year
payback period contemplated under the rebuttable-presumption test. In
addition, DOE routinely conducts an economic analysis that considers
the full range of impacts to consumers, manufacturers, the Nation, and
the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The
results of this analysis serve as the basis for DOE's evaluation of the
economic justification for a potential standard level (thereby
supporting or rebutting the results of any preliminary determination of
economic justification). The rebuttable presumption payback calculation
is discussed in section IV.F of this final rule.

IV. Methodology and Discussion of Related Comments

This section addresses the analyses DOE has performed for this
rulemaking with regard to room air conditioners. Separate subsections
address each component of DOE's analyses.
DOE used several analytical tools to estimate the impact of the
standards considered in this document. The first tool is a spreadsheet
that calculates the LCC savings and PBP of potential amended or new
energy conservation standards. The national impacts analysis uses a
second spreadsheet set that provides shipments projections and
calculates national energy savings and net present value of total
consumer costs and savings expected to result from potential energy
conservation standards. DOE uses the third spreadsheet tool, the
Government Regulatory Impact Model (GRIM), to assess manufacturer
impacts of potential standards. These three spreadsheet tools are
available on the DOE website for this rulemaking: <a href="http://www.regulations.gov/docket??D=EERE-2014-BT-STD-0059">www.regulations.gov/docket??D=EERE-2014-BT-STD-0059</a>. Additionally, DOE used output from the
latest version of the Energy Information Administration's (``EIA's'')
Annual Energy Outlook (``AEO'') for the emissions and utility impact
analyses.

A. Market and Technology Assessment

DOE develops information in the market and technology assessment
that provides an overall picture of the market for the products
concerned, including the purpose of the products, the industry
structure, manufacturers, market characteristics, and technologies used
in the products. 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 room air
conditioners. The key findings of DOE's market assessment are
summarized in the following sections. See chapter 3 of the final rule
TSD for further discussion of the market and technology assessment.
1. Scope of Coverage and Product Classes
In the April 2022 NOPR, DOE did not propose any substantive changes
to the room air conditioner scope of coverage or product classes, but
did propose making clarifying amendments to the product class
descriptions. Specifically, DOE proposed to revise the threshold values
of cooling capacity in the product class descriptions to the nearest
hundred Btu/h that would not exceed the existing thresholds, which is
consistent with the cooling capacity delineation used in practice due
to the rounding instruction at 10 CFR 429.15(a)(3) so would not impact
compliance with current energy conservation standards. The proposed
change to the product class delineation would add clarity and
consistency amongst two existing regulatory provisions. 87 FR 20608.
DOE requested comment on the room air conditioner scope of coverage and
product classes.
Currently, reversible and one-way products are in separate product
classes and are therefore not compared in any analysis conducted by
DOE. However, according to the Center for Law and Social Policy
(``CLASP''), taking the efficiency of alternate heating methods into
account would allow DOE to treat the reverse cycle in both room and
central air conditioners not as a feature meriting its own product
class, but as a technology/design option to reduce energy consumption
and high energy bills. In this manner, a one-way air conditioner would
have the energy consumption of typical furnaces and boilers factored
into its annual performance metric, while a reversible air conditioner
could eliminate this energy consumption depending on its heating
capacity and cold-climate performance potentially leading to energy
conservation standards that require the use of reversing capabilities
in all air conditioners. (CLASP, No. 42 at p. 2)
Room air conditioner energy conservation standards are currently
based on the CEER metric, determined in accordance with the DOE test
procedure for room air conditioners at appendix F to 10 CFR 430
(``appendix F''). Appendix F does not currently account for the energy
consumption during heating operation, and therefore the CEER metric
reflects the energy efficiency of a room air conditioner during cooling
mode, and other low power modes. In order to account for the energy
cost of alternate heating methods for non-reverse cycle room air
conditioners, a test procedure amendment would be necessary to address
heating mode performance, which is outside of the scope of this energy
conservation standards rulemaking.
The Public Utilities recommended that DOE establish new product
classes for room air conditioners with reverse cycle and <8,000 British
thermal units per hour (``Btu/h'') and to consider less stringent
standards for such product classes so as to not preclude the
introduction of such equipment and deprive consumers of any potential
consumer utility. The Public Utilities also provided options for
potential standards in these suggested product classes, noting that
generally efficiencies for room air conditioners with reverse cycle are
lower than those without reverse cycle. (Public Utilities, No. 47 at
pp. 2-4)
DOE is not aware of any room air conditioners currently sold on the
market, or any prototypes in development, that meet the criteria
outlined by the Public Utilities. DOE is unaware of any data suggesting
that the current energy conservation standards preclude the
introduction of room air conditioners with reverse cycle capabilities
and capacity less than 8,000 Btu/h to the market. Furthermore, the lack
of extant products that meet these criteria leaves DOE without the
information needed to analyze whether a new product class is necessary.
Therefore, DOE is not amending the product class structure at this time
to

[[Page 34309]]

specifically address room air conditioners with reverse cycle
capabilities and capacity less than 8,000 Btu/h. DOE is, however,
adopting the clarifying amendments to the product class descriptions,
originally proposed in the April 2022 NOPR, to align with the rounding
instruction at 10 CFR 429.15(a)(3).
2. Technology Options
In the NOPR market analysis and technology assessment, DOE
identified 22 technology options initially determined to improve the
efficiency of room air conditioners, as measured by the DOE test
procedure:

Table IV.1--Technology Options for Room Air Conditioners
------------------------------------------------------------------------

-------------------------------------------------------------------------
Increased Heat Transfer Surface Area:
1. Increased heat exchanger surface area (frontal area, fin density
and depth of coil).
2. Condenser coil subcooler.
3. Suction line heat exchanger.
Increased Heat Transfer Coefficient:
4. Improved fin and tube design.
5. Hydrophilic coating on fins.
6. Microchannel heat exchangers.
7. Spray condensate on condenser coil.
Component Improvements:
8. Improved indoor blower and outdoor fan blade design.
9. Improved blower/fan motor design.
10. Improved compressor efficiency.
Improved Installation, Insulation, and Airflow:
11. Improved installation materials.
12. Reduced evaporator air recirculation.
13. Reduced thermal bridging and internal air leakage.
Part-load Performance:
14. Variable-speed compressors.
15. Variable-speed drive fans and blowers.
16. Thermostatic or electronic expansion valves.
17. Thermostatic cyclic controls.
18. Air and water economizers.
Standby Power Improvements:
19. Low standby-power electronics.
20. High frequency switching power supply.
Alternative Refrigerants:
21. Significant New Alternatives Policy (``SNAP'')-approved
refrigerants (R-32, R-441A, and R-290).
Other Improvements:
22. Washable air filters.
------------------------------------------------------------------------

a. Alternative Refrigerants
In the April 2022 NOPR, DOE analyzed R-32 (difluoromethane or HFC-
32), R-441A (hydrocarbon blend), and R-290 (propane or HC-290) as
potential design options to replace R-410A to improve unit efficiency.
DOE also analyzed the potential impact of implementing these
alternative refrigerants on overall system cost and component
efficiency. As discussed in chapter 3 of the NOPR TSD, while DOE did
find efficiency benefits associated with R-441A and R-290 refrigerants
relative to R410A, DOE did not rely upon those alternative refrigerants
in the engineering analysis due to practical concerns regarding
flammability and availability. DOE did not find reliable evidence of
significant efficiency benefits from a change to R-32 refrigerant.
However, based on DOE's expectation that manufacturers are likely to
change the primary refrigerant used in room air conditioners to R-32 in
response to recent California refrigerant regulations,\19\ DOE analyzed
the efficiency of compressors that use R-32 as part of the technology
analysis and implemented these compressors in the engineering analysis
in the April 2022 NOPR.
---------------------------------------------------------------------------

\19\ The California Air Resources Board (CARB) finalized its
rulemaking on Prohibitions on Use of Certain Hydrofluorocarbons in
Stationary Refrigeration, Chillers, Aerosols-Propellants, and Foam
End-Uses Regulation. See <a href="https://ww2.arb.ca.gov/rulemaking/2020/hfc2020">https://ww2.arb.ca.gov/rulemaking/2020/hfc2020</a>. This regulation prohibits the sale of new room air
conditioners with refrigerants with a GWP of 750 or greater in
California beginning on January 1, 2023. See chapter 3 of this final
rule TSD for additional discussion.
---------------------------------------------------------------------------

NEEA and NWPCC supported the inclusion of R-32 in the engineering
analysis because of the potential energy savings, the number of
products already using R-32, and the new California refrigerant
requirements. In particular, NEEA agreed with the approached used by
DOE to incorporate R-32 compressors into the design options used to
achieve EL 3. (NEEA and NWPCC, No. 50 at pp. 4-5) NYSERDA also
supported DOE's incorporation of R-32 refrigerants and variable speed
compressors across the analysis, and urged DOE to move swiftly toward
finalizing this standard to lock in the beneficial impacts as soon as
possible. (NYSERDA, No. 41 at p. 3)
In this final rule analysis, DOE has maintained its approach to
incorporating R-32 from the NOPR analysis.
Larsen requested that DOE include calculations on the impacts of
alternate refrigerants in room air conditioners in updating the
standards of room air conditioners as well as changing DOE's priorities
to include environmental impact and quality of life. Larsen referenced
challenges to DOE's decision not to include refrigerants (R-32, R441A,
R-290) approved by the Environmental Protection Agency (EPA)
Significant New Alternatives Policy (``SNAP'') in its engineering
analysis, and stated that technological feasibility, predicted costs in
the wake of increased value in climate and health benefits, reduced
global warming potential compared to the proposed refrigerant R-410A,
and findings by the Oak Ridge National Laboratory that showed

[[Page 34310]]

increased efficiency by around 3 percent warrant the inclusion of these
calculations of benefits associated with alternative refrigerants,
specifically R-32. (G. Larsen, No. 37 at pp. 1-4)
EPCA requires that DOE focus on the efficiency impacts of various
design options, rather than the overall environmental impact. (42
U.S.C. 6295(o)(2)(A)) DOE does consider adverse effects on consumer
utility when evaluating technology options. As discussed in chapter 3
of the final rule TSD, DOE found varying reports of the efficiency
benefits attributable from the change-over from R-410A to R-32, and as
discussed in chapter 5 of the NOPR TSD, opted not to include R-32
specifically as an efficiency option but did include inherent
efficiency differences between R-32 compressors and R-410A compressors
in the analysis. Due to the varying reports of efficiency impacts and
the limitation of scope for this energy conservations standards
rulemaking, DOE maintains the same approach as the NOPR, to analyze a
change over to R-32 refrigerant so as to utilize the compressor
efficiency benefits of R-32 compressors relative to R-410A compressors,
without considering specific efficiency benefits attributable to the
refrigerant itself.
The Association of Home Appliance Manufacturers (AHAM) requested
that DOE consider the recent safety testing challenges and safety
concerns associated with the charge size of hydrocarbon refrigerants
such as R-290 as, according to AHAM, DOE and the Electric Power
Research Institute (``EPRI'') study projecting that use of R-290 would
yield significant efficiency gains fail to take into account the
practical considerations that prevent the use of R-290 in room air
conditioners. AHAM stated that the safety standard UL 60335-2-40 will
likely limit the charge size of hydrocarbon refrigerants such as R-290
to 114 grams due to lab safety concerns, significantly less than the
200-300 grams required for the smallest capacities of room air
conditioners according to AHAM. Additionally, AHAM requested that DOE
take the concerns of groups representing firefighters and fire services
into account and should not rely on R-290 refrigerant to achieve
efficiency gains in its analysis. (AHAM, No. 43 at p. 26)
In chapter 3 of the NOPR TSD, DOE noted that researchers have
observed efficiency benefits associated with using R-290 as a
refrigerant. However, DOE understands that this design option is still
new to the room air conditioner industry and poses substantial design
challenges to meet UL safety standards. DOE did not propose to rely on
R-290 refrigerant as a design option in the NOPR analysis and
maintained that approach in this final rule.
Systemair requested clarification regarding whether R-454B was
included in the analysis. (Systemair, Public Meeting Transcript, No. 38
at pp. 15-16) \20\ AHAM disagreed with the potential use of R-454B as a
refrigerant as mentioned by Systemair because of considerable cost
increases as it is a more expensive refrigerant than R-32, lower
efficiency than R-32 compressors, and lack of availability. AHAM
recommended that DOE reject the use of R-454B as a technology option.
(AHAM, No. 43 at p. 27) Additionally, UL stated that for any
refrigerant considered in DOE's analysis, SNAP approval would be
required. (UL, Public Meeting Transcript, No. 38 at pp. 16-17)
---------------------------------------------------------------------------

\20\ A notation in the form ``Systemair, Public Meeting
Transcript, No. 38 at pp. 15-16'' identifies an oral comment that
DOE received on May 3, 2022 during the public meeting, and was
recorded in the public meeting transcript in the docket for this
test procedure rulemaking (Docket No. EERE-2014-BT-STD-0059-0030).
This particular notation refers to a comment (1) made by Systemair
during the public meeting; (2) recorded in document number 38, which
is the public meeting transcript that is filed in the docket of this
energy conservations standards rulemaking; and (3) which appears on
pages 15 through 16 of document number 38.
---------------------------------------------------------------------------

SNAP approved R-454B for use in residential air conditioning
applications, subject to certain use conditions, in a final rule
published on May 6, 2021. 86 FR 24444. Therefore, DOE investigated R-
454B as a design option for this final rule analysis. DOE did find some
efficiency benefit associated with implementation of R-454B but noted
the additional costs associated with the technology and the design and
supply challenges that AHAM discussed. The full design option analysis
of R-454B can be found in the technology assessment in chapter 3 of the
final rule TSD.
b. Product Weight
AHAM stated that DOE did not sufficiently evaluate the impact of
its proposals with respect to product weight, and requested that DOE
consider design parameters of 50 or 150 pound weight thresholds for one
or two person lifts set by manufacturers for worker safety standards,
consumer utility, and other distribution requirements. According to
information collected by AHAM from members on their models' weight and
dimension characteristics, AHAM stated that there is a strong
relationship between product weight and cooling capacity and claimed
that DOE is underestimating the change in weight associated with
technology options and design required to meet DOE's proposed standards
for a significant number of models in the market. According to AHAM
member data, there will likely be significant increase to product
weight that exceeds DOE's identified acceptable limits, and that by
generalizing the increase in product weight by product class, DOE is
overlooking a significant portion of the market. According to AHAM,
this increase in product weight is an ongoing consideration as products
are often removed from windows seasonally, and senior citizens who rely
on these products will have more difficulty with heavier products.
According to member data, AHAM estimated that product weight increases
of up to 14.6 pounds for Product Classes 1-3 would be required to meet
the proposed standards, with each estimated resulting product weight
above the 51-pound threshold determined by DOE as a reasonable upper
limit for single-person portability. For Product Class 1, AHAM
predicted product weight increases between 21 and 56 percent, compared
to DOE's estimate of 17 to 46 percent. AHAM further estimated weight
increases between 7 and 22 percent for Product Classes 3, 4, 5a, 8a,
and 16. (AHAM, No. 43 at pp. 19-21)
DOE understands that product weight is a concern to consumers,
which is why DOE considered the effect on product weight when
conducting the engineering analysis. DOE considered weight restrictions
only for Product Class 1 because units in Product Class 2 already
commonly exceed the 50-pound Occupational Safety and Health
Administration (OSHA) recommendation for a single-person lift, implying
that single-person lifts are not an important consumer attribute for
Product Class 2 or for larger units. DOE modeled the potential
increases in product weight due to more efficient compressors using
compressor weight data from product teardowns. Based on this analysis,
DOE expects that manufacturers will be able to preserve single-person
lift capability for those products for which it is important to
consumers (i.e., units within Product Class 1), as DOE predicts a unit
weight increase between 17 and 46 percent for the models in DOE's
teardown sample to achieve the max-tech efficiency level, but in no
instance would unit weight exceed 51 pounds. DOE's analysis indicates
that unit weights resulting from higher efficiency level design options
that exceed a 150-pound two-person carry threshold were limited to two
product classes, PC 5b and PC 11,

[[Page 34311]]

where existing units either nearly or already exceed 150 pounds. DOE
expects that these large units are already installed primarily with the
assistance of professional installers, limiting the impact of increased
weight on the consumer utility of these units.

B. Screening Analysis

DOE uses the following four 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 commercially viable,
existing prototypes will not be considered further.
(2) Practicability to manufacture, install, and service. If it
is determined that mass production of a technology in commerical
products and reliable installation and servicing of the technology
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. If a technology is determined to
have a significant adverse impact on the utility of the product to
significant subgroups of consumers or 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) Safety of technologies. 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 technology has
proprietary protection and represents a unique pathway to achieving
a given efficiency level, that technology will not be considered
further due to the potential for monopolistic concerns.

Sections 6(b)(3) and 7(b) of appendix A.
In sum, 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.
The subsequent sections include comments from interested parties
pertinent to the screening criteria, DOE's evaluation of each
technology option against the screening analysis criteria, and whether
DOE determined that a technology option should be excluded (``screened
out'') based on the screening criteria.
1. Screened-Out Technologies
In the April 2022 NOPR, DOE proposed screening out air and water
economizers and suction-line heat exchangers in the screening analysis,
based on their negative impacts on product utility to consumers and on
manufacturing impracticality.
AHAM requested that DOE screen out installation materials like
accordion side-curtains as there is no way to account for the energy
savings according to the existing test procedure given that these
features are not installed in the calorimeter during efficiency
testing. AHAM also requested that DOE screen out the use of an extended
polystyrene (EPS) panel as a technology option as the test procedure
will not capture any efficiency gains given that calorimeters are
balanced to avoid high differential pressure, which is the source of
efficiency gains for this technology option. Additionally, AHAM stated
that an EPS panel may conflict with the effectiveness of other
technology options such as the condenser coil subcooler and increased
heat transfer area. Further, AHAM stated that as most units on the
market already use washable air filters, this technology option will
not result in significant energy savings or efficiency gains. (AHAM,
No. 43 at pp. 27-28)
While the DOE test procedure does not account for the efficiency
effects of installation materials (e.g., side-curtains, EPS panels,
washable air filters), the technologies still meet the screening
criteria, in that they are technically feasible, widely used and not a
barrier to availability, manufacturing, installation, or service, do
not pose a risk to health, and are not a proprietary technology.
Therefore, DOE did not screen out installation materials at this stage.
DOE notes that, as discussed in chapter 5 of the NOPR TSD, installation
materials were not a design option used to construct efficiency levels
for this analysis.
2. Remaining Technologies
Through a review of each technology, DOE concluded that all of the
other identified technologies listed in section IV.B.2 of this document
met all five screening criteria to be examined further as design
options in DOE's final rule analysis. In summary, DOE did not screen
out the following technology options:
Table IV.2 displays the design options retained for the engineering
analysis.

Table IV.2--Retained Design Options
------------------------------------------------------------------------

-------------------------------------------------------------------------
Increased Heat Transfer Surface Area:
1. Increased heat exchanger surface area (frontal area, fin density
and depth of coil).
2. Condenser coil subcooler.
Increased Heat Transfer Coefficient:
3. Improved fin and tube design.
4. Hydrophilic coating on fins.
5. Microchannel heat exchangers.
6. Spray condensate on condenser coil.
Component Improvements:
7. Improved indoor blower and outdoor fan blade design.
8. Improved blower/fan motor design.
9. Improved compressor efficiency.
Improved Installation, Insulation, and Airflow:
10. Improved installation materials.
11. Reduced evaporator air recirculation.
12. Reduced thermal bridging and internal air leakage.
Part-load Performance:
13. Variable-speed compressors.
14. Variable-speed drive fans and blowers.
15. Thermostatic or electronic expansion valves.
16. Thermostatic cyclic controls.
Standby Power Improvements:
17. Low standby-power electronics.
18. High-frequency switching power supply.

[[Page 34312]]

Alternative Refrigerants:
19. SNAP-approved refrigerants (R-32, R-441A and R-290).
Other Improvements:
20. Washable air filters.
------------------------------------------------------------------------

DOE 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 the remaining 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). For additional details, see chapter 4
of the final rule TSD.

C. Engineering Analysis

The purpose of the engineering analysis is to establish the
relationship between the efficiency and cost of room air conditioners.
There are two elements to consider in the engineering analysis; the
selection of efficiency levels to analyze (i.e., the ``efficiency
analysis'') and the determination of product cost at each efficiency
level (i.e., the ``cost analysis''). In determining the performance of
higher-efficiency products, DOE considers technologies and design
option combinations not eliminated by the screening analysis. For each
product class, DOE estimates the baseline cost, as well as the
incremental cost for the product/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 efficiency-level approach, the
efficiency levels established for the analysis are determined based on
the market distribution of existing products (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 interpolate to define ``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 relied on a combination of these two
approaches. For each product class, DOE analyzed a few units from
different manufacturers to ensure the analysis was representative of
various designs on the market. The analysis involved physically
disassembling commercially available products, reviewing publicly
available cost information, and modeling equipment cost. From this
information, DOE estimated the manufacturer production costs (``MPCs'')
for a range of products currently available on the market. DOE then
considered the design options manufacturers would likely rely on to
improve product efficiencies. From this information, DOE estimated the
cost and efficiency impacts of incorporating specific design options at
each efficiency level.
DOE analyzed six efficiency levels as part of the engineering
analysis: (1) The current DOE standard (baseline); (2) an intermediate
level above the baseline but below the ENERGY STAR level, either
halfway between the two or at a level where a number of models were
certified (EL 1); (3) the ENERGY STAR efficiency criterion (EL 2); (4)
the efficiency attainable by a unit with the most efficient R-32
single-speed compressor on the market (EL 3); (5) an intermediate level
representing the efficiency of variable-speed units on the market, as
tested by DOE using the recently amended test procedure (EL 4); and (6)
the maximum technologically feasible (max-tech) efficiency (EL 5).
In evaluating the technologies manufacturers could use to achieve
the analyzed efficiency levels, DOE considered design options which
made the largest impact on unit efficiency and for which the cost-
efficiency relationship was well defined. Accordingly, DOE implemented
increased heat exchanger area, condenser coil subcoolers, improved
blower motor efficiency, improved compressor efficiency, variable-speed
compressors, and low standby-power electronic controls as design
options, some or all of which were used to estimate the cost required
to reach each efficiently level. DOE did not consider in its analysis
certain technologies that met the screening criteria but that DOE was
unable to evaluate for one or more of the following reasons: (1) Data
were not available to evaluate the energy efficiency characteristics of
the technology, (2) available data suggested that the efficiency
benefits of the technology are negligible, and (3) certain technologies
cannot be measured according to the conditions and methods specified in
the existing test procedure. Further information on how the design
options were chosen and implemented in the engineering analysis is
available in chapter 5 of the final rule TSD.
a. Baseline Efficiency/Energy Use
For each product/equipment class, DOE generally selects a baseline
model as a reference point for each class, and measures changes
resulting from potential 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, or, if no standards are in
place, the baseline is typically the most common or least efficient
unit on the market.
Of the 48 total units DOE selected for analysis in this rulemaking,
19 of them were baseline units that fell within 12 of the 16 room air
conditioner product classes and served as reference points for each
analyzed product class. DOE used these reference points to assess the
effects of amended energy conservation standards, which in turn support
the engineering, LCC, and PBP analyses. The baseline units in each of
the analyzed product classes represent the

[[Page 34313]]

basic characteristics of equipment in that class.
b. Higher Efficiency Levels
DOE considered five efficiency levels (``ELs'') above the baseline
for this analysis. As discussed in chapter 5 of the final rule TSD, DOE
modeled EL 1, EL 2, and EL 3 by analyzing the cost and efficiency
impacts of implementing improved single-speed compressors. DOE also
analyzed the impact of implementing tube-only or tube-and-fin
subcoolers at EL 3 if the analyzed unit did not already have one. At EL
4, DOE considered the efficiency impacts of variable-speed compressors
already available on the market and replacing permanent split capacitor
(``PSC'') fan motors with more efficient electronically commutated
motors (``ECMs'').
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. As discussed in chapter 5 of
the final rule TSD, for the max-tech level, DOE modeled replacing
single-speed compressors with the maximum efficiency variable-speed
compressors available, reducing standby power to the minimum observed
in DOE's teardown sample, and increasing the cabinet and heat exchanger
to the largest feasible sizes to improve efficiency. For all product
classes, the max-tech level identified for EL 5 exceeds any other
regulatory or voluntary efficiency criteria currently in effect in the
United States.
The max-tech level is based entirely on modeled combinations of
design options that have not yet been combined in a commercially
available room air conditioner. Notably, while the key design option
implemented at max-tech, variable-speed compressors, is also considered
at EL 4, the significant difference between the two is the level of
variable-speed compressor efficiency being considered. At EL 4, DOE
considers the variable-speed compressors currently implemented in room
air conditioners on the market today, for which performance has been
characterized through testing. At EL 5, DOE is considering the highest
efficiency variable-speed compressor identified in compressor catalogs,
which are not currently implemented in room air conditioner models on
the market today or in prototypes. Therefore, the efficiency level at
max-tech, EL 5, for each product class is a numerical estimation for
the theoretical implementation of the highest efficiency variable-speed
compressors. Furthermore, the DOE room air conditioner test procedure
measures variable-speed unit performance differently than test
procedures for other air conditioning products, so limited performance
and efficiency data are available for the most efficient examples of
this emergent technology for room air conditioners.
Additionally, the most efficient variable-speed compressors that
DOE identified in compressor catalogs that were implemented in the
analysis at the max-tech efficiency level are manufactured by one
manufacturer and have rated Energy Efficiency Ratios (``EERs'') between
11.2 and 11.7 Btu/Wh, with a range of rated capacities between 4,705
Btu/h and 16,170 Btu/h. Given the lack of information regarding
availability of these highest efficiency variable-speed compressors,
and the limited number of variable-speed compressors rated at or near
the compressors considered for the max-tech efficiency level, there may
not be widespread availability of these high-efficiency variable-speed
compressors.
Gradient stated that EL 4 accurately represents an intermediate
efficiency level that represents the efficiency of variable-speed units
on the market. According to Gradient, variable-speed compressors for
room air conditioners with a capacity greater than 8,000 Btu/h are at
this time a mature technology that is available from most
manufacturers, and the technology needed for implementing variable-
speed drives is no longer specialized. Therefore, Gradient strongly
supported the proposal of EL 4 as the minimum efficiency level for room
air conditioners with a capacity greater than 8,000 Btu/h. (Gradient,
No. 40 at p. 2) NEEA and NWPCC also supported the new EL 4 level
representing the efficiency of variable-speed units on the market below
max tech. (NEEA and NWPCC, No. 50 at p. 5)
DOE agrees with Gradient that multiple units with cooling
capacities greater than 8,000 Btu/h from several manufacturers
employing variable-speed compressors are now available on the market.
Further, DOE concludes that variable-speed compressors with
efficiencies higher than those currently observed on the market are
technically feasible, but there is uncertainty as to whether they would
be available in the quantities that would be required to implement them
on the necessary scale at the time that compliance with the standards
being adopted in this final rule will be required.
In their comments, NEEA and NWPCC expressed disappointment in the
reduction of EL 3 CEER from the preliminary analysis to the NOPR
analysis because of the significant cost-effective national energy
savings achievable by using high efficiency single-speed compressors.
However, they agreed with the methodology used to reach the change, as
they recognize that the reduction in maximum single-speed compressor
efficiency to 12.7 Btu/Wh was based on a comprehensive survey of
available compressors and accounted for the changeover to R-32
refrigerant. (NEEA and NWPCC, No. 50 at p. 5)
DOE is not making any changes to EL 3 in this final rule analysis,
retaining the reduction in maximum single-speed compressor efficiency
to 12.7 Btu/Wh as discussed in the NOPR.
AHAM requested clarification regarding DOE's conclusion that some
of the technology options would not result in changes to chassis size
and weight. (AHAM, Public Meeting Transcript, No. 38 at pp. 26-27) P.R.
China stated that the proposed increases to efficiency ranging from 20
to 50 percent depending on the product class are unreasonable due to
size, weight, and cost concerns and instead recommended controlling the
increase in standards of each product class to about 15 percent.
According to P.R. China, the upgrading technology paths introduced in
the April 2022 NOPR would lead to increased costs and size of chassis
associated with the proposed energy efficiency levels, and can lead to
increased burden on consumers, and increased carbon emissions in the
production process. Therefore, P.R. China suggests optimizing the
proposed standards to reduce potential impacts on the supply chain.
(P.R. China, No. 39 at pp. 3-4) Friedrich also indicated that based on
its industry experience, EL 3 would require room air conditioner
chassis to be enlarged and become heavier, due, in substantial part, to
increased heat exchanger cross-sectional area and compressor size.
(Friedrich, No. 44 at p. 5)
According to AHAM, DOE underestimated the impacts that the
considered technology options will have on chassis size, specifically
with adoption of variable-speed compressors, feasible chassis width,
and installation impacts/costs. AHAM stated that DOE should evaluate
the space needed for compressor controls and transformers when
considering the space needed for variable-speed compressors, as these
additional components may not fit into existing sleeve sizes.
Additionally, AHAM stated that at the proposed

[[Page 34314]]

amended standard levels, chassis sizes will increase significantly to
greater than DOE's estimated maximum feasible chassis width and
therefore DOE is underestimating a significant portion of the market.
AHAM presented percent changes to product dimensions based on member
data that ranged from 6 to 15 percent in height, 2 to 19 percent in
width, and 2 to 21 percent in depth across Product Classes 1, 2, 3, 4,
and 16. AHAM indicated that these increased dimensions would lead to
more efficient room air conditioners that are potentially incompatible
with older buildings, and would require either reinstallation, changes
to the building's infrastructure, or purchase of second-hand less
efficient products that do fit windows in these older buildings leading
to negative health impacts for low income consumers and those in
underserved communities. AHAM also stated that with increased chassis
sizes and weight, there will be the potential for an increase in
packaging and structural robustness costs to ensure the product is not
damaged during transport and to ensure the product passes the drop
tests requirement outlined in UL 60335-2-40, Annex GG. AHAM requested
that DOE update its analysis according to the information provided.
(AHAM, No. 43 at pp. 21-23)
Friedrich disputed the technological feasibility of increasing
compressor efficiency to the levels DOE used to model EL 3 and EL 4.
Friedrich stated that it was unable to source a single-speed compressor
that would achieve EL 3 with an EER of 12.7 Btu/h and that the most
efficient single-speed compressor it was able to source has an EER of
10.8 Btu/h. Friedrich added that it was also unable to source a
variable-speed compressor with an EER of 13.2 Btu/h, though Friedrich
did not provide any information about the variable-speed compressors
that are available to them. (Friedrich, No. 52 at p. 2)
DOE identified the highly efficient compressors used in the design
analysis in rotary compressor catalogues from companies that typically
provide compressors for room air conditioners. The highest efficiency
compressors available on the market used R-32 refrigerant. DOE
incorporated only those compressors rated at American Society of
Heating, Refrigerating, and Air-Conditioning Engineers (``ASHRAE'')
test conditions in this analysis. On this basis, DOE concluded that
these higher efficiency compressors would be an available option for
increasing the efficiency of room air conditioners subject to the
amended standards, including those discussed in Friedrich's comments.
DOE's analysis indicates that manufacturers should not need to
increase chassis sizes in order to implement variable-speed compressors
at EL 4. DOE has observed that compressor controls and transformers do
not require additional chassis size; room air conditioners with
variable-speed compressors currently on the market have similar or
smaller chassis sizes compared to their equivalent single-speed
counterparts, as discussed further in chapter 5 of the final rule TSD.
With respect to more robust packaging, DOE agrees that as chassis sizes
increase, additional packaging is needed. Therefore, DOE has altered
the NOPR analysis to incorporate an incremental cost for packaging into
its engineering analysis at max-tech, where DOE modeled chassis size
increases.
As a part of the engineering analysis, DOE considered the weight
increases associated with each design option for which a substantive
weight impact was expected. Those design options included changes to
the compressor efficiency, implementation of variable-speed
compressors, and adjustments to the heat exchangers (including
subcoolers) and resulting chassis size changes, which are discussed in
detail both in this document and in chapters 3 and 5 of the final rule
TSD. DOE determined that there is sufficient room in the chassis to
swap a more efficient compressor of similar overall size and
configuration, and therefore would not impact the overall size of the
room air conditioner, unlike increases to the heat exchanger which
would necessarily increase the model's overall size. In that way, DOE
considered the changes to a model's overall size and weight resulting
from implementing design options at each efficiency level. GEA
indicated that, in order to meet the EL 3 requirements, either a
variable-speed compressor or a large chassis size increase would be
required, while DOE modeled the cost of meeting this efficiency level
using only component replacements and a single-speed compressor. (GEA,
No. 49 at pp.1-2)
While manufacturers may elect to either implement variable-speed
compressors or increase chassis size as a means to reach EL 3, DOE's
analysis shows that the most efficient single-speed compressor alone
can allow room air conditioners to reach EL 3. As DOE's analysis
estimates that manufacturers are likely to use the most cost-effective
design options, DOE modeled EL 3 using the most efficient single-speed
compressors instead of other possible design options.
Friedrich suggested that compressor data found in catalogues would
be better if averaged rather than selecting the most efficient data for
DOE's analysis, given that manufacturers may not always be able to
implement the best compressors in their products. (Friedrich, Public
Meeting Transcript, No. 38 at pp. 18-19)
EPCA requires DOE to adopt the maximum standards that are both
technically justified and economically feasible. (42 U.S.C.
6295(o)(2)(A)) When assessing efficiency levels, and in particular the
maximum technologically feasible room air conditioner efficiency level,
DOE considered the compressor with the maximum available efficiency,
based on product literature, to determine the limits of technical
feasibility in room air conditioner compressors. Using an average would
not provide DOE with the maximum technologically feasible result,
though DOE notes that when considering efficiency levels above baseline
and below max-tech, compressors of various efficiency were assessed and
implemented in the analysis.
Gradient requested clarification regarding the evaporating and
condensing temperature test conditions used to characterize compressor
efficiency in catalogue data surveyed by DOE. (Gradient, Public Meeting
Transcript, No. 38 at pp. 17-18)
In developing the engineering analysis, DOE considered compressors
for which performance data were available in accordance with ASHRAE or
Air Conditioning, Heating, & Refrigeration Institute test conditions,
which use a condenser temperature of 54.4 [deg]C and an evaporation
temperature of 7.2 [deg]C. These compressor test conditions are an
industry standard, and are commonly used in characterizing and
determining relative compressor efficiency improvements.
Friedrich stated that most of the technology options in DOE's
analysis, such as a suction line heat exchanger, do not offer any
benefit for the refrigerant used, or have already been used to maximize
efficiency like with condenser coil subcoolers, and direct current (DC)
fan and blower motors. Friedrich also stated that microchannel heat
exchangers may not be appropriate for R-32 applications where
minimizing leakage is paramount, as such heat exchangers have issues
with galvanic corrosion. (Friedrich, No. 44 at p. 9)
As discussed in chapters 3 and 5 of the final rule TSD, DOE
evaluates each technology option for its potential efficiency benefit.
However, when developing the engineering analysis, DOE typically
focuses on design options with substantial impact on efficiency that
DOE expects manufacturers would

[[Page 34315]]

implement in their designs to improve efficiency. In the case of
condenser coil subcoolers, while DOE did find that most units
implemented some form of this technology, DOE identified different
types of subcoolers with varying efficiency benefits, and therefore
retained subcoolers as a design option for those units for which
efficiency improvements using a subcooler or improved subcooler design
were feasible. In the case of fan and blower motors, DOE identified ECM
motor technology as a potential improvement over the commonly
implemented PSC motors, and considered the improvement at the two
highest efficiency levels. DOE did not consider the implementation of
microchannel heat exchangers as a design option for the engineering
analysis due to the high cost and lack of room air conditioner
application-specific efficiency data.
NEEA and NWPCC stated that they could provide data on the cost-
effectiveness of high efficiency models. (NEEA and NWPCC, No. 50 at p.
4)
DOE did not receive any additional information from NEEA and NWPCC
on high efficiency models ahead of this final rule.
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
product, the availability and timeliness of purchasing the product on
the market. The cost approaches are summarized as follows:
<bullet> Physical teardowns: Under this approach, DOE physically
dismantles a commercially available product, component-by-component, to
develop a detailed bill of materials for the product.
<bullet> Catalog teardowns: In lieu of physically deconstructing a
product, DOE identifies each component using parts diagrams (available
from manufacturer websites or appliance repair websites, for example)
to develop the bill of materials for the product.
<bullet> Price surveys: If neither a physical nor catalog teardown
is feasible (for example, 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 present case, DOE conducted the analysis using physical
teardowns. The resulting bill of materials (``BOM'') provides the basis
for the MPC estimates. DOE estimated the cost of the highest efficiency
single-speed and variable-speed compressors implemented in EL3 and EL
5, respectively, by extrapolating the costs from price surveys of other
compressors. DOE used this approach because, as discussed previously,
DOE is not aware of these most efficient single-speed and variable-
speed compressors being implemented in any available room air
conditioners to date.
To account for manufacturers' non-production costs and profit
margin, DOE applies a 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. DOE developed
an average manufacturer markup by examining the annual Securities and
Exchange Commission (``SEC'') 10-K reports \21\ filed by publicly-
traded manufacturers primarily engaged in appliance manufacturing and
whose combined product range includes room air conditioners. Chapter 12
of the final rule TSD provides additional information on the
manufacturer markup.
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\21\ U.S. Securities and Exchange Commission, Electronic Data
Gathering, Analysis, and Retrieval (EDGAR) system. Available at
<a href="http://www.sec.gov/edgar/search/">www.sec.gov/edgar/search/</a> (last accessed September 7, 2022).
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3. Cost-Efficiency Relationship
The results of the engineering analysis are presented as cost-
efficiency data for each of the efficiency levels for each of the
product classes that were analyzed, as well as those extrapolated from
a product class with similar cooling capacity and features. DOE
developed estimates of MPCs for each unit in the teardown sample, and
also performed additional modeling for each of the teardown samples, to
develop a comprehensive set of MPCs at each efficiency level. DOE then
consolidated the resulting MPCs for each of DOE's teardown units and
modeled units using a weighted average for product classes in which DOE
analyzed units from multiple manufacturers. DOE's weighting factors
were based on a market penetration analysis for each of the
manufacturers within each product class. The resulting weighted-average
incremental MPCs (i.e., the additional costs manufacturers would likely
incur by producing room air conditioners at each efficiency level
compared to the baseline) are provided in Tables 5.5.5 and 5.5.6 in
chapter 5 of the final rule TSD. See chapter 5 of the final rule TSD
for additional detail on the engineering analysis.
Gradient agreed with the incremental cost for Product Classes 1
through 5b including the expected trend of increased cost for higher
capacity units, but stated that the incremental cost for variable-speed
compressor technology should depend only on the capacity of the system,
and as such, Gradient recommended applying the incremental costs for
Product Classes 1 through 5b to systems of similar capacity in other
product classes. (Gradient, No. 40 at p. 2)
DOE based its incremental costs for each product class on data
derived from teardowns of units in that product class and a design
option analysis. The differences in incremental costs observed between
non-louvered and louvered units are not due to differences in cost
estimates for the variable-speed compressor design option, but inherent
differences in incremental cost estimates for a particular
configuration. These inherent differences in incremental costs are
driven by differences in design and component types, as shown by DOE's
teardown analysis, as discussed in further detail in chapter 5 of the
final rule TSD.
AHAM stated that reducing energy consumption in room air
conditioners requires balancing multiple tradeoffs between cost,
functional performance, and energy efficiency among numerous
components, with different mixes of technology for each product
platform. Accordingly, AHAM stated that manufacturers have therefore
selected virtually all of the viable technologies across their product
lines and requested that DOE recognize that there is limited new
technology that would allow for significant per-unit reduction in
energy consumption in room air conditioners and that the more radical
or comprehensive the design change, the more likely that retooling is
necessary and, thus, the greater the product cost increase and capital
investment requirement. AHAM concluded that while there may be
declining costs over time associated with energy efficient components,
these are due to changes in productivity and/or value engineering that
is independent of energy efficiency. (AHAM, No. 43 at pp. 18-19)
While DOE recognizes that manufacturers face tradeoffs regarding
cost, performance, and efficiency, DOE identified several feasible
technologies for improving product efficiency across product lines that
have only been implemented in a few room air

[[Page 34316]]

conditioner models to date, such as variable-speed compressors and ECM
fan motors. DOE's analysis in this final rule takes into account costs
associated with retooling and capital investments when determining
economic justification. See section IV.J.2.c of this document for a
description of the conversion cost methodology.
4. Consumer Utility
According to AHAM, consumers may elect to use window units in wall
sleeves because higher capacity through-the-wall room air conditioners
are already more costly, larger, and heavier than their window
counterparts, which may limit efficiency gains and even lead to safety
concerns due to inadequate cooling of high-pressure components. AHAM
requested that DOE avoid this result not only because it undercuts
energy conservation savings goals, but also because it increases safety
risks for consumers, with a disproportionate burden on lower income and
underserved communities. (AHAM, No. 43 at pp. 22-23)
In its analyses, DOE assumes that consumers will install products
according to manufacturer instructions and that they will not install
units in an unsafe manner. DOE has no information from which to
estimate the potential efficiency effects of the incorrect installation
described.

D. Markups Analysis

The markups analysis develops appropriate markups (e.g., retailer
markups, distributor markups, contractor markups) in the distribution
chain and sales taxes to convert the MSP estimates derived in the
engineering analysis to consumer prices, which are then used in the LCC
and PBP 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 April 2022 NOPR, DOE assumed the main party in the
distribution chain after manufacturers was retailers.
Friedrich requested additional details regarding the assumption
that 100 percent of room air conditioners sales occur through the
retail distribution channel. (Friedrich, Public Meeting Transcript, No.
38 at p. 29)
Unlike other larger space cooling equipment that require additional
ductwork or installation materials, DOE was unable to find data
suggesting that room air conditioners require a general or mechanical
contractor for installation. In the absence of data or additional
comment provided by stakeholders, DOE maintains the assumption in this
final rule that 100 percent of sales occur through the retail
distribution channel.
DOE developed baseline and incremental markups for each actor in
the distribution chain. Baseline markups are applied to the price of
products 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.\22\
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\22\ Because the projected price of standards-compliant products
is typically higher than the price of baseline products, 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 relied on economic data from the U.S. Census Bureau to estimate
average baseline and incremental markups. Specifically, DOE used the
2017 Annual Retail Trade Survey for the ``electronics and appliance
stores'' sector to develop retailer markups.\23\
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\23\ U.S. Census Bureau, Annual Retail Trade Survey. 2017.
<a href="http://www.census.gov/programs-surveys/arts.html">www.census.gov/programs-surveys/arts.html</a>.
---------------------------------------------------------------------------

Chapter 6 of the final rule TSD provides details on DOE's
development of markups for room air conditioners.

E. Energy Use Analysis

The purpose of the energy use analysis is to determine the annual
energy consumption of room air conditioners at different efficiencies
in representative U.S. single-family homes, multi-family residences,
and commercial buildings, and to assess the energy savings potential of
increased room air conditioner efficiency. The energy use analysis
estimates the range of energy use of room air conditioners in the field
(i.e., as they are actually used by 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.
To estimate annual room air conditioner usage and energy
consumption in the April 2022 NOPR, DOE first calculated the number of
operating hours in cooling mode for each room air conditioner in the
residential and commercial samples using the reported energy use for
room air conditioning in the EIA's Residential Energy Consumption
Survey (``RECS'') 2015 \24\ and Commercial Building Energy Consumption
Survey (``CBECS'') 2012,\25\ along with historical estimates of the EER
of the room air conditioner(s) in each sample home or building. DOE
based the latter on the reported age (or simulated age) of the unit and
historical data on shipment-weighted average EER.
---------------------------------------------------------------------------

\24\ U.S. Department of Energy-Energy Information
Administration. Residential Energy Consumption Survey. 2015.
<a href="http://www.eia.gov/consumption/residential/data/2015/">www.eia.gov/consumption/residential/data/2015/</a>.
\25\ U.S. Department of Energy-Energy Information
Administration. Commercial Buildings Energy Consumption Survey.
2012. <a href="http://www.eia.gov/consumption/commercial/data/2012/">www.eia.gov/consumption/commercial/data/2012/</a>.
---------------------------------------------------------------------------

AHAM questioned the accuracy of the RECS data more generally,
pointing to several sources of potential error or uncertainty within
the dataset. (AHAM, No. 43 at pp. 8-10)
RECS represents the largest available data-set of installed
residential appliance stock that is designed to be nationally
representative.\26\ Although there may be error or uncertainty in
household responses, as in any survey, there is no evidence that
responses to any of the questions regarding room air conditioners
suffers from a systematic bias that would impact the energy use or LCC
analysis. Additionally, the RECS end use energy consumption data, used
is the energy use analysis, is derived from household energy bills
provided by respondents and is an exact measurement that is not subject
to response error from the household. The RECS end-use estimates are
based on an engineering approach and calibrated based on the relative
uncertainties of and correlations between the end uses.\27\ A study
comparing field-energy estimates from the Pecan Street Project \28\ to
end-use estimates from RECS found good agreement between the air
conditioning, water heating, and refrigerator consumption estimates as
a fraction of the whole-home energy.\29\ Although the authors found
that the total energy consumption by end use was higher in RECS
households, the authors attribute the difference to selection bias
associated with the volunteer households within the Pecan Street
dataset. For this final rule, DOE maintains that the RECS dataset

[[Page 34317]]

provides the most reasonable, nationally representative estimate for
room air conditioner energy consumption in the U.S.
---------------------------------------------------------------------------

\26\ <a href="http://www.eia.gov/consumption/residential/reports/2015/comparison/index.php">www.eia.gov/consumption/residential/reports/2015/comparison/index.php</a>.
\27\ Energy Information Administration. RECS 2015 Consumption
and Expenditures Technical Documentation Summary. <a href="http://www.eia.gov/consumption/residential/reports/2015/methodology/pdf/2015C&EMethodology.pdf">www.eia.gov/consumption/residential/reports/2015/methodology/pdf/2015C&EMethodology.pdf</a> (last accessed September 12, 2022).
\28\ <a href="http://www.pecanstreet.org/dataport/">www.pecanstreet.org/dataport/</a>.
\29\ Brock Glasgo, Chris Hendrickson, In[ecirc]s M.L. Azevedo.
Using advanced metering infrastructure to characterize residential
energy use. The Electricity Journal, Volume 30, Issue 3, 2017, Pages
64-70.
---------------------------------------------------------------------------

AHAM and Friedrich stated that it appears highly likely that DOE
has overestimated the cooling hours substantially based on end-use
energy consumption estimates from RECS 2015, and thus the energy usage
and related potential savings from more efficient room air
conditioners. (AHAM, No. 43, at p. 8; Friedrich, No. 44 at pp. 7-8)
According to AHAM, in many, if not most cases, room air conditioners
are not thermostat-driven, load-following but, rather, are turned on
and off by users as required, and assuming a load-following pattern
substantially overstates the number of hours a room air conditioner is
actually on.\30\ AHAM believes it to be more common that room air
conditioners are turned on and off by user choice such as when it is
especially hot or when a room is occupied, and that the usage hours in
that control mode are likely to be much lower than estimates based on
load modeling. In support of this point, AHAM stated that in the RECS
data, nearly half the respondents report turning on their room air
conditioners only when needed and an additional 17 percent adjust the
temperature manually, while only 30 percent report setting one
temperature and leaving the unit as is.
---------------------------------------------------------------------------

\30\ RECS reports space cooling end-use energy consumption
estimates based on calculated cooling load based on household
characteristics and weather data.
---------------------------------------------------------------------------

DOE acknowledges that the statistical nature of the RECS end-use
load analysis includes some uncertainty, but maintains that the RECS
end-use energy consumption estimates remain the best available dataset
for determining the hours of operation associated with room air
conditioners. DOE notes that the responses within the household survey
portion of RECS for room air conditioner usage do not necessarily imply
higher or lower usage relative to DOE's estimates from RECS energy
consumption data. For example, respondents that turn their unit on and
off manually could potentially use their unit more than expected based
only on cooling load-based operation.
DOE performed a sensitivity analysis to estimate the potential
impact of overestimating operating hours for households that turn their
unit on and off as needed. For this sensitivity analysis, DOE reduced
the operating hours by half for households reported in RECS as turning
their unit on and off as needed. Although energy savings are reduced
due to the overall lower operating hours in this sensitivity analysis,
the average LCC savings remains positive for all product classes at the
adopted TSL with a majority of consumers receiving a net benefit. The
average shipment-weighted LCC savings are $62 (relative to $85 in the
reference case) and 25% of consumers are impacted negatively (relative
to 17 percent in the reference case). As noted above, the assumption of
reduced usage associated with household that manually turn their unit
on or off is a conservative assumption given that these households
could potentially use their unit more than estimated based cooling-load
based operation. See appendix 8F of the final rule TSD for the full
results of the analysis.
AHAM and Friedrich stated that portable air conditioners are a more
appropriate analog for room air conditioner usage rather than assuming
a cooling load-driven model, since both products are used as a last
resort to meet a specific need and suggested DOE base operating hours
on a field-metering study of portable air conditioners. (AHAM, No. 43
at p. 13; Friedrich, No. 44 at p. 8)
The portable air conditioner field-metering study referenced by
AHAM and Friedrich analyzed only 19 units for less than a full cooling
season.\31\ As stated in the report itself, given the limited number of
test sites in two locations in the Northeast, the study was not
intended to be statistically representative of portable air conditioner
(``AC'') users in the United States. Even if portable air conditioners
were a good analog to room air conditioners, the limitations of this
dataset in terms of sample size and representation of usage would
preclude its application for the energy use analysis.
---------------------------------------------------------------------------

\31\ Burke et al., 2014. ``Using Field-Metered Data to Quantify
Annual Energy Use of Residential Portable Air Conditioners.'' LBNL,
Berkeley, CA. LBNL Report LBNL-6469E. September 2014.
---------------------------------------------------------------------------

In the April 2022 NOPR, DOE accounted for the reduction in energy
use of models with a variable-speed compressor during part load
operation based on the methodology developed for the DOE test
procedure. DOE accounted for geographic-dependent climate variability
by calculating U.S. State-dependent performance adjustment factors
(``PAFs'') using historical climate data spanning the period from 2008-
2016 from the National Oceanic and Atmospheric Administration. For each
state in the United States, DOE performed a temperature bin analysis to
calculate within the cooling season (June through August) the fraction
of time the outdoor dry bulb temperature was in one of four temperature
bins: 80-84 degrees Fahrenheit (``[deg]F''), 85-89 [deg]F, 90-94
[deg]F, and 95-99 [deg]F. DOE then calculated the corresponding PAF for
each state using the methodology developed for variable-speed drive
units in the test procedure and applied the PAF to the EER at full
load.
AHAM stated that before DOE assigns significant value to expensive
variable speed/capacity compressors and related control and other
systems in its engineering analysis, it needs to validate its
assumptions about room air conditioner operating conditions, operating
hours, and the likelihood of part load operation. (AHAM, No. 43 at p.
17)
The methodology used in the April 2022 NOPR to estimate the energy
savings associated with part-load operation is based on the DOE test
procedure, as well as available data regarding room air conditioner
usage. The development of the test procedure involved testing the
performance of variable-speed units relative to single-speed units in a
laboratory setting and measuring the relative efficiency gained by
part-load operation. DOE is unaware of additional data that can be
utilized to estimate the performance of variable-speed units. DOE's
application of PAFs for variable-speed units used in the energy use
analysis is consistent with the methodology used in DOE test procedure
and represents DOE's best estimates to capture the efficiency gains of
part load operation based on available data.
Rice stated that the energy use analysis in the April 2022 NOPR
does not use the correct weighting factors to calculate room air
conditioner (``RAC'') CEERs and performance adjustment factors
(``PAFs''). Rice states that the weighting factors used by DOE were the
fractional time spent in each bin, while the correct approach would be
to use fractional cooling delivered, as done in the RAC test procedure
final rule. Rice suggested DOE modify its approach in the final rule to
use weighting factors derived by the fractional cooling delivered.
(Rice, No. 48 at p. 2)
DOE clarifies that the calculated State-dependent CEERs and PAFs in
the April 2022 NOPR were estimated on the fractional cooling delivered,
as suggested by Rice, which are derived from the fractional time spent
in each temperature bin. The description of the analysis has been
updated in the final rule TSD to reflect this clarification.
In the April 2022 NOPR analysis, DOE included the impact of fan-
only mode energy consumption in the total energy

[[Page 34318]]

use, based on available data for portable ACs. Based on field metering
data of portable air conditioners, fan-only mode is estimated at 30
percent of cooling mode hours. DOE assumed that models below ENERGY
STAR efficiency level would operate in fan-only mode 30 percent of
cooling mode hours.\32\ For ELs that meet or exceed the ENERGY STAR
level, DOE estimated the amount of time the unit spent in fan-only mode
based on the ENERGY STAR Version 4.2 criterion for room air
conditioners criterion requiring that the unit run in off-cycle fan
mode less than 17 percent of the time spent in off-cycle mode. Thus,
for ELs that meet or exceed the ENERGY STAR efficiency level, DOE
assumed units would operate in fan-only mode 5 percent of cooling mode
hours.
---------------------------------------------------------------------------

\32\ Ibid.
---------------------------------------------------------------------------

NEEA and NWPCC stated that DOE's assumption of fan-only mode being
30 percent of cooling mode hours for models below ENERGY STAR
efficiency level is a reasonable assumption. Additionally, NEEA and
NWPCC agree that more efficient units (those meet or exceed the ENERGY
STAR level) would be less likely to operate in fan-only mode given
their variable-speed fans and motors and support the assumed operation
of fan-only model to be 5 percent of cooling mode hours for these
units. (NEEA and NWPCC, No. 50 at p. 5)
In the April 2022 NOPR, DOE assumed that approximately half of room
air conditioners are unplugged for half of the year. The ``unplugged''
time associated with these units is averaged over all units.
The California IOUs provided data supporting DOE's assumption. In
an online survey conducted on behalf of the California IOUs by
Evergreen Economics, results show that 48 percent of households with a
room air conditioner reported removing their unit and reinstalling
their equipment each year. (California IOUs, No. 47 at pp. 4-5)
DOE appreciates the data provided by the California IOUs supporting
its assumption. DOE maintains its assumption for this final rule.
P.R. China suggested DOE account for the degradation in energy
efficiency over the lifetime of the product and in different operating
environments in the energy use and LCC analyses. (P.R. China, No. 39 at
p. 4)
DOE is unaware of data suggesting a decrease in product efficiency
over the lifetime of room air conditioners. Moreover, there is no
indication that the degradation would preferentially impact more
efficient products over less efficient ones. As this effect would
impact the energy use of units at various efficiency levels, it would
likely have a small impact on the overall LCC savings results.
Chapter 7 of the final rule TSD provides details on DOE's energy
use analysis for room air conditioners.

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
room air conditioners. 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
use, maintenance, and repair). To compute the operating costs, DOE
discounts future operating costs to the time of purchase 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 room air conditioners 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.
For each considered efficiency level in each product class, DOE
calculated the LCC and PBP for a nationally representative set of
housing units and commercial buildings. As stated previously, DOE
developed household samples from the 2015 RECS and 2012 CBECS. For each
sample household, DOE determined the energy consumption for room air
conditioners and the appropriate energy price. By developing a
representative sample of households, the analysis captured the
variability in energy consumption and energy prices associated with the
use of room air conditioners.
Inputs to the calculation of total installed cost include the cost
of the product--which includes MPCs, manufacturer markups, retailer and
distributor 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, product lifetimes, and discount rates. DOE created
distributions of values for product 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 room air conditioner user
samples. For this rulemaking, the Monte Carlo approach is implemented
in MS Excel together with the Crystal Ball\TM\ add-on.\33\ The model
calculated the LCC and PBP for products at each efficiency level for
10,000 housing units or commercial buildings 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, product
efficiency is chosen based on its probability. If the chosen product
efficiency is greater than or equal to the efficiency of the standard
level under consideration, the LCC and PBP calculation reveals that a
consumer is not impacted by the standard level. By accounting for
consumers who already purchase more-efficient products, DOE avoids
overstating the potential benefits from increasing product efficiency.
DOE calculated the LCC and PBP for all consumers of room air
conditioners as if each were to purchase a new product in the first
year of required compliance with new or amended standards. Amended
standards apply to room air conditioners manufactured 3 years after the
date on which any new or amended standard is published. (42 U.S.C.

[[Page 34319]]

6925(m)(4)(A)(i)) Therefore, DOE used 2026 as the first year of
compliance with any amended standards for room air conditioners.
---------------------------------------------------------------------------

\33\ Crystal Ball\TM\ is commercially-available software tool to
facilitate the creation of these types of models by generating
probability distributions and summarizing results within Excel,
available at <a href="http://www.oracle.com/technetwork/middleware/crystalball/overview/index.html">www.oracle.com/technetwork/middleware/crystalball/overview/index.html</a> (last accessed September 6, 2022).
---------------------------------------------------------------------------

Table IV.3 summarizes the approach and data DOE used to derive
inputs to the LCC and PBP calculations. The subsections that follow
provide further discussion. Details of the spreadsheet model, and of
all the inputs to the LCC and PBP analyses, are contained in chapter 8
of the final rule TSD and its appendices.

Table IV.3--Summary of Inputs and Methods for the LCC and PBP Analysis *
------------------------------------------------------------------------
Inputs Source/method
------------------------------------------------------------------------
Product Cost................. Derived by multiplying MPCs by
manufacturer and retailer markups and
sales tax, as appropriate. Used
historical data to derive a price
scaling index to project product costs.
Installation Costs........... Baseline installation cost determined
with data from RSMeans 2022.
Annual Energy Use............ The total annual energy use by operating
mode multiplied by the hours per year in
each mode. Variability: Based on the
2015 RECS and 2012 CBECS.
Energy Prices................ Electricity: Based on Edison Electric
Institute data for 2021. Variability:
Regional energy prices determined for
each Census Division.
Energy Price Trends.......... Based on AEO2022 price projections by
Census Division.
Repair and Maintenance Costs. Assumed no change with efficiency level
for maintenance costs. Repair costs
estimated for each product class and
efficiency level.
Product Lifetime............. Weibull probability distribution
developed from historical shipments,
American Housing Survey, and RECS, with
an average lifetime of 9 years.
Discount Rates............... Approach involves identifying all
possible debt or asset classes that
might be used to purchase the considered
appliances, or might be affected
indirectly. Primary data source was the
Federal Reserve Board's Survey of
Consumer Finances.
Compliance Date.............. 2026.
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
in the sections following the table or in chapter 8 of the final rule
TSD.

1. Product Cost
To calculate consumer product 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 products and higher-efficiency products, because DOE applies
an incremental markup to the increase in MSP associated with higher-
efficiency products.
Economic literature and historical data suggest that the real costs
of many products may trend downward over time according to ``learning''
or ``experience'' curves. Experience curve analysis implicitly includes
factors such as efficiencies in labor, capital investment, automation,
materials prices, distribution, and economies of scale at an industry-
wide level. To derive the learning rate parameter for room air
conditioners that utilize single-speed compressors, DOE obtained
historical Producer Price Index (``PPI'') data for room air
conditioners from the Bureau of Labor Statistics (``BLS''). A PPI
specific to ``room air-conditioners and dehumidifiers, except portable
dehumidifiers'' was available for the time period between 1990 and
2009.\34\ After 2009, DOE used the primary products series of ``air-
conditioning, refrigeration and forced air heating equipment'', which
includes room air conditioners, spanning the years 2010-2021.\35\
Inflation-adjusted price indices were calculated by dividing the PPI
series by the gross domestic product index from Bureau of Economic
Analysis for the same years. Using the combined data from 1990-2021,
the estimated learning rate (defined as the fractional reduction in
price expected from each doubling of cumulative production) is 24
percent. For efficiency levels that include variable-speed compressors,
DOE applied a different price trend to the controls portion of the
variable-speed compressors that contributes to the price increments
moving from EL 3 (an efficiency level achieved with the highest
efficiency single-speed compressor) to EL 4 and EL 5. DOE used PPI data
on ``semiconductors and related device manufacturing'' between 1967 and
2021 to estimate the historic price trend of electronic components in
the control. The regression performed as an exponential trend line fit
results in an R-square of 0.99, with an annual price decline rate of
6.3 percent. See chapter 8 of the final rule TSD for further details on
this topic.
---------------------------------------------------------------------------

\34\ Room air-conditioners and dehumidifiers, except portable
dehumidifiers PPI series ID: PCU3334153334156; <a href="http://www.bls.gov/ppi/">www.bls.gov/ppi/</a>.
\35\ Air-conditioning, refrigeration, and forced air heating
equipment manufacturing, Primary Products PPI series ID:
PCU333415333415P; <a href="http://www.bls.gov/ppi/">www.bls.gov/ppi/</a>.
---------------------------------------------------------------------------

2. Installation Cost
Installation cost includes labor, overhead, and any miscellaneous
materials and parts needed to install the product. In the April 2022
NOPR, DOE assumed that the installation cost would be constant for all
efficiency levels and, thus, did not include installation costs in the
LCC calculation.
AHAM stated that even with minimal size increases in smaller room
air conditioners, different chassis sizes will necessitate different
installation brackets that do not cover louvers. AHAM requested that
DOE analyze costs of necessary retrofits if chassis size changes and
the increased installation costs due to heavier products. (AHAM, No. 43
at p. 23)
DOE agrees that a standard that changes the chassis size or weight
of units may increase installation costs. For the final rule, DOE used
data from RSMeans 2022 to estimate the labor and material cost
necessary for installing units at various capacities. DOE matched the
RSMeans installation costs derived by capacity to the corresponding
baseline level within each product class. To account for additional
labor hours in higher efficiency equipment with significantly larger
dimensions and/or weight, DOE based the labor hour estimates on labor
hours for higher capacity room air conditioners with similar
dimensions/weight. DOE notes that chassis size only increases at the
max-tech level and does not project an increased cost due to retrofits
at the adopted TSL.
3. Annual Energy Consumption
For each sampled household or business, DOE determined the energy
consumption for room air conditioners at different efficiency levels
using the approach described previously in section IV.E of this
document.

[[Page 34320]]

a. Rebound Effect
A direct rebound effect occurs when a product that is made more
efficient is used more intensively, such that the expected energy
savings from the efficiency improvement may not fully materialize. At
the same time, consumers benefit from increased utilization of products
due to rebound. Higher-efficiency room air conditioners reduce the
operating costs for a consumer, which can lead to greater use of room
air conditioners. Overall consumer welfare (taking into account
additional costs and benefits of increased usage) is generally
understood to increase from rebound. DOE did not find any data on the
rebound effect that is specific to room air conditioners. In the April
2011 Direct Final Rule, DOE estimated a rebound of 15 percent for room
air conditioners for the NIA but did not include rebound in the LCC
analysis. 76 FR 22454, 22511. Given the uncertainty and lack of data
specific to room air conditioners, DOE did not include the rebound
effect in the LCC analysis for this final rule. DOE does include
rebound in the NIA for a conservative estimate of national energy
savings and the corresponding impact to consumer NPV. See sections
IV.H.2 and IV.H.3 of this document for further details on how the
rebound effect is applied in the NIA.
4. Energy Prices
Because marginal electricity price more accurately captures the
incremental savings associated with a change in energy use from higher
efficiency, it provides a better representation of incremental change
in consumer costs than average electricity prices. Therefore, DOE
applied average electricity prices for the energy use of the product
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.
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. For
the residential sector, DOE calculated electricity prices using the
methodology described in Coughlin and Beraki (2018).\36\ For the
commercial sector, DOE calculated electricity prices using the
methodology described in Coughlin and Beraki (2019).\37\
---------------------------------------------------------------------------

\36\ Coughlin, K. and B. Beraki.2018. Residential Electricity
Prices: A Review of Data Sources and Estimation Methods. Lawrence
Berkeley National Lab. Berkeley, CA. Report No. LBNL-2001169.
<a href="https://ees.lbl.gov/publications/residential-electricity-prices-review">https://ees.lbl.gov/publications/residential-electricity-prices-review</a>.
\37\ 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. <a href="https://ees.lbl.gov/publications/non-residential-electricity-prices">https://ees.lbl.gov/publications/non-residential-electricity-prices</a>.
---------------------------------------------------------------------------

DOE calculated weighted-average values for average and marginal
price for the nine census divisions for both the residential and
commercial sectors. As the EEI data are published separately for summer
and winter, DOE calculated seasonal prices for each division and
sector. See chapter 8 of the final rule 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 AEO2022,
which has an end year of 2050.\38\ To estimate price trends after 2050,
DOE used a constant value based on the simple average between 2046
through 2050.
---------------------------------------------------------------------------

\38\ U.S. Department of Energy-Energy Information
Administration. Annual Energy Outlook 2022 with Projections to 2050.
Washington, DC. Available at <a href="http://www.eia.gov/forecasts/aeo/">www.eia.gov/forecasts/aeo/</a> (last
accessed September 6, 2022).
---------------------------------------------------------------------------

5. Maintenance and Repair Costs
Repair costs are associated with repairing or replacing product
components that have failed in an appliance; maintenance costs are
associated with maintaining the operation of the product. Typically,
small incremental increases in product efficiency produce no, or only
minor, changes in repair and maintenance costs compared to baseline
efficiency products. In this final rule analysis, DOE did not include
maintenance costs in the LCC.
In the April 2022 NOPR, DOE assumed that repair frequencies are low
and increase for the higher-capacity units due to more expensive
equipment costs. DOE assumed that 1 percent of small-sized units (below
8,000 Btu/h), 2 percent of medium-sized units (8,000 to 20,000 Btu/h),
and 3 percent of large-sized units (above 20,000 Btu/h) are maintained
or repaired each year. DOE assumed that an average service call and
repair/maintenance takes about 1 hour for small and medium-sized units
and 2 hours for large units, and that the average material cost is
equal to one-half of the incremental equipment cost.
Friedrich states that DOE failed to incorporate increased repairs
costs to service room air conditioners with variable-speed compressors
and increased heat exchanger sizes. According to Friedrich, the
likelihood and repair cost will increase due to complexity of
components with variable-speed compressors or additional braze joints
for larger heat exchangers. (Friedrich, No. 44 at pp. 8-9)
DOE's analysis incorporates an increased repair cost due to the
higher incremental costs associated with units with variable-speed
compressors for more expensive components as suggested by Friedrich.
DOE is unaware of any data indicating an increased likelihood of repair
due to variable-speed compressors or increased heat exchanger sizes. A
retrospective analysis of the April 2011 Direct Final Rule found that
DOE's approach to estimating repair costs at each efficiency level
based on the incremental equipment cost agreed with an analysis of
consumer survey data.\39\ DOE maintains its approach to estimating
repair rates and costs for this final rule.
---------------------------------------------------------------------------

\39\ Ganeshalingam, M., Ni, C., and Yang, H-C. 2021. A
Retrospective Analysis of the 2011 Direct Final Rule for Room Air
Conditioners. Lawrence Berkeley National Laboratory. LBNL-2001413.
---------------------------------------------------------------------------

6. Product Lifetime
For room air conditioners, DOE developed a distribution of
lifetimes from which specific values are assigned to the appliances in
the samples. DOE conducted an analysis of actual lifetime in the field
using a combination of historical shipments data, the stock of the
considered appliances in the American Housing Survey, and responses in
RECS on the age of the appliances in the homes. The data allowed DOE to
estimate a survival function, which provides an average appliance
lifetime. This analysis yielded a lifetime probability distribution
with an average lifetime for room air conditioners of approximately 9
years.
Friedrich states that the increase in braze joints needed for
larger heat exchangers may increase the potential for refrigerant
leaks. Friedrich adds that in the event of a refrigerant leak,
consumers are more likely to retire their unit early rather than repair
the unit due to the high repair cost resulting in a short lifetime for
efficiency levels with this technology. (Friedrich, No. 44 at p. 9)
As described in section IV.F.5, the April 2022 NOPR assumed a low
repair rate (1-3 percent). Data was not provided by stakeholders during
the rulemaking demonstrating the impact that larger heat exchangers
would have on the repair rate or repair cost which

[[Page 34321]]

could potentially lead to shorter product lifetimes. For this final
rule, DOE maintained the same lifetime distribution for all efficiency
levels.
7. Discount Rates
In the calculation of LCC, DOE applies discount rates appropriate
to households to estimate the present value of future operating cost
savings. DOE estimated a distribution of discount rates for room air
conditioners based on the opportunity cost of consumer funds.
DOE applies weighted average discount rates calculated from
consumer debt and asset data, rather than marginal or implicit discount
rates.\40\ The LCC analysis estimates net present value over the
lifetime of the product, so the appropriate discount rate will reflect
the general opportunity cost of household funds, taking this time scale
into account. Given the long time horizon modeled in the LCC, the
application of a marginal interest rate associated with an initial
source of funds is inaccurate. Regardless of the method of purchase,
consumers are expected to continue to rebalance their debt and asset
holdings over the LCC analysis period, based on the restrictions
consumers face in their debt payment requirements and the relative size
of the interest rates available on debts and assets. DOE estimates the
aggregate impact of this rebalancing using the historical distribution
of debts and assets.
---------------------------------------------------------------------------

\40\ The implicit discount rate is inferred from a consumer
purchase decision between two otherwise identical goods with
different first cost and operating cost. It is the interest rate
that equates the increment of first cost to the difference in net
present value of lifetime operating cost, incorporating the
influence of several factors: transaction costs; risk premiums and
response to uncertainty; time preferences; interest rates at which a
consumer is able to borrow or lend. The implicit discount rate is
not appropriate for the LCC analysis because it reflects a range of
factors that influence consumer purchase decisions, rather than the
opportunity cost of the funds that are used in purchases.
---------------------------------------------------------------------------

To establish residential discount rates for the LCC analysis, DOE
identified all relevant household debt or asset classes in order to
approximate a consumer's opportunity cost of funds related to appliance
energy cost savings. It estimated the average percentage shares of the
various types of debt and equity by household income group using data
from the Federal Reserve Board's Survey of Consumer Finances \41\
(``SCF'') for 1995, 1998, 2001, 2004, 2007, 2010, 2013, 2016, and 2019.
Using the SCF and other sources, DOE developed a distribution of rates
for each type of debt and asset by income group to represent the rates
that may apply in the year in which amended standards would take
effect. DOE assigned each sample household a specific discount rate
drawn from one of the distributions. The average rate across all types
of household debt and equity and income groups, weighted by the shares
of each type, is 4.3 percent.
---------------------------------------------------------------------------

\41\ U.S. Board of Governors of the Federal Reserve System.
Survey of Consumer Finances. 1995, 1998, 2001, 2004, 2007, 2010,
2013, 2016, and 2019. (Last accessed September 6, 2022.)
<a href="http://www.federalreserve.gov/econresdata/scf/scfindex.htm">www.federalreserve.gov/econresdata/scf/scfindex.htm</a>.
---------------------------------------------------------------------------

See chapter 8 of the final rule TSD for further details on the
development of consumer discount rates.
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 considered the projected
distribution (market shares) of product efficiencies under the no-new-
standards case (i.e., the case without amended or new energy
conservation standards).
DOE utilized confidential 2019 shipments data disaggregated by
product class and efficiency provided by AHAM in response to the June
2020 Preliminary Analysis to estimate the efficiency distribution in
2019. In the April 2022 NOPR, DOE assumed an annual 0.25 percent
increase in shipment-weighted CEER for each product class to develop
the efficiency distribution in 2026. The efficiency trend is supported
by a retrospective analysis of the April 2011 Direct Final Rule which
used a similar efficiency trend for single-speed compressor units.\42\
For this final rule, DOE assumed this trend applied to efficiency
levels with single-speed compressors (EL 0, EL 1, EL 2, and EL 3).
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\42\ Ganeshalingam, M., Ni, C., and Yang, H-C. 2021. A
Retrospective Analysis of the 2011 Direct Final Rule for Room Air
Conditioners. Lawrence Berkeley National Laboratory. LBNL-2001413.
---------------------------------------------------------------------------

In the 2022 NOPR, DOE assumed the adoption of variable-speed
technologies would follow a Bass diffusion curve which describes how
new technologies diffuse into the consumer market. DOE assumed that
units with variable-speed technologies would account for 5 percent of
shipments in each product class by 2026.
In response to the April 2022 NOPR, NEEA and NWPCC provided sales
estimates for variable-speed units and all room air conditioners sold
as part of the EPA ENERGY STAR[supreg] Retail Products Platform
(ESRPP). NEEA and NWPCC encouraged DOE to use these data to calibrate
the Bass diffusion curve for variable-speed models. (NEEA and NWPCC,
No. 50 at pp. 2-4)
DOE thanks NEEA and NWPCC for the provided sales data needed to
calibrate the Bass diffusion curve for the adoption of variable-speed
technologies. The ESRPP data provided by NEEA and NWPCC indicated a
faster adoption of variable-speed technologies than estimated in the
April 2022 NOPR between 2018 and 2022, in particular for capacities
greater than 8,000 Btu/h. For this final rule, DOE calibrated its Bass
diffusion curve model for variable-speed models to reach 7 percent of
shipments in 2026 with faster adoption for capacities greater than
8,000 Btu/h based on the provided data.
The estimated market shares for the no-new-standards case for room
air conditioners in 2026 are shown in Tables IV.4 through IV.6. See
chapter 8 of the final rule TSD for further information on the
derivation of the efficiency distributions.

Table IV.4--Room Air Conditioners Without Reverse Cycle and With Louvered Sides: No-New-Standards Case Market Shares in 2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
<6,000 Btu/h (PC1) 6,000-7,900 Btu/h (PC2) 8,000-13,900 Btu/h (PC3)
-----------------------------------------------------------------------------------------------
Efficiency level Efficiency Efficiency Efficiency
---------------- Market share ---------------- Market share ---------------- Market share
CEER (%) CEER (%) CEER (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................ 11.0 7.7 11.0 0.0 10.9 0.0
1....................................................... 11.4 85.2 11.4 74.6 11.4 30.3
2....................................................... 12.1 2.1 12.1 18.3 12.0 58.0
3....................................................... 13.1 0.0 13.7 2.1 14.3 0.9
4....................................................... 16.0 5.0 16.0 5.0 16.0 10.7

[[Page 34322]]

5....................................................... 20.2 0.0 21.2 0.0 21.9 0.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
14,000-19,900 Btu/h (PC4)
20,000-27,900 Btu/h (PC5a)
>=28,000 Btu/h (PC5b)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................ 10.7 0.0 9.4 0.0 9.0 40.3
1....................................................... 11.1 0.0 9.8 9.0 9.4 45.7
2....................................................... 11.8 89.1 10.3 80.3 9.9 9.0
3....................................................... 14.0 0.1 11.8 0.0 10.3 0.0
4....................................................... 16.0 10.7 13.8 10.7 13.2 5.0
5....................................................... 19.8 0.0 18.7 0.0 16.3 0.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table IV.5--Room Air Conditioners Without Reverse Cycle and Without Louvered Sides: No-New-Standards Case Market Shares in 2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
8,000-10,900 Btu/h (PC 8a) 11,000-13,900 Btu/h (PC8b) 14,000-19,900 Btu/h (PC9)
-----------------------------------------------------------------------------------------------
Efficiency level Efficiency Efficiency Efficiency
---------------- Market share ---------------- Market share ---------------- Market share
CEER (%) CEER (%) CEER (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................ 9.6 0.0 9.5 0.0 9.3 39.1
1....................................................... 10.1 11.4 10.0 0.0 9.7 46.9
2....................................................... 10.6 83.6 10.5 94.3 10.2 9.0
3....................................................... 12.3 0.0 12.3 0.7 10.9 0.0
4....................................................... 14.1 5.0 13.9 5.0 13.7 5.0
5....................................................... 18.7 0.0 19.0 0.0 16.8 0.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table IV.6--Room Air Conditioners With Reverse Cycle, Casement-Slider: No-New-Standards Case Market Shares in 2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
w/louvers (PC11) wo/louvers (PC12) Casement-slider (PC16)
-----------------------------------------------------------------------------------------------
<20,000 Btu/h <14,000 Btu/h
Efficiency level -----------------------------------------------------------------------------------------------
Efficiency Efficiency Efficiency
---------------- Market share ---------------- Market share ---------------- Market share
CEER (%) CEER (%) CEER (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................ 9.8 50.7 9.3 39.1 10.4 34.4
1....................................................... 10.4 35.2 9.7 46.9 10.8 51.6
2....................................................... 10.8 9.0 10.2 9.0 11.4 9.0
3....................................................... 12.3 0.0 11.3 0.0 13.2 0.0
4....................................................... 14.4 5.0 13.7 5.0 15.3 5.0
5....................................................... 18.0 0.0 16.4 0.0 19.1 0.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

9. Payback Period Analysis
The payback period is the amount of time it takes the consumer to
recover the additional installed cost of more-efficient products,
compared to baseline products, through energy cost savings. Payback
periods are expressed in years. Payback periods that exceed the life of
the product mean that the increased total installed cost is not
recovered in reduced operating expenses.
The inputs to the PBP calculation for each efficiency level are the
change in total installed cost of the product and the change in the
first-year annual operating expenditures relative to the baseline. The
PBP calculation uses the same inputs as the LCC analysis, except that
discount rates are not needed.
As noted previously, EPCA establishes a rebuttable presumption that
a standard is economically justified if the Secretary finds that the
additional cost to the consumer of purchasing a product complying with
an energy conservation standard level will be less than three times the
value of the first year's energy savings resulting from the standard,
as calculated under the applicable test procedure. (42 U.S.C.
6295(o)(2)(B)(iii)) For each considered efficiency level, DOE
determined the value of the first year's energy savings by calculating
the energy savings in accordance with the applicable DOE test
procedure, and multiplying those savings by the average energy price
projection for the year in which compliance with the amended standards
would be required.

G. Shipments Analysis

DOE uses projections of annual product shipments to calculate the
national impacts of potential amended or new energy conservation
standards on energy use, NPV, and future manufacturer cash flows.\43\
The

[[Page 34323]]

shipments model takes an accounting approach, tracking market shares of
each product class and the vintage of units in the stock. Stock
accounting uses product shipments as inputs to estimate the age
distribution of in-service product stocks for all years. The age
distribution of in-service product stocks is a key input to
calculations of both the NES and NPV, because operating costs for any
year depend on the age distribution of the stock.
---------------------------------------------------------------------------

\43\ DOE uses data on manufacturer shipments as a proxy for
national sales, as aggregate data on sales are lacking. In general,
one would expect a close correspondence between shipments and sales.
---------------------------------------------------------------------------

Total shipments for room air conditioners are developed by
considering the demand from replacements for units in stock that fail
and the demand from first-time owners in existing homes. DOE calculated
shipments due to replacements using the retirement function developed
for the LCC analysis. DOE calculated shipments due to first-time owners
in existing households using estimates from room air conditioner
saturation in RECS 2015 and projections of housing stock from AEO2022.
See chapter 8 of the final rule TSD for details.
DOE considers the impacts on shipments from changes in product
purchase price and operating cost associated with higher energy
efficiency levels using a price elasticity and an efficiency
elasticity. As in the April 2022 NOPR, DOE employs a 0.2-percent
efficiency elasticity rate and a price elasticity of -0.45 in its
shipments model. These values are based on analysis of aggregated data
for five residential appliances including room air conditioners.\44\
The market impact is defined as the difference between the product of
price elasticity of demand and the change in price due to a standard
level, and the product of the efficiency elasticity and the change in
operating costs due to a standard level.
---------------------------------------------------------------------------

\44\ Fujita, K. (2015) Estimating Price Elasticity using Market-
Level Appliance Data. Lawrence Berkeley National Laboratory, LBNL-
188289.
---------------------------------------------------------------------------

H. National Impact Analysis

The NIA assesses the national energy savings (``NES'') and the NPV
from a national perspective of total consumer costs and savings that
would be expected to result from new or amended standards at specific
efficiency levels.\45\ (``Consumer'' in this context refers to
consumers of the product being regulated.) DOE calculates the NES and
NPV for the potential standard levels considered based on projections
of annual product shipments, along with the annual energy consumption
and total installed cost data from the energy use and LCC analyses. For
the present analysis, DOE projected the energy savings, operating cost
savings, product costs, and NPV of consumer benefits over the lifetime
of room air conditioners sold from 2026 through 2055.
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\45\ The NIA accounts for impacts in the 50 states and U.S.
territories.
---------------------------------------------------------------------------

DOE evaluates the impacts of new or amended standards by comparing
a case without such standards with standards-case projections. The no-
new-standards case characterizes energy use and consumer costs for each
product class in the absence of new or amended energy conservation
standards. For this projection, DOE considers historical trends in
efficiency and various forces that are likely to affect the mix of
efficiencies over time. DOE compares the no-new-standards case with
projections characterizing the market for each product class if DOE
adopted new or amended standards at specific energy efficiency levels
(i.e., the TSLs or standards cases) for that class. For the standards
cases, DOE considers how a given standard would likely affect the
market shares of products with efficiencies greater than the standard.
DOE uses a spreadsheet model to calculate the energy savings and
the national consumer costs and savings from each TSL. Interested
parties can review DOE's analyses by changing various input quantities
within the spreadsheet. The NIA spreadsheet model uses typical values
(as opposed to probability distributions) as inputs.
Table IV.7 summarizes the inputs and methods DOE used for the NIA
analysis for the final rule. Discussion of these inputs and methods
follows the table. See chapter 10 of the final rule TSD for further
details.

Table IV.7--Summary of Inputs and Methods for the National Impact
Analysis
------------------------------------------------------------------------
Inputs Method
------------------------------------------------------------------------
Shipments.................... Annual shipments from shipments model.
Compliance Date of Standard.. 2026.
Efficiency Trends............ Bass diffusion curve to allocate
shipments to ELs with variable-speed
technology and annual 0.25% increase in
shipment-weighted CEER for ELs with
single-speed technology.
Annual Energy Consumption per Calculated for each efficiency level
Unit. based on inputs from energy use
analysis.
Total Installed Cost per Unit Calculated for each efficiency level
based on inputs from the LCC analysis.
Incorporates projection of future

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