Cold air/water HVAC systems [40°F (4.4°C)] have been developed for use with ice thermal storage because (1) they require one-third to one-half as much primary air as 40°F(4.4°C) all-air HVAC systems, (2) they control humidity and temperature separately and thus can be applied in a much broader range of facilities without overdrying the air, and (3) they are lower in both first cost and energy cost than the all-air systems, making ice storage equipmenat more practical option. This paper describes 40°F (4.4°C) air/water VAV systems and compares the following HVAC systems in terms of electric demand (day vs. night), energy usage, energy cost, and first cost:40°F (4.4°C) air/water VAV system with partial ice storage40°F (4.4°C) air/water VAV system with full ice storage40°F (4.4°C) all-air VAV system with partial ice storage40°F (4.4°C) all-air VAV system with full ice storage55°F (12.8°C) all-air VAV systemAlso examined are (1) the impact of different utility rate structures on the economics of the alternative ice thermal storage HVAC systems and (2) a specific retail store application of a 40°F (4.4°C) air/water system with partial ice thermal storage.Conclusions include the following: (1) where there is only a small spread between the utility’s day and night energy usage rates, a partial ice storage air/water system can produce a lower annual energy cost than a full ice storage system; and (2) the 40°F (4.4°C) air/water partial ice system is the most cost-effective of the five HVAC systems compared, in each of four utility rate scenarios. It is lower in first cost than the alternative cold-air systems and approximately equal in first cost to the conventional all-air VAV system (lower in the case of a large building, higher in the case of a small building); and the annual energy cost is 50% to 57% less than that of the conventional 55°F (12.8°C) system and 29% to 32% less than that of a 40°F (4.4°C) all-air partial-ice system.