1

UNITED STATES DEPARTMENT OF ENERGY

PUBLIC MEETING ON ENERGY CONSERVATION STANDARDS FOR

SMALL ELECTRIC MOTORS

U.S. Department of Energy

Room 1E-245

1000 Independence Avenue, Southwest

Washington, D.C.

Thursday, September 13, 2007

9:00 a.m.

Participants

DOUG BROOKMAN, Facilitator

RONALD LEWIS

Department of Energy (DOE)

ROB BOTELER

Emerson

ANTONIO BOUZA

Department of Energy (DOE)

TIM SCHUMANN

Sew-Eurodrive

MAHIMA GUPTA

Navigant Consulting

BEN BARNETT

Emerson

TOM HINK

Regal Beloit

MIKE SCHOLAND

Navigant Consulting

ROBERT VAN BUSKIRK

LBNL

STEVE NADEL

American Council for an Energy Efficient

Economy

ERIC STAS

Department of Energy (DOE)

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A G E N D A

AGENDA ITEM:

Welcome

Ron Lewis

Agenda Review

Doug Brookman

Opening Remarks

Rob Boteler, Emerson Motor Company

Rulemaking Overview and Analytical Methodology

Antonio Bouza

ANOPR ANALYSIS:

Market and Technology Assessment

Mahima Gupta

Screening Analysis

Mahima Gupta

Engineering Analysis

Mahima Gupta

Preliminary Manufacturer Impact Analysis

Michael Scholand

Afternoon Session

Markups for Equipment Price Determination, Energy

Use and End-Use Load Characterization, and

Life-Cycle Cost and Payback Period Analysis

PAGE:

4

5

9

11

27

81

88

105

Robert van Buskirk 117

Shipments Analysis and National Impact Analysis

Robert van Buskirk 145

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A G E N D A

AGENDA ITEM:

3

PAGE:

NOPR ANALYSIS:

Revisions to ANOPR Analyses and LCC Subgroup

Analysis

Robert Van Buskirk 158

Manufacturer Impact Analysis

Michael Scholand 161

Utility Impact Analysis, Employment Impact

Analysis, Environmental Assessment, and Regulatory

Impact Analysis

Robert van Buskirk 71

Closing Remarks

Antonio Bouza 176

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1 P R O C E E D I N G S

2 9:10 a.m.

3 MR. BROOKMAN: Okay. So let's begin, shall

4 we? Good morning, everybody, and welcome. This is the

5 U.S. Department of Energy's Public Meeting on Energy

6 Conservation Standards for Small Electric Motors. Nice

7 to see you here. My name is Doug Brookman. I'll be

8 facilitating today's meeting.

9 As is typically the case, we have welcoming

10 remarks, and we're fortunate to have Ron Lewis with us

11 this morning, accompanied by other staff and

12 contractors.

13 But, Ron, please.

14 Welcome

15 Ron Lewis

16 MR. LEWIS: Thank you, Doug. Good morning.

17 Welcome. Thank you for being here this morning. These

18 public meetings are meant to give you our thoughts and

19 sort of a status report, a glimpse at where we are in

20 our work on the technologies that are on the agenda

21 today.

22 We're very, very interested this early on in

23 our activities to get input and have people -- your

24 perspectives, concerns, issues that we may not have

25 addressed, things that you think are important for us

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1 to have in our thoughts and in our analysis. We're

2 hoping that nobody will be very shy, that you'll share

3 with us your concerns, and we desire those inputs.

4 So again, we thank you for attending today

5 and look forward to having some discussion with you.

6 MR. BROOKMAN: Thank you.

7 MR. LEWIS: Thanks, Doug.

8 MR. BROOKMAN: So it's our tradition to have

9 everybody introduce him- or herself, and maybe I could

10 start on this side of the room. If you'd just say your

11 name and your organizational affiliation, and we'll

12 just wind our way around, please.

13 (Introductions)

14 Agenda Review

15 Doug Brookman

16 MR. BROOKMAN: So I think all of you received

17 a packet when you signed in at the registration table.

18 There's quite a bit of information there. There is a

19 rather lengthy slide presentation. In addition, there

20 is a supplemental piece that's four pages long that

21 describes specific issues for stakeholder comment, and

22 then there's a blue document entitled "The Scope of

23 Coverage for Small Electric Motors: Energy Conservation

24 Standards Rulemaking," which has a lot of detailed

25 stuff which I'm sure we'll get into as the day goes on

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1 here.

2 I'm going to run through the agenda briefly

3 and we'll move on from there. We're doing the second

4 element listed on your agenda. Following my agenda

5 review, we want to invite any of you that wish to make

6 brief opening remarks, comments about the issues that

7 you think need to be focused on, that sort of thing.

8 We're hoping you won't read a lengthy document into the

9 record. This is a brief overview kind of an

10 opportunity.

11 As we go along today, you'll see that there's

12 lots of opportunity, lots of structure, for you to

13 comment on the framework and the analysis and the

14 various features in the work that you're going to see.

15 So following opening remarks from any of you

16 that wish to do so, we'll have a rulemaking overview

17 and the analytic methodology. Going from there, we'll

18 talk about the ANOPR analysis, the market and

19 technology assessment.

20 We'll have a break round about 10:30 or so,

21 mid morning. Following that, we'll talk about

22 screening analysis, engineering analysis, and

23 preliminary manufacturer impact analysis. There will

24 be additional discussion on those issues as required.

25 We'll break round about noon for lunch and

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1 return here round about one o'clock and talk about

2 markups for equipment price determination, energy use,

3 end-use load characterization, and life-cycle cost and

4 payback period analysis. Following that, shipments

5 analysis and national impact analysis, and then any

6 additional discussion on those issues.

7 We anticipate again a break mid afternoon,

8 and following the break a NOPR analysis and take up

9 life-cycle cost subgroup analysis, manufacturer impact

10 analysis, a whole bunch of different analyses, if you

11 will. And utility impact analysis, employment impact

12 analysis, environmental assessment, and regulatory

13 impact analysis. Those are the whole suite of

14 different analytical frameworks and tools that the

15 Departments uses when it's considering these issues.

16 Look ahead toward the requisites of the final

17 rule, and we do anticipate that there will be an

18 opportunity late this afternoon, whether it's four

19 o'clock or perhaps it might be earlier, to have anybody

20 raise any additional issues that they haven't had a

21 chance to cover yet during the course of the day.

22 So we certainly will end today no later than

23 five o'clock, and we'll see as the day goes on how we

24 progress. So that's the plan for the day.

25 Questions and comments here at the outset?

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1 (No response)

2 MR. BROOKMAN: How many of you are new to

3 these kind of proceedings here?

4 (Show of hands)

5 MR. BROOKMAN: Several of you are. Okay. If

6 you have questions or comments as we're going along,

7 please feel free to slow us down and we'll make sure we

8 try and fit them in.

9 I'd ask for your consideration for what have

10 emerged as norms during these public meetings. Please

11 speak one at a time. Please say your name for the

12 record each time you speak. Please keep the focus

13 here. Turn your cell phones to vibrate or silent mode.

14 If you have to have a sidebar conversation with

15 someone, keep it brief or take it out of the room if

16 you would, please.

17 I'm going to be queuing people to speak by

18 name as best I can. I do wish to encourage follow-on

19 comments so we get discussion going. I think that's a

20 useful thing. So please feel free to go back and forth

21 with someone.

22 These microphones, you need to put your face

23 right into them. Otherwise they won't pick up the

24 sound. This meeting is going to be recorded and there

25 will be a full transcript of all the meeting available

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1 to all the participants and for the Department's use.

2 I think that that is all that I have to cover

3 at this point. Questions, additional comments at this

4 point? Yes, Rob.

5 MR. BOTELER: Rob Boteler, Emerson Motor

6 Company.

7 MR. BROOKMAN: Good job. You did it the

8 first time out of the gate.

9 (Laughter)

10 MR. BOTELER: I'll forget.

11 MR. BROOKMAN: That was really good. Okay.

12 Opening Remarks

13 Rob Boteler, Emerson Motor Company

14 MR. BOTELER: I just wanted to make a couple

15 of comments. As you can see, the NEMA organization,

16 NEMA members, are pretty well represented here. That I

17 think kind of demonstrates our willingness to work

18 together. We've worked together in this kind of an

19 environment with this group. Jim Raba and Steve Nadel

20 and I have a long legacy of this sort of activity.

21 I would tell you that there's probably three

22 areas that we are kind of concerned about. We're

23 concerned more so on the small motors than we have been

24 in the past on integral motors with the enforcement

25 issues and the potential for a greater amount of the

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1 product coming in as an embedded component within

2 imported product. That's one of our concerns.

3 We've looked at kind of the difference that

4 we have in this structure that we had in the integral

5 motors where there are activities where we are looking

6 at outside consulting organizations helping us to

7 quantify and design and look at that end of our

8 product. That concerns us because of course we are the

9 motor guys and we like to stay on the design,

10 manufacture, and process side on our own.

11 I think the other thing is on the economic

12 feasibility. When we look at the definition of the

13 product, we are concerned and we kind of question what

14 the real economic justification is going to be for the

15 end user. We're always pleased to sell more expensive

16 motors into the marketplace. That's how we make our

17 living. But if it really doesn't benefit our customers

18 or our country we do have a concern.

19 MR. BROOKMAN: Okay. Thank you. And thank

20 you for being so concise. Other opening remarks,

21 remarks that seek to flag issues for the Department

22 here at the outset?

23 (No response)

24 MR. BROOKMAN: I see none on this side of the

25 table. Anybody else wish to open up with anything

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1 additional?

2 (No response)

3 MR. BROOKMAN: Okay. So then, on to Tony.

4 Rulemaking Overview and Analytical Methodology

5 Antonio Bouza

6 (PowerPoint presentation)

7 MR. BOUZA: Okay. The public meeting today,

8 as Doug already outlined, we're going to have

9 introductions. We already did them. Let me do a quick

10 overview of the rulemaking process, and I'll highlight,

11 you know, the different analyses that it includes: the

12 ANOPR, the NOPR, and the final rule. Those will also

13 be dived into in greater detail by the contractors

14 performing those analyses. At the end of the day,

15 we'll have closing remarks.

16 As Doug already mentioned, the process for

17 developing energy efficiency standards involves a lot

18 of analysis. We also have public notice and we also

19 have interested parties, stakeholders, participate in

20 the process. That's where you guys come in.

21 The main purpose of the framework document is

22 to present the procedural and analytical approaches

23 that the Department is going to undertake in this

24 rulemaking and also to provide a forum for discussion.

25 The Department hasn't done any work yet except the

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1 work that it performed through the determination

2 analysis. At that time the Department worked to

3 develop a very simple approach to determine is it

4 economically justified to proceed down this path of a

5 rulemaking.

6 During the whole presentation and through the

7 framework document you're going to see there were

8 little boxes. These little boxes are highlighting

9 comments that the Department seeks direct feedback on.

10 So we wish you, when you're reading the framework

11 document or during the presentation, you'll see these

12 little boxes highlighting a particular issue that we

13 want to encourage feedback from stakeholders. To aid

14 in that process we've boxed it in. So instead of

15 looking for bullets, you know, it's boxed in.

16 I also want to encourage everybody to provide

17 feedback. We do have a comment period when it ends,

18 and that is September 28th. In order for us to

19 maintain our schedule and not to fall behind, to be

20 able to meet our deadlines, we encourage everybody to

21 provide comments in a timely fashion. This is very

22 critical. In the past, certain comments would come in

23 after a certain date and then the Department would have

24 to stop, rethink sometimes, be able to start to proceed

25 forward, sometimes wouldn't be able to fully

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1 incorporate those comments into its analysis.

2 So we encourage you to submit comments by

3 September 28th. In the framework document we do

4 outline the procedure by which you should submit your

5 comments. We actually need for the record a signed

6 copy, but you can send an electronic copy, and this is

7 also in the framework document, to the

8 small electric motors std.rulemaking@ee.doe.gov.

9 So on September 28th you can send in an

10 electronic copy and then later on you can follow it up

11 with a handwritten one with your signature for the

12 record. That will actually be entered into the docket

13 and you'll have -- you know, different stakeholders can

14 come into DOE and will have access to that docket. So

15 if you have confidentiality data you want to provide to

16 the Department, please highlight that information or

17 work through the contractors on how to submit those

18 types of data to the Department so it can use that in

19 its analysis.

20 Just some background. The Energy Policy and

21 Conservation Act, EPCA, authorizes the Department of

22 Energy to establish energy conservation standards for

23 small electric motors that would be technologically

24 feasible and economically justified and would result in

25 significant energy savings. So the Department's

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1 marching mission is to set standards.

2 One of the first thresholds was the

3 determination analysis. That was recently published.

4 The determination analysis was published just last

5 year, on July 10th, 2006. It was a positive

6 determination. Using some simple spreadsheets and

7 calculations, the Department was able to determine

8 preliminarily that it would be technologically

9 feasible, economically justified, and would result in

10 significant energy savings. Considering now when we

11 embark on a full-blown rulemaking, we're going to be

12 diving into more detailed analysis.

13 As you can see, by having a positive

14 determination it was a trigger. So the Department

15 embarked on two rulemakings. One is the test

16 procedure. The test procedure is the yardstick. You

17 also have the energy conservation standard. That's

18 what we're starting today. That is how high something

19 has to be or what is that level of efficiency. So we

20 embarked on those two rulemakings.

21 For the test procedure we're going to go to a

22 notice of proposed rulemaking and then have a final

23 rule. For the energy conservation standards, the first

24 element, the first building block that we're starting

25 off, is the framework document. That's why we're here

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1 today. The next major notice or major milestone is

2 going to be an advance notice of proposed rulemaking.

3 That's going to be -- it's estimated. Later on I'll go

4 into greater detail -- next year, by September 2008.

5 And that's mostly why we're here today, to discuss the

6 analysis that will be leading up to that publication so

7 we're able to do those analyses and you're able to

8 provide some input before we even start.

9 I just want to say a few things about the

10 test procedure rulemaking. At this time the DOE does

11 not have a test procedure on the books, so we are

12 developing a test procedure. At this time we do have

13 NIST working on those activities, and I want to

14 highlight Tom Nelson. He identified himself. He's the

15 individual who's supporting the DOE in developing these

16 test procedures.

17 At this time we're looking at exploring

18 existing test procedures or how they could be modified

19 using IEEE or Canadian Standard Association test

20 procedures, how they can be strengthened and applied to

21 small motors. I know it's not the topic for today's

22 meeting, but if you have guidance or inputs that you

23 wish to provide the Department or to submit them to Tom

24 Nelson, you're more than welcome because we are going

25 down that path. Any help that we can receive is

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1 definitely worthwhile.

2 So one of the requests DOE welcomes comment

3 on --

4 MR. BOTELER: Tony? Rob Boteler. We looked

5 at the -- on the test methods, and certainly being

6 members of IEEE and being on the various committees,

7 112 is the test method we would use and recommend for

8 the three-phase product.

9 IEEE 114 has not been maintained. It's

10 actually not currently an enacted standard, but we've

11 discussed that amongst ourselves and we didn't see any

12 real major issues with 114. We believe that if there

13 was a need for us to go to IEEE and reactivate that

14 standard that we would take that as an action item.

15 MR. BOUZA: The concern that DOE does have,

16 we cannot wait until IEEE -- we can't be held or wait

17 for a standard to be fully implemented, voted on. We

18 have a very tight schedule. We have a report to

19 Congress that forces us to meet certain deadlines and

20 we're working very hard to meet those deadlines. So

21 we'll have to proceed forward.

22 So if you can -- you may have like issues or

23 concerns related to that standard or wish that -- we're

24 going to march forward, but we want to incorporate any

25 guidance that you can provide. It's great that you

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1 guys are working through IEEE or any associations and

2 fully maybe updating that standard, but we'll try our

3 best to --

4 MR. BOTELER: There's been a DOE taskforce

5 looking at 114, or a NIST taskforce?

6 MR. BOUZA: We don't have any current

7 taskforce.

8 MR. BOTELER: Technical committee; how's

9 that?

10 MR. BOUZA: No.

11 MR. BOTELER: Okay. I thought there had

12 been.

13 MR. BROOKMAN: So that's from Rob. Thank

14 you. So I think the Department -- it would be really

15 beneficial for the Department for you to comment to the

16 extent you can, whether it's 114 or whether you depart

17 from 114. That will reinforce NIST's ability to then

18 work on that test procedure. Hopefully they will all

19 harmonize in the end, right?

20 Tim, did you want to jump in here?

21 MR. SCHUMANN: No. We were just having --

22 this is Tim Schumann with Eurodrive. I was asking --

23 MR. BROOKMAN: Tom.

24 MR. SCHUMANN: -- Tom here if he was involved

25 with the 114 standard, and he said no. But basically,

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1 we're all on the same page here, that this would be the

2 best method for us to proceed with.

3 MR. BROOKMAN: Okay. Thanks for jumping in

4 with that content.

5 MR. BOUZA: In addition, if you have other

6 parties that can provide information related to these

7 test procedure activities, you know, we're more than

8 welcome to receive or tell them that DOE is starting

9 those activities and we would like, you know, feedback.

10 The next item, Bullet Number 3, will talk

11 about the energy conservation standards, the main

12 purpose of this meeting, to start off. I'll give a

13 quick overview of some of the criteria and some of the

14 analysis the Department is going to undertake.

15 EPCA directs the DOE -- later on, when the

16 DOE actually proposes a standard, it's going to be

17 using EPCA's seven criteria. So there are seven

18 criteria the Department is going to use, starting with

19 the most -- what we consider the most technologically

20 feasible design out there and work ourselves down. We

21 have these EPCA factors, and these EPCA factors that

22 are going to be used later on to propose a level and

23 the level that the DOE finally goes to, well, the

24 Department has some analysis to support each of these

25 factors.

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1 Most of these analyses are started at the

2 ANOPR and later on they're updated for the NOPR. Right

3 now, because of the report to Congress, most of the

4 ANOPR analyses that support the economic impact on

5 consumers, life-cycle cost analysis, manufacturer's

6 impact. That would also include direct employment.

7 Lifetime operating cost; that's supported by the life8 cycle cost.

9 Total projected energy savings. When we say

10 "total energy savings" we're talking for the whole

11 country. So you have the life-cycles that supports an

12 individual, then you have for the whole nation. For

13 the whole nation, that's supported by the national

14 impact.

15 Impact on utility or performance. That's

16 supported by the engineering analysis and screening

17 analysis. Impact or any lessening of competition. The

18 MIA, the manufacturer's impact analysis, that in the

19 past the DOE has done that analysis at the NOPR stage.

20 I want to draw your attention that due to the report

21 to Congress the DOE is going to be doing a preliminary

22 manufacturer's impact analysis as part of the ANOPR.

23 The need for national energy conservation,

24 that's supported by the national impact analysis, and

25 other factors that the Secretary considers -- well, and

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1 that's the environmental assessment, the utility

2 impact, and the employment impact analysis. By

3 employment we mean indirect. These are analyses later

4 on that are going to be initiated at the NOPR stage.

5 So we have some time before we undertake those

6 activities.

7 The timeline for the DOE for this rulemaking.

8 There are certain stages. At this stage right now,

9 last year we determined. We had a determination.

10 Today the main purpose of this meeting is the

11 framework. Today we actually start. In less than a

12 year we'll have to publish a notice, an advance notice

13 of proposed rulemaking. In a little bit less than a

14 year a NOPR is going to be published and then a final

15 rule.

16 At each point we'll have a public meeting

17 like today's, right now. A framework document was

18 published up on the Web and we notified users through

19 the Federal Register about the availability of that

20 document.

21 For the ANOPR, the Department will also do a

22 Federal Register notice with more detail about the

23 ANOPR analysis. That's going to be published in the

24 Federal Register notice and also announcing a public

25 meeting again. All of DOE's analysis, spreadsheets,

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1 what we call the Technical Support Document, the

2 documentation to support the DOE's analysis, how we

3 undertook something, the nuts and bolts of the

4 analysis, will also be published on the Web and you'll

5 have an opportunity to provide feedback to the DOE.

6 The final opportunity for public notice will

7 be at the NOPR, notice of proposed rulemaking. At that

8 time the DOE will broadcast, will identify a level that

9 the Department is considering and is proposing, and

10 individuals will be able at that public meeting,

11 similar to what they did at the ANOPR, augmented by the

12 three additional analyses that are performed for the

13 NOPR, will have an opportunity to comment on those

14 analyses.

15 This sort of summarizes a little bit of

16 today's meeting and the framework document as being the

17 first element in our path to a final rule. We did

18 publish a Federal Register notice. The framework

19 document provides an overview of the rulemaking process

20 and encourages stakeholder participation. We also

21 invite comments on any proposed approaches or issues

22 that you think are important or perceive to be

23 important. I know today we already highlighted a few.

24 This chart with the chevrons show a little

25 bit the flow of the analysis. Right now one of the

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1 first steps is doing a market and technology, and later

2 on we'll go into greater detail on the details of these

3 analyses and the screening analysis. The main purpose

4 is to generate certain types of small motors that are

5 going to be analyzed by the engineering analysis.

6 The engineering analysis is going to mostly -

7 - the main focus is to come up with a selling price

8 versus efficiency relationship. The ones that come

9 out, certain technologies, certain mechanisms or means

10 by which efficiency is improved, are passed on to the

11 engineering.

12 At the same time, like I mentioned earlier,

13 with the ANOPR we are going to be doing a preliminary

14 manufacturer's impact analysis that is an outcome of

15 the engineering. After the engineering, as the

16 products, we'll come up with additional costs

17 associated with markups for equipment and price

18 determination. We'll also be doing -- as part of the

19 life-cycle cost we have to come up with energy use and

20 energy use load characterization. How are these small

21 motors used out in the field. What kind of profiles,

22 the cost associated with those.

23 That feeds into the life-cycle and the

24 payback period analysis. So right here we're talking

25 about the individual user. We find out what are his

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1 costs, what are the economics to that user if he buys a

2 more expensive small motor compared to the baseline

3 unit that characterizes what's currently out there.

4 This is -- we also have a shipment analysis.

5 The only way that you're able to calculate for the

6 whole nation the energy savings or how much energy are

7 going to be saved is if you know how many units of

8 these are being sold into the marketplace and also what

9 kind of impacts going to a certain level may have. So

10 that's an input into the national impact analysis.

11 Later during the day we'll go into greater

12 detail about the nuts and bolts of these analyses.

13 The purpose of the ANOPR public meeting that

14 will happen next year will be to present the

15 methodologies for the ANOPR analysis and to present the

16 results, characterize them. It'll be the first time --

17 today the DOE has no results to present. We just have

18 -- we're going to be presenting the ideas and the

19 concepts that are going to drive us to perform some

20 analysis. We'll get feedback from stakeholders on how

21 we should incorporate certain factors, some guidance,

22 some information, and next year you'll be able to see

23 the results of those efforts.

24 We also would -- at that time we'll seek

25 input from stakeholders on the methodologies,

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1 assumptions, and data sources that the DOE has used to

2 perform these analyses.

3 For the NOPR at that time, since the basic

4 tools have already been vetted out at that time, the

5 DOE had a public meeting. We received feedback. We

6 will look at all the comments and try to address them

7 and see where our analysis can be strengthened. At

8 that time we also will be working toward proposing a

9 level, and our first -- based on the feedback the DOE

10 will update its engineering, life-cycle, and payback

11 period analysis and national impact based on feedback

12 that the DOE receives.

13 At the same time, there's going to be new

14 analyses that the DOE is going to be performing: the

15 life-cycle subgroup analysis. Manufacturer's impact is

16 going to be -- instead of being a preliminary it now is

17 going to be a full-blown manufacturer's impact, knowing

18 what are the direct impacts. Now that you have a

19 certain level the stakes are a little bit higher and

20 manufacturers normally are able to provide to the DOE

21 with a better resolution what are the impacts of the

22 certain, discrete level that the DOE could go to.

23 Also, the utility, employment, indirect,

24 environmental assessment, and regulatory impact

25 analysis.

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1 We also -- I know later on we're going to be

2 talking about getting input from the subgroups. There

3 are certain groups, maybe, that are going to be more

4 impacted more greatly by a standard than others. So

5 that's something later on that we'll try to get

6 feedback on.

7 Okay. And the purpose of the NOPR public

8 meeting, just like the ANOPR, is to hear views of

9 stakeholders on the Department's proposed standard

10 levels. Before it was on the analysis, what were the

11 preliminaries. For the NOPR you'll have an opportunity

12 to actually comment on the level that the DOE had

13 proposed and also to obtain input on any remaining

14 issues. Sometimes later through the rulemakings issues

15 come up that weren't foreseen earlier on in the

16 process, even though we're working very hard to make

17 sure those issues surface sooner than later.

18 So if you do have issues, do not wait until

19 the NOPR. The sooner we can address them, the better

20 it is for everybody.

21 After the NOPR analysis, the DOE will receive

22 feedback and the DOE will revise the NOPR analysis, all

23 the different elements, and come up and publish a final

24 rule.

25 I do want to highlight today that being the

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1 first major part of our milestone is the end of the

2 comment period. That's going to be September 28th. So

3 please submit comments to the DOE on that date or

4 before. If it happens after we'll try our best, but we

5 -- to give full consideration and to be able to

6 maintain our schedule.

7 As you can see, this is a very aggressive

8 schedule. The ANOPR is going to be published in

9 September 2008. We also have the NOPR published in the

10 Federal Register July 2009 and the final rule February

11 2010.

12 The manufacturer may be wondering, well, what

13 happens after the DOE publishes a final rule? For this

14 product, you will have to comply with it. The

15 effective date is 36 months, three years, after the

16 final rule. So after the DOE finalizes, has a standard

17 that individuals will have to comply with, you have

18 three years to be able to ramp up to be able to have

19 that capability to produce that in the marketplace.

20 Now we're going to go into greater detail on

21 the individual elements of the analyses, those

22 components, those chevrons that I went very quickly

23 through, in greater detail, talking about the inputs to

24 those analyses. Mimi?

25 MR. BROOKMAN: Questions, briefly, at this

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1 point? Any questions?

2 (No response)

3 MR. BROOKMAN: No. Okay. We're all set.

4 Mimi.

5

6

7

Market and Technology Assessment

Mahima Gupta

(PowerPoint presentation)

8 MS. GUPTA: Hi. I'm Mimi Gupta with Navigant

9 Consulting. I will be presenting the market and

10 technology assessment, the screening analysis, and the

11 engineering analysis.

12 So the market and technology assessment is

13 one of the foundational analyses of our energy

14 conservation standards rulemaking. The purpose is to

15 characterize the market of small motors, the small

16 electric motors industry, and measures to improve

17 efficiency of small electric motors.

18 The Department achieves these objectives by

19 identifying and characterizing manufacturers of small

20 electric motors, estimating national shipments of

21 various types of motors, identifying technologies that

22 could improve motor efficiency, and identifying other

23 regulatory or non-regulatory initiatives intended to

24 improve efficiency of motors covered under this

25 rulemaking.

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1 So in general, the market and tech provides

2 information to give DOE a context for the other

3 analyses. So, how does the market and tech relate to

4 the other analyses in this rulemaking.

5 There are three critical outputs of the

6 market and technology assessment: equipment classes,

7 baseline models, and technology options. I'm going to

8 discuss each of these outputs in more detail later, but

9 I'd just like to give you a sense of how they relate to

10 the other analyses.

11 Equipment classes is basically what the

12 Department uses to group together similar types of

13 equipment. The Department will establish one standard

14 level per equipment class. Baseline models serve as

15 reference points against which the Department will

16 measure changes in efficiency and manufacturing selling

17 price as a result of the standards. Both equipment

18 classes and baseline models feed into the engineering

19 analysis.

20 Finally, technology options are basically all

21 the ways that you can make a motor more efficient.

22 These technology options are fed into the screening

23 analysis, which screens out various ones based on four

24 criteria, which I'll discuss later, and the remaining

25 technology options, called design options, go into the

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1 engineering analysis.

2 So I'd like to defer Item 3 to a later slide

3 where it appears again. It's basically just asking for

4 general information on shipments and prices and general

5 information that we need for the market and technology

6 assessment, but that will appear on a later slide.

7 So before establishing equipment classes,

8 baseline models, or technology options, the Department

9 must first establish the scope of the rulemaking. So

10 what's the definition of a small electric motor?

11 EPCA defines a small electric motor as a NEMA

12 general purpose alternating current, single speed,

13 induction motor built in a two-digit frame number

14 series in accordance with NEMA Standards Publication

15 MG1, 1987.

16 So key terms in this definition are "general

17 purpose alternating current," "single speed,"

18 "induction motor," and "two-digit frame number series."

19 So, how does MG1, 1987, define "general purpose"?

20 If you turn to your blue handout, all the

21 relevant definitions and tables from MG1, 1987, are

22 provided. We've provided this handout to serve as a

23 reference tool to facilitate discussion regarding the

24 scope of this rulemaking.

25 So as seen in Section D1 of this handout,

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1 "general purpose alternating current motors" as defined

2 by NEMA MG1 is an induction motor rated 200 horsepower

3 or less which incorporates an open construction, rated

4 continuous duty, and service factors and temperature

5 rises in accordance with several tables in the

6 standard.

7 Later on, at the end of the scope section,

8 we'll be asking for comments regarding how this

9 definition of "general purpose" in MGl defines the

10 scope of our rulemaking.

11 So another important term in the definition

12 of "small electric motor" is "two-digit frame number

13 series." How does NEMA MG1 define that term? So MGl

14 states that the frame number for a small machine shall

15 be the "D" dimension in inches multiplied by 16. You

16 can see from the figure here that the "D" dimension

17 corresponds to the dimension corresponding to the

18 center line of the shaft to the bottom of the feet of

19 the motor.

20 Within this standard MG1 identifies three

21 standard two-digit frame sizes, and that's 42, 48, and

22 56. However, DOE is aware that non-standard or metric

23 frame sizes are built, and at the end of this section

24 we'll ask for comment on whether these non-standard or

25 metric frame sizes are included in the scope of this

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1 rulemaking.

2 Finally, the third important term defined by

3 MG1 is induction motor. MG1 classifies induction

4 motors as either squirrel cage or wound rotor motors,

5 but in addition it also identifies various types of

6 motors within these two categories. Slide 34 shows a

7 breakdown of induction motors as presented by MG1.

8 In addition to being broken down as squirrel

9 cage or wound rotor motors, induction motors can be

10 broken into two groups, single-phase or poly-phase.

11 And Section D3 of your blue handout defines these terms

12 of different types of motors within these groups.

13 So single-phase squirrel cage motors are

14 broken into six different types of motors: split15 phase, resistance start, and so on. Single-phase wound

16 rotor motors are broken into three different groups:

17 repulsion, repulsion start, and repulsion induction.

18 So given all these different types of motors,

19 the Department is concerned that some types of motors

20 may not fall into the scope of this rulemaking based on

21 various performance standards for general purpose

22 motors contained in MG1. So, what are some examples of

23 this?

24 For example, split-phase and resistance start

25 motors have locked-rotor torques that may be below

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1 minimum torques required by general purpose, single2 phase small motors, as indicated by Section 12.32.2.

3 These sections are in your handout as well, in Section

4 S of your handout.

5 Another example is that shaded pole and

6 permanent split capacitor motors often have breakdown

7 torques outside the breakdown torque limits of motors

8 considered general purpose.

9 Again, at the end of this section we'd like

10 your comments on whether these tables in MG1 limit the

11 scope of this rulemaking to and exclude certain types

12 of motors.

13 Finally, the Department will also request

14 comment on the market size of wound-rotor motors that

15 meet the definition of small electric motor.

16 So now that we've identified the ways the

17 type of motor can limit the scope of our rulemaking,

18 what are the ranges of horsepower that fall under our

19 scope of rulemaking.

20 So NEMA MG1 identifies horsepower ratings for

21 small induction motors ranging from sub-fractional, or

22 below 1/20th horsepower, up to 1 horsepower. However,

23 DOE recognizes that currently some general purpose

24 alternating current single-speed induction motors built

25 in two-digit frame numbers on the market now can be up

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1 to 5 horsepower. So DOE requests comment on this

2 issue, on whether these greater-than-l-horsepower

3 motors should be included in the scope of this

4 rulemaking.

5 So in addition to MG1 defining the scope of

6 this rulemaking, Congress has also limited the scope to

7 only those small electric motors not contained as a

8 component in otherwise regulated products. Some

9 examples of covered products that may contain small

10 electric motors are residential air conditioners and

11 heat pumps, furnaces, and the list goes on.

12 So I'd like to pause here and open the floor

13 for some discussion about the scope of coverage.

14 First, Item 1 refers to or asks -- welcomes comment on

15 additional covered products such as furnaces, as we

16 just discussed, that contain small motors or other

17 factors that would affect the scope of the small

18 electric motors rulemaking.

19 DOE welcomes comment on whether small motors

20 with nonstandard frame sizes or small electric motors

21 with metric dimensions are considered to have two-digit

22 frame numbers as long as "D" is between values that

23 when multiplied by 16 equals a two-digit number.

24 DOE also invites comment on whether any

25 shaded-pole, permanent split capacitor, split-phase, or

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1 resistance-start motors are currently manufactured or

2 could be manufactured to meet the statutory definition

3 of "small electric motor."

4 In general, we welcome shipment information

5 on both squirrel-cage and wound-rotor motors, and in

6 particular wound-rotor motors that meet the definition

7 of small electric motors and what their market share

8 is.

9 Finally, DOE invites comment on horsepower

10 ratings of covered small electric motors.

11 MR. BROOKMAN: So then, maybe we could start

12 then with the questions and the subjects listed in

13 Slide 38 in your handout and receive comments on those

14 first. Then we'll move on. Rob.

15 MR. BOTELER: Rob Boteler. Well, the first

16 thing we looked at was the definition of -- let's stay

17 with the three-phase, poly-phase, and the 42, 48, and

18 56 frame. We looked at one-quarter through 3

19 horsepower, and you're introducing the 5 horsepower.

20 think we'd have to take a look at that. We didn't

21 discuss that. I mean, certainly your observation that

22 there are some products made at 5 horsepower is true.

23 I guess, to begin with, we would -- backing

24 up, we would go back to that very first EPCA

25 definition, and that is where we are beginning and we

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1 would stay with, is a general purpose continuous duty

2 product. I think that's one element that we as the

3 manufacturers in the initial regulations almost 20

4 years ago, that was a critical element. Everything

5 we're talking about today, our assumption is that that

6 remains intact, that it's general purpose continuous

7 duty product that we're talking about.

8 On the single-phase, we looked at that as the

9 one-quarter through 1 horsepower, which was in the

10 original document. We looked at -- I don't have my

11 notes in front of me, but the -- my engineering

12 buddies will jump in here, but it's the cap start, cap

13 run, and the -- there was a third one in there.

14 In the document you actually, I think -- the

15 permanent split capacitor was the other one. And the

16 split-phase motor was not one that we would recommend

17 to be included. So that was --

18 MR. BROOKMAN: Can you say why you would

19 exclude that?

20 MR. BOTELER: I'll defer to my engineering -

21 MR. BROOKMAN: Ben.

22 MR. BARNETT: Yes, Ben Barnett with Emerson.

23 I think basically we felt like that was already

24 excluded. Within the words "already adopted" in the

25 NEMA work it had already excluded it and that you had

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1 accepted that.

2 MR. BOTELER: Right. Yeah. It was excluded

3 in your document.

4 MR. BARNETT: That's the way we interpreted

5 it. We agreed with you. We said, okay, you're right.

6 MS. GUPTA: Well, I think it was excluded in

7 the determination analysis, and we were reevaluating

8 the scope of coverage for the ANOPR analysis.

9 MR. BOTELER: Okay. This is Rob again.

10 Then, if that's the case, then we'd have to go back and

11 take another look at it.

12 MS. GUPTA: Okay.

13 MR. BROOKMAN: Okay. Thank you.

14 MR. BOTELER: Let's see. Rob Boteler again.

15 Your other comment -- your other question was on --

16 well, are you ready to talk about shipping figures?

17 Did you ask that question, too?

18 MS. GUPTA: Sure, yeah.

19 MR. BOTELER: Sure? On that one, we as

20 manufacturers submit data, and once we have a better

21 definition I think we would submit data to the NEMA

22 business system. We have an economic group within NEMA

23 that does that for us.

24 We're all sitting at the table here together,

25 but at the end of the day we are actually all

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1 competitors and we hold a lot of things very

2 confidential, and our shipping numbers and our designs

3 of course are two of those things. So once we have a

4 good definition, we can provide that data to you and

5 then NEMA would provide that.

6 MS. GUPTA: So, are you aware of wound-rotor

7 motors that are shipped with two-digit frame sizes?

8 MR. BOTELER: Actually, that was the question

9 that I asked Ben. As a manufacturer, as Emerson, I

10 don't know that we make wound-rotor motors.

11 MS. GUPTA: At all.

12 MR. BOTELER: I don't believe we make them.

13 We sell a lot of motors, so I might not know

14 everything. I don't know about my other competitors

15 here. Do you make wound-rotor --

16 MR. BROOKMAN: Yes, Tom. Tom Hink.

17 MR. RINK: Tom Hink, Regal Beloit. No, as a

18 matter of fact, we are not in the two-digit wound-rotor

19 business. We don't participate in that at all.

20 MS. GUPTA: Okay.

21 MR. BROOKMAN: Okay. So, other comments?

22 Mike Scholand, yes?

23 MR. SCHOLAND: Mike Scholand from Navigant.

24 Rob, I just wanted to follow on with your question.

25 You emphasized the terms "general purpose and

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1 continuous duty" as the statutory definition. Could

2 you elaborate on both of those terms, how you interpret

3 "general purpose" and how you interpret "continuous

4 duty"?

5 MR. BOTELER: Well, I think on the general

6 purpose we look at motors that are designed for

7 multiple applications, that go into -- mostly go into

8 the after-market and some very basic applications.

9 When we look at this frame size and this horsepower,

10 whether it's three-phase or single-phase, there's a

11 very large amount that are manufactured for OEM that

12 are unique. I'll call them "definite purpose" or

13 "special purpose" motors. They don't fall into the

14 general purpose category.

15 In many, many cases, they are not rated as

16 continuous duty. In many cases they're not sold with a

17 NEMA frame designation. They're not even sold with a

18 horsepower designation. They're not -- we as

19 manufacturers, if you have a piece of equipment in your

20 home that uses one of these motors, you cannot buy that

21 motor from us. We would sell that motor back to the

22 original equipment manufacturer, and that's when you

23 would have to go back to Sears or the retailer where

24 you bought the piece of equipment and you'd have to buy

25 the motor as a spare part from them.

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1 What was your second question?

2 MR. SCHOLAND: It was the continuous duty

3 aspect.

4 MR. BOTELER: Well, yeah. In an awful lot of

5 the smaller frame sizes, small horsepower, we don't

6 build the motors. We don't nameplate them as

7 continuous duty because they're not designed for

8 continuous duty like an industrial or commercial motor.

9 When you look at the motor that's designed

10 for your chop saw that you go to Home Depot -- it just

11 happened when this came through, I happened to walk

12 through Home Depot and I started looking around and I

13 noticed a 56-frame cap-start, cap-run motor. We don't

14 want to tell you trade secrets, but Home Depot is a

15 customer. The motor that you would be looking at is

16 not a continuous duty design. It's an intermittent

17 duty design. It's probably a motor designed for 1,000

18 hours of total operating time. And I'm not talking

19 about a year, I'm talking about over the lifetime of

20 the motor.

21 I think that's where we need to -- when we

22 start to look at economic justification, we have to be

23 realistic about the operating power that a lot of this

24 equipment actually sees.

25 MR. SCHOLAND: Definitely. I know Robert

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1 will be touching on that in the LCC this afternoon, but

2 I wanted to explore a little bit more garage door

3 openers, pencil sharpeners, vacuum cleaners.

4 MR. BOTELER: Well, we're not down to that

5 size. The product we're talking about here doesn't go

6 down to pencil sharpeners. It possibly could go to

7 garage door openers. A garage door opener could be a

8 42, but that would be a product that more than likely

9 would be sold not as a 42 frame, it would be sold as a

10 special OEM product, intermittent duty, and it would be

11 name-plated with the amp draw.

12 MR. SCHOLAND: I have a question for you on

13 the two-digit frame series as well. I'm sorry, Mimi.

14 MS. GUPTA: No, go for it.

15 MR. SCHOLAND: Sorry. Mike Scholand from

16 Navigant Consulting. I guess, so the motors going into

17 those applications are not rated for continuous duty,

18 are not designed and built by your members as

19 continuous duty motors; is that what you're saying?

20 MR. BOTELER: That example, right.

21 MR. SCHOLAND: So, could you give me an

22 example of a small motor that's a general purpose

23 continuous duty that is sold?

24 MR. BOTELER: It would be something that

25 would go into our -- really into our distributor

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1 catalogue, and it would be sold just as a footed 48-

2 frame motor. I don't know where the application would

3 be. It might be in a bench grinder or something that

4 would be in a local tire repair shop or something.

5 MR. SCHOLAND: And of your total proportion

6 of sales of continuous versus intermittent duty, could

7 you just give a rough estimate -- not maybe you

8 particularly. You can make an estimate for the country

9 as a whole -- what proportion of your sales are

10 continuous duty small motor sales and what proportion

11 are the intermittent duty?

12 MR. BOTELER: I'd rather not. I don't know.

13 MR. SCHOLAND: Okay.

14 MR. BOTELER: I would tell you that the

15 continuous duty is a small percentage of the total of

16 the product.

17 MR. SCHOLAND: Okay. Sorry, Tony. Did you

18 want to ask a question on that?

19 MR. BOUZA: Yeah, yeah.

20 MR. BROOKMAN: Tony Bouza.

21 MR. BOUZA: Yeah, I have one question related

22 to the MG1 definition. When they're proposing these

23 four criteria, open construction, rated continuous

24 duty, service factor, and Class A insulation system,

25 it's all related to defining a general purpose

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1 alternating current motor. So it's just to come up

2 with the rating that it is, and you can agree or

3 disagree with me, if it's a general purpose motor,

4 right? That's all that's defined.

5 Then the statutory requirement says a NEMA

6 general purpose alternating current single-speed

7 induction motor. So it's not a one-on-one. So, could

8 a general purpose, going back, motor, could you define

9 a general purpose alternating current not be

10 continuous? Can somebody look at them and say "That

11 is," going along the same lines that Mike Scholand

12 commented? Could a non-continuous be also considered a

13 general purpose alternating current motor?

14 MR. BOTELER: No.

15 MR. BOUZA: No?

16 MR. BOTELER: No. It has to be -- a general

17 purpose motor would be continuous.

18 MR. BOUZA: It has to be continuous?

19 MR. BOTELER: Yeah.

20 MR. BOUZA: And it has to meet all of those

21 four criteria as stated?

22 MR. BOTELER: Yeah.

23 MR. BOUZA: Okay.

24 MR. BROOKMAN: Thank you, Rob. Thank you.

25 Yes, please.

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1 MR. VAN BUSKIRK: Robert Van Buskirk,

2 Lawrence Berkeley National Lab. When the Department

3 published the determination, it also put out a

4 Technical Support Document that went along with the

5 determination. So that Technical Support Document

6 identified three distribution channels, one where the

7 motor manufacturers were going directly to OEMs,

8 another where the motor manufacturers went to

9 distributors to OEMs, and the other where motor

10 manufacturers went to distributors and then to the end

11 users.

12 It had -- in that document it provided an

13 estimate. Those two OEM channels were 65 percent of

14 total motor sales, whereas the ones that went to the

15 direct users were about 35 percent of motor sales.

16 So I think a key question for us is, in the

17 breakdown that was in that Technical Support Document,

18 would there be a large fraction of the shipments that

19 were assumed to be general purpose going to OEMs that

20 would fit your definition of the non-continuous duty

21 motors? So that might be particular specific figures

22 for you to look at and comment on.

23 MR. BOTELER: Rob Boteler again. Yeah. Like

24 I say, walking away from this meeting we need to

25 understand the definition clearly enough that we can

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1 communicate with the members to be able to really drill

2 down to the numbers.

3 MR. BROOKMAN: Okay. Michael Scholand, yes.

4 MR. SCHOLAND: Mike Scholand again. I had a

5 follow-on with the two-digit frame number series. We

6 understand that the MG1, 1987, includes three numerical

7 values. It's 42, 48, and 56. However, it's an

8 equation that is the "D" dimension multiplied by 16.

9 The statute talks about two-digit number series. So,

10 is it possible to contemplate that a frame series of 10

11 and a frame series up to 99? I understand these would

12 be special-order motors that the industry standardized

13 around these three, but would you perceive those as

14 covered products or not?

15 MR. BOTELER: No. The way we perceived it

16 was if it was name-plated as a 42, 48, or 56. I'm

17 sorry. This is Rob Boteler.

18 MR. BROOKMAN: Thank you. Please. Okay,

19 Michael?

20 MR. SCHOLAND: Yeah, I'm all set, Doug.

21 Thank you.

22 MR. BROOKMAN: Mimi, I'm going to allow you

23 to go to the boxes that queue up DOE's questions and

24 quiz them about what they haven't covered yet. I

25 didn't know that they covered, for example -- did you

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1 cover the metric? That was part of Mike's question.

2 MS. GUPTA: Yeah, yeah, that's similar to

3 Mike's question.

4 MR. BROOKMAN: Yeah.

5 MS. GUPTA: I mean, would metric equivalents

6 for the two-digit frame sizes be -- would you consider

7 that general purpose two-digit frame size.

8 MR. BROOKMAN: Rob.

9 MR. BOTELER: This is Rob. That's a tough

10 one because the metric motor is not going to be sold

11 into this market, in the North American market, as a

12 drop-in general purpose, I don't think. Now, will it

13 come in as a component of a piece of equipment?

14 Absolutely.

15 So I'm kind of torn. I don't know how. I

16 mean, in the integral product we do cover and we have a

17 cross-referenced table. But I'm not sure. I don't

18 know if my colleagues have a comment or not.

19 Absolutely the metric product will be part of printing

20 presses and components that are coming in particularly

21 from Europe and also from China. But how we would

22 cross-reference that to a 42, 48, or 56 frame I'm not

23 exactly sure.

24 Didn't answer your question, did I? Sorry.

25 MR. BROOKMAN: Okay. As I'm casting my eyes

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1 down among your colleagues, no one wishes to make an

2 additional comment at this time. Tom.

3 MR. RINK: Tom Hink, Regal Beloit. I agree

4 with what Rob was talking about. It's kind of a hard

5 question to answer. Typically when you talk about a

6 42, 48, or 56 frame it could be analogous to a shoe

7 size or a coat size. It's something that everyone

8 understands. So the whole premise behind having frame

9 sizes is so that if you had a 56 frame motor and you

10 buy another 56 frame motor it should be a drop-in to

11 your application.

12 There are a lot of types of motors that may

13 not fall into those categories. Non-42, 48, or 56

14 could be an issue with imports.

15 MR. BROOKMAN: Steve Nadel.

16 MR. NADEL: Just to give a couple of

17 preliminary comments from our perspective. One, you

18 asked about metric or other frame sizes. Our tendency

19 would be to say they -- if they're general purpose they

20 should be covered. We don't want to have enforcement

21 problems. It will be not that difficult for someone

22 with an import to come up with a slightly different one

23 and say, hey, I'm going to sell this more cheaply

24 because -- so I think we should try to avoid that. I

25 recognize it gets more complicated. It's not quite

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1 standard, but if enforcement is an issue, let's not

2 create glaring loopholes.

3 More generally, we would like -- we would

4 look toward more inclusive coverage to cover those

5 motors that will be generally used that will have

6 significant operating hours. I don't care so much

7 about a chop saw that's used 12 hours a year or

8 something. That have significant enough operating

9 hours in order that higher efficiencies are

10 economically justified.

11 If we draw it too narrow, I know PG&E has

12 asked us to take a look at what DOE is covering, and if

13 too much is being left on the table to start developing

14 some proposals for the State of California to say,

15 well, DOE says they can't do this, so maybe California

16 should. I suspect the manufacturers would much prefer

17 a national standard than having California go its own

18 way.

19 So let's get this coverage and definitions

20 right, would be our advice.

21 MR. BROOKMAN: Okay. Thank you. Yes,

22 Michael Scholand.

23 MR. SCHOLAND: Sorry, Doug. Mike Scholand

24 again. I wanted to ask, and this was something I've

25 had -- I've worked with NEMA or for the Department on

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1 the transformer rulemaking. It was helpful to see the

2 reporting form that transformer manufacturers used when

3 providing data to NEMA's database. If I could get a

4 blank copy of that form, that might help us with the

5 data request or the discussion on shipments that you

6 might be able to supply the Department for the

7 shipments analysis.

8 MR. BOTELER: This is Rob Boteler. Today we

9 submit data on the integral product. We don't submit

10 data on the fractional product, so there really is no

11 form. We would be creating one.

12 MR. SCHOLAND: Creating one?

13 MR. BOTELER: Yeah. Based on the definitions

14 today, our NEMA staff would work to create the form.

15 MR. SCHOLAND: Gotcha. Okay. Thank you.

16 MR. BOTELER: I don't know if there's a

17 problem sharing the form with you, but we'll have to

18 create it first.

19 MR. SCHOLAND: Thank you.

20 MR. BROOKMAN: Thank you. Tony Bouza.

21 MR. BOUZA: Yeah. Tony Bouza. I have one

22 little question, if you're able to, and I know this is

23 going to be a topic for later today. When you define

24 continuous, you know, that the motor is rated for

25 continuous duty, can you elaborate on, later on, if

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1 this motor, we can assume that its load, the job that

2 it's placed in most often, will be used for longer

3 periods of time? So later on while they're modeling

4 the life-cycle cost you know, well, these motors are

5 rated for continuous use, most often they are used for

6 continuous use.

7 So if they're highly loaded or used more

8 frequently instead of something residential, they're

9 not going to be lightly loaded. So they're going to be

10 used in the marketplace. When we do the economic

11 analysis, we can assume that they're going to be

12 operating for longer periods of time, or we can make

13 that correlation.

14 MR. BOTELER: This is Rob. That's a tough

15 question. You're confusing two terms: "load" and

16 "hours of operation." You have to be careful there.

17 MR. BOUZA: Okay.

18 MR. BOTELER: Load, when you're a motor

19 manufacturer, means that I'm selling you a 5-horsepower

20 motor and you're running it at 2 horsepower. That's

21 the load.

22 MR. BOUZA: Okay.

23 MR. BOTELER: You can run it for five minutes

24 or five hours, but the load is the amount of horsepower

25 that you're taking out of the motor.

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1 It's very difficult, and actually, we do get

2 to that later in the discussion. But we as motor

3 manufacturers sell continuous duty motors that go into

4 applications that may run a great many hours per year

5 or they might run very, very few hours per year.

6 You're sitting in a building. Hopefully it has a

7 sprinkler system, although I don't see it, where you

8 have fire pumps. The fire pump motors are continuous

9 duty motors and they never run unless you have a fire.

10 We saw lots of other motors that go into

11 applications that they run periodically. They're

12 opening doors or they're running robots or something

13 that they run a few hours, but yet the motor is a

14 continuous duty, is designed as a continuous duty.

15 You have to remember, we make motors in our

16 general purpose arena. We all have warehouses full of

17 motors and we sell them to thousands and thousands of

18 different customers that go into thousands of

19 applications. We don't know what that application is

20 with a general purpose motor. We built it to the

21 specifications of NEMA so that the end user or the OEM

22 could purchase that motor and be able to understand

23 what the performance of that motor is going to be, but

24 we don't know that necessarily when we build motors.

25 MR. BROOKMAN: Yes.

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1 MR. VAN BUSKIRK: Robert Van Buskirk,

2 Lawrence Berkeley Lab. Again, for the determination

3 analysis and the TSD, there's a Table 3.2, which

4 provides at that stage the Department's estimates of

5 the hours of operation per year and the typical motor

6 loading for about a dozen different applications. So

7 if you could review that and find and correct any

8 discrepancies that you may find.

9 MR. BOTELER: You'll have to give me a copy

10 of that document. I probably have it here somewhere.

11 MR. VAN BUSKIRK: It's right on the Web.

12 MR. BROOKMAN: Back to you, Mimi. I want to

13 ask Mimi to -- any additional comment that she wishes

14 to seek, to do that now.

15 MS. GUPTA: Well, I wanted to hit back on

16 something we talked about earlier with general purpose

17 and the scope in terms of the types of motors covered.

18 You said that you came prepared to discuss capacitor

19 start, capacitor run, capacitor start induction run,

20 and permanent split capacitor motors as part of the

21 scope.

22 I was interested to hear what you thought

23 about the breakdown torque requirements for permanent

24 split capacitor motors as they relate to the breakdown

25 torque requirements for general purpose small induction

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1 motors because, I mean, as I saw in MG1 they don't seem

2 to overlap a great deal. So, would you consider most

3 permanent split capacitor motors general purpose?

4 MR. BROOKMAN: Rob.

5 MR. BOTELER: My career in motors has been in

6 larger motors, not smaller motors. I would tell you

7 that I would consider the vast majority to not be

8 general purpose motors. We build them -- I can't think

9 of any that we build in the general purpose category

10 and put into our distributor price book. We build them

11 all for specific applications for OEM. Well, let's not

12 say all. Let's say the vast majority.

13 MR. BROOKMAN: Tom, do you want to add on?

14 MR. HINK: I agree with Rob. The vast

15 majority, frankly, we almost consider split phases more

16 of a definite purpose application. They may not have

17 as high of a breakdown torque as defined here, they may

18 not have as high of a service factor which is defined

19 here for general purpose, and it's really more of a

20 custom design for specific applications as opposed to

21 general purpose use.

22 MS. GUPTA: Okay. Just adding onto that, the

23 definition of "general purpose" limits the insulation

24 type of insulation A. Would you --

25 MR. BROOKMAN: Are you referring to a page

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1 there?

2 MS. GUPTA: It should be in Section --

3 MR. BOUZA: It's page 2, number 4.

4 MR. BROOKMAN: Page 2 in the supplement?

5 Okay.

6 MS. GUPTA: Yeah. Class A insulation systems

7 for small motors. Would you consider only Class A

8 insulation systems as general purpose or has that

9 changed?

10 MR. BROOKMAN: This is page 2, number 4, the

11 blue sheet, which is right in the very middle of that

12 page. It says number 4, Class A insulation system with

13 temperature rise as specified. Ben.

14 MR. BARNETT: Well, basically, both classes

15 are included, A and B.

16 MS. GUPTA: I think Class B is specified for

17 medium motors.

18 MR. SCHOLAND: Mike Scholand here. That's

19 NEMA's term, "medium," not the statutory term "medium."

20

21

22

MS. GUPTA: Right.

MR. SCHOLAND: So it's considered --

MS. GUPTA: But -- okay.

23 MR. BARNETT: I mean, the way I'm

24 understanding this is, they're using the definition for

25 Class B that's found in the medium motor section but

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1 really you could use a Class B installation in these

2 motors if you wanted to and be included.

3 MS. GUPTA: Okay.

4 MR. BROOKMAN: Okay. So that was Ben Barnett

5 speaking there.

6 MR. BARNETT: Yes, I'm sorry.

7 MR. BROOKMAN: Thank you. Okay. Any

8 additional comment on this specific issue?

9 (No response)

10 MR. BROOKMAN: So Mimi, cue the others for

11 us. Oh, no, Tony's got one. Tony.

12 MR. BOUZA: This is just a general -- later

13 on you commented about if you were to open a Granger's

14 catalogue book and looked at the motors there with

15 those frame sizes, would you assume that all those

16 motors that fall into those frame sizes are general

17 purpose unless they're stated otherwise, or there

18 wouldn't be motors outside, like through normal

19 distribution chains, that are not general purpose?

20 Would somebody design a specific and sell it or can we

21 assume all the motors that make it into the marketplace

22 are general purpose? Ones that are small motors.

23 MR. BOTELER: I would tell you that if I

24 looked at the Granger catalogue in the 42, 48, and 56

25 range that's -- probably the vast majority of them

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1 would be actually included in covered products. They

2 would be HVAC product, they would be furnace motors,

3 they would be pool pump motors, and things like that.

4 I don't think I'd go as far as to say that what was

5 left that wasn't an HVAC or previously covered by the

6 system.

7 MR. BOUZA: Yeah, but since those are -- when

8 something is manufactured it's great. But once it

9 makes it into the marketplace for replacement, I would

10 assume those motors, since you're buying it, has to

11 meet the standard. It is a general purpose motor,

12 right?

13 MR. BOTELER: No. I mean, we sell motors

14 that would be in this frame size that we would sell to

15 somebody like Johnstone and that motor is designed for

16 your furnace. So it's not a general purpose motor.

17 It's specific to your York or your Trane furnace. We

18 made it for that particular unit.

19 MR. BOUZA: Yeah, but when it makes it into a

20 Granger's catalogue it's not keyed towards that

21 application anymore. It's in the marketplace. It can

22 be used. It will be a general purpose motor. You

23 know, if it's a 42 frame size it could -- even though

24 maybe it's original intent was made to go into a

25 particular manufacturer's furnace, when it makes it

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into the marketplace you can't guarantee that it's

2 going to go to that carrier of furnace. It may go to

3 somebody's fan somewhere else. It's no longer

4 earmarked or -- you know, the direct distribution

5 channel go to the general public.

6 MR. BOTELER: Right. That's why --

7 MR. BOUZA: And that's the statute, right?

8 MR. BOTELER: Right. And that's why when we

9 originally did the integral product we started out kind

10 of where Steve was headed a minute ago, looking at

11 applications. We realized very quickly that there's no

12 way that you can control in the marketplace the

13 application. You have to go back to a very clear

14 definition and going back to the NEMA standards and our

15 definition of the general purpose and special purpose

16 we believe to be the only way that we can really go to

17 market and have the necessary controls that there's a

18 possibility of any fair kind of enforcement.

19 MR. BROOKMAN: That exchange was between Tony

20 and Rob. Do you want to finish on there, Tony?

21 MR. BOUZA: Yeah. I think I'm somewhat

22 confused as -- you're saying that these motors that

23 could be in a Grainger catalogue and that could be

24 labeled as general purpose, right? Most often they

25 are.

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1 MR. BROOKMAN: Hey, Tony, Robert seems to

2 have the thought here.

3 MR. VAN BUSKIRK: Robert Van Buskirk from

4 Lawrence Berkeley Lab. When you go to the catalogue,

5 you have categories there listed: pool pump motors,

6 HVAC motors, a dozen different categories. So when

7 he's talking about the pool pump motors, you're going

8 to the pool pump motor section of the catalogue.

9 MR. BOUZA: Okay. But that was that

10 particular motor. If you looked under the 42, for some

11 of them it is a general purpose motor. I'm not saying

12 for all the applications but for some it's not, okay.

13 MR. BOTELER: Well, if it was built

14 originally to -- made up with your whatever pool pump,

15 whatever the pump was, it's not considered -- it may

16 not have feet or it may have --

17 MR. BOUZA: Right. And then it wouldn't fall

18 to be -- I'm talking about just the ones that are those

19 particular frame sizes. If it's a 42 -- for example,

20 if it's a 42 frame size general purpose, even though it

21 could be listed in -- I'm not familiar with the pool

22 pumps, but it meets the NEMA definition of a 42. It's

23 independent of its application. General purpose is a

24 general purpose.

25 MR. BOTELER: In the Granger catalogue there

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1 would be a fair number of general purpose products in

2 these frame sizes, yes.

3 MR. BROOKMAN: Tim, do you want to jump in

4 here? Tim, get the microphone up close.

5 MR. SCHUMANN: Well, what was I was going to

6 add onto that -- this is Tim from Eurodrive, Tim

7 Schumann. When, for example, a pool pump motor is

8 designed, it's designed around a typical pump head.

9 When several manufacturers make, quote, unquote, a

10 "pool pump motor" and a 46 frame motor, it's designed

11 to fit several manufacturers of heads, pump heads, to

12 make them interchangeable for the consumer. You know,

13 if you have a pool in your backyard and your motor

14 burns out or the bearing blows out, you can go to

15 Granger and buy a pool pump motor.

16 But as Rob clarified at the end, there will

17 be a section that is sold as general purpose,

18 continuous duty, Class B motors for industrial

19 applications. There will be a section just defined for

20 that. For OEMs or end users to go buy a pool pump

21 motor and try and turn a fan with it, one in a million.

22 MR. BROOKMAN: Okay. Thank you. So Mimi,

23 back to you. Any other things you wish to cue before

24 you proceed?

25 MS. GUPTA: I think we've pretty much

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1 addressed most of the comments.

2 MR. BROOKMAN: Okay.

3 MS. GUPTA: Thank you. Yeah.

4 MR. BROOKMAN: Steve Nadel.

5 MR. NADEL: Yeah. A couple of other things.

6 I think we need to be careful about drawing these

7 lines so narrow. Yes, you may make a particular motor

8 for a York and a very slightly different one for

9 Carrier Air. But they're generally going to be pretty

10 similar. You say they're both special purpose or

11 definite purpose. We're ruling out large classes of

12 motors, and there's a lot of savings there. So if we

13 don't get them here, we'll get them elsewhere.

14 In particular, we're interested in the

15 shaded-pole class. They tend to be a fairly

16 inefficient class. There's a lot of opportunities to

17 upgrade to more efficient classes. Yes, some of them

18 are very intermittent. We're not interested in those

19 so much. But there are ways to cover those. I know

20 that's what California is particularly interested in as

21 we move away from shaded-pole and high operating hour

22 applications. So again, do we do it here or do we do

23 it in Sacramento?

24 MR. BROOKMAN: Okay. So, Mimi.

25 MS. GUPTA: All right. I think we've

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1 addressed all the comments, so I'll move on.

2 So once the Department has established the

3 scope of the rulemaking, then DOE will divide small

4 electric motors into equipment classes. I'd like to

5 discuss a little bit more about that.

6 Now, as stated earlier, each equipment class

7 is given a separate efficiency level. DOE divides

8 covered equipment into classes with three criteria.

9 One is the type of energy uses. So in our case, it

10 would be electricity, but maybe more specifically it

11 could be single-phase or poly-phase.

12 Two, the capacity of the equipment. For

13 small motors it might be horsepower.

14 And third, performance-related features that

15 justify a different standard level. Factors that we

16 may consider relating to that criterion may be the

17 speed of operation, which may relate to the number of

18 poles in the motor.

19 For the determination, DOE analyzed the

20 following as separate equipment classes: single-phase

21 capacitor start induction run motors, single-phase

22 capacitor start capacitor run motors, and poly-phase

23 motors, as we discussed earlier.

24 So, how will the Department develop equipment

25 classes for the ANOPR? Based on the criteria I just

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1 explained, there are multiple factors to consider for

2 equipment classes. One is the motor type. So we may

3 treat -- one option is to treat squirrel-cage poly4 phase -- rotor poly-phase or the several various types

5 of single-phase motors separately. Another factor to

6 consider is horsepower, which could range from sub7 fractional to one or possibly even higher horsepower,

8 depending on our established scope.

9 Another one, as I discussed earlier, number

10 of poles. And another factor that DOE may consider in

11 creating equipment classes is the frame size.

12 So I'd like to pause here again to welcome

13 our input on which parameters DOE should consider in

14 the equipment classes, if there's any parameters that

15 I've haven't mentioned that we should consider also,

16 and on the equipment classes that were established for

17 the determination.

18 MR. BROOKMAN: Rob, there are a lot of ways

19 to slice this, it seems, right? Yeah. I note, for

20 example, in Slide 41 there are 11 listed motor types.

21 MS. GUPTA: Right. These correspond to those

22 listed in MG1 under induction motor.

23 MR. HINK: Tom Hink, Regal Beloit. We had

24 talked about this before, and one of the other concerns

25 you may want to include in this as well is the

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enclosure type of a motor.

2 MS. GUPTA: Enclosure type?

3 MR. HINK: Enclosure type. Yeah, there is a

4 precedent already in NEMA where we subdivided totally

5 enclosed fan-cooled versus drip-proof as well as RPM

6 and horsepower to break it up as such for

7 reasonableness. So you might want to consider that as

8 well.

9 MS. GUPTA: So now, would totally enclosed be

10 considered general purpose?

11 MR. BOTELER: This is Rob. By the definition

12 that we started out with, it's defined as an open motor

13 in the very first definition. But yes, we would sell

14 closed general purpose motors.

15 MS. GUPTA: Okay.

16 MR. BROOKMAN: Yes, please, Ben.

17 MR. BARNETT: Ben Barnett. You also -- I'm a

18 little confused, and perhaps others are as well,

19 because you're talking specifically about single-phase

20 motors involving capacitors. Then you also raised the

21 issue of there are many other types of single-phase

22 motors that operate without capacitors in the circuit

23 at all.

24 MS. GUPTA: Okay.

25 MR. BARNETT: Okay. Now, it seems to me you

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1 can't have it both ways. If we're going to say that

2 we're only going to consider capacitor type motors as

3 being covered, then that just automatically takes out

4 this, this, and this. So I think we need to understand

5 that.

6 MS. GUPTA: Yeah. I mean, I think that the

7 issue is that we haven't established the scope as

8 limited only to capacitor start motors as of yet. We

9 wanted input on whether single-phase motors without

10 capacitors are considered general purpose. So

11 depending on the established scope, then yeah, if only

12 capacitor single-phase motors were included in the

13 scope, then we obviously wouldn't have product classes

14 that would include those non-capacitor motors.

15 MR. BOTELER: This is Rob Boteler. This is

16 kind of a new question to us. In the original document

17 we got --

18 MS. GUPTA: Right.

19 MR. BOTELER: -- defined this way. So that's

20 why we're mumbling a little bit here. We haven't had a

21 chance to consider this, so. And I think this has to

22 come back and adding shaded-pole, and I'm not sure what

23 a repulsion motor is. I don't think we make those.

24 But I think the action item would be that we would have

25 to take a look at this and come back to it.

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1 MR. SCHOLAND: Mike Scholand here from

2 Navigant. Ben, you used the phrase "this, this, and

3 this" in your statement. In your comments when you

4 come back to the Department, it would be great if you

5 could expand on what specifically you mean that you

6 perceive as could also be included that we're not

7 listing on that Slide 41. Thank you.

8 MS. GUPTA: So in terms of enclosure type,

9 you mentioned that it may require different product

10 classes. I was wondering if you could expand on how

11 enclosure type affects the efficiency. Does it affect

12 the efficiency?

13 MR. BROOKMAN: Ben?

14 MR. BARNETT: I'm sorry. I was completely

15 off that.

16 MR. BROOKMAN: That's okay. Repeat the

17 question, Mimi.

18 MS. GUPTA: I was hoping to get an expansion

19 on how enclosure type affects efficiency of small

20 motors.

21 MR. BARNETT: Oh, how the enclosure?

22 MS. GUPTA: Yeah.

23 MR. BARNETT: In general it really doesn't.

24 It really affects how the other aspects of how the

25 motor is designed, and so it's really -- I don't

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1 consider it tied to efficiency.

2 MS. GUPTA: Okay, okay. Then, why would you

3 ask -- why would you want us to consider it as a

4 separate product or equipment class if it has no

5 connection to efficiency?

6 MR. HINK: Tom Hink, Regal Beloit. I think

7 the main reason they brought that up is, as Rob said,

8 our original understanding was that these were going to

9 be drip-proof and it's not defined here. I mean,

10 you're defining the motor types or defining the

11 horsepower range and you didn't define that drip-proof

12 was primarily going to be covered.

13 MS. GUPTA: Okay. Drip-proof is an open

14 construction.

15 MR. RINK: Yes.

16 MS. GUPTA: Okay.

17 MR. BROOKMAN: So, did you want to supplement

18 Tom's comment? No. Okay.

19 MS. GUPTA: Okay. Thanks for your comments.

20 So a second critical input, or output of the market

21 and tech in addition to equipment classes is baseline

22 models. So, what is a baseline model?

23 Baseline models are representative units from

24 each equipment class that serve as reference points to

25 assess changes resulting from energy conservation

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1 standards. These changes either may be higher

2 efficiencies or changes in manufacturer selling price.

3 In general, a baseline model will represent

4 the least efficient, most typical equipment for that

5 particular equipment class. Also, often when there are

6 similarities between equipment classes a representative

7 equipment class is chosen to analyze and one baseline

8 unit is chosen from that particular equipment class,

9 and then standard levels are often scaled from that

10 chosen equipment class to other equipment classes.

11 I'd like to pause here and open the floor for

12 discussion on which baseline models should be selected

13 from equipment classes and why. DOE also welcomes

14 comment on the scaling of findings from the

15 representative equipment classes to other equipment

16 classes that it does not analyze.

17 MR. BOTELER: Rob Boteler. We looked at what

18 we considered the scaling and the equipment class, and

19 we -- I think we looked at it in terms of, again, going

20 back to what we had done on the integral product, and

21 we looked at enclosures as being one of the things that

22 would determine the baseline models and then of course

23 the speed and the horsepower. We didn't look at

24 applications.

25 Certainly the other performance issues --

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1 when we look at an electric motor we have, depending

2 upon the application and the customer needs, anywhere

3 from 10 to 15 different performance criteria that

4 become important. We need to keep those within our

5 design parameters.

6 But I'm not sure I can answer your question,

7 but I think we've kind of broadened out here by looking

8 at the other products.

9 MS. GUPTA: Right.

10 MR. BOTELER: Again, we were trying to come

11 back on the definition of baseline and relate it to

12 what we've done on the integral product. It would be a

13 horsepower-speed-frame relationship that we would

14 cross-reference possibly to an IEC equivalent.

15 MS. GUPTA: So you can imagine that scaling

16 between separate horsepower and between different poles

17 would be feasible and appropriate.

18 MR. BOTELER: Yeah. I mean, you mentioned

19 earlier eight-pole motors. I don't know; again, we

20 haven't looked at that. Eight-poles are such -- we're

21 into a small amount of product I think when we -- with

22 the definition as we've developed it, and eight-poles

23 would just be a tremendously small part of what we

24 would build in this product line. It's a very small

25 part of what we build in general.

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1 We build slow-speed machines when we get into

2 500s and 5,000 horsepower. Then we build slow-speed

3 machines. But in this category -- Ben, you correct me

4 if I'm wrong -- but two-pole and four-pole, four-pole

5 is probably 85 percent of the production and two-pole

6 is almost all of the rest. Then there's a little bit

7 of six-pole. I don't know of any applications where we

8 actually sell eight-poles.

9 MR. BARNETT: General purpose.

10 MR. BOTELER: Yeah, general purpose.

11 MR. BARNETT: A lot of eight-pole and six12 pole motors are sold in definite purpose applications,

13 but not in this category. It would be in products that

14 would be regulated. I mean, they would go into

15 products that would be regulated by other regulations.

16 So it would be out of the scope.

17 MR. BROOKMAN: Okay. So that was Ben Barnett

18 there. Thank you. Okay.

19 Just for those that are just wanting to know,

20 in a little bit we're going to take a break. So hang

21 in there if you need to hang in.

22 So then, Mimi, do you want to keep going?

23 MS. GUPTA: Yeah, sure. All right. Finally,

24 the third critical output of the market and tech is

25 technology options. As I stated earlier, technology

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1 options are ways to improve the efficiency of motors.

2 Initial technology options can be divided by how they

3 reduce specific types of losses in motors.

4 IEEE testing standards identify four separate

5 types of losses: 12R losses, core steel losses,

6 friction and windage losses, and stray-load losses. On

7 this slide here, on Slide 45, we see some initial

8 technology options that we've identified.

9 For reducing 12R losses one can increase the

10 diameter of the copper wire in the stator, increase the

11 rotor conductors' cross-sectional area, or increase the

12 rotor and ring size.

13 For core steel losses you may be able to

14 substitute a better or a lower hysteresis grade of

15 steel or create thinner laminations.

16 And for friction and windage losses, one

17 could perhaps change the bearings or bearing lubricants

18 or use a more efficient fan or cooling system.

19 So I'd like to pause here and open the floor

20 for comment on these technology options that I've

21 identified here. DOE welcomes comment on whether there

22 are other technology options that it should also

23 consider in addition to these.

24 MR. BOTELER: This is Rob Boteler. The

25 question is should DOE consider these technology

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1 options. I don't know if DOE should, but maybe the

2 manufacturer could. I think -- I mentioned in our

3 opening remarks one of our concerns I think is that

4 we're the guys who make motors for a living and we have

5 a lot of resources and we don't want this to become an

6 oversimplified exercise by simply looking at adding

7 active material. The 12R losses, looking at that and

8 assuming that that's the only way that it can happen.

9 At the same time, we're all competitors and

10 we don't share a lot of things. We share very few

11 things. But we just took a look at it and we said,

12 well, what are some of the options. We said, well, we

13 have the rotor forces and stresses, we have bar shapes

14 and fits, we have aluminum versus copper, we have rotor

15 skew, air gap, cooling circuit. We have the length and

16 the diameter ratios. We have speed torque

17 characteristics.

18 One of the things we can do is we can leave

19 the motor alone and we can just play with other

20 components. We can increase the efficiency and reduce

21 the power factor, and then every time we turn on the

22 motor the end user sees peak demand go up and we've

23 accomplished -- we've increased the efficiency of the

24 motor but we've actually increased the peak.

25 We can look at things like unbalanced

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1 magnetic forces and noise. We can look at stator core

2 designs, winding elements, stator and frame

3 construction. We mentioned open versus enclosed. We

4 can look at long motors versus short motors, the rotor

5 design and construction. We can look at single-cage

6 designs, we can look at double-cage designs. There's a

7 whole litany of things, and I'm really only talking

8 about at that point just the design characteristics.

9 Some of these guys with me work in the

10 manufacturing area. We can take the same motor and

11 improve our same motor design and improve our

12 manufacturing processes by adding slow turning of the

13 rotors, by doing induction heating of the rotors and

14 dropping the rotor on the shaft differently that would

15 dramatically improve efficiency. We didn't change the

16 design at all.

17 So it kind of concerns us when we see Chart

18 Number 45 where we're looking at -- we took this as an

19 option and we look at this and say there are many, many

20 more options than what's on Chart 45. But these are

21 options that we as individual motor manufacturers are

22 going to exercise when we reach the point when we know

23 what's expected of us. We're not going to share those

24 options with each other. We know what the options are,

25 but the details of those options, how we individually

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1 address the issue we don't share. We are competitors.

2 MR. BROOKMAN: Given that range of options,

3 how would you suggest the Department consider this?

4 MR. BOTELER: I would suggest that the

5 Department go forward with establishing the definitions

6 and working with us to establish test methods and

7 working with us to establish some reasonable efficiency

8 levels. Then we as the manufacturers will use those

9 test methods and we will demonstrate that we can

10 conform using whatever design or manufacturing elements

11 we choose.

12 MR. BROOKMAN: Tony Bouza.

13 MR. BOUZA: Yeah. I do want to comment that

14 later on we are going to go into the engineering

15 analysis. One of the things that DOE is going to look

16 at is using these technologies, be it whatever laundry

17 list. Maybe we'll be able to tackle on today you

18 provided some additional things to look into it. To be

19 able to come what is the selling price, the cost of

20 that transformer -- not transformer, small motor that

21 you're selling, what that efficiency relationship is.

22 That characterization is something that we're

23 trying to develop. Unless we know which technology

24 options, it's very hard to come up with those curves.

25 I know that there are many ways, and we

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1 appreciate that whatever standards that DOE goes to and

2 proposes that they're not the only, one way. So I'm

3 very happy to hear that there are a lot of

4 opportunities just besides materials but manufacturing

5 abilities, treating the steel certain ways,

6 manufacturing substitution, increases not only on the

7 design update factor of it.

8 But our marching, we can't. If you look at

9 the distribution transformer rulemaking for an example,

10 we just didn't do a material substitution. There were

11 a lot of parameters that were modified in chain. Our

12 approach on this is to do something similar with the

13 engineering coming up with those relationships.

14 Unless we know what factors are driving it --

15 I mean, it's great if you are able to provide -- I know

16 there's competition and different manufacturers may

17 tackle how to make a more efficient small motor in a

18 different way than maybe Emerson or another

19 manufacturer. But we would like to know all the

20 possible ways so when we set a standard we know what

21 are those economics.

22 It's very hard later on when there's an MIA

23 to know what are the economics if we pick -- the

24 Department goes to a certain level and it's all based

25 on very expensive retooling or something else. So we

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1 would like to know what are these pathways to a more

2 efficient small motor, and different manufacturers may

3 have. If you're not able to provide, if you would

4 direct input on that. Maybe you can provide the

5 Department where this information may lie or sources or

6 mechanisms which we can find out that information.

7 MR. BOTELER: This is Rob Boteler. All of

8 these things are variables, and then within the

9 variation each manufacturer and each design that each

10 manufacturer has could use any one of the variables.

11 So I could have a design where maybe my best

12 option is in fact to increase the active material in

13 that design. My friends at Regal Beloit may have the

14 same horsepower and speed and they already have some

15 active material in and their best choice is to improve

16 their manufacturing process to achieve a higher level.

17 It's going to vary all over.

18 MR. BOUZA: Yeah, and we welcome that.

19 That's a good -- whatever level that DOE finally

20 adopts, if that's the way that they can meet it, by one

21 manufacturer doing another way. Manufacturer A will --

22 you know, more active material, manufacturer B will

23 address it through improvements in manufacturing, that

24 means it's a good standard.

25 There are many ways to get there. It isn't

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1 one path. We just want to know what are all -- most of

2 the paths. What are the major paths. We've

3 highlighted some today that we perceive are the big

4 ones, but have we left out anything major from the

5 list, the laundry list. Maybe we should add

6 manufacturing different designs.

7 MR. BOTELER: This is Rob again. I

8 understand what you're saying, but I think one thing

9 that you're driving to is to then come up with an

10 estimated cost delta between today's product and

11 tomorrow's product.

12 MR. BOUZA: Yes.

13 MR. BOTELER: And I think when we look at all

14 of the variables you'll be on your spreadsheet doing a

15 lot of averages of averages. That concerns us.

16 MR. BOUZA: Well, I mean, one of our goals

17 later on is coming up with a baseline unit and a unit

18 that's more efficient and to be able to calculate the

19 economics of those two units. That's where we're going

20 to calculate the life-cycle costs and later on the

21 national energy savings for the nation as a whole. So

22 we are -- you know, that is true. I'm not going to

23 hide that information. That's our main goal. Later

24 today when Robert comes up and he explains all the

25 economics, he'll talk about these particular issues.

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1 MR. BROCKMAN: Mike Scholand.

2 MR. SCHOLAND: Mike Scholand, Navigant

3 Consulting. Sorry, Steve. This will be really quick.

4 I just wanted to say, Rob, that Tony is absolutely

5 correct. The Department needs to create an aggregated

6 estimate of the relationship between the manufacturer's

7 selling price and efficiency of the motors ultimately

8 sold, starting with the baseline model that Mimi was

9 making reference to all the way up to a maximum

10 technologically feasible motor.

11 It will have to be an aggregated number.

12 It's not going to be the same curve for everybody.

13 That's part of the rulemaking process. That's why DOE

14 has an advance notice of proposed rule and a notice of

15 proposed rule, two opportunities in the future where

16 manufacturers will be able to review the cost

17 efficiency relationship, compare that to their own

18 data, and then -- I'm going to be talking about this in

19 a minute.

20 Navigant Consulting can enter into

21 confidentiality agreements with individual

22 manufacturers who are willing to participate and we

23 discuss the individual impacts on those manufacturers

24 relative to the standard levels being considered.

25 That's your opportunity to really voice your concerns.

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1 That confidentiality agreement is contained

2 within our organization. We provide aggregated,

3 rolled-up information to the Department for making the

4 decision in terms of the level that they go to. But

5 that's how the rulemaking process is structured to take

6 into consideration manufacturer impacts.

7 MR. BROOKMAN: Steve Nadel.

8 MR. NADEL: Okay. I mean, just to provide

9 some illustrations of ways this perhaps could work to

10 suit everybody's needs, I know for some other products

11 what DOE has done is to find a baseline efficiency

12 level. Let's say in the case of a particular class of

13 small motors 58 percent efficiency happens to be the

14 baseline. They need to know how much more it's going

15 to cost if we raise it to 59, 60, 61, et cetera.

16 Sometimes what they've done is, through the

17 trade associations particularly, each manufacturer

18 says, well, if I had to go to 59, 60, 61, given my own

19 processes, it would cost X amount more. You can

20 aggregate it across manufacturers. NEMA could provide

21 it. That could be something that DOE could use.

22 However, DOE also needs to do some analysis

23 on its own to help verify that the data they're getting

24 is reasonable. You guys all obviously have some

25 interest in the outcome of this. It's not just an

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1 academic exercise. Just like, for example, if you guys

2 were to buy some ball bearings, you'll get some. You

3 won't just trust the supplier. You'll test some. If

4 the supplier says, "Well, the best I could do is sell

5 this to you for $8," you'll send them to some of your

6 people and say, "Do you think there's a way we can get

7 them to produce it for less?" Do you trust or verify?

8 So DOE is going to need to verify. They'll

9 probably, using my example, say, okay, we define a 58

10 percent baseline motor as this. It's kind of an

11 average. It's a conglomeration. Then, do several

12 different levels based on that, based on all the input

13 you get, some of which will be public, some of which

14 you can provide them in confidence, so they can have

15 something that can approximately mirror that.

16 If the two wind up pretty similar, no big

17 deal. It's only if the two wind up very differently

18 then we all need to look at what's causing the

19 differences. How can we best get at the truth.

20 I know a few weeks ago we had a workshop. It

21 was the ANOPR workshop on commercial refrigeration.

22 There had been a whole bunch of analyses DOE had done,

23 a whole bunch of analyses that ARI and its members had

24 done. They wound up across many product classes being

25 pretty close, actually -- and this was the first --

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1 that ARI said we think you should use the DOE data and

2 not our data because it was effectively smoother than

3 the ARI data because it was an aggregation. Different

4 manufacturers had some discontinuities that didn't work

5 out as well.

6 But these are ways we can all work together

7 to come up with something that takes advantage of your

8 expertise but trusts but verifies from DOE's point of

9 view.

10 MR. BROOKMAN: Tony.

11 MR. BOUZA: Yeah, I do want to say -- I know

12 Mike Scholand may touch upon this later -- the

13 Department has to figure out what is the maximum, the

14 most technologically feasible design, what we consider

15 the max tech. Unless we know all the pathways there,

16 we're not going to be able to put that on our radar

17 scope.

18 Then the Department, at the NOPR stage, will

19 start at the most technologically feasible design max

20 tech and, using the seven criteria at the very

21 beginning, start dropping down as many levels as we

22 have to until it checks off. You can check them off

23 and the DOE can't go any further. That's where we end

24 up. We don't start from the bottom up. We start with

25 the most technologically feasible design out there.

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1 So we need to know all the pathways, the most

2 efficient. We know there are going to be many ways to

3 get to a certain level, but we need to know all the

4 technologies, all those opportunities there. We want

5 to listen and want to hear from you guys what you have

6 to say.

7 MR. BROOKMAN: Robert.

8 MR. VAN BUSKIRK: Robert Van Buskirk,

9 Lawrence Berkeley Lab. Also, on the issue of taking

10 averages of averages, the Department can keep the

11 calculations. When we have data that's disaggregated,

12 we can keep the calculations disaggregated until the

13 end to avoid some of the averaging-of-averages problem.

14 MR. BROOKMAN: So I think then it would be

15 useful for the Department if, in your written comments,

16 you can specify a range of options that would be

17 indicative of the major classes, major variables, and

18 the like that would be, I guess, out of the weeds

19 enough and sufficient coverage enough, that sort of

20 thing.

21 I'm going to suggest we take a break at this

22 point, 11 o'clock. You're done with your stuff, right,

23 pretty much, Mimi?

24 MS. GUPTA: Well, after the break I'll be

25 presenting the screening --

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1 MR. BROOKMAN: You'll continue presenting,

2 but on this slide here.

3 So it's 11 o'clock. Let's take a break until

4 11:15. Here inside the Forrestal Building you need to

5 wear your badge, your visitor's badge.

6 (Brief recess)

7 MR. BROOKMAN: Okay. Let's resume. Mimi,

8 are you still p resentin g ?

9 MS. GUPTA: I am.

10 MR. BROOKMAN: That's what I thought. Okay.

11 So we're back. Thanks for being on time so

12 we can resume. We are going to resume beginning on

13 Slide --

14 MS. GUPTA: Forty-seven.

15 MR. BROOKMAN: Okay.

16 Screening Analysis

17 Mahima Gupta

18 (PowerPoint presentation)

19 MS. GUPTA: Okay. So we had a really nice

20 discussion about technology options to make motors more

21 efficient. So next I'd like to discuss the screening

22 analysis, which is where the technology options

23 developed in the market and technology assessment are

24 fed into.

25 The purpose of the screening analysis is to

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1 screen out those technology options that will not be

2 considered in the engineering analysis. The Department

3 does this by evaluating each technology option based on

4 four separate criteria. The first is technological

5 feasibility. That criterion screens out options that

6 are not currently incorporated in commercial products

7 or working prototypes.

8 The second, practicability to manufacture,

9 install, and service, screens out options if it is

10 determined that mass production or reliable

11 installation and servicing of that technology could not

12 be achieved on the scale necessary by the effective

13 date of the standard.

14 The third screens out options which are

15 determined to have significant adverse impact on

16 product utility or availability to consumers.

17 The fourth screens out options which are

18 determined to have significant adverse impacts on

19 health or safety.

20 I'd like to pause here and open the floor for

21 comment on the four screening criteria that I mentioned

22 and how they may relate to the technology options that

23 I presented earlier and maybe some of the other

24 technology options that Rob listed.

25 MR. BROOKMAN: So this is a pretty open-ended

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1 --

2 MS. GUPTA: Yeah.

3 MR. BROOKMAN: Yes -- opportunity for you

4 should you wish to comment here. Rob.

5 MR. BOTELER: I think maybe, Tom, would you

6 want to comment on Item 10 on the technology design?

7 We've had a comment on that earlier.

8 MR. RINK: This is Tom Hink, Regal Beloit.

9 One of the concerns we had reading through this thing

10 is that depending upon what technology design options

11 you consider, you have to keep in mind perhaps the

12 small manufacturer. What is he going to do once all of

13 these rules are established. You run the risk that if

14 he suddenly has to purchase all of this new capital

15 equipment and so on and all this new manufacturing

16 processes, you could potentially run him out of

17 business. That's one of the things I think you need to

18 keep in mind and perhaps maybe consider for part of the

19 screening analysis as well as to what could potentially

20 happen to small manufacturers.

21 MR. BOUZA: For the screening analysis?

22 MR. BROOKMAN: Tony Bouza.

23 MR. BOUZA: Yeah, Tony Bouza, Department of

24 Energy. Those are the only four criteria we use on the

25 screening analysis. Later on we are going to have a

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1 manufacturer's impact analysis and that will be

2 discussed later. So impacts to small manufacturers,

3 even large. What are the impacts of certain pathways

4 to certain levels, are going to be analyzed in the

5 impacts to manufacturers later. That's a different

6 analysis.

7 Sometimes it's very hard. We don't want to

8 screen out options very early that may seem unfeasible

9 or uneconomic. So very early in the process, very

10 broad, we screen out on those four criteria. Later on,

11 when the Department does pick a level, it has seven

12 factors to choose from that are -- not choose from, but

13 it will go through each element to use to come up with

14 a level. So it's not a particular analysis. It isn't

15 going to be the life-cycle, it's not going to be the

16 national impact. It's going to be all those seven

17 factors together. One of those seven factors is going

18 to be the manufacturer's impact analysis.

19 MR. BROOKMAN: So that'll be described in a

20 little more detail later on this afternoon. Okay. Tom

21 Hink.

22 MR. HINK: Tom Hink again, Regal Beloit. One

23 of the other items we were considering too is the

24 feasibility of enforcement. I don't know if that would

25 be part of the screening process or maybe in some other

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1 area, but it's something that we shouldn't lose sight

2 of, I think, in this whole process.

3 MR. BOUZA: Yeah. I think that's a cross4 cutting issue not only for small motors but for all the

5 products. So the DOE is aware. We appreciate that you

6 provide that information or that concern to us. If you

7 have insight on how we can do a better job or what to

8 look for or any insight related to small motors, we

9 appreciate receiving comments on it as being an

10 important factor.

11 MR. STAS: This is Eric Stas, DOE. I just

12 wanted to add that we do, in doing the manufacturing

13 analysis, we also do subgroup analyses, and small

14 businesses might be one of the subgroups that we look

15 at. Also, when we look at things that are the

16 Regulatory Flexibility Act and do our regulatory

17 analysis, we do focus specifically on small

18 manufacturers. So they're not forgotten.

19 MR. BROOKMAN: Thank you. Thanks for that

20 comment. Okay.

21 MR. BOTELER: This is Rob Boteler. That's a

22 good point on small manufacturers because when we do

23 get into this category of product there are a number of

24 manufacturers that are not members of NEMA that are

25 much smaller that are likely not represented here.

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1 MR. BOUZA: Can you provide those names to us

2 so we have --

3 MR. BOTELER: I couldn't, no. I don't --

4 MR. BOUZA: No, no. But at a later time, or

5 anybody? Because later on when -- I know when the MIA

6 is structured or when they go out on interviews we

7 definitely want to include NEMA members and non-NEMA

8 members too to make sure that everybody is included in

9 this process.

10 MR. BOTELER: This is Rob. There is a Small

11 Motor Association. You might want to check with them.

12 I'm not -- I don't know that we're members of that,

13 but they might be a good resource.

14 MR. BROOKMAN: Okay.

15 MR. BOTELER: I have a couple other comments.

16 On the practicality to manufacture, install, and

17 service, one of the issues that we face with the

18 technologies is that as we go to greater efficiency we

19 have to be careful that we don't force the

20 manufacturers to oversize the motors, which then makes

21 it very difficult, if not impossible, to install the

22 motors in the original piece of equipment.

23 I think the other thing; we talked about

24 availability to customers and Steve has made some

25 comments about state regulations. I think one of the

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1 things we've got to be also aware of is that we as

2 manufacturers sell this product into a distribution

3 channel or to an OEM. We have absolutely no idea where

4 that product is going to go. So the availability to

5 the customer if it's regulated in a particular state,

6 I'm not sure how that would ever be controlled by a

7 state.

8 If we sell a motor to a manufacturer in Iowa

9 that's making cooling equipment or pencil sharpeners,

10 right? And that pencil sharpener ends up in L.A., I

11 don't know how that would ever be enforced.

12 That's kind of part of our concern with all

13 of this, is the enforcement, because whether you

14 believe it or not we as the NEMA organization try very

15 hard to comply and be a willing partner in the

16 regulation. In doing so, we don't want to put

17 ourselves in a negative position in competition.

18 Impacts on health and safety. With motors,

19 thank goodness -- we haven't checked the paint lately

20 to see if we have any lead in it, but other than that -

21

22 (Laughter)

23 MR. BOTELER: We don't use any mercury. We

24 don't really get into the health and safety area much.

25 We're pretty much materials that you can hurt yourself

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1 if you dropped one on your foot but not much beyond

2 that.

3

4

5

6

MR. BROOKMAN: Thank you.

Engineering Analysis

Mahima Gupta

(PowerPoint presentation)

7 MS. GUPTA: Okay. So after the Department

8 has conducted the screening analysis, the remaining

9 technology options, called design options, then migrate

10 into the engineering analysis, which I'm going to

11 discuss now.

12 The purpose of the engineering analysis is to

13 characterize the relationship between manufacturer

14 selling price and motor efficiency. As you can see on

15 this plot here, as you increase efficiency or go across

16 to the right on the X axis the projection is that

17 manufacturing selling price will increase as well.

18 This is generally the case because as efficiency

19 increases generally manufacturing cost of production

20 will increase as well.

21 So these manufacturing selling price

22 efficiency relationships are then used in the life23 cycle cost and payback period analyses, the

24 manufacturer impact analysis, and the employment impact

25 analysis, which will be discussed later today.

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1 So, how does the Department determine this

2 manufacturer selling price-efficiency relationship.

3 There's various methods to develop this relationship.

4 Steve Nadel earlier described what we call the

5 efficiency level approach. The approach listed on the

6 slide here is representative of what we call the design

7 option approach. Both are valid approaches and DOE has

8 not decided on one or the other approach yet, so we

9 would definitely be open to your input.

10 As Steve mentioned, efficiency level approach

11 incorporates looking at motors at different

12 efficiencies and incremental costs between those

13 efficiencies and then DOE would qualify that data and

14 maybe obtain from manufacturers, either with tear-downs

15 and its own analysis, to cost out different efficiency

16 motors.

17 The design option approach that DOE presents

18 here on this slide starts off by establishing a broad

19 range of motor designs spanning many different

20 efficiency levels and determining their associated cost

21 of production. DOE proposes to do this, if it were to

22 choose the design option approach, by using electric

23 motor design software, which I will discuss in greater

24 detail later.

25 A second step would be to conduct preliminary

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1 manufacturer interviews, which Mike Scholand will

2 discuss more later on. We would use those interviews

3 to collect cost data on efficient motor designs.

4 As a third step, DOE would develop

5 engineering curves of manufacture and cost versus

6 efficiency based on the software runs and then

7 qualified with the manufacturer-submitted data.

8 Finally, DOE would then prepare an analytical

9 report that would appear in the ANOPR technical support

10 document to obtain -- and mark up the manufacturing

11 cost of production to obtain a manufacturing selling

12 price-versus-efficiency relationship.

13 So given the importance of these engineering

14 curves, how does the Department propose generating them

15 if they were to use the design option approach. If the

16 Department were to use the design option approach, they

17 would start with a baseline model from each analyzed

18 product class. This would serve as the bottom of the

19 curve, as you can see in the first graph.

20 Then, using the design software and by

21 applying various design options to that baseline model,

22 we would slowly walk up the curve in efficiency and

23 manufacturer cost of production. The top of this curve

24 represents the maximum efficiency design that's

25 technologically feasible, or max tech.

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1 Finally, a third step, DOE would use

2 manufacturer-supplied data or possibly purchase and

3 tear down motors to qualify design software data. So

4 regarding the software the Department has looked into

5 various software packages, and I'd like to spend a

6 slide discussing what are some of the key attributes

7 DOE is seeking in the software if it were to use the

8 design option approach.

9 So one important input to the software would

10 be the ability to vary the motor's physical design

11 parameters so that various design options that we

12 discussed earlier today can be applied to the baseline

13 model. The baseline model would be established in the

14 software using its physical parameters, and that will

15 represent a commonly sold motor on the market. Another

16 important input to the software would be material

17 costs.

18 For outputs, important outputs may be speed

19 torque curves and other performance characteristics,

20 such as efficiency and power factor, and a bill of

21 materials and estimated labor.

22 Using the bill of materials and estimated

23 labor in conjunction with material costs, DOE will

24 establish a manufacturer production -- cost of

25 production. So, what does the manufacturer cost of

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1 production consist of.

2 The manufacturer production cost consists of

3 direct material costs, direct labor costs, factory

4 overhead, and depreciation. Now, as I discussed

5 earlier, the Department proposes to use, if they use

6 the design option approach, a combination of software

7 analysis and interviews with industry experts and

8 manufacturers to develop the cost efficiency

9 relationship.

10 Once the manufacturer production cost is

11 established, the Department will then apply a

12 manufacturer markup to calculate the manufacturer's

13 selling price. So, what are these markups composed of.

14 These markups are composed of sales and

15 general and administrative costs, research and

16 development costs, interest, and profit. The

17 Department will develop a markup based on publicly

18 available information such as SEC 10-K reports, company

19 annual reports, and various investment reports.

20 So now I'd like to pause and open the floor

21 for discussion on the engineering analysis and address

22 Items 11 through 15. Item 11 addresses DOE welcoming

23 comment on incremental manufacturing costs, including

24 production and non-production costs.

25 Item 12 welcomes comment on current prices

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1 for materials used in the construction of small

2 electric motors.

3 Item 14 addresses the software tool that we

4 discussed, if DOE were to use the design option

5 approach. Any input from stakeholders would be welcome

6 on which software tool would be best.

7 And then Item 13 welcomes comment on the

8 design option approach presented as well as the

9 efficiency option approach.

10 Item 15 welcomes comment on the markup

11 approach.

12 MR. BROOKMAN: So, lots of content there for

13 you to comment upon.

14 MR. BOTELER: Yeah.

15 (Laughter)

16 MR. BOTELER: We want to go back to Item 11.

17 Is that where we started?

18 MR. BROOKMAN: That's the starting point,

19 yeah. Incremental manufacturing costs.

20 MR. BOTELER: This is Rob Boteler, Emerson.

21 The first comment is, we did go through these,

22 obviously, before we got here. As a group, we said

23 that this information was quite proprietary and we

24 weren't -- we didn't readily share this with other

25 manufacturers. I guess our consulting friends over

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1 here would look at that, and this might be something

2 that they would gather.

3 We talked about -- I mentioned earlier that

4 each manufacturer has a high degree of variance, and we

5 would look at -- some would be minimal design changes

6 that would be good for us. Others we would have to

7 spend capital.

8 I just got an e-mail from the president of

9 our company talking about some things that are

10 happening in the lighting area, and it's very timely.

11 I'll have to give him credit for that. His comment is,

12 on the lighting area, one of the things that's

13 happening is manufacturers are deleveraging in various

14 operations the factories that they have. That really

15 is an issue because you mentioned the burden rate, and

16 certainly that is one of the things that we all look

17 at.

18 We as manufacturers assign burden rate by

19 work center, by factory, by line of equipment. We have

20 lines of equipment. Most of this product is made in

21 NAFTA countries today or in Asia. These are very high22 speed lines. These are lines that are doing thousands

23 of units a day. One of the considerations when we

24 looked at changing designs is the likelihood that we

25 will move off of one of those lines to a more manual

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1 process.

2 I think all of us need to take that into

3 consideration when we come back to you with some of

4 those numbers on what the delta would be between the

5 standard product of today and the product of tomorrow

6 if that burden rate goes up. As manufacturers -- I

7 don't know about these guys. Some of them are

8 engineers. But as a marketing guy, I fight the burden

9 rates every day, trying to be competitive in the market

10 place.

11 Material is material. We all face that same

12 battle and we all pay pretty much the same price. We

13 try and outdo each other with design, but we move this

14 product around the world to try and save money on the

15 labor and burden rates. As we develop new product like

16 this, that's going to be a consideration for us as we

17 go to lesser volumes on some of the products.

18 Item 12. We've commented on the material

19 costs, and I think all of you have seen, and we'd be

20 happy to share with you the London Metal Exchange and

21 what's happened to us in copper in our standard. A

22 year ago or two years ago it was in the $1.30, $1.40 a

23 pound, and I think it closed yesterday at $3.30, $3.40

24 a pound. As motor manufacturers, copper is one of our

25 primary costs. That's a consideration.

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1 The one thing we would caution on that is

2 that we don't look at an average over the last two or

3 three years. We have to look at what's happened in the

4 last two or three months.

5 I think I'm on Number 14 here. Thirteen?

6 MR. BROOKMAN: Fourteen.

7 MR. BOTELER: Fourteen. When we talk about

8 the software tools, we as manufacturers don't know of

9 any commercially available design tool that we would

10 make a comment or recommendation on. We all use our

11 own programs and we've developed those over many years

12 of trial and error and testing and confirmation testing

13 to validate our designs. Those are extremely

14 proprietary programs that we would never share with

15 each other. We would never even -- in our engineering

16 circles we wouldn't even discuss some of the various

17 attributes or elements of those programs.

18 So I don't know how we can validate a

19 program. I guess if there were units manufactured

20 using a particular piece of software, if you came to us

21 and wanted us to test those in a round robin or

22 something to validate the software program was actually

23 producing product and we could produce it that met that

24 efficiency standard, that would be an option.

25 I think your comment about the efficiency

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1 option, I think from everything I've heard today that

2 Steve's proposal on an efficiency option, where we

3 looked at a range of efficiency increases and then we

4 went back and ran calc programs to determine what the

5 potential cost delta would be, is something that we

6 would be able to do. We would aggregate that

7 information either through NEMA or through the

8 consulting group.

9 MR. BROOKMAN: Additional comments on --

10 MR. BOTELER: Anybody else?

11 MR. BARNETT: Ben Barnett. I guess I would

12 say one thing about the software. In the process of

13 DOE's analysis and studies, if you do make use of some

14 commercially available software, that needs to be made

15 known to us so we know what you're looking at so that

16 we -- because we might well want to do some work

17 ourselves using that same package so we're on the same

18 page.

19 I would also say just as kind of a general

20 comment, I'm assuming that the whole purpose of the DOE

21 engineering analysis is to develop a set of guidelines

22 so that you can test the veracity of what the

23 manufacturers are saying relative to what's possible

24 within these frameworks for motors. So that, you don't

25 come up with a standard that is technically impossible

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1 to meet and that's your whole intent. And one that is

2 --

3 MR. BOUZA: Fundamental, like Mimi showed, is

4 to come up with that curve and to make sure that we

5 have covered all those pathways, different materials,

6 different opportunities out there to make the unit --

7 MR. BARNETT: I'm assuming that you might

8 come up with a point on this curve that while

9 technically achievable might be economically

10 outrageous.

11 MR. BOUZA: Oh yeah.

12 MR. BARNETT: I'm assuming that you would --

13 that you expect for that to happen.

14 MS. GUPTA: Yes.

15 MR. BARNETT: Okay.

16 MR. BOUZA: The max tech sometimes -- we

17 can't make a determination. We haven't done any

18 economic analysis. But we're obligated to come up with

19 that point. Not economic, but the most technologically

20 feasible. We have to put that on the graph.

21 MR. BROOKMAN: Steve Nadel.

22 MR. NADEL: The one thing I was going to say

23 about software; you guys know the field pretty well.

24 There are consultants out there. There are packages

25 out there. Are there ones that you think are better

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1 than others? Often there may be some retiree or former

2 employee of some of your companies. Sometimes you may

3 be too busy and you have to job something out. Is

4 there something?

5 I recognize you do most of it internally, but

6 if there's something in the public domain that DOE can

7 use that you think may be better than some of the other

8 options out there.

9 MR. BOUZA: Or what not to use.

10 (Laughter)

11 MR. BOTELER: This is Rob Boteler. No, we

12 don't use any software other than our own. I don't

13 know of any other manufacturer that does. I don't know

14 of any.

15 MR. BROOKMAN: Thank you. Any other comments

16 on this screen? Did you cover markup approaches, Item

17 15?

18 MR. SCHOLAND: That's later.

19 MR. BROOKMAN: Okay.

20 MS. GUPTA: Well, there was the markup

21 between cost of production and manufacturer's selling

22 price. If anyone has any comments on that approach.

23 MR. BOTELER: This is Rob Boteler again.

24 You're assuming that there's a relationship there. As

25 a marketer, I would tell you that I'm not so sure there

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1 is. We're in a competitive environment and we don't

2 necessarily go to market based strictly on a cost

3 relationship. I mean, we're like every other business.

4 That's not how business works. That's my only

5 comment.

6 (Laughter)

7 MR. BROOKMAN: Okay.

8 MS. GUPTA: Okay. So finally, as my last

9 slide in the engineering analysis, I'd like to address

10 the issue of proprietary designs, which we've already

11 addressed a little bit today.

12 The Department will evaluate all design

13 options that are commercially available or present in

14 working prototypes, including proprietary designs.

15 However, a proprietary design will only be considered

16 if they do not represent a unique path to a given

17 efficiency level.

18 In addition, the engineering analysis will

19 also consider outside regulatory changes and how that

20 may affect the small motor market and manufacturers.

21 I believe we've already discussed proprietary

22 designs a bit, but I'd like to open the floor for

23 additional comment on proprietary designs or if there

24 are -- yeah. Sorry. If there are other outside

25 regulatory changes that may affect your industry.

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1 MR. BOTELER: Well, this is Rob Boteler. I

2 think we have covered the proprietary designs, and I

3 don't think there's really -- we all have designs we're

4 working on. We continue to work on designs every day

5 to reduce cost and improve performance. That's what we

6 do. But we don't share those with our competition. We

7 buy the other guy's motor and he buys our motor and we

8 look at each other's stuff, but we don't share that

9 kind of information.

10 I think on the regulatory side I'm not so

11 sure we know a whole lot about what's going on. Steve

12 and I talk once in a while and he tells me what's going

13 on in California to try and get me motivated.

14 (Laughter)

15 MR. BOTELER: But other things that are going

16 on and even in some cases like a regulation on HVAC

17 equipment or something like that. We would like to

18 know from DOE if there are changes coming in, SEER

19 ratings and that sort of thing, or if there are

20 products today that are not covered as pieces of

21 equipment. If refrigeration equipment, a vending

22 machine, maybe that's not covered today but maybe you

23 know that it's coming in the future and it's something

24 that we should be considering. But today I can't --

25 you know, I don't know what those things are.

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1 MR. LEWIS: This is Ron Lewis from DOE. Rob,

2 there is on our website a button that's highlighted. I

3 think it's called "The Five-Year Plan." It's actually

4 our report to Congress that we issued January of 2006

5 that gave a five-year look out at all the rulemakings

6 that are on the books right now.

7 There are several things. Beverage vending

8 machines are one of those things. There's HVAC on

9 there. There are several things. So if you want to

10 get a preview look, in the back of that there's a

11 schedule of all the rulemakings.

12 MR. BOTELER: Okay.

13 MR. LEWIS: So there's new legislation, as

14 you're well aware, that's on the Hill right now that's

15 going to impact us in some way. There are a few rules

16 that have been accelerated. It's subject to change,

17 but most of it's going to be right there in that five18 year plan.

19 MR. BOTELER: Okay. I'll take a look.

20 MR. STAS: Eric Stas from DOE. We also want

21 to hear about other impacts beyond DOE that you might

22 be getting regulated by, different agencies. Some

23 manufacturers would have new EPA requirements or

24 something like that which is going to require a

25 significant investment. We want to hear about those

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1 other types of regulatory burdens I think beyond DOE.

2 MR. BOTELER: Manufacturing kind of

3 regulations. Okay. I can't comment on that. In the

4 EPA area, really I think the only process we're

5 involved there is in our varnishing processes, but

6 that's not new for us. I mean, we've always had those

7 regulations.

8 This regulation would not change our

9 compliance or anything that I know of there.

10 MR. STAS: Eric Stas again. I just use EPA

11 as an example, but you're regulated all over the place

12 from a variety of different sources. So we want to

13 know the picture of anything new that's on your horizon

14 that would impact your costs and things like that.

15 MR. BROOKMAN: Okay. Other comments related

16 to what you see on Slide 60, Items 16, 17, 18, and 21?

17 MR. BOTELER: This is Rob Boteler again.

18 Item 18. One of the comments that -- actually, we made

19 this comment earlier -- identical motors could

20 routinely be sold and used in either a general purpose

21 or a regulated application. That's where Steve was

22 headed. We could sell a furnace motor that is sold in

23 possibly a Granger or a Johnstone catalogue and it

24 could be considered by definition a general purpose

25 product.

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1 It's a little bit difficult because when you

2 talk about general purpose for this type of product you

3 have to ask yourself where would anybody buy this?

4 Would you buy a motor in this configuration for your

5 home as a general purpose motor and invent your own

6 application? You wouldn't. You would only buy a motor

7 in this horsepower and speed range that was a

8 replacement for something that was going into another

9 component. It's hard to see the general purpose

10 product there.

11 Item 19. No, we're not to 19. Twenty-one.

12 We jumped.

13 (Laughter)

14 MR. BOTELER: Well, 21 goes back to what we

15 talked about earlier, that the engineering would use

16 all of the elements, and it was actually in Item Number

17 7, to meet the design. It's going to be a combination

18 of design as well as process changes and we're going to

19 have to be careful on design changes that we don't jump

20 frame size or do something that would create a product

21 that can't be a drop-in.

22 MR. BROOKMAN: Okay. Other comments?

23 (No response)

24 MR. BROOKMAN: No? Okay.

25 MS. GUPTA: Okay. So that concludes the

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1 engineering analysis, and Mike Scholand will now talk

2 about the preliminary manufacturer impact analysis.

3 Preliminary Manufacturer Impact Analysis

4 Michael Scholand

5 (PowerPoint presentation)

6 MR. SCHOLAND: Thank you, Mimi. My name is

7 Mike Scholand. I work at Navigant Consulting here in

8 Washington, D.C. We're a contractor supporting the

9 U.S. Department of Energy and several of the energy

10 conservation standards rulemakings. I've been

11 fortunate enough to be given the slot five minutes

12 before lunch, so I'm pretty sure I shouldn't have too

13 many questions at the end of this session.

14 MR. BROOKMAN: We may go a little bit beyond

15 five minutes, since we took a late break. We may just

16 plug on ahead here for a while.

17 MR. SCHOLAND: Thanks, Doug.

18 (Laughter)

19 MR. SCHOLAND: So the manufacturer's impact

20 analysis examines how potential energy efficiency

21 levels affect manufacturers and their production costs.

22 Some design changes may be marginal, but others,

23 particularly at higher efficiency levels, could be

24 substantial. So what I'll be describing here is the

25 process through which the Department assesses those

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1 impacts on manufacturers, and since this is done in

2 consultation with industry I want to talk about this

3 process. If you have any concerns, you can raise them

4 now.

5 So, why does the Department conduct a

6 preliminary manufacturer's impact analysis? The

7 requirement to conduct the MIA, is the acronym that we

8 use and you've probably heard it mentioned this

9 morning, is grounded in one of the seven EPCA factors,

10 which Tony had mentioned in the morning as well.

11 That's, again, to consider the impacts on manufacturers

12 of these products.

13 So as Tony mentioned this morning, one of the

14 changes that came about with the first report to

15 Congress in January of 2006 was to move part of the

16 manufacturer's impact analysis, which used to only be

17 done in the NOPR stage of the rulemaking, into the

18 ANOPR stage, which enables DOE to start considering

19 these issues earlier in the rulemaking process.

20 So these bullets say the Department will

21 conduct, evaluate, and report preliminary data in the

22 ANOPR and that preliminary data will include

23 anticipated conversion capital costs by efficiency

24 level and anticipated direct employment costs and

25 impacts, but also some qualitative commentary about how

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1 the levels may impact the business. I'll go into a

2 little more detail in future slides.

3 But, how is the MIA actually conducted? This

4 slide shows the flow of chevrons. We think of the MIA

5 in a three-phase context: phase 1, phase 2, and phase

6 3. Phase 1 is the part that's been moved up to be part

7 of the advance notice of proposed rulemaking. The

8 second two phases I'll talk about this afternoon when

9 we're discussing the rulemakings for the notice of

10 proposed rulemaking, the NOPR.

11 So in phase 1, we'll work on generating an

12 industry profile and conducting preliminary MIA

13 interviews. As Tony indicated in his overview, DOE now

14 looks at these issues in the ANOPR, and the purpose for

15 doing that is basically to provide initial discussion

16 on any potential impacts to manufacturers and to

17 provide an opportunity to verify DOE market information

18 and engineering design options and curves.

19 We've been talking about using software to

20 generate those curves. If that is the path the

21 Department chooses, this would be an opportunity for

22 manufacturers to review those. If it's a manufacturer23 generated efficiency level approach, that validation is

24 obviously not needed. The onus is then on the

25 Department to validate.

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1 So, what is the methodology followed for

2 phase 1 of the MIA. There's really two parts of it.

3 DOE conducts background research trying to understand

4 what products are out there and who's manufacturing

5 them. That's the industry profile portion of it. And

6 then in developing the cost efficiency relationships

7 that Mimi discussed in the engineering we ask

8 manufacturers to discuss their concerns and what

9 changes may be necessary at their facilities to respond

10 to those standards.

11 So these bullets make reference to, on the

12 profile, looking at current and past industry structure

13 and market characteristics, producing an industry

14 profile, which becomes part of the ANOPR documentation,

15 and identifying critical issues.

16 That work is generated through a series of

17 interviews, and in those interviews we discuss topics

18 like shipment projections, conversion costs, product

19 mixes, market shares, and the cumulative regulatory

20 burden, which Eric was discussing earlier, is actually

21 part of the preliminary MIA.

22 So other federal agencies, whether they be

23 Department of Energy or otherwise, who regulate you,

24 the Department wants to be aware of that because that

25 may also have some bearing on the level that the

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1 Department ultimately goes to for this rulemaking.

2 That's it. There actually isn't an "Issue"

3 slide for the preliminary MIA. So this is my last

4 slide. Are there any comments or questions?

5 MR. BOTELER: This is Rob Boteler. Is there

6 any involvement at this stage on the manufacturer's

7 impact where Commerce gets involved and starts to look

8 at the impact? We talked a little bit about the small

9 manufacturer. There is certainly a potential here that

10 depending upon how much capital is invested that we

11 could effectively take out some small manufacturers

12 very quickly by regulating this. We could take out

13 small manufacturers and, depending upon how well it's

14 enforced, we could take out foreign competition.

15 Does Commerce get involved and have comments?

16 MR. SCHOLAND: Mike Scholand here. DOE may

17 want to respond as well, but I can just tell you from

18 my own experience with a different rulemaking small

19 manufacturer analysis is part of the manufacturer's

20 impact analysis. We actually do it as part of phase 3,

21 as a detailed assessment in what's called manufacturer

22 subgroups. Typically, small manufacturers are part of

23 that.

24 Eric also made reference earlier to the

25 Regulatory Flexibility Act that the Department is

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1 required to review. There is a Small Business

2 Administration. The Department has to clear that

3 through them. So that consultative process is there.

4 In addition to that, Tony had mentioned that

5 when Navigant is trying to identify, and the Department

6 is trying to identify, the manufacturers it would like

7 to consult with for the MIA, NEMA members are

8 definitely there. There may also be non-NEMA members.

9 There may be small manufacturers in both categories.

10 NEMA may have some small manufacturers of small motors,

11 and non-NEMA companies as well.

12 So generally, the selection process tries to

13 be as objective as possible.

14 MR. BOUZA: Yeah. My request is still there

15 to get a list. I know you don't like probably

16 providing a list of competitors, but to provide maybe -

17 - the NEMA probably can provide small manufacturers

18 that are NEMA members, but we also want to include non19 NEMA members, too. So if you know of small

20 manufacturers, you can provide their names. That would

21 help us.

22 MR. BARNETT: Ben Barnett. The Small Motor

23 Manufacturing Association that Rob mentioned earlier,

24 an established industry group of just that category of

25 people.

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1 MR. BOUZA: Yes, and they are --

2 MR. BARNETT: Once you latch onto that, I

3 think you'll have the list that you're looking for.

4 MR. BOUZA: Right. They were part of our e5 mail distribution list. They are participating. They

6 are reading. They weren't able to come here today, but

7 we want to make sure that -- there could be some other

8 small ones that are not members of that association.

9 If you know, just make sure that we can check them off.

10 You know, if you have some particular small

11 manufacturers that have some unique situations or they

12 provide a very unique product in the niche marketplace,

13 we would like to know to supplement the information

14 that we have that may not be complete.

15 MR. STAS: Eric Stas from DOE. I would just

16 add that I believe it's at the NOPR stage the document

17 is sent to the FTC to check for anticompetitive

18 effects. So you get another layer of review.

19 MR. NADEL: Steve Nadel. Is that FTC or the

20 Department of Justice?

21 MR. STAS: DOJ. Sorry.

22 MR. SCHOLAND: Any other points before lunch?

23 Hint, hint.

24 (Laughter)

25 MR. BROCKMAN: We're going to keep going a

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1 little bit longer.

2 MR. SCHOLAND: Oh, Robert has a question.

3 Sorry.

4 MR. VAN BUSKIRK: Well, Robert Van Buskirk,

5 Lawrence Berkeley National Lab. There is a list of

6 manufacturers in the determination TSD. So look at the

7 table of the list of manufacturers in that TSD. If

8 there are any that you notice missing from that, that

9 would be great.

10 MR. BOUZA: And that document is on our

11 website for the Department of Energy. You have to link

12 on the first page or you can Google "small motors DOE."

13 I'm pretty sure that it'll come up.

14 We will be putting all this documentation

15 from this meeting up on the Web. So individuals that

16 weren't able to show up today will have the same access

17 and the same information as everybody in this room

18 today early next week.

19 MR. BROOKMAN: Yes. Ron Lewis.

20 MR. LEWIS: This is probably a good place to

21 insert that it's not just in the matter of

22 manufacturers or potential impacts on small

23 manufacturers but anything where you have a concern or

24 a criticism and you want to introduce it as a question

25 that we need to consider, it's very, very helpful and

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1 especially front-end loaded to have specifics. If

2 you've got issues, you've got particular motors that

3 you're concerned about whether they're in the scope,

4 different elements that we've covered here.

5 The earlier you bring up specifics. If you

6 just introduce a general statement, it may not get

7 covered to your satisfaction. We're asking that you

8 try not to just make generalized statements wherever

9 possible but give us as much specificity. If you've

10 got a partial solution path or can suggest a

11 recommendation or something that we ought to look at,

12 then that would be very helpful.

13 What we want to do, we're under a lot of time

14 pressure. We've got an awful lot of rulemakings

15 underway. We don't ever want to go backwards and have

16 to discard analysis that we've done because we didn't

17 know of something. It makes it very disruptive. So

18 that's why we're having this meeting now. The

19 framework document is trying to introduce that we've

20 got this underway. We're trying to show you the things

21 that we've planned on, the things that are under

22 consideration right now.

23 You'll have the ANOPR and the NOPR stage to

24 come back and meet with us again and look at the

25 analysis, but we're trying to front-end load it and

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1 introduce you to the things that we're aware of and

2 things that we're missing. Something where you don't

3 agree with what we've got, the earlier you can tell us

4 about it and the more specific, the more helpful that

5 would be to the process.

6 MR. BROOKMAN: Tony Bouza.

7 MR. BOUZA: Tony Bouza from the Department of

8 Energy. If you do provide the Department with certain

9 pathways to gets to efficiency, if it impacts the test

10 procedure we would like to know that quickly and

11 efficiently. We're developing a test procedure. It

12 has to be able to test the units that the Department of

13 Energy is going to prescribe a standard to.

14 So even though we keep forgetting, they're at

15 the hip, both rulemakings. It's very important that we

16 finalize the test procedure. We don't find out -- we

17 go down a path and we find out that a certain material,

18 a certain combination with standards that are today, or

19 future standards that are coming down, may not be

20 appropriate. So we want to make sure we don't get into

21 issues with the test procedure and being able to have

22 that precision.

23 MR. BOTELER: This is Rob Boteler. Test

24 procedures are really good examples because you could

25 have small manufacturers that have dynamometers. They

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1 don't have the capability of doing some of the test

2 procedures per IEEE. By adding that and having them to

3 either go out and buy that equipment or buy the

4 service, it could be a tremendous strain on them.

5 MR. BOUZA: Well, I know we're developing

6 test procedures, but we're not going to -- there could

7 be other opportunities besides testing every single

8 unit. There could be other pathways of coming up with

9 ratings. If we were to look at using distribution

10 transformers, the requirement may not be, and I'm just

11 speculating, on every single unit.

12 MR. BOTELER: This is Rob Boteler. If the

13 testing would include testing of every unit, you would

14 never be able to afford a refrigerator again.

15 (Laughter)

16 MR. BOTELER: I'll go on the record with

17 that. How's that? I'll stand by that one. And the

18 wait would be -- yeah. If we're doing thousands a day

19 and now all of a sudden we're testing two a day, it's

20 going to impact the market.

21 MR. BROOKMAN: Okay. Thank you. Other

22 comments related to this series of content? Because I

23 think Michael Scholand has convinced me of the logic of

24 taking a break right now.

25 MR. SCHOLAND: That's what's scheduled.

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1 MR. BROOKMAN: Yeah.

2 MR. SCHOLAND: We're right on schedule.

3 MR. BROOKMAN: Okay. It's now 10 after 12.

4 It's hard to eat lunch here in less than an hour, I've

5 found. So let's resume at 1:10 in this room. This

6 room will be locked while we're away. Those of you

7 that are new here, don't go off campus. Stay in the

8 building or you won't get back in time.

9 (Whereupon, at 12:10 p.m., the meeting was

10 adjourned for lunch, to reconvene at 1:20 p.m., the

11 same day.)

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1 A F T E R N O O N S E S S I O N

2 1:20 p.m.

3 MR. BROOKMAN: Okay. We're going to resume,

4 and thanks for getting back here pretty close to on

5 time. We're going to proceed as described in the

6 agenda, and Robert, you're up.

7 Markups for Equipment Price Determination, Energy Use

8 and End-Use Load Characterization, and Life-Cycle Cost

9 and Payback Period Analysis

10 Robert Van Buskirk

11 (PowerPoint presentation)

12 MR. VAN BUSKIRK: Hi. My name is Robert Van

13 Buskirk. I'm from Lawrence Berkeley National Lab, and

14 our role in the analysis is to take the engineering

15 cost numbers, manufacturer's selling price, and do the

16 next steps in terms of evaluating the consumer

17 economics, the cost, the energy savings, the various

18 aspects of the benefits and costs, and do the consumer

19 impact analysis, the national impact analysis, the

20 utility impact analysis, the environmental impact

21 analysis, and the regulatory impact analysis.

22 So those are many of the economic impact

23 analyses that also are part of the regulatory

24 requirements for evaluating a standard.

25 So as part of that, you can see in the flow

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1 diagram that to get into the economics there are two

2 additional key inputs. One is taking the outputs from

3 the engineering analysis, adding markups on the

4 equipment, and the markups include installation costs,

5 to determine the consumer cost of the equipment, and to

6 also characterize the energy use and the end use loads,

7 and then to take those pieces and feed them into the

8 consumer economics.

9 Then the consumer economics, which is in the

10 life-cycle cost and payback period analysis, is coupled

11 with the national scale shipments analysis, and those

12 two feed into a national impact analysis. So those are

13 the steps of analyzing the economics after we do the

14 engineering. What I'm going to do is I'm going to go

15 through each of those steps and point out some of the

16 questions and issues that you may be concerned with and

17 the methods that we use.

18 So in the markups for equipment price

19 determination, the purpose is even more general than

20 what's stated on this slide. The purpose is to take

21 the equipment distribution, the design distribution,

22 with the manufacturing selling price and to trace it

23 through the distribution chain and convert those

24 incremental costs of efficiency into an incremental

25 cost of efficiency at the consumer level, or the owner

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1 of the piece of equipment.

2 That will include markups in the distribution

3 chain. It will include installation costs. It will

4 include sales tax. Any other costs that get between

5 the piece of equipment at the manufacturer door and the

6 piece of equipment as installed on the consumer

7 premises.

8 So on this slide we have three largely

9 symbolic pictures of what the distribution channels

10 might be like. One distribution channel pictured here

11 is from a manufacturer to a distributor to a contractor

12 to a consumer. Another is from a manufacturer to a

13 distributor to a consumer. Another is from a

14 manufacturer to a consumer.

15 I think in the determination analysis those

16 right two distribution channels were mediated through

17 OEMs. We brought up some of the issues earlier in the

18 morning about motors going directly to consumers versus

19 motors that go into a product and then to a consumer

20 through an OEM. I think to what extent general purpose

21 motors go into OEM products and then those OEM products

22 get onto a consumer premises and to what extent those

23 motors going into those OEM products are special

24 purpose motors that may have a different type of

25 coverage, I think those are important issues for this.

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1 In addition, let me go to the next slide.

2 Basically, we would like very general types of input on

3 this. Well, a wide scope of input on this. DOE

4 welcomes comment on the different types of distribution

5 that happen in the distribution chain, some of the key

6 stakeholders and participants in the distribution

7 chain, and the typical markups that may be applied by

8 those stakeholders.

9 The key thing again is getting the overall

10 markup from the manufacturer selling price to the

11 consumer retail price.

12 Now, the Department realizes that there's

13 going to be a wide distribution of markups. We can

14 incorporate in the analysis a wide distribution of

15 markups, but there's going to be distribution costs

16 that are going to constrain at least the averages of

17 these distribution markups. The tendency of the

18 Department in several of its other analyses has been to

19 do a cost-based analysis of how the product is

20 progressing through the distribution chain as a way of

21 getting a good handle on what some of these

22 distribution markups might be.

23 So I think I'll pause for a moment and see if

24 people have comments on distribution chain markups.

25 MR. BOTELER: Yeah. This is Rob Boteler.

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1 have a comment. The first thing on your chart, when

2 you say "manufacturer," I think for the sake of

3 everything we do going forward you should maybe add

4 "manufacturer/importer." There are going to be

5 importers involved, and certainly they would be covered

6 in this, also.

7 When you use the term "manufacturer" you're

8 referring to us as a motor manufacturer, not an OEM who

9 uses our piece of equipment, correct?

10 MR. VAN BUSKIRK: Right.

11 MR. BOTELER: I would tell you that by and

12 large the increments that you're looking for from

13 manufacturer to distributor, distributor to contractor

14 -- the contractor might be referred to as "reseller" in

15 some of the data that you see -- and then to the end

16 user or consumer, that is published data that I think

17 most of the manufacturers have. I don't think there's

18 an issue providing that to you, the published data.

19 Now, confidential programs that we have with

20 individual distributors we're probably not going to

21 share with you, but I don't know that you really need

22 the one-off programs. You're looking for the general

23 terms of the marketplace, and that would be available.

24 Your channel number three. I don't know

25 about my cohorts here, but I would tell you that that

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1 channel really doesn't exist. On this type of product

2 we as a manufacturer would never sell this directly to

3 an end user or a consumer. It would always go either

4 to the distributor or to a reseller to the end user.

5 We do have a few direct agreements with large

6 end users, but they would never cover this type of

7 product. They would cover large motors only.

8 MR. VAN BUSKIRK: Right.

9 MR. BROOKMAN: Let me note for the record

10 that your colleagues down here on the panel are nodding

11 in agreement. Yes?

12 MR. HINK: That is correct.

13 MR. BROOKMAN: Yes, thank you. To further

14 reinforce your comment. Okay. Would you say anything

15 more generally about distribution channels? Are there

16 any novel or distinctive distribution channels not

17 covered by these representations?

18 MR. BOTELER: I mean, if you look at the

19 distribution, there is national distribution, which is

20 Power Transmission Association type people. There are

21 electric service and repair, ESA, type people who get

22 involved a little bit in this product. The primary is

23 going to either be the power transmission chains or the

24 specialists in the HVAC area.

25 But the specialists in the HVAC area, like we

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1 talked this morning, I believe what they would be

2 selling would be covered in part of the SEER number for

3 the piece of HVAC equipment. I would be surprised if

4 they bought a general purpose product from us. We

5 wouldn't necessarily tell them they couldn't, but they

6 wouldn't have any reason to.

7 MR. BROOKMAN: Okay. Thank you.

8 MR. VAN BUSKIRK: Other comments?

9 (No response)

10 MR. VAN BUSKIRK: Okay. Let's go on to the

11 next step. The next step for us to consider in the

12 consumer economics aspects of the analysis is the

13 energy use and the end-use load characterization.

14 Specifically, I'd like to mention that there

15 is a Table 3.2 in the Technical Support Document for

16 the determination analysis that gives average numbers

17 for Department estimates for operating hours and

18 typical loadings for motors for different types of

19 applications. So that will be a good starting point

20 for your written comments in terms of checking the

21 Department's initial estimates.

22 So for the energy use and end-use load

23 characterization, the purpose is to develop the energy

24 use and demand characteristics, develop annual energy

25 consumption data for the life-cycle cost and payback

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1 period analyses, and to calculate annual operating

2 costs.

3 The Department will develop the average

4 numbers, but remember that we also do our analyses as a

5 full national distribution. So while average estimates

6 may be a starting point, the Department will do

7 distributions of those numbers that try to be

8 nationally representative.

9 So we developed these distributions of the

10 small electric motor operating hours and motor loading

11 data and any other statistical characteristics that

12 might be important for the motor loads, like peak

13 coincidence factors. Peak coincidence factors will be

14 important for things like industrial demand charges.

15 Your demand charge depends on the peak load in your

16 building, and whether or not that motor is running at

17 the time of peak is going to determine its contribution

18 to the peak load.

19 Another effect that may be important for some

20 consumers are the impacts of the power factor

21 characteristics of the motors. So the Department's

22 analysis would benefit from information on how much

23 consumers are concerned about power factor effects and

24 the impact that those power factors have on their

25 operations and their utility bills.

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1 So our request for comments includes any

2 recommendations there may be on sources of data that

3 can provide end-use operating profiles for each of the

4 motor types covered under this rulemaking, and we

5 welcome comment on whether the end-use operating

6 profiles are -- how different they are for the

7 different motor types covered under the rulemaking and

8 for the different application types.

9 I've pointed you to a table as a starting

10 point.

11 MR. BOTELER: Well, this is Rob Boteler.

12 When we talk about load characteristics, we are now

13 back to talking about load as far as horsepower load,

14 right? So we've defined it that way.

15 MR. VAN BUSKIRK: Yeah.

16 MR. BOTELER: Good. It's interesting. You

17 bring up power factor and you said does the end user

18 care about power factor, and the answer is the end user

19 doesn't have a clue what power factor is. But when it

20 trips the circuit and his building shuts down, then he

21 realizes what the results are going to be. That is

22 certainly an issue as we increase efficiency, power

23 factor goes down, and there is the possibility,

24 depending upon how much we try and increase, that we

25 create a product that trips the breakers pretty

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1 regularly. That's a possibility.

2 On the hours of operation, end-use operating

3 profiles -- and I guess -- maybe I'm reading this

4 wrong. The hours of operation, is that part of your

5 question, also?

6 MR. VAN BUSKIRK: Yes. So there's two

7 aspects of the loading. There's the hours of operation

8 and then the actual mean RMS loading.

9 MR. BOTELER: We as the manufacturer, we see

10 that and get involved with it with our larger OEMs when

11 we deal on the special-purpose and definite-purpose

12 product. But quite frankly, when we sell the general

13 purpose, continuous duty product, we kind of build to

14 the specification within NEMA. But to say that we have

15 a good handle on whether that motor is going to run two

16 hours a week or 200, we really don't know.

17 I think that's data that, from your

18 investigative side, going out to some of the other

19 trade associations that apply our products and maybe

20 asking those questions would be very valuable. We

21 don't really feel that we in particular would qualify

22 to glance at that. We could certainly venture a guess,

23 and in the past we have ventured guesses, but we're

24 getting to the point where guesses maybe aren't what we

25 want to do.

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1 MR. BROOKMAN: Additional comments here?

2 Yes. Keep going.

3 MR. BOTELER: No, I think that's it.

4 MR. BROOKMAN: Okay.

5 MR. BOTELER: That's it.

6 MR. VAN BUSKIRK: Any other comments?

7 (No response)

8 MR. VAN BUSKIRK: Okay. Let's go on to the

9 next topic.

10 So the next topic we're going to cover is the

11 life-cycle cost and payback period analyses. These

12 analyses have several components. I'm going to go

13 through the different issues on that analysis one by

14 one.

15 Remember the life-cycle cost is both the

16 initial cost of the product and the present value, the

17 discounted operating and maintenance costs of the

18 product.

19 So for the life-cycle cost and payback period

20 analysis, we assess the net life-cycle cost impacts of

21 differing efficiency standards for small motors on the

22 consumer. We try to do an accounting of all the costs

23 that may be involved, both the plusses and the minuses.

24 The LCC equals the consumer price plus any

25 extra installation or other initial costs plus the sum

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1 of annual operating and maintenance costs discounted to

2 a particular base year. So this is an economic

3 evaluation from the consumer perspective. It's

4 implemented in an Excel spreadsheet. The Excel

5 spreadsheet does a distributional analysis and attempts

6 to calculate a nationally representative distribution

7 of economic impacts.

8 The results are expressed as the life-cycle

9 cost difference between a baseline no-standards model

10 and a standard model. The Department also calculates a

11 simple payback in years and reports those paybacks as

12 part of the analysis.

13 As I hinted at before, the calculation does a

14 Monte Carlo simulation that just says you randomly

15 sample according to your population weights, different

16 consumer economic and equipment conditions, and you

17 weight those according to the number of motors in each

18 of the sectors, and you correlate the features of the

19 consumer economics and the features of the motors when

20 relevant in order to calculate the full distribution

21 impacts with as much precision as possible.

22 There is a life-cycle cost and payback period

23 analysis for each equipment product class that the

24 Department analyzes.

25 So, the next slide, Slide 75, shows the

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1 diverse inputs, outputs, and processes involved in the

2 life-cycle cost analysis. So, the total installed

3 cost. You can see the many inputs, ranging from the

4 installation cost to the motor price, the

5 manufacturer's selling price, the various markups that

6 may be involved distributing that to the consumer.

7 Then we add sales tax. That produces the total

8 installed cost.

9 On the operating cost side, again you can see

10 the many various inputs, including the motor loading,

11 the motor rating, the operating hours, the power

12 factor, and those inputs provide an annual electricity

13 consumption. That electricity consumption is valued

14 vis-a-vis the price of electricity, and that gives you

15 an operating cost.

16 Then the other factors that come in are

17 analyzing the motor lifetime and any replacement or

18 repair costs, and those also can go into analyzing the

19 present value of the operating cost. Those operating

20 costs are discounted and modified by virtue of the

21 discount rate and any long-term trends that are

22 forecast in the electricity price, and that gives you

23 the lifetime operating cost, which is combined with the

24 total installed cost to produce the life-cycle cost for

25 the product.

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1 So, the annual energy costs. The energy

2 prices are used to convert the energy use to energy

3 costs. DOE has developed through previous rulemakings

4 a fairly comprehensive database of billing formulas for

5 commercial and industrial customers. Our plan for the

6 current analysis is to calculate a baseline bill for a

7 sample of commercial industrial customers, add the

8 incremental energy use characteristics from a change in

9 the motors used by that customer, calculate the

10 incremental change in the bill, and that will give us

11 what we call a marginal energy price or marginal energy

12 cost.

13 What happens is many customers have both the

14 energy part of their bill and they also have a demand

15 peak part of their bill. What happens is, depending

16 upon the statistics of the loads, it may more affect

17 peak or less affect peak, and so the Department uses

18 this marginal analysis to capture those effects as

19 necessary.

20 The forecast for future electricity prices

21 comes out of the Department's Energy Information

22 Administration. They have an annual energy outlook

23 that provides long-term forecasts for electricity, the

24 various scenarios are used for projecting high, medium,

25 low prices.

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1 If stakeholders provide alternative price

2 projections, the Department may also use those

3 alternative price projections as sensitivities to

4 evaluate the robustness of the results.

5 So here we have a little item. The

6 Department welcomes input on the proposed methodology

7 for estimating current and future electricity prices.

8 Any comments on this?

9 MR. BOTELER: This is Rob Boteler. I mean, I

10 don't know that we know a whole lot about future

11 electricity prices. My one comment would be when

12 you're talking about the single-phase product I don't

13 really think you're talking about the commercial and

14 industrial tariffs. You really need to spill over into

15 res ide ntial .

16 MR. VAN BUSKIRK: Okay. Thanks.

17 MR. BOTELER: On the three-phase, yeah, that

18 would be okay.

19 MR. VAN BUSKIRK: Okay.

20 MR. BOTELER: Like I pointed out, in your

21 chart, direct end user, there really is no direct end

22 user to speak of.

23 Other than that, I mean, I think your

24 projections -- it looks like you've covered it all.

25 I'm sure you guys have done this many times, so I don't

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1 think we would have a whole lot to add on this one.

2 MR. VAN BUSKIRK: Well, again, any specifics

3 you may be able to provide for what fraction of the

4 products are going into residential or commercial

5 versus industrial.

6 MR. BOTELER: I think we do that as just the

7 division between single-phase and three-phase. Just

8 assume that all the single-phase is going into

9 residential, and it's really --

10 MR. VAN BUSKIRK: And maybe small commercial?

11 MR. BOTELER: Yeah. Maybe a gas station or

12 something like that, or a retail store.

13 MR. BOUZA: This is Tony Bouza from the

14 Department of Energy. I do want to say that these

15 tools are going to be made available in an Excel

16 spreadsheet. So even though right now you may not

17 think of certain scenarios or different price scenarios

18 that you may have, later on these tools -- you can go

19 in and change some of the numbers and do your own

20 modeling and your own scenarios. Then, later on, you

21 can provide that to the Department if you perceived --

22 at the ANOPR and NOPR levels.

23 MR. VAN BUSKIRK: On to the next issue,

24 maintenance, repair, and installation costs. On this

25 issue I think we had some comments earlier in the day

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1 that might be particularly relevant here. Currently

2 the Department's thought or the operating assumption

3 may be that -- well, the Department doesn't have

4 particular information indicating that routine repair

5 and maintenance costs are going to be more or less for

6 more efficient motors. But I remember from earlier in

7 the day that there was some mention that more efficient

8 motors may have difficulty meeting particular space

9 constraints.

10 So the extent to which efficiency leads to

11 motor size issues and motor size issues lead to

12 installation cost issues, I think that would be

13 information that would be quite useful to the

14 Department.

15 So the Department welcomes comment on whether

16 and how to develop maintenance, repair, and

17 installation costs for small electric motors.

18 Specifically, DOE invites comment on how efficiency

19 requirements may affect the ability of motor designs to

20 fit in constrained spaces and configurations.

21 MR. BOTELER: This is Rob Boteler. That

22 really is kind of back to Steve's suggestion of doing

23 an efficiency-driven look, I guess, at what the designs

24 would be. I guess if you have a 2 percent gain in

25 efficiency, you stay on the same frame size, maybe. If

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1 you go to 4 percent, you have to jump a frame size. So

2 then, of course, if you jump a frame size then you have

3 a product that is not -- in many cases you can't

4 install it back into the same piece of equipment. But

5 that's going to be determined by the level of

6 efficiency more than anything.

7 MR. VAN BUSKIRK: Well, the question I would

8 have for that is, if at a certain efficiency level you

9 have to jump a frame size -- okay. The efficiency

10 levels are set by horsepower rating. So the

11 implication would be that if the efficiency levels are

12 high enough, then particular horsepower ratings may no

13 longer be available in particular frame sizes.

14 MR. BOTELER: Right. It's another way to

15 look at it, but yes, that's exactly right. If you

16 can't make the efficiency in the horsepower without

17 jumping a frame size, then the horsepower goes away.

18 MR. RINK: This is Tom Hink from Regal

19 Beloit. One of the things to keep in mind too, adding

20 on to what Ron said, is that perhaps if you have to,

21 for example, add another capacitor to meet a certain

22 efficiency level and suddenly you have this large

23 capacitor sticking on the outside of the motor where it

24 might hit something potentially in an end-use

25 application, that could also restrain you from having a

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1 motor that would fit in an already established end-use

2 application.

3 MR. BOUZA: This is Tony Bouza from the

4 Department of Energy. Are there any standards that

5 provide guidance on size related to those capacitors,

6 that housing, any criteria? Or is it right now just --

7 it doesn't go into the -- if you look at the frame

8 sizes, they provide dimensions for certain

9 characteristics just for the bolting. But I don't

10 think -- I'm not familiar enough with the product to

11 know are there any other dimensions constrained to

12 thinks bulging out from the case.

13 MR. BOTELER: I don't know whether I can

14 answer that. On the three-phase, again where my world

15 is most of the time, we don't have that issue. But I

16 would say on the single-phase I don't think that's

17 considered. So it's whatever the product was built for

18 for the OEM.

19 MR. RINK: This is Tom Hink, Regal Beloit. I

20 know for a fact that depending upon what manufacturer

21 may be producing capacitors, their product may have

22 different diameters. What they normally may do is they

23 may try to standardize them to a certain case size so

24 that a series of capacitor ratings can fit in the same

25 case.

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1 MR. BOUZA: Right. Are those cases -- are

2 they standardized to date?

3 MR. HINK: To my knowledge, no, they are not.

4 MR. VAN BUSKIRK: Would people have any

5 suggestions on how the Department might estimate the

6 cost to the consumer of switching the frame size?

7 MR. BOTELER: I don't think so. This is Rob

8 Boteler. Every application would be different. I

9 mean, in some cases it might be a matter of, in your

10 piece of equipment, moving a pump over a couple of

11 inches to make something fit. Would you as a consumer

12 do that in your piece of equipment at home? I don't

13 think so. I think what you would end up with is you

14 would be throwing away that piece of equipment.

15 MR. BOUZA: Yeah, I did it with --

16 (Laughter)

17 MR. BOTELER: State your name.

18 MR. BOUZA: Tony Bouza. I did it once for a

19 gas application.

20 MR. BROOKMAN: And your engineering

21 credential as well.

22 (Laughter)

23 MR. BOUZA: I've done it for a gas

24 application. The replacement engine didn't have the

25 physical, so it got moved back a couple inches.

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MR. BROOKMAN: Okay. So we have an extreme

2 case here.

3 (Laughter)

4 MR. VAN BUSKIRK: Okay. On to the next

5 topic. So another input into the life-cycle cost

6 analysis is the analysis period in lifetimes.

7 Currently the Department is proposing to use an

8 analysis where the product lifetimes for the base case

9 and the standard case are the same. Any impacts that

10 efficiency levels might have on product lifetime I

11 think would be important information for the Department

12 to have early on.

13 Any information on what the distribution of

14 lifetimes would be for the products would also be very

15 useful since the lifetime of the analysis is a key

16 factor in the evaluation of the consumer economics.

17 MR. BOTELER: This is Rob Boteler. I don't

18 think any of us would tell you that a motor with

19 increased efficiency, whatever that is, has a longer or

20 a shorter lifetime than the standard motor that it's

21 replacing. There is a certain element in the market

22 today that has tried to study integral motors and

23 determined that integral premium efficient motors have

24 a longer life expectancy than non-premium efficient

25 motors because they may have slightly reduced operating

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1 temperatures and reduced bearing temperatures.

2 But I think when all is said and done most of

3 us manufacturers don't think there's enough difference

4 there to really -- we would not tell you that the life

5 expectancy changes dramatically enough to worry about

6 on a premium efficient product.

7 MR. BOUZA: Are we talking about hours, days?

8 MR. BARNETT: Yes.

9 MR. BOUZA: Hours?

10 MR. BOTELER: I don't think we've ever done a

11 study that we could really quantify that, but it would

12 be -- I don't know. It's not significant.

13 MR. BOUZA: Okay.

14 MR. BARNETT: It's not significant. The

15 bearing temperatures really don't change. We use

16 pretty much the same bearing systems. One of the

17 things that we see the charts on is the overall

18 operating temperature and we see the chart for every 10

19 degrees and the life expectancy of the stator increases

20 by 10 years. But that's not what fails in a motor.

21 What fails in a motor is the mechanical side and the

22 bearings. So it really doesn't have that great of an

23 impact.

24 MR. VAN BUSKIRK: Robert Van Buskirk, LBL. A

25 follow-up question is, would there be any information

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1 on what fraction, no matter how small, of the failures

2 would be due to temperature effects so that even though

3 the effect may be small it at least would be

4 quantifi abl e ?

5 MR. BOTELER: Speaking from our experience,

6 we don't really keep records. Again, motors that we

7 see don't fail because of temperature issues. They

8 fail because of binding failures, faults in the

9 insulation system, or bearing failures.

10 MR. BROOKMAN: Do you know about approximate

11 lifetime? Is it consistent?

12 MR. BOTELER: I don't know that I'm qualified

13 to answer that one. I don't know if any of my

14 competitors are here or not.

15 MR. SCHUMANN: This is Tim Schumann. In

16 general we rate most of our motors in the industrial

17 world based on bearing life. That's the major

18 significant factor that we look at, and we all use the

19 same bearing manufacturers. So that's the lifetime of

20 t he motor.

21 MR. BOUZA: Tony Bouza from the Department.

22 So we can assume that there is no difference between

23 the poly-phase and the single-phase motors. They're

24 a ll the same. We can ma ke the same --

25 MR. BOTELER: As far as the life expectancy?

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1 MR. BOUZA: Yes. Not so much the life but

2 the same with respect to efficiency.

3 MR. VAN BUSKIRK: Same principle, that is.

4 MR. BOUZA: Same principle.

5 MR. VAN BUSKIRK: The efficiency is unlikely

6 to have an effect on the lifetime for both poly-phase

7 and single-phase.

8 MR. BOUZA: There wouldn't be a greater

9 impact on one, not on the other. Since sometimes when

10 we're speaking and we're thinking in general, sometimes

11 it's hard to pin your responses to the single-phase or

12 the poly-phase.

13 MR. BOTELER: I would agree with that.

14 MR. VAN BUSKIRK: Robert Van Buskirk, LBL.

15 One more follow-up question. Would it be possible for

16 more efficient motors to have a change in weight that

17 would have an impact on bearing lifetimes?

18 MR. BOTELER: This is Rob Boteler. I don't

19 think so. You're talking about -- most of the weight

20 is going to be in the stator, maybe a little bit in the

21 rotor. But I would not think that --

22 MR. VAN BUSKIRK: The stator weight would not

23 change.

24 MR. BOTELER: The stator weight could change,

25 but it wouldn't -- you asked if it would --

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1 MR. VAN BUSKIRK: Impact the bearings.

2 MR. BOTELER: -- impact the bearings. Well,

3 the stator wouldn't impact the bearings. The weight of

4 the rotor might impact the bearings, but I don't think

5 it would change enough to --

6 MR. SCHOLAND: Mike Scholand here from

7 Navigant with a follow-on. Coming from the lighting

8 world and thinking about electronic ballasts, when you

9 say that in a single-phase the lifetime is no different

10 from the poly-phase because the bearings are the

11 limiting factor, you're keeping mind, obviously, the

12 capacitor, right?

13 MR. BOTELER: No, that's not what we said.

14 MR. SCHOLAND: I'm sorry.

15 MR. BOTELER: The question was, would the

16 effect on poly-phase to go to premium efficient or the

17 effect on single-phase be the same. The answer was

18 yeah.

19 MR. SCHOLAND: But, is the limiting factor on

20 the single-phase the bearings or is it the capacitor,

21 if it has a capacitor on single-phase?

22 MR. BOTELER: Or is it the switch.

23 MR. BARNETT: Yeah. This is Ben Barnett. In

24 thinking about this in general terms, single-phase

25 motors are less reliable than poly-phase motors simply

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1 because they have more stuff. Notice that's auxiliary

2 stuff. Now, that's starting components as capacitors,

3 whereas the poly-phase does not have that. So just

4 inherently, there's a difference. But it's not

5 efficiency related.

6 MR. BROOKMAN: When it's the extra stuff that

7 fails it's not --

8 MR. BARNETT: Many times it is, and depending

9 on how you look at it, we as a motor manufacturer say,

10 man, that wasn't our stuff that failed. But you as a

11 consumer would think my motor failed. You don't know

12 whether it's the switch or the capacitor. You see it

13 as the motor failure. But from a reality, when you go

14 to analyze it, you could break it down and say it is

15 the capacitor or it is a switch.

16 Generally, I mean, think about it; anything

17 in there that has physical movement is where you have

18 the trouble, which puts it very often on a mechanical

19 switch, because many of these small machines have

20 mechanical starting devices. Those things really

21 sometimes are where the problems occur. It's not

22 efficiency. It's not tied to efficiency.

23 MR. BROOKMAN: Okay.

24 MR. RINK: Can I make one more comment,

25 please?

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1 MR. BROOKMAN: Yes. Please do, Tom.

2 MR. HINK: Tom Hink, Regal Beloit. One thing

3 we might want to consider, too. If we're talking about

4 product lifetimes here, sometimes the motor is not the

5 weak link. There could be small pieces of equipment

6 that nothing is wrong with the motor but something else

7 happened to the equipment, and the end user may choose

8 to throw the whole thing away and buy a new one. There

9 may be a lot more life in that motor. But if we're

10 going to be looking at the true payback period of this

11 thing, I think we need to keep that in mind as well.

12 MR. VAN BUSKIRK: Robert Van Buskirk,

13 Lawrence Berkeley Lab. Any information that

14 stakeholders can provide to the Department that

15 provides some estimates of the fraction of motors that

16 may be subjected to that form of early disposal would

17 be quite useful for the Department in developing its

18 analysis.

19 MR. BROOKMAN: Okay. Thank you.

20 MR. VAN BUSKIRK: So, on to discount rates.

21 This is a little more detailed. It becomes a

22 contentious issue on many rulemakings, and because it's

23 been discussed so long the Department's current

24 analysis has been refined in some detail.

25 So the approach that the Department uses on

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1 discount rates, which is effectively your interest

2 rate, is a weighted average cost of capital. So when

3 one is trying to calculate the weighted average cost of

4 capital, one runs into several issues. Among these

5 issues are the returns on stocks are different than

6 they were 20 years ago. Interest rates go up and down.

7 What are the right interest rates? How do you average

8 things properly?

9 The current approach proposed by the

10 Department is to follow the guidance of the Federal

11 Reserve. So the Federal Reserve calculates interest

12 rates and it uses the finance equations for doing that.

13 The most difficult interest rate to calculate is the

14 cost of equity capital, which is the capital that's

15 obtained on the stock market, because it goes up and

16 down so much.

17 Because the Federal Reserve lends out --

18 makes loans, sort of higher-risk loans, at equity

19 capital rates and uses a standard formula for

20 calculating those equity capital rates, the Department

21 is proposing to use the Federal Reserve's method for

22 calculating the average rate of equity capital. We're

23 providing the details of that.

24 So, 40-year averaging period, geometric means

25 used for the averaging, and calculating the market risk

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1 premium relative to a 10-year Treasury rate bond. Then

2 there's an academic data source that's fairly

3 comprehensive for the interest rates, and that's called

4 Damadoran online. That provides rates of return and

5 various interest rates in a nice, convenient, compiled

6 form.

7 So the Department welcomes any input on its

8 proposed approach.

9 MR. BOTELER: Yes. Rob Boteler. I don't

10 think we have any comments. Sounds good to us.

11 Shipments Analysis and National Impact Analysis

12 Robert Van Buskirk

13 (PowerPoint presentation)

14 MR. VAN BUSKIRK: Okay. So, on to the

15 shipments analysis. After the individual consumer

16 impacts are calculated, the next step is to do the

17 shipments analysis. How many motors and which type are

18 being shipped now and in the future.

19 The purpose is to quantify changes in small

20 motor shipments due to potential new energy efficiency

21 standards and projections. The method is a shipments

22 model will rely on a range of data sources and the

23 model will only consider shipments of covered product.

24 In addition, shipments forecast approach.

25 There's limited publicly available information, but

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1 there's some. The Department needs to project

2 shipments of small electric motors out over 30 years

3 because that's the forecasting planning period for

4 evaluating the regulation.

5 There are a couple possible approaches. One

6 is an approach based on a projection of historical

7 data. Say shipments have been increasing at X rate and

8 so they will keep increasing at that rate 30 years into

9 the future.

10 Another would be a projection that tries to

11 get a more quantitative handle on the dynamics and the

12 stocks of small motors and how they're getting

13 replaced, looking at the installed base and how that

14 installed base turns over. That has the advantage of

15 being able to capture more dynamics. It has the

16 disadvantage of being more complex and a little more

17 difficult to calibrate the models.

18 So, analysis requirements are to project the

19 shipments by type, power rating, and sector. Possible

20 data sources: trade association data. I think NEMA

21 has already volunteered to provide some of that data.

22 U.S. census and looking at the different end-use

23 sectors.

24 Typically, the Department has a high-,

25 medium-, and low projection scenario based on different

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1 assumptions, and we try to make the approach as simple

2 and as transparent as possible so that stakeholders can

3 review it well.

4 The Department welcomes information to

5 support the shipments analysis, so historical

6 shipments, breakdown of shipments by end-use sector,

7 information on distribution channels, and comments on

8 trends or issues that may influence the projection of

9 motor shipments. So, comments on sources of data and

10 effects.

11 I think one of the effects that we would like

12 to mention and highlight are elasticity effects. That

13 is, if prices go up, how might shipments go down, or

14 how might shipments shift between one type of motor

15 product and another type of motor product. So, the

16 degree to which the Department can get information that

17 will help it quantify those shifts, then those

18 quantified shifts can be reflected in the Department's

19 analysis.

20 MR. BOTELER: Rob Boteler. I think I would

21 tell you on the two possible approaches that we would

22 certainly look at the projection based on historic

23 data, which we would -- once defined, we would help you

24 create. Trying to do a projection based on installed

25 base, I don't know how you would do that because you

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1 would have to have some assumptions of the failure rate

2 and replacement rate. We don't have those. Our

3 marketing guy is trying to bring that stuff up

4 regularly, and I'd stick with the historic data. What

5 we really do.

6 (Laughter)

7 MR. BOTELER: I think, really, the critical

8 thing on this section that we need to work together on

9 is a very clear definition of product categories, or

10 subgroups, as we called them earlier, I think. I think

11 that's the most critical thing.

12 We historically, even in our large, higher

13 horsepower product, we have a lot of confusion when we

14 go to the members and try and accumulate data because

15 we all have kind of our own interpretations sometimes

16 on definitions. It's important that we have those very

17 clear.

18 On your elasticity, that's an interesting

19 one. I don't know if we have a whole lot of elasticity

20 that we can look at there because that sort of assumes

21 that if one motor has a cost slightly higher than

22 another that you can switch pretty easily to a

23 different product because it's less costly.

24 I don't know that there's really a lot of

25 that that would occur, because motors are an applied

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1 product. If you need the motor to make your piece of

2 equipment run, I mean, you're not going to say, well,

3 the equipment has a 1 horsepower and I'm going to save

4 money and buy a half horsepower motor. I don't see

5 people doing that. You wouldn't, certainly, switch

6 from a single-phase motor to a three-phase motor

7 because you could save money because you would have to

8 change the whole system in order to do that. So I

9 wouldn't think there would be a lot of elasticity.

10 MR. VAN BUSKIRK: Okay. Other comments?

11 (No response)

12 MR. VAN BUSKIRK: Okay. The next slide was

13 more asking for comments, which I think we've covered.

14 On to the national impact analysis.

15 For the national impact analysis, the purpose

16 is to determine the projected national energy savings

17 and consumer national net present value. For this

18 analysis the Department develops an annual series of

19 national energy and economic impacts, utilizes the

20 shipments model to estimate the total stock of small

21 motors in service each year, utilizes the life-cycle

22 cost analysis results to estimate cost in energy use

23 per unit in any given year, aggregates the costs in

24 energy use for all years in the analysis period,

25 reports energy savings in Quads of primary energy

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1 consumption, so the energy savings at the power plant.

2 One Quad is 293 terawatt-hours of electricity.

3 DOE reports estimates of economic impact as a

4 change in consumer national net present value in

5 constant year dollars, and accounts for the time value

6 of money through defined discount rates.

7 Currently, the Department uses a Treasury

8 bill discount rate and a private sector cost of capital

9 discount rate, where those discount rates are 3 percent

10 and 7 percent real.

11 So the next slide, Slide 88, shows basically

12 a schematic of summing up all those quantities and

13 adding them to a national energy savings and net

14 present value.

15 Slide 89 just provides a little more detail,

16 fleshes out the same schematic diagram. Shipments

17 going into the various costs, the various costs being

18 added up at the national level, then present value due

19 to the discount rate.

20 So the Department welcomes any comment on the

21 national energy savings spreadsheet models, and that it

22 will be using for the Small Electric Motor Energy

23 Conservation Standards.

24 MR. BARNETT: Ben Barnett. This is not a

25 comment so much but a question. I'm assuming that you

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1 have already done some preliminary analysis in this

2 area that gives you a feel for the level of energy to

3 be saved with this initiative that you're working on.

4 Am I correct?

5 MR. BOUZA: Tony Bouza. The Department did

6 publish a determination.

7 MR. BARNETT: Okay.

8 MR. BOUZA: And the determination I think had

9 between 0.6 through 0.79 Quads of energy savings, the

10 range.

11 MR. BARNETT: 0.6 to 0.7, is that what you're

12 --

13 MR. BOUZA: Yeah.

14 MR. BARNETT: Okay. All right. I'm just --

15 thank you. That helps put it in perspective as to

16 where you're going at the beginning.

17 MR. BOUZA: Right, right. And we consider

18 that to be significant energy savings, and that's what

19 triggered this rulemaking and the test procedure. If

20 that determination was negative, then we wouldn't be

21 here.

22 MR. BARNETT: Okay. Also, I guess maybe the

23 second question, if 0.6 is significant, is 0.3

24 significant?

25 MR. BOUZA: It's very close to -- we do

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1 comment that on the determination of I think the air

2 conditioning rule -- what was the border that we

3 considered?

4 MR. STAS: Eric Stas, DOE. Some of the court

5 cases that have been going around said that anything

6 above a de minimus level. They don't exactly pin it

7 down, but it sounds like there is no set cutoff and the

8 numbers can get reasonably low.

9 MR. BARNETT: Thank you.

10 MR. BOUZA: For room air conditioning it was

11 between 0.36 to 0.96 Quads. Is that 0.096? Yeah,

12 0.96, so less than a Quad. Yeah, 0.36 to 0.96. So,

13 one-third to one Quad, basically.

14 MR. SCHOLAND: The one thing, Ben, just to be

15 clear, as Robert had said when he was calculating the

16 national energy savings, it's over a 30-year time

17 period?

18 MR. BOUZA: Yes.

19 MR. SCHOLAND: For that Quad. That's not an

20 annual, but that's looking at 30 years of shipments and

21 combining all those energy savings you arrive at the

22 Quad savings that Tony said were in the determination

23 for small motors.

24 MR. BOTELER: This is Rob Boteler. If you're

25 doing it over 30 years, is there something in there

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1 where we would figure the motor being replaced twice,

2 maybe three times in that 30 years?

3 MR. VAN BUSKIRK: Yes. So the national

4 impact analysis does a stock accounting. So whereas

5 even if the shipments analysis does, say, a projection

6 of 2 percent growth per year, the model will be

7 initialized to estimate what the corresponding stock of

8 motors is that matches those sales. So that set of

9 motor shipments will have a corresponding stock, and

10 the Department will use a lifetime to get a turnover

11 rate on that stock.

12 So the new shipments which are affected by

13 the standard then go into the stock and they turn over

14 at the lifetime rate. So the national impact analysis

15 does the stock turnover accounts to match the long-term

16 shipments projection.

17 MR. BOTELER: Okay. The other question I

18 have is, when you look at the savings, is there also a

19 DOE cost-to-savings ratio that is a target number? I

20 mean, if it's going to cost, I don't know, $20 to

21 improve the efficiency of the motor and it's going to

22 save $4 a year in energy, is there a ratio that we're

23 looking for?

24 MR. VAN BUSKIRK: Robert Van Buskirk, LBL.

25 All the extra costs of buying the more efficient motors

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1 are included on one side of the balance sheet. Then

2 the operating costs are included only for as long as

3 those motors are actually operating. Then the net is

4 calculated using discounting. There are two discount

5 rates in the recent analysis by the Department. One is

6 a 3 percent real, the other is a 7 percent real.

7 The Department takes the whole stream of

8 costs and benefits, shuts off the shipments at the end

9 of the analysis year, and allows the remaining stock to

10 be replaced, and then does the present value of all

11 those costs and benefits in one aggregate calculation.

12 So the lifetime together with the discount

13 rate provides the effective payback time that is

14 required to get a net positive on the national economic

15 impacts.

16 MR. BOTELER: This is Rob Boteler. Is there

17 a specified payback time? Does DOE have a rule it must

18 pay back in X number of years?

19 MR. BOUZA: Tony Bouza, Department of Energy.

20 You have to know that different products have

21 different lifetimes. So you have to take that into

22 consideration. There isn't a real diehard number per

23 se.

24 MR. VAN BUSKIRK: Well, but mathematically

25 you can make the statement that the payback time for

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1 the extra cost has to be less than the lifetime of the

2 motor.

3 MR. BOTELER: Right. That figures.

4 MR. VAN BUSKIRK: And how much less depends

5 on the discount rate. So at the 3 percent discount

6 rate it will be a little less than the lifetime of the

7 motor. At the 7 percent discount rate it will be

8 moderately less. But my memory from recent Department

9 analyses is that the paybacks are longer than two or

10 three years, shorter than 15 years. So it's going to

11 be somewhere in that range to come out with a positive

12 NPV.

13 MR. BOTELER: What was your assumption of

14 increase in efficiency when you made that?

15 MR. VAN BUSKIRK: Well, the payback -- we

16 should maybe have a --

17 MR. BOUZA: While Robert is thinking, Tony

18 Bouza, Department of Energy. I do want to say that

19 when the Department sets a standard on a particular

20 level it is one of the factors. Earlier today we

21 talked about those seven factors or criteria. When you

22 end up at a particular level, you had all those seven

23 factors that went into the decision. Then, at the

24 outcome, you come up with something. People will look

25 at the payback period at the decision, but that wasn't

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1 the only input. There were seven other criteria that

2 went into that decision.

3 So it's very hard to pinpoint. You can say

4 that this was it, or this. You have to look at NPV.

5 You have to look at employment impacts, impacts on

6 manufacturers. So even though the economics may drive

7 you one direction, it could be the manufacturer's

8 impacts that drive you in another direction, or in some

9 instances it could be the NPV or some other criterion,

10 or small business impacts.

11 So where you end up, it's very hard then to

12 associate that with just one of the particular analyses

13 or one of the components. That's where, if you read

14 any of the other final rules, the Department starts off

15 with a max tech and works itself down and explains how

16 it ended up at that level. So we have to keep in mind

17 not just one factor but a whole bunch.

18 MR. BOTELER: Rob Boteler. I was just trying

19 to understand. You made the comment that the savings

20 was 6 to 7 Quads, and I wondered if that was -- oh, I'm

21 sorry, 0.6.

22 MR. BROOKMAN: 0.6, yeah.

23 MR. BOTELER: Thank you. Was that based on

24 two points of efficiency gain or eight points or 10

25 points. What kind of gain -- you're going to tell me

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1 that's in here, right?

2 MR. BOUZA: Yeah.

3 (Laughter)

4 MR. BOUZA: That's from the determination

5 that's publicly available. But the analysis isn't as

6 robust as this full-blown analysis. We simplified it.

7 MR. BOTELER: Right. I understand.

8 MR. VAN BUSKIRK: And again, it's in the

9 Technical Support Document on the website.

10 MR. BOTELER: Okay.

11 MR. VAN BUSKIRK: Okay. And then what I have

12 is, Doug, are we ready for a stretch break? Because

13 now we're on to the NOPR analysis.

14 MR. BROOKMAN: Let's just keep going. We've

15 only been at it an hour here.

16 MR. BOTELER: We have flights out tonight,

17 so.

18 MR. BOUZA: We can go late into the night,

19 then.

20

21

22

23 Sunday.

24

25

MR. BOTELER: No, no, no.

(Laughter)

MR. BOTELER: I've been traveling since

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1 NOPR ANALYSIS

2 Revisions to ANOPR Analyses and LCC Subgroup Analysis

3 Robert Van Buskirk

4 (PowerPoint presentation)

5 MR. VAN BUSKIRK: Okay. The analyses that

6 I'm going to cover next are done in the second step, or

7 the step after the advance notice of proposed

8 rulemaking. They're done in the step of the notice of

9 proposed rulemaking. Remember for the advance notice

10 of proposed rulemaking the analysis is presented, some

11 possible standard levels are presented, but the

12 Department does not present a specific proposal on a

13 standard level.

14 For the notice of proposed rulemaking the

15 Department is presenting a particular proposed standard

16 level, and when that notice comes out, there are

17 additional, more detailed analyses that are also

18 provided at that time.

19 So this diagram shows that process. The

20 first section is just a revision of the ANOPR analyses,

21 and then the Department adds a series of additional,

22 more detailed analyses. Those include the life-cycle

23 cost subgroup analysis; the complete manufacturer

24 impact analysis; the utility impact analysis, which

25 says, okay, how does this impact the energy sector; the

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1 net national employment impact analysis, which says for

2 the country as a whole how does it impact jobs; the

3 environmental assessment, which includes impacts on

4 emissions and air quality; and the regulatory impact

5 analysis, which evaluates other possible regulatory

6 alternatives to a mandatory standard.

7 So in the life-cycle subgroup analysis, the

8 purpose is to analyze the economic impacts of standards

9 on consumers, including subgroups who may be

10 disproportionately impacted compared with the general

11 user population. The method is to extend the regular

12 life-cycle cost analysis to examine the impacts for

13 defined subgroups.

14 This is slightly different. The manufacturer

15 impact analysis will look at subgroups of

16 manufacturers, like small businesses. This is

17 subgroups of consumers. So example issues for this

18 type of analysis might be motors become more expensive

19 for farmers and farmers have an adverse economic

20 impact, those types of individual subgroup analyses.

21 So for this, the Department welcomes comment

22 on what, if any, consumer subgroups might be

23 appropriate in considering standard impacts for small

24 electric motors.

25 MR. BOTELER: This is Rob Boteler. I don't

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1 think I can envision the farmers or a particular group

2 of subgroups, a subgroup being an equipment type or

3 something like that, being adversely affected if they

4 were a domestic manufacturer of that equipment and

5 buying their motors from a domestic manufacturer who

6 was in full compliance with the new regulation.

7 I think it kind of goes back to what I

8 mentioned in my opening comments about enforcement

9 issues. The subgroup that is going to be put at a

10 disadvantage is potentially all of the domestic

11 manufacturers if there is a foreign manufacturer

12 importing the piece of equipment and there is not an

13 adequate method to regulate and force conformance the

14 same as we would have with us as the domestic

15 manufacturers. So the subgroup really becomes the

16 importer versus the domestic manufacturer.

17 But in terms of would a printing press have

18 an issue versus a farmer, I don't think we can really

19 answer that.

20 MR. VAN BUSKIRK: So in essence, domestic OEM

21 compared to an importer of equipment, where the

22 imported equipment may not have the standard enforced

23 on all the motors in the equipment.

24 MR. BOTELER: Correct.

25 MR. VAN BUSKIRK: Other comments?

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1 (No response)

2 MR. VAN BUSKIRK: You're next.

3 Manufacturer Impact Analysis

4 Michael Scholand

5 (PowerPoint presentation)

6 MR. SCHOLAND: Mike Scholand here from

7 Navigant. I just wanted to zoom back to Slide 16. You

8 don't need to do it because it's in your packets, but

9 to reiterate the importance of this slide to you all

10 now that you're familiar with these terms "life-cycle

11 cost analysis," "manufacturer's impact analysis,"

12 "engineering analysis."

13 You can see how the Department is required to

14 consider these seven factors under the Energy Policy

15 and Conservation Act and the analyses that we've been

16 presenting today tie back to those seven factors and

17 help the Secretary make the decision about what level

18 to go to, weighing all these. So this is a very

19 important slide Tony gave this morning.

20 MR. BOUZA: Yeah, Tony Bouza. I don't know

21 if it was made clear, but this office does not pick the

22 standard. It is the Secretary of Energy that

23 determines it. So we do the work, present the results,

24 and the decision-maker makes the decision, whoever that

25 decision-maker is at that time.

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1 (Laughter)

2 MR. BOTELER: There could be a changing of

3 the guard and a different decision-maker?

4 MR. BOUZA: Well, considering that we're in

5 an election year, you can make your bets that there

6 will be somebody new.

7 MR. BOTELER: I don't know, Jim. This will

8 be what, the third time we've gone through this?

9 (Laughter)

10 MR. STAS: Eric Stas, DOE. I'd just point

11 out, too, that when you get to the NOPR stage we'll

12 propose one certain level but we'll also be showing you

13 trial standard levels that we were considering but

14 didn't choose, and then you'll also have an opportunity

15 to comment on that and tell us that we're proposing the

16 wrong one. Where we propose A we should be picking B

17 and why. So there would be flexibility to maybe do

18 something a little different in the final rule.

19 MR. BOUZA: Right. And you'll be able to use

20 these seven factors or criteria to say, well, you

21 didn't properly take into consideration this because of

22 this. You will have an opportunity to present new data

23 or something that we overlooked or something that we

24 misinterpreted based on the information. So there are

25 a lot of opportunities for stakeholders to present

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1 their views to the DOE in an open setting and then also

2 through the comment period. So there are a lot of

3 opportunities.

4 MR. SCHOLAND: So this is the manufacturer's

5 impact analysis, continued now. We're in the NOPR

6 phase. Again, the purpose is to assess the impacts of

7 standards on manufacturers and subgroups of

8 manufacturers, such as small manufacturers, as has been

9 mentioned a few times today.

10 The method followed in conducting the MIA is

11 really twofold. There's a quantitative and a

12 qualitative assessment. So the first bullet discusses

13 something called the Government Regulatory Impact

14 Model, the GRIM model, which is quite simply a

15 discounted cash flow model that allows us to take a set

16 of investment figures and changes in manufacturer's

17 costs and then calculate the discounted cash flows in a

18 base case and under different regulatory standard

19 scenarios.

20 So that ultimately assesses the industry net

21 present value impacts of the industry net present value

22 under the various standard scenarios.

23 The second bullet there is discussing the

24 qualitative aspects. Basically, through interviews we

25 get an understanding of the aspects, meeting with

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1 manufacturers to assess those other impacts.

2 So, the next slide. You've seen our flow

3 diagram. This just kind of shows that we're moving on

4 from the ANOPR. We're looking at phase 2 and phase 3.

5 Next slide. Phase 2, the second phase,

6 starts once we've completed the bulk of the analysis

7 for the NOPR. We develop a straw man GRIM, if you

8 will, which again is a cash flow model for a typical or

9 generic small motor manufacturer, our characterization

10 of it, Navigant's.

11 We then use that model together with an

12 interview guide to initiate dialogue with

13 manufacturers. Typically, that's under a

14 confidentiality agreement. In fact, in all cases it

15 is.

16 We prepare the straw man GRIM and the

17 interview guide and we send both out ahead of the

18 meeting or ahead of a face-to-face interview that we

19 would hold with you, and we're interested with

20 discussing with the manufacturers both the financial

21 impacts on a cash basis as well as the qualitative

22 impacts as well.

23 The interviews are actually conducted as part

24 of phase 3, so I may be a little bit confusing in my

25 talking points. But phase 2 we develop the straw man

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1 GRIM and the interview guide and we send it out. In

2 phase 3 we sit down with you on your turf and discuss

3 the impacts.

4 Those interviews are conducted once there are

5 draft internal LCC and national impact analysis results

6 available. Then the Department has generally a good

7 idea of the cost justified standard level from the

8 consumer side. So then that enables us to get started

9 understanding what is the cost justified level from a

10 manufacturer's side.

11 Typically, during the interviews we talk

12 about shipment projections, conversion costs, what's

13 involved in achieving a higher efficiency level, how

14 much capital would be necessary to do that, how much a

15 product might change and would that affect your

16 profitability, trying to understand how the standard

17 might impact the competitive market, which would be

18 particularly relevant for small manufacturers.

19 Then, secondly, the process typically

20 involves members of many departments within companies.

21 For example, engineering, marketing, financial.

22 Because the cash flow involves lots of impacts and

23 forecasts that impact these different areas of your

24 companies.

25 Slide 100. DOE invites comment on the

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1 manufacturer's impact analysis. Well, actually, I'm

2 sorry. Slide 32 is asking for appropriate subgroups of

3 manufacturers to consider, and Item 33 is inviting

4 comment on regulatory impacts on manufacturers which

5 we're discussing in phase 1. The cumulative regulatory

6 burden, not just DOE but EPA, Department of Commerce,

7 or other departments that regulate your business.

8 And DOE is of course inviting comment on the

9 manufacturer's impact analysis as a whole, although

10 it's not explicitly mentioned as an item.

11 MR. BOUZA: In addition, the GRIM model

12 that's spreadsheet-based will also be made available on

13 the Web, too. So not only would you see the results

14 from the tool itself, you'll be able to have the tool

15 that generated the results for your own review, also.

16 MR. BROOKMAN: Thank you, Tony. Comments on

17 these two questions, Items 32 and 33?

18 MR. BOTELER: Rob Boteler. I don't know that

19 I have any real comments. I guess one point of

20 clarification. Again, when we get into some of the

21 questions about obsolescence and tooling and

22 investment, those are going to be driven by the

23 segmentation or the sub-grouping of the products again.

24 So when we get to this point, I guess from having done

25 the ANOPR we've already defined that pretty well so

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1 we've got that under control.

2 DOE or you all as a consultant going into our

3 plants and manufacturing and financial groups, in the

4 first draft that we saw in August we had some concerns

5 over that.

6 MR. SCHOLAND: I do want to clarify. Going

7 into the plants is -- we'll be invited. We're not

8 going to force anybody.

9 MR. BOTELER: Yeah. Thanks.

10 MR. SCHOLAND: Right. If we're not welcome,

11 we ' re no t go i ng t o s how up.

12 MR. BOTELER: You're invited to come to our

13 plant.

14 We don't necessarily have anything to hide,

15 but we have people at lower levels that aren't privy to

16 the big picture and I think we would want, when you

17 come to our facilities, to have the list of questions

18 and be wel l prepared to answer those questions. Then I

19 don't think we have a problem with it.

20 MR. BOUZA: DOE, Tony Bouza. Yeah. Usually,

21 like Mike Scholand commented on, the interview guide

22 will be standardized. So they will be able to go to

23 different manufacturers to present the same que stions.

24 MR. BROOKMAN: It's sent in advance.

25 MR. BOUZA: In advance.

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1 MR. SCHOLAND: Believe it or not, the

2 interview guide actually even becomes an appendix to

3 the Technical Support Document. So it is eventually a

4 public document. But the initial draft which comes to

5 you guys is one consistent questionnaire touching on

6 all the different areas that we need information on

7 relating to manufacturer impacts, and you do definitely

8 get that at least two weeks in advance, ideally four.

9 We'll have to see how we're doing on schedule at that

10 point.

11 MR. BOTELER: That information is then -- if

12 it's shared, it's not -- or, it's not shared at all?

13 MR. SCHOLAND: It is shared, but in an

14 aggregate point of view.

15 MR. BOTELER: Okay.

16 MR. SCHOLAND: Correct. We take those

17 responses, whether you do a written response -- because

18 you'll get a Word document. You can type it in -- or a

19 verbal response, and that just guides the discussion.

20 We take notes. We keep all of our binders from the

21 interview guides in a locked filing cabinet at work.

22 We aggregate those results and what's reported to the

23 Department, obviously federal employees being subject

24 to the Freedom of Information Act, is only the

25 aggregated answers.

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1 All of the individual company responses

2 reside with Navigant. The confidentiality agreement

3 you would be signing is with Navigant. My boss Mike

4 Rivest, who has been called away by Tony's boss, is the

5 person who signs on our side. We've done this for

6 years like that.

7 MR. BROOKMAN: Other questions or comments on

8 32 and 33, particularly subgroups that would be

9 impacted or other regulations that would contribute to

10 cumulative regulatory burden?

11 MR. RINK: This is Tom Hink. I think we

12 should keep in mind, though, too, that there is some

13 pending energy legislation to expand the scope of

14 energy efficiency under EPACT, to include more motor

15 c l asses.

16 MR. BOUZA: Tony Bouza, Department of Energy.

17 This rulemaking, because it was on schedule -- we have

18 a schedule with one of the reports to Congress -- we're

19 obligated to finish this rulemaking. It may be that we

20 will be engaging on future rulemakings. At that time

21 we would start those, too. But at this time we're

22 under court order to get this -- start making them.

23 MR. SCHOLAND: Tony, can I chime in on the

24 end of that? I think what Tom's referring to are the

25 prescriptive standards for the 1- to 200-horsepower.

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1 It's kind of a more efficient version of what's already

2 regulated under EPCA.

3 MR. HINK: Right.

4 MR. SCHOLAND: It includes higher efficiency

5 and an upgrade to the existing standards and an

6 expansion. But those are the 1 - to 200-horsepower, not

7 the small motors that are being discussed in this

8 rulemaking.

9 MR. HINK: Right . And that coupled with

10 working on small motors could potentially create a

11 burden.

12 MR. BOUZA: We'll handle that issue when we

13 come . I do know, if you look back at the distribution

14 transformer rulemaking, at one time we had three

15 different types of transformers we were regulating.

16 EPACT 2005 took low -voltage dry out of the picture and

17 the rulemaking proceeded. We don ' t know what the Hill

18 may propose, and we ' ll act and respond accordingly.

19 MR. BOTELER: This is Rob Boteler . But from

20 the perspective of this organization, the way it's

21 written this time , it'll go as a direct rule so it

22 won ' t go through this process. Not that we don't enjoy

23 this process.

24 (Laughter)

25 MR. BROOKMAN: They might object to your

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1 lightening their work load.

2 MR. BOTELER: Good point.

3 MR. BOUZA: Yeah. We do have a five-year

4 schedule.

5 (Laughter)

6 MR. BROOKMAN: I was jesting, of course.

7 Yes.

8 Okay. So, Michael.

9 MR. SCHOLAND: Yeah, I'm all set. Robert.

10 Utility Impact Analysis, Employment Impact Analysis,

11 Environmental Assessment, and Regulatory Impact

12 Analysis

13 Robert Van Buskirk

14 (PowerPoint presentation)

15 MR. VAN BUSKIRK: Robert Van Buskirk,

16 Lawrence Berkeley Lab. The next analysis is the

17 utility impact analysis. The utility impact analysis

18 assesses the impacts of a standard on domestic energy

19 supplies. Specifically, the Department runs NEMS-BT.

20 What NEMS-BT is, is it's the National Energy Modeling

21 System. That's the economic forecasting code for the

22 energy sector that's run by the Energy Information

23 Administration. The Department runs a version of it

24 both with and without a standard to look at the

25 incremental impacts in terms of generation and fuel mix

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1 and those different aspects.

2 So the Department welcomes any comment people

3 might have on using the EIA NEMS model for conducting

4 the utility impact analysis. Any comment?

5 MR. BOTELER: I don't really think -- we

6 don't know enough about it. I mean, it looks like

7 something you've used in the past and it works, so I

8 think our comment is it's acceptable.

9 MR. VAN BUSKIRK: Onward. The next is the

10 employment impact analysis. This is the net national

11 employment. So this assesses the overall impact of

12 national employment from the imposition of energy

13 efficiency standards at different levels. It includes

14 both direct and indirect employment impacts.

15 The direct employment impacts are estimated

16 from the manufacturer impact analysis. The indirect

17 employment impacts result from shifting consumer

18 expenditures amongst different classes of goods and

19 services within the economy. It's a substitution

20 effect that comes from changing equipment and energy

21 costs.

22 What tends to happen is expenditures in the

23 energy sector are lots of dollars spent for not so many

24 jobs because of the large generators and large

25 investment in infrastructure. When you decrease the

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1 expenditures on energy and move it into consumer

2 savings, the average expenditure in the economy tends

3 to generate more jobs than expenditures in the energy

4 sector. So that often is the dominant effect of

5 shifting expenditures from energy to the economy in

6 general.

7 The Department has been going through

8 different versions of an input/output model. The

9 previous versions were called IMBUILD. The most recent

10 version of the input/output model is now called ImSET,

11 Impact of Sector Energy Technology. It's a model

12 developed by Pacific Northwest National Laboratories.

13 So the Department welcomes feedback on its

14 approach to assessing national employment impacts and

15 possible effects that it should make sure to take into

16 consideration.

17 MR. BOTELER: This is Rob Boteler. What

18 you've done sounds reasonable to us.

19 MR. VAN BUSKIRK: Next is the environmental

20 assessment. The environmental assessment done by the

21 Department focuses on emissions from the energy sector.

22 Specifically, the emissions of concern include C02,

23 nitrogen oxides, and oxides of sulfur. The Department

24 also has historically analyzed mercury emissions from

25 coal power plants.

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1 Many times the environmental assessment, when

2 it examines sulfur dioxide or mercury emissions, those

3 emissions are regulated by the EPA under cap and trade

4 systems. So even though there may be a decrease in the

5 demand for electricity, because there's a regulation

6 that caps the emissions the changes in electricity

7 won't necessarily change the physical emissions because

8 the physical emissions will tend to sit at the

9 regulatory cap rather than moving up or down.

10 The big unregulated emission right now is

11 C02. Nitrogen oxides are regulated in about half of

12 the country currently.

13 So the Department welcomes any feedback and

14 comments on its approach to looking at environmental

15 impacts and assessment.

16 MR. BOTELER: Once again, Rob Boteler. I

17 think you're doing a great job on that one.

18 (Laughter)

19 MR. BOTELER: Not an area that motor

20 manufacturers really get involved with. Only we can

21 help, but we don't really do this kind of calculation.

22 MR. VAN BUSKIRK: Onward. Regulatory impact

23 analysis. Regulatory impact analysis explores the

24 potential for non-regulatory alternatives to new energy

25 efficiency standards. What the method does is it bases

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1 the assessment on actual impacts of any such

2 initiatives to date and also considers the potential

3 impacts of any existing initiative or any future

4 initiative.

5 This is the analysis where the Department can

6 explore different non-mandatory alternatives to

7 efficiency standards and evaluate the benefits, costs,

8 and impacts relative to the proposed efficiency

9 standard.

10 So again, any comments stakeholders might

11 have on regulatory alternatives that should be

12 considered by the Department in the regulatory impact

13 analysis would be appreciated.

14 MR. BOTELER: Rob Boteler. In the size

15 product that we're talking about, the voluntary

16 programs to try and help the end user or consumer

17 understand life-cycle cost and buy a more efficient

18 product, the cost and resources to try and convince at

19 the point of sale are astronomical. We don't believe

20 that they're particularly effective, if at all. So

21 that's one of the reasons why we're quite willing to

22 talk about regulatory methods instead.

23 MR. VAN BUSKIRK: Okay. I'm going to hand it

24 back to Tony Bouza.

25 Closing Remarks

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1 Antonio Bouza

2 MR. BOUZA: Before I go into closing remarks,

3 I do want to thank everybody for coming here and

4 listening to us talk about these exciting analyses,

5 probably some more exciting than others.

6 But I do want to draw your attention -- I

7 know you've already seen this slide before earlier on

8 in the presentation, but I do want to draw your

9 attention to September 28th, the due date for comments.

10 I know we gave you a lot of information. We even gave

11 you some additional handouts to supplement the

12 framework document that was posted up on the Web. So

13 you have some homework to do.

14 We just want to make sure that if you do

15 provide comments, you do identify your comments with

16 the docket number and the regulatory notification

17 number with your comments.

18 You can e-mail your comments to the e-mail

19 address. But for the record, we need a signed copy of

20 your official comments. So that could come in later.

21 So if you send an e-mail and then a few days later drop

22 one in the mail with your signature, that's great. If

23 you want to send it by courier or Express Mail or

24 whatever, then we do provide the address of the DOE,

25 the postal address, to Brenda Edwards-Jones, the lady

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1 at the front desk over here. So you just have to

2 provide that information. It's also provided in the

3 framework document itself, the instructions. So it's

4 very critical.

5 Again, I want to thank everybody for coming.

6 I know the turnout was not very high, but hey, I think

7 the quality was great and the people that did show up

8 did contribute a lot to our understanding of small

9 motors. Definitely we look forward to your written

10 comments, and others too that weren't able to show up

11 today that will be providing.

12 If you know anybody else that should be

13 involved that is not, you can always e-mail them a link

14 to our website so they can download the Federal

15 Register and the framework document itself. They may

16 have a different perspective than you may have, so the

17 more people we get involved, the better we can do our

18 jobs in moving forward.

19 I think everybody got a quiz from Doug.

20 MR. BROOKMAN: Please fill out the evaluation

21 form that we just handed out. It just takes a second.

22 (Whereupon, at 2:40 p.m., the meeting was

23 concluded.)

24

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