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## U.S. Department of Energy

Commercial and Industrial Pumps Negotiated Rulemaking Working Group Meeting Summary—Fifth Meeting Forrestal Building, Washington, D.C. April 30, 2014

Members in Attendance (Day 2) Lucas Adin U.S. Department of Energy Tom Eckman Northwest Power and Conservation Council (ASRAC Member) Robert Barbour TACO, Inc. Charles Cappelino ITT Industrial Process Greg Case Pump Design, Development and Diagnostics (Hydraulic Institute) Gary Fernstrom California IOUs Mark Handzel Xylem Corporation Albert Huber Patterson Pump Company Dan Delaney Regal Beloit (alternate for Howard Richardson) Joanna Mauer Appliance Standards Awareness Project Doug Potts American Water Charles Powers Flowserve Corporation, Industrial Pumps Louis Starr Northwest Energy Efficiency Alliance Greg Towsley Grundfos USA Meg Waltner Natural Resources Defense Council

Doug Brookman Facilitator, Public Solutions, Inc.

Absent Steve Rosenstock Edison Electric Institute

Additional Attendees Jeff Alascio, Alex Bosenberg, Robert Boteler, Bria n Carlson, Daniel Cohen, Katie Coughlin, Charles Foster, Jeremiah Freeman, Emily Marchetti, Harry Massie, Jiangang Hu, Elizabeth Kohl, Christopher Lau, Brent McManis, Laura Petrillo-Groh, Callie Re is, Arnie Sdano, Brent McManis, Steve Thompson, Daniel Weintraub, Sarah Widder and Alison Williams

Day 2—Working Group Meeting #5, April 30, 2014 Facilitator Doug Brookman called the Working Group (WG) meeting to order and welcomed all present at 9:45AM. All the members present for Day 1 were present for Day 2. One member was absent.

The facilitator described a delay in the meeting start time. The court reporter was late. Once the court reporter arrived the WG started. Everyone present introduced him/herself. While the WG was waiting for the meeting to formally commence, the memb ers had an informal discussion on workload and scheduling issues. As noted previously, the WG has a lot of work to do to arrive at a recommended standard and complete a term sheet and only three more scheduled meeting dates.

In discussion, Al Huber recommended that the WG tag an additional day onto the existing remaining meeting dates. Members checked their calendars and, surprisingly, that was a wo rkable solution. The WG established the following new dates: June 17 (9AM-5PM) and July 25 (8AM-3PM). There was2 

### Page | 2 discussion on holding the third meeting day from 8AM to Noon. And, also that it could be featured as a decision-making day. For now, the third day of meet ings will remain as the currently scheduled last meeting day is, from 8AM-3PM.

In addition, the WG discussed having a two-hour we binar once every two weeks to cover analytical material and provide an opportunity to comment in advance of formal meetings. 1PM EST was established as the time for any of WG’s webinars. May 14 was established as the first webinar date.

Members also discussed the efficacy and usefulness of the SharePoint site. Several members had trouble with access. Most found it difficult to use. DOE will consider seeking an alternate pathway instead of SharePoint. Members also confirmed that access to the analytical team should be through Lucas Adin, so he can manage the work load, etc.

The facilitator laid out a proposed agenda:

 Metrics

 Conclude the LCC Analysis presentation

 Revisit key assumptions from the Engineering Analysis Presentation

 Other issues not listed and as they emerge

Metrics

Lucas Adin stated that the manufacturer’s caucus ha d consulted with Sarah Widder and asked her to present a proposal for a metric. Sarah Widder began pr esenting, stating that she hoped to obtain a general consensus on a high-level construct of a metric for co ntrolled and uncontrolled pumps. She started with a list of five things the WG should want to accomplish with a metric:

 Be objectively measurable from a test procedure and standard perspective

 A quantifiable metric that represents th e performance of the covered product

 Represent the energy use on that covered produc t consisting of those three components when

present

 Differentiate performance am ong pump models and pump conf igurations and communicate information about pump performance to the consumer

 Compare the efficiency of a given pump to the minimum standard level

Sarah continued: “We are trying to accomplish two thi ngs with this metric. The metric has a test procedure component and a standard component. A nd the way that they're each calculated could be

different. Dan described how the standard is set in terms of the PER, but it won't be calculated the same way the PER is calculated for a given pump model. The test procedure will describe how the PER is measured for a given pump. You have a pump in a test stand. And then you use calculations to get to the metric. The energy conservation standard is set thro ugh a different process that we discussed yesterday. Then they're comparable but not the same.”

“Today we're just talking about the test procedure side of the metric, how you compare among pump models and how you calculate the PER for a given pum p. At the bare pump level MEI measures the performance of a bare pump. I've defined two new terms so that we can differentiate between controlled pumps and uncontrolled pumps. PER with a subscript CL refers to a constant load pump energy rating, and then the PER with a subscript VL for a pump-moto r-controls refers to a variable load pump energy rating, sort of like the highway-city comparison we we re using earlier. The controlled and variable load

will have the same or a similar construct. It will be equally weighted, average of electrical input power to the pump with a minimally compliant, uncontrolled pu mp as the denominator. So that would be the standard that we're setting through a different process.3 

### Page | 3 “I've defined some of the terms here. PER is a pump en ergy rating. W, or omega, is the weighting. You could or could not have a load control factor. The PI is power input to the pump at the driver or the

motor. And the main difference for controlled versus variable load is the weighting points. For an uncontrolled pump, we would use the weighting points of 75 percent, 100 percent, 110 percent of BEP flow, as is assumed in the EU so that they are th e same load points and equal weighting. The motor performance would account for losses and would be either th at of the motor that is paired with that pump if the pump is sold with the motor or a minimally co mpliant motor, as we have discussed previously. The equation is, essentially, we have the weighted averag e input power on the numerator and the denominator becomes the minimally compliant standard level. There's no assumption for controls performance here. We're not accounting for a standardized drive effi ciency. There are no controls because it's an

uncontrolled situation.”

Continuing: “Conversely, for a variable load, a cont rolled pump, we have adjusted the load points somewhat to provide more explicit differentiation of the benefit you get from applying controls to a variable load. We have 25 percent, 50 percent, 75 percent, and 100 percent of BEP flow, equal weighting, and the exact same denominator.

A motor manufacturer asked, are we required as a motor manufacturer to measure our efficiencies at those loads? Sarah: “no, the pump manufacturers or whoever is certifying this pump would take the full load losses of a motor that's paired with that mini mally compliant pump and then use a default loss curve

that's been defined to determine the losses at loads other than full load.”

A member inquired about a default loss curve. Is that something that you will have as part of the formulation? Sarah: “yes.” The member con tinued that he had concer ns about defaulting all technologies into one default loss curve. Sarah ac knowledged that was “a really excellent observation and something we need to discuss in more detail. At this point, I would really like to reach agreement on the high-level construct of this metric. But if we could agree on the numerator and denominator and the general idea of what applies to controlled versus vari able, that would be my goal today. And then we can revisit how we specifically account for motor losses a nd other things like that in the future.”

Sarah reiterated that “what I'd really like for us to consider and agree on today is that we establish separate but similar metrics for controlled versus vari able load. We will account for motor losses in some format. This is at a high level.”

A member asked “for any given pump, would you report both of these, the constant load and variable load PERs, or would it be dependent on the configuration th at the pump is sold in?” Sara: “that's something

the WG has to discuss.”

Lucas Adin asked how the manufacturer’s caucus envisi oned this in practice? Al Huber responded, “We discussed it, and we believe we will probably publish a nameplate or a label that will have both because we have no idea how the customer is going to use it...so the information should be there for every

model.”

Lucas continued, “our understanding is that, at least the way that we normally do things, only one of those numbers would actually be the number to which a product is subject to a standard. So we'd set a standard using one of those metrics. And a ll products would be subject to a standard on that basis, but the other would be like a descriptive metric that would be for c onsumer value, and it could be on the label and that kind of thing.” Al Huber: “yes. That's fine.” Sarah continued, describing some major assumptions imp licit in the metric for which she hoped to obtain

some resolution:4 

### Page | 4  We're going to account for losses. We don't specify how but at a general level, we would like to

account for motor losses.

 Equal weighting of the pump input power at these load points in our numerator.

 We're going to have the minimally compliant unc ontrolled pump as a denominator in both cases. “This will make the PER just in terms of how you're observing it on a label range from zero to one, where one is the worst pump you can buy. We had talked previously about trying to make a metric where higher is better. With this, you could either flip them or do one minus this metric. I

feel comfortable with a lower is better scen ario, but the Working Group can certainly discuss

that.”

 An assumption surrounding drive efficiency. “I don't necessarily feel tied to 96 percent, but that would just be a ratio that you can see that's factored out in the left-hand side to account for the fact that you will observe some increased power b ecause of the drive efficiency. And that's easy to accomplish in this metric.”

A member stated that typically pumps are listed in e fficiency, a higher-efficiency pump is better. Sarah answered, “we have to think about these not as efficien cy because even in the cons tant load application, lower is better. Lower is better with PER.” A manufacturer contributed, “I'm used to seeing efficiency in the higher-efficiency is better. But we're really no t talking about pump efficiency here. We're talking about horsepower. And so the lower horsepower we u se or the less horsepower we use, that is better. That's why we (manufacturers) went along with it. We think it's reasonable. Now, I don't know how good a metric is going to be at one to zero and you've got a .5 and a .25. You might better to up that times five and make it five, four, three, or two, one, or something.”

A manufacturer described a wider arc of testing issues: “the activity that's going on here is a three-part activity. The Europeans are requiring this as part of the regulation for the motor, drive, and obviously extended product. The IEC version of that is doing a similar approach...They're going to develop a drive efficiency, a motor efficiency use on a drive -- so each one of these will be individually identified as efficiency levels -- and then the whole extended product itself. So a three-part type approach where the extended product is more like an approach to use, rather than a defined level, much like how the Euro pump standard is today.”

Another manufacturer added, “We are going to have to deviate from what the Europeans are doing, mainly because the DOE can only regulate the manufacturer; whereas, Europe can regulate the marketplace, and we can't here or we don't. So y ou're going to end up with a different scheme. We finally realized that down the -- you're going to end up with some differences. And that's the reason why. Now, Europeans don't like it, but that's the way it is.”

A member stated that the WG needed some examples to see how the numbers fall out, especially contrast uncontrolled with controlled pumps. Sarah responded that we could do th ree examples. “One is a PER for a constant load application—it is just rated as a bare pump and we're applying the constant load metric. It would have a PER in the way we define th e metric, .9. Let's say it's a little bit better than the

minimum standard that we have set. So it's near one but a little bit less than one because it has the default

minimum efficient motor and no controls. So it's not going to be able to be that much better than the standard. There's not that much you can do from a hydraulic perspective. We talked about that yesterday.”

“If I took that same pump and rated it with a moto r that was slightly better than the DOE minimum standard motor, that would further reduce my PER. So that benefit and efficiency that you are achieving from the motor would be captured. Let's say you went from a .9 to a .87.”5 

### Page | 5 “If you were then to put controls on, let's say, variable frequency drive, on that same pump and motor package, that would probably reduce your PER by usi ng the load points that we have assumed, something like 50 percent. So you would go from like a .87 to something less than .5, .4 or something.”

A member asked if it is possible to have a PER of one . Sarah: “Yes, that would be a minimally compliant motor....it would be exactly equal to the standard.”

Members questioned the application of the motor and the impact of different load points. Sarah: “in regard to application to the motor... .one thing we didn't present here is now the motor is sized for these calculations. So we're going to assume a defined and universally applicable sizing method where the motor is representative of what is done in the indu stry but above the BEP flow point. And so the 110percent BEP flow point will not be larger than the full load of the motor. So there will be no overspeeding of the motor.”

A member speculated “one thing that will probably happen is eventually if the motor guys actually do come up with something, there will an AEDM, altern ative efficiency determination method. And then you will be able to calculate it more than one way. But for this one, we're starting with a base one (a default value)....But as they figure out how their motors perform, then -- what happens is it will be the -- most people will just choose the calculation met hod because it doesn't cost anything to certify it.”

Members asked about implementation, how labels/namep lates would work for constant load and variable load conditions. Lucas asked “how you compare a thro ttled pump to a pump used with a VFD. So the pump that was sold just as a bare pump plus motor (would) have that metric use for comparison on it. So, say, if you were to use this pump with a VFD and control its speed, this is what its rating would look like.” Al Huber “You would have to have both numbers on the nameplate or the label.”

As the presentation/discussion on the metric moved toward closure, members still had questions. They wanted examples and wanted to be clearer on impl ementation, labeling and other specifics. Other members suggested that a preliminary vote on this metr ic construct would be useful. There seemed to be general agreement among members that this approach was workable. In discussion, several members indicated that they were not ready to cast even a preliminary vote on this metric construct.

Lucas Adin contributed that “from a logistical standpoi nt, if we don't vote on this today, like I've said previously, I think, it doesn't stop the train on st andards analysis...the main area where this becomes important is in the test procedure ....so I think we can keep on our path prospectively. We just have to be pretty sure about which questions we need to resolve. And I am confident that we can resolve them so that we can definitely have a vote, certainly by the next meeting,...”

Greg Case added, “We haven't said anything to this group, but HI has started a new task force that's supporting the ASRAC HI members in calculations. And we have 15 engineers. Our basic goal for that

task force was we wanted all of the manufacturers to have a clearer understanding of what the metric was and calculate through the various metrics that were ava ilable to us. And, with that, we meet every Friday on this task force now. And we will be looking at this this Friday with what we come away with here and sending those 15 engineers out to run their current pu mp databases through this .” He concluded by asking that no vote be taken.

After considerable discussion, the facilitator concl uded that enough members were uncomfortable taking a vote that the WG would not vote that day. He noted , nevertheless, that there seemed to be a lot comfort and support for the presented construct among virtually all members.6 

### Page | 6 In discussion, the members generated a list of questions/areas for further discussion at the WG’s next meeting (or webinar).

The facilitator noted the "Items to Discuss at the Next Meeting Webinar" recorded by Sarah Widder:

 Metric nomenclature.

 Comparison of MEI and PER.

 Impact of test procedure and metric on standard.

 Definition of basic model.

 Examples for different pump configurations.

 Implementation of PER sub-CL and PER sub-VL with the sub elements.

 Labeling/marketing logistics, including sales channels.

 Additional reported information or label information. Who is the manufacturer?

 Market impacts, especially application to utility programs

 Motor and driver part load loss factor testing versus calculation options.

 Testing burden.

 Certification and enforcement issues.

Sarah Widder confirmed that the WG would be getting a new updated PER calculator spreadsheet.

The facilitator confirmed that a webinar would be held on May 14 th , from 1:00-3:00 PM EDT and that metrics would be the topic for the first hour followed by a discussion on standards issues.

Returning from the lunch break, the facilitator described the informal scheduling discussion that the WG had while it was waiting for the court reporter to arri ve in the morning. He described that he had consulted with Betsy Kohl to make sure the WG could have an informal discussion on process items only—the timeline and meeting schedul e. Accordingly, the WG discussed the workload, and considered additional meeting dates. In that discussion, we est ablished two new meeting dat es, with one new day of meetings being added to the sche duled June and July. The new dates are June 17 and July 25.

Lifecycle Cost Analysis Katie Coughlin began presenting, picking up where she ended the previous day: “the energy use, the LCC, and the engineering are all very closely coupled. ......Given the number of issues that have been raised about the engineering and what will actually ha ppen to the market under a standard, I think that it's best to look at the LCC results that I am going to present as a scenario anal ysis, rather than some prediction of what the actual cost-benefit will be....from the energy use calculation, we are developing distributions of duty points; load profile shapes; a nd annual hours of operation; and, finally, this BEP offset that we used to represent the difference betw een the duty point and the BEP for the pump. All of these are going to then be imported into the LCC. And we develop a very large LCC sample around these different distributions. And this lifecycle cost is gene rally one of the factors that is used to make the decision about the standard level. Typically, the crite ria are that you really can't pass a standard with a substantial fraction of the users who have negative LCC savings. Beyond that, there's no hard and fast

rule about what LCC has to be or can't be.”

Continuing, “overall, the purpose here, then, is to assess the impacts to the consumer of the change in both the purchase price and the operating cost of the unit. The LCC is the sum of the total installed cost plus the sum of the annual operating costs over the lifet ime of the pump applying a discount rate, a sort of real discount rate, which represents the actual cost of alternative investments, with the actual return on

alternative investments. We do this Monte Carlo a pproach, which really just means that for many of these variables we use a sampling from a distribution. And then we pick some number, some large7 

### Page | 7 number, for the total sample that is just meant to be large enough to represent all the variability that might be in these various quantities. So we typically use 10,000 LCC -- 10,000 individual LCC calculations.”

“We start with the engineering analysis ....And then we have the markups analysis....those two go into essentially determining the customer price. And we a dd installation costs. And that defines the total installed cost. Installation costs are only relevant if th ey depend on the standard level, which they don't in this case or that's what we're assuming....we start with the energy use calculation that gives us the energy consumption. Then we have electricity prices. Th at goes into an annual energy cost. Then we have repair and maintenance. That goes into the annual op erating cost. Then we add the lifetime, a discount rate, and a trend on electricity prices over the lifetim e of the unit. We get up with the lifetime operating cost. So the total installed cost generally goes up. Lifetime operating cost goes down. The sum of the two is either positive or negative. And that's essentially all we really care about at the end of the day. And that's how we defined the lifecycle cost....the add itional inputs are repair and maintenance, they only really matter if they're different between different standard levels and we're assuming that they aren't. So we really aren't counting them at the moment. So the lifetime discount rates (and) electricity price trend are the additional inputs.”

Katie continued: “So the mechanics of the LCC again are to create the sample of 10,000 what I call pump

installations. So the installation is the combination of a user and a pump. So there's user data that does not change under the efficiency level. So, for ex ample, if a pump is operated a certain number of hours per year and you expect it to have a certain lifetime, that's not going to change when we change the standard level. Otherwise you don't have a good comparis on. So the user characteristics are selected and then fixed. And then on the pump side, we go through each nominal efficiency level. And if the pump

that's chosen in the base case is above the efficiency criterion, then we just leave it alone. Otherwise, if it fails, we have to find a new pump for that user. So right now we're using -- again, this is where the scenario analysis comes in, essentially. So dependi ng on the product and how well you can represent the market, you can have different types of what we call consumer choice models to understand how when somebody's pump is no longer available for sale, what ar e they going to do. Currently we take the kind of simplest method of choosing and just say they're going to buy the cheapest thing that's still available to them. And, to add a little bit of variability to that, we defined a ten percent price band around the cheapest pump. And you can just randomly pick something from that.”

“So one of the -- so now I am going to get into thi ngs that are really just calculation issues because we have the data that came from the manufacturers, but we need to kind of set things up so we can go through this calculation method in the way that we normally do because we do LCCs all the time. And they all have to be kind of consistent . So one of the things that we really need to do an LCC is to be able to say, ‘Okay. This is an equivalent pump under a ll standard levels.’ And I need a distribution of efficiencies available so that I can look at what happens at each standard level. So with the data that we have, the way we set this up is to create what we call representative units....The idea is, rather than consider each individual pump, we just, say, create bins in your space of power and flow. We're defining our duty point here as power and flow. And within a bin, we say, just take one pump out of that bin and call that a representative pump."

A member asked if the analysis uses a simple distribution of available products or some sort of market weighting? Katie replied: “We are actually using both. So for the base case, we were defining the average pump using the current shipments. But to understand what might happen at higher standard levels, we're keeping all the models in the analysis, ev en if they don't currently have any shipments. So within each bin, essentially we start off with, say, ei ght models. And we weight those models by the shipments to come up with a bin average flow, bi n average power, specific speed. We create pump curves and efficiency curves based on the bin average data. And we leave the C-values alone. So the Cvalues are then -- because the C-values are sort of inde pendent of flow and specific speed. So they don't8 

### Page | 8 actually care where you are on this plot. And the list of C-values, then, gives us the basis for defining a

distribution of efficiencies within that bin.”

“And then there's another step....once you have defined an average pump, you need to create the actual efficiency and price distribution that goes with the distri bution of efficiencies. So that's what the next two

slides are meant to illustrate. So now I have added -- if you think of the previous plot, I am taking just the flow axis on the horizontal. And now I've put the e fficiency, the actual pump efficiency, on the vertical

axis because that is the number that goes into the energy use calculati on (handout p.22). And those green stars are pumps. Those two black vertical lines repres ent the limits of a given bin. And the C-values, a surface with a constant C-value, is represented here by that green line. So, as we were discussing yesterday, a constant C-value is a sort of equivalent efficiency across a range of sizes. So to create our actual efficiency distribution for this bin average pump, we basically just have to slide those stars onto a vertical line that lines up with the value of the bin average flow.”

Katie continued: “we start off with this list of models . In each model, we have flow head, we have units shipped, we have specific speed, we have a C-value de fined for that from that European equation. It's always the same equation. So the C-value itself is a number that is defined for the pump. The question of

which C-value defines a standard is not relevant here. We're just talk ing about the pumps themselves. So what I want to do here is I want to say, well, I want to treat all the pumps in this bin, which have different flows, different powers. I want to treat them as e quivalent to a user. So I have to normalize that variability across power and specific speed and so that I can say if the pump at the right-hand side of the bin has one efficiency, and the pump at the left-hand side of the bin has a different efficiency because they have different flows. And I want to say, what if they were both at the flow point of the weighted average? What would their efficiencies be in that case? And I can do that using the equation that defines MEI, that that surface equation just says, for a given C-value, if you move around to a different flow and specific speed, how does your efficiency change? That is what that equation actually tells you.”

And continuing: “So I do that here. I use the equation from the EU that we are also adopting. And I just calculate what the efficiency would be if I moved a ll those pump flow point, duty points over to the value for my bin average. That gives me an efficiency. I already know the bin average flow had all the rest of it. And the one other thing I need now is the pump price. And since this is no longer a real pump, I can't use a real price. I use the model price that Dan h as developed from the engineering. So now we have a situation where for a given representative flow point, I have now a set of efficiencies that all correspond to that fixed flow point. I have a set of prices that go with those efficiencies. And I can begin to do the analysis, which tells me, suppose I was buying that lowest-efficiency pump and it got kicked out of the market? What would happen? What would be the next pump I would buy? What would its efficiency

be?”

And continuing: “So, essentially, now we're looking at the same setup of an installation as a pump plus a user (handout p.24). But now I only have -- I have 81 bins in which I have these representative pumps. The data is associated with the pump, and I have the data associated with the user. So to model various bits of the economics, we include in our description of the user the sector, which here is -- we have commercial, industrial, municipal, and agriculture. And we model the application because that affects the hours of use. The sector is the discount rates, cost of capital, that sort of thing depend on the sector. And electricity prices also depend on the sector. So that's why we include those. The rest of these are pretty much we are taking the BEP offset from the energy use. There's a load profile. We have the electricity price. We have the discount rate. We have the life time. And then we also need to weight. So what fraction of pumps are irrigation pumps that are not well pumps, that sort of thing? What fraction of pumps are used for pressure boost in the industry? That weight calculation...is fairly complicated....but it's just accounting. It's really just taking data tables and manipulating them. Essentially, we use these three data sources listed on the left (handout p.25) th at I mentioned for the energy use calculation. We9 

### Page | 9 have this motors database, which gives us a sense of , within each power range of motors, what is the distribution across application and sector. We're using also the agriculture irrigation data and the PG&E pump test data. To get pump distribution by sector, we have a consultant estimate. And then we're using the manufacturer shipments data to distribute pumps by type, flow, and power. So all of this, we end up being able to say, I have specified my sector, my a pplication, my pump type, my pump speed. And I can say, that's four percent of pumps. This is eight percent of pumps and that sort of thing. It's, again, something that you would have to do to complete the calculation. It generally doesn't affect the results that strongly.”

A member questioned the seven and ten-cent per kilowatt hour electricity rate projections. He also noted that many utilities are moving to time-of-use smart ra tes, which are time and seasonally differentiated. This should be reflected in the analysis.

Continuing, Katie stated that “discount rates are used to determine the present value of the lifetime operating expenses. We use the weighted average cost of capital methodology, which is -- essentially, what this does is say if I have a choice of sp ending money on a more efficient pump versus buying something else that's useful to me in my business, what is the potential return on that alternative investment? So the weighted average cost of capital combines the financial cost of debt if you have to finance the purchase with debt versus cost of equity.... this gets into now this concept of how the products

are distributed over the market. So we call this the base case efficiency distribution. This represents the current distribution of products by efficiency. And, essentially, we try to use the LCC to sort of represent not just what happens when you buy a more effi cient pump but how many people are actually not impacted at all because they already bought a more effi cient pump. So this is why we need this base case

distribution.”

Several members commented on the incongruities/incons istencies in the base case efficiency distribution table (handout p.33), noting, for example, that very few pumps will be in the PER85 range.

Continuing, Katie presented the average life cycle cost and average life cycle cost savings estimates (handout p.34, 35): “so now we get to example results. This is a scenario -- and I'm going to talk in a

moment about the cost of the model because that's ve ry confusing I think. So essentially what we have here is the lifecycle cost, the total lifecycle cost for the sample average for each product class as a function of these PER values....what is happening at each PER is we are getting all of the users who were buying a failing pump and giving them a new pump. And I think the thing that you want to take away from this is, first of all, that the change in lifecycle cost is a small number compared to the lifecycle cost. So we're looking at pretty marginal differences here.”

Katie concluded by presenting some example resu lts and interpretations (handout p.37, 38):

 The LCC is the sum of a cost and a benefit which are calculated independently

 The LCC benefit provides an upper bound on the cost of efficiency that the user can pay without

economic loss

 The cost of improving efficiency is summarized in the ‘cost curve’, which shows the product cost versus C-value for a given pump.

Members returned to the issue of 30-year amortization and a discount rate of 10 percent, stating that kind of payback is totally unrealistic in the market place. Dan Weintraub responded: “I think what Katie is trying to get at is that we have to get away from th e idea of what's the payback to that, because you can look at the INPV to the industry, we can look at how you guys are going to fare with what you could actually get in the market. What Katie is trying to ge t at is that she needs to come up with a hybrid of what's the value of the efficiency in the marketplace, and what could those pumps be valued at? What could that price be for you to sell it at? And then Chris is going to run scenarios of what are different10 

### Page | 10 markup schemes that could possibly happen....And you'll be able to bound how the industry will make their money back or not make their money back ove r the timeframe depending on what the market will

bear.”

A member inquired about the time and cost involved in manufacturing a new, more efficient pump, that the costs seem similar regardless of the efficiency ga in. A manufacturer replied that the costs for the more efficient pump are higher because the design pro cess involves multiple iterations to arrive at those new levels of efficiency.

Continuing, he asked for clarification, how DOE in setting a standard, balances the benefits to consumers versus the burden on manufacturers. He stated “are they equally weighted?....because the cost to what you are going to gain is, for the manufacturer, is terribl e.” Another manufacturer restated his concern that “we are opening up Pandora's box for competition from offshore.”

A member of the energy efficiency caucus responded “In every one of these standards improvement processes, we hear your point of view that there is some industry impact....The way I rationalize it is, unfortunately, American industry is subject to international competition. And incrementally these rules bring some energy savings benefit, and I don't think pr oportionately damage jobs as much as the reality of international competition anyway.”

Lucas Adin responding to the manufacturers concerns sai d: “Unfortunately, there's no definitive way that I can tell you this one factor matters more than another. It really -- there are seven factors that we have to consider in evaluating which standard level is justifiable in a partic ular case. And in every standards rulemaking we do, those have differe nt considerations....We all have to vote on it based on how we feel about these different things.”

Another member reinforced those remarks: “I want to restate there are -- as Lu cas said, there are seven factors here. Each one of them gets weighed di fferentially in each rulemaking. And having been involved in multiple of these, I can tell you there is no thumb on the scale for any one of them. Each time

it's a different consideration. Sometimes it's the ma nufacturing impact that drives it; sometimes it's the consumer impact....and I think I at least came to th is table wanting to weigh those equally and find out

the information that....as it unfolds we'll see what the manufacturing benefits and costs are and the consumer benefits and costs. I think that's, to me, an important factor. And we will weigh those and

reach some conclusion.”

Revisiting Engineering Analysis Dan Weintraub returned to the issues that elicited the greatest responses on Day 1, as follows: “The goal here is to nail down these inputs. So when we come back to it with updates, we are not talking about assumptions....the number one assumption that was up for discussion, which we should talk about first, probably the biggest, was percent of pumps dropped....what we came to agree upon, myself and the manufacturers, talking about the data, would be 25 pe rcent of pumps are dropped at the low PER level. Ten. And then at 40, going down 15. Now, I actually have numbers to back this up, as I went back into

the data.”

Continuing, Dan said “We overestimated our (previous) estimates....in reality, talking with the manufacturers, the ones who didn't tell us anything is because they are not planning on really dropping many pumps. And the general consensus was zero to 10 percent for a general manufacturer in the industry who didn't have any other reason, such as a large conglomerate industry, to not drop pumps and bring in other models....So if you say 10 percent fro m the remaining models that have failed are the ones that drop, you get 15 models drop of all the rest of the pumps, aside from the people we talked to. So you have 34 pumps being dropped and 15 pumps being dropped, and it ends up being 24 percent when you11 

### Page | 11 work these numbers. Similarly, going down the line, assuming that less pumps are dropped as you go further out, just like we had learned from the other manufacturers, going down to I think five percent of the pumps are dropped from the manufacturers that we have not spoken to because they weren't planning on really dropping many. You put those numbers together and it scales down to 16 and then out to 15. So we are proposing modeling 25, linearly going down to 15 at 40, and then 15 out, based on our discussions. And I think the manufacturers are in agreement this is for the advocates to evaluate this.”

Continuing, Dan described changes to MPC when switc hing to advanced casting: “What our data showed from surveys from manufacturers -- th e average cost increase of those reporting was two percent, and there was a maximum of 15 percent increase and a minimum of minus 15 percent increase. So some manufacturers reported that switching to the advanced casting would save money, some reported that it would cost a little more money, and on average it came out to two percent over, which we looked at as

zero cost increase.”

A participant indicated that investment castings are purchased with a larger minimum order size, so manufacturers incur a larger cost from holding a larger inventory.

Dan continued, describing additional improveme nts to the analysis based on the following:

 “three percent of failing pumps would be polished”

 Higher levels of efficiency (PER85) will force everyone to use VFDs

 Solid modeling utilizing CAD design tools will cost more

Dan concluded his presentation, stati ng: “we've gone through the list. Unless anyone has objections, so it

seems like the consensus on the HI side was that we are going to continue with the costs that we went through, that we originally used. Okay? And no objections. So we're going to continue on with the cost

structure.”

Sarah Widder confirmed she was worked on a revised PER calculator

The facilitator closed out the session with a brief summary of the WG’s work:

 On Day 1 we had a very detailed description of the market and technology screening and engineering analysis

 On Day 2 we started off the meeting late becau se we didn't have the court reporter present. Informally we had a productive discussion on workload and scheduling and established some supplemental meeting dates—J une 17th and July 25th.

 Once we got underway at 9:45 in the morning, we had a detailed presentation and discussion on metrics. We obtained a significant level of unde rstanding and comfort with the presented metrics

construct. The WG chose not to vote on it.

 We established a webinar for May 14th.

 We continued with a detailed presentation on lifecycle cost analysis

 We closed out Day 2 with a detailed reconsidera tion/revisions to the engineering analysis based on feedback that the analysts received yesterday.

Lucas Adin made closing remarks: “we have obviously presented a lot over the last couple of days, and we have gotten some initial feedback, which is great . We want to get as much feedback as we can on everything that we present. I want to reiterate...tha t regardless of what the information on the screen in our preliminary analysis appears to suggest, DOE hasn't made any decisions on any of this yet. We don't have a position that we have already predetermined or anything to that effect.....I've gotten a couple of questions about whether you can submit comments and new information in the interim periods between12 

### Page | 12 these meetings. Absolutely. We hope that you would. We want to be able to incorporate as much feedback as you're able to provide us. And we 've gotten some new data....That's very helpful.”

A manufacturer closed by reiterating the concern about the ability of the industry to pass along higher

costs.

The WG meeting concluded at 2:45 PM.

Meeting Summary prepared by Doug Brookman May 27, 2014 publicsolutions@earthlink.net