Date: April 13, 2015

Case: The Energy Conservation Standards for Residential Furnaces

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U.S. DEPARTMENT OF ENERGY PUBLIC MEETING 

 THE ENERGY CONSERVATION STANDARDS FOR 

 RESIDENTIAL FURNACES 

 U.S. Department of Energy 

 1000 Independence Ave. SW 

 Washington, DC 20585 

 Room No. 8E-089 

 April 13, 2015 

 9:00 A.M. 
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1 Appearances for Department of Energy Meeting 

2

3 John Cymbalsky, DOE 

4 Ashley Armstrong, DOE 

5 Dan Cohen, DOE 

6 Eric Stas, DOE 

7 Francine Pinto, DOE 

8 Johanna Hariharan, DOE 

9 Doug Brookman, Public Solutions, -- Moderator 

10 Donald M. Brundage, Southern Company 

11 Adam Darlington, Navigant 

12 Andrew deLaski, ASAP 

13 S. Craig Drumheller, NAHB 

14 Rachel Feinstein, HPBA 

15 Victor Franco, Lawrence Berkeley National Laboratory 

16 John Hodges, Wiley Rein 

17 Daniel Lapato, American Public Gas Association 

18 Michael J. McCabe 

19 Samuel McClive, Navigant 

20 Charles McCrudden, ACCA 

21 Michael Rivest, Navigant 

22 Steven J. Rosenstock, Edison Electric Institute 
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1 APPEARANCES (CONTINUED:) 

2

3 Aniruddh Roy, Goodman 

4 Dave Schryver, American Public Gas Association 

5 Caroline Davidson-Hood, AHRI 

6 Frank Stanonik, AHRI 

7 Kathryn Clay, American Gas Association 

8 Mark Krebs, LACLEDE Group 

9 Jim Moore, LaClede Gas 

10 Christopher Lau, Navigant 

11 Everett Shorey, Shorey Consulting, Inc. 

12 Gregory J. Stunder, Philadelphia Gas Works 

13 Constantin Von Wentzel, Navigant 

14 Dave Winningham, Allied Air Enterprises 

15 Alex Lekov, Lawrence Berkeley National Laboratory 

16 Larry Dale, Lawrence Berkeley National Laboratory 

17

18

19

20

21

22
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1 P R O C E E D I N G S 

2 (9:30 a.m.) 

3 MR. BROOKMAN: Good morning, everyone. 

4 Welcome. This is a continuation of the Energy 

5 Conservation Standards Notice of Proposed Rulemaking 

6 meeting for furnaces. Today is April 13, 2015, here 

7 in the Forrestal Building in Washington, D.C. 

8 My name is Doug Brookman, Public Solutions 

9 Baltimore. We started this meeting on March 27th, 

10 2015. We got through a great deal of material. We 

11 had a lot of very positive and useful commentary, so 

12 we didn't complete it all on that date, and that's 

13 the reason we're here today. 

14 We're going to start with welcoming 

15 remarks and perhaps some overview from John 

16 Cymbalsky. 

17 MR. CYMBALSKY: Welcome back everybody to 

18 finish our meeting here on non-weatherized and mobile 

19 home gas furnaces. 

20 We are going to pick up -- you see the 

21 slide up there -- we are going to pick up back where 

22 we left off with the life-cycle cost subgroup 
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1 analysis, and we're going to take a little deeper dive 

2 into this as we start the meeting. But we're going 

3 to go around and do introductions. 

4 MR. BROOKMAN: Yes. 

5 MR. CYMBALSKY: So, I'm John Cymbalsky, 

6 program manager for Appliance Standards. 

7 (Introductions were made.) 

8 MR. BROOKMAN: Okay. Thank you. And 

9 thanks to all of you for being here this morning. 

10 Nice to see you. Apologies to those of you joining 

11 us online; there was a little bit of technical difficulty 

12 getting going here this morning. 

13 Just to be clear, at our last meeting, we 

14 got through a lot of material. If you look at the 

15 agenda and your slides, we went through the overview. 

16 We talked about scope and the engineering analysis. We 

17 covered the life-cycle cost analysis. We were on subgroup 

18 analysis when we stopped, and that's where we will 

19 resume today. 

20 Following the subgroup analysis, we will 

21 *go directly into shipments model, NIA National Impact

22 Analysis, RIA Regulatory Impact Analysis, and then 
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1 discuss the MIA Manufacturer Impact Analysis, and then as we

2 move towards the end of this meeting, environmental,

3 employment and additional research/side research. An

4 opportunity,again, at the end of this meeting for anybody

5 that wishes to raise additional issues, supplemental 

6 issues, issues that you don't think have been covered 

7 sufficiently for this important meeting. 

8 I'd ask for your consideration to please speak 

9 one at a time. If everyone can make sure their 

10 phones are muted right now, please take a peak and 

11 make sure the little green light is not illuminated 

12 so that we don't have any feedback in the room. 

13 And those of you that are joining us via 

14 the web, welcome. We hope to have you participate in 

15 this meeting as best we can. If using the software 

16 provided, if you raise your hand to speak, we will 

17 unmute you in the room, and we should be able to hear 

18 you, and you can chime in. 

19 I'd also ask, as there will be a complete 

20 record of this meeting and a transcript available, 

21 please say your name each time you speak, and you can 

22 get used to turning these microphones both on and 
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1 off. 

2 And I think that's the bulk of the 

3 preliminary stuff. John Cymbalsky. 

4 MR. CYMBALSKY: Thank you, Doug. And this 

5 is John Cymbalsky again from DOE. 

6 So up here, we have the slide we kind of 

7 ended with last time which showed the subgroup 

8 analysis for this rulemaking. And as you can see 

9 here, what we presented a couple weeks back was that 

10 the low-income subgroup would relatively not win as 

11 much as the general population. So over the past few 

12 weeks, we've actually dug deeper into the theory 

13 behind the economic -- the economic theory behind say 

14 rental markets, things like that. How people pay for 

15 the equipment that are low income, how renters versus 

16 home owners pay for equipment and receive the benefit 

17 long-term over their energy bills. So, based on that, 

18 we're going to probably rethink the numbers that you 

19 see here because I think there's a competing theory 

20 that would suggest low-income people actually would 

21 do better than the general population. And so today 

22 what I've done, I've handed out some additional 
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1 slides we'll put in the docket later, but we're going 

2 to go through this. And I've asked Dr. Larry Dale 

3 from Lawrence Berkeley National Lab to kind of walk 

4 through the economic theory behind sort of the split 

5 incentive theory, the theory behind rental markets, 

6 and why actually we think low-income consumers could 

7 be made better off through this regulation. 

8 So I'll ask Larry to come up to the 

9 podium, and Emily, if she could put the other slide 

10 deck up that we loaded this morning. 

11 MR. BROOKMAN: Do you have a 

12 question/comment here, Mark? 

13 MR. KREBS: Well, you had mentioned if 

14 anybody wanted to make opening statements and then we 

15 just got right into the meeting. 

16 MR. BROOKMAN: We already made opening 

17 statements at our last meeting and there will be an 

18 opportunity at the end of this meeting to make any 

19 remarks that you wish to make. 

20 So these are the new slides; correct? 

21 DR. DALE: Yes. 

22 MR. BROOKMAN: And Larry can advance them? 
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1 DR. DALE: Yes. 

2 (Pause.) 

3 DR. DALE: Can you all hear me? 

4 Can you hear me? 

5 So I want to talk about the impacts of 

6 efficiency standards on low-income households. And I 

7 spent the last week thinking about this issue, 

8 talking with experts at U.C. Berkeley and have put 

9 together these slides trying to illustrate what I 

10 think is the key part of the problem. 

11 Currently, as you saw from the last slide, 

12 DOE treats low-income consumers pretty much like 

13 everyone else, discount rates differ a little bit. 

14 But the main point is, they're treated like a typical 

15 household, whereas most low-income households are 

16 living in apartments or they don't own their 

17 households, so they may pay the energy bills, but 

18 they don't buy the more-efficient equipment. 

19 So right from the start, you can see 

20 there's a possibility that if they're not buying the 

21 equipment, nothing happens. Then they would get the 

22 advantage of lower energy bills, but they're not 
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1 having to pay the higher costs of more-efficient 

2 equipment. So that's really maybe the key point to 

3 keep in mind. 

4 What economists like myself will tell you 

5 is that things will start changing from that point. 

6 There's a possibility that some households with lower 

7 energy bills will be more attractive to renters, so 

8 the demand for those households, for those apartments, 

9 would rise, and that could increase the rent. That 

10 would be one way that low-income households living in 

11 apartments might face a higher cost from standards. 

12 But in fact, anybody who has looked for apartments 

13 knows you almost never check energy bills when you're 

14 looking for apartments. All you really see as you're 

15 going from apartment to apartment, is what the rent is 

16 going to be. 

17 Low-income households, high-income 

18 households that are renting, they all pretty much do 

19 the same thing; they're not aware of potential energy 

20 savings, and so it's not reflected in higher rents. 

21 The other possibility is landlords who 

22 have to buy the more-efficient equipment that costs a 
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1 little more are going to try to raise the rents. And 

2 that is a real possibility. They will try to do that, 

3 but as I will try to show in these three slides, 

4 that's fairly difficult to do, or it's constrained at 

5 any rate by the slopes of the demand and supply 

6 curve. 

7 So here from the slide you see, I'm saying 

8 renters are unaware of energy savings. And actually, 

9 a recent study by somebody funded by the Resources 

10 for the Future group and work under the direction of 

11 Severn Bornstein at U.C. Berkeley, they've done a very 

12 clever study and actually showed, in fact it's true, 

13 even though this seems like intuition, it is in fact 

14 backed up by the data. Renters are not aware of 

15 energy savings. So renters don't raise rents in 

16 apartments just because the apartments have lower 

17 energy bills. 

18 Landlords are aware of higher energy 

19 costs. This is also apparently the case, and while 

20 they pay the higher cost of equipment, and they will 

21 attempt to raise rates, standard economic theory is 

22 going to suggest they're going to have a lot of 
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1 trouble doing this in the few apartments every year 

2 that are buying more-efficient equipment. 

3 The implications from these findings are: 

4 tenants benefit from lower energy bills; rent 

5 increases may not, and I would say almost certainly 

6 do not, cover the higher equipment costs. So overall, 

7 tenants (meaning largely low-income households in 

8 this case, or rather the other way around, low-income 

9 households that are largely tenants) are probably 

10 better off than suggested by our LCC analysis. 

11 Sorry to bore you early in the morning 

12 with the supply and demand curve, but this is from 

13 your ECON 101, you might remember. This is sort of a 

14 typical analysis showing what happens when, in this 

15 case, the supply curve costs go up because it's now 

16 more expensive to provide an apartment because you 

17 have to buy more-efficient equipment and that costs 

18 something more. You can see the supply curve 

19 dropping from the dash line S-1 to the solid line S-2 

20 which is S-1 plus the higher equipment costs. 

21 The intersection of demand and supply is 

22 giving you the price. This line is showing you the 
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1 higher cost of the equipment, but you can see between 

2 the two dotted lines the actual price. In this case, 

3 the rent for the apartment is going up much less than 

4 the increase in the apartment cost. 

5 So the point of all this is that landlords 

6 are going to be constrained by how much they raise 

7 rents. And in general, they can't raise rents as much 

8 as the increase in equipment costs. They are 

9 particularly constrained in urban areas where the 

10 demand curve is going to be fairly elastic because 

11 we're talking about relatively few households at any 

12 one time, and the supply curve is relatively 

13 inelastic. Hence urban areas, even though rents may 

14 go down or the ability to capture rents may go down, 

15 it's very hard to take apartments off the market or 

16 increase apartments in the market. So the price is 

17 constrained that way. In that case, the increase in 

18 rents that would accompany a rise in costs would be 

19 much less than the rise in costs. 

20 Here's a few statistics. Low-income 

21 households, about 60 percent of them, are in public 

22 housing or renting. Their incomes are lower than for 
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1 typical owners. And here's a summary of the impacts 

2 of what I've just been talking about. Impacts on 

3 energy bill, the tenants get the full savings of the 

4 lower-cost energy bills. The impact of the first 

5 cost, the increased cost of the equipment. It's 

6 going to be a partial increase for public housing and 

7 renters and a full increase for owners. 

8 So in sum, for most of the low-income 

9 households, we think the LCC analysis is 

10 underestimating benefits of standards, whereas for 

11 owners, which is a smaller part of the low-income 

12 population, it's probably getting it about right. So 

13 those are the slides I have to describe. Do I stand 

14 up here for questions? I'm not quite sure. 

15 MR. BROOKMAN: Stay right there. 

16 Steve Rosenstock. Let me ask you, 

17 apparently the polygon system is working well, so 

18 every time you shuffle papers or click your pen, 

19 everybody on line can hear it. So if we can be as 

20 quiet as possible. Steve Rosenstock. 

21 MR. ROSENSTOCK: Steve Rosenstock, Edison 

22 Institute. Quick question. On the first slide, you 
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1 talked about assumptions -- renters aware of energy 

2 savings. If they're paying their bill, they're 

3 paying their electric and gas bills, right? 

4 DR. DALE: Yeah, that's right. 

5 MR. ROSENSTOCK: So why wouldn't they be 

6 aware of their energy savings? 

7 DR. DALE: Well, they will after they get 

8 the apartment, but the determination of rent is 

9 right when they get the apartment. 

10 MR. ROSENSTOCK: It's also a year after. 

11 It's every year afterwards when there's a rent 

12 increase, correct? 

13 DR. DALE: It can be. It's true. 

14 MR. ROSENSTOCK: Right. And was that 

15 accounted for? 

16 DR. DALE: It is. In the study I'm 

17 referencing at the bottom here, this Erica Meyers 

18 study -- 

19 MR. ROSENSTOCK: Right. Yeah, that none of us has

20 seen 

21 until today. 

22 DR. DALE: Yeah, I know, I'm sorry. It is 
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1 certainly accounted for, but it is also the case, and 

2 it's a much lower impact. 

3 MR. ROSENSTOCK: Okay. And the question 

4 also I have is, in many areas, haven't rents been 

5 faster than the rate of inflation, rental increases 

6 in apartments? 

7 DR. DALE: Where housing is tight, rents 

8 are going up. I actually can't tell you what's going 

9 on inside of inner-cities, but I don't think that's 

10 the case in much of the northeast, which is the reason 

11 we're talking about it. 

12 MR. ROSENSTOCK: And I remember you saying 

13 you talked to experts at University of California 

14 Berkeley. 

15 DR. DALE: Yes. 

16 MR. ROSENSTOCK: Did you talk to experts 

17 at the Apartment Owners and Building Association or 

18 National Multi-Housing Council for this study? 

19 DR. DALE: I have not. 

20 MR. ROSENSTOCK: Okay. Thank you. 

21 MR. BROOKMAN: Yes, please, Catherine? 

22 MS. CLAY: Good morning, thanks for the 
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1 presentation. I did have a couple of questions. 

2 First of all, so in this new analysis, are you 

3 assuming that in every case that the landlord would 

4 actually put in the more-energy-efficient appliances, 

5 more-energy-efficient furnace? 

6 So what I'm getting at is, in some cases, 

7 it's physically impossible or at least because of 

8 code restrictions or the like, to put in the more9 efficient condensing furnace. So in those cases 

10 where the alternative would be to put in a less11 efficient alternative, does that -- was that captured 

12 in this at all? 

13 DR. DALE: Yeah, I should be a little 

14 clearer. This is not really a study of the situation 

15 at hand. This is a study of how of information 

16 available to tenants and landlords and what the 

17 impacts will be of changes in energy bills and energy 

18 costs on rents and how rapidly they're passed 

19 through. 

20 The question you're asking is, I think, 

21 how -- is in fact the cost of equipment higher in 

22 apartments or the cost of maintenance higher in 
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1 apartments or in typical households? 

2 MS. CLAY: No. 

3 DR. DALE: So that that -- I'm sorry. 

4 MS. CLAY: No. No, no, no. The problem 

5 is that with condensing furnaces, you may not be able 

6 to actually put in the more-energy-efficient option. 

7 DR. DALE: Oh, I see, it may not happen at 

8 all? 

9 MS. CLAY: It may not happen. 

10 DR. DALE: As I said, I haven't -- this is 

11 not something that -- 

12 MS. CLAY: No, no. You could actually 

13 push people towards choices that are less energy 

14 efficient. 

15 MR. CYMBALSKY: This is John from DOE. 

16 Let me jump in here. So what Catherine is asking 

17 about is more like a fuel switching scenario. So all 

18 this is saying here is that if a condensing furnace 

19 is installed in an apartment which will be required 

20 upon replacement sometime in the future if the 

21 standard goes into effect, what we're saying is we 

22 think the low-income people will possibly be made 
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1 better off based on this. Whether or not they switch 

2 to a pump or no an electric furnace is a different 

3 case. 

4 MR. BROOKMAN: Dave. 

5 MR. WOOD: This is Dave Wood, Allied. And 

6 maybe this is getting a little bit too far into the 

7 weeds, but was the cost to convert the venting 

8 systems and drains considered as part of this? 

9 MR. CYMBALSKY: Yes, that's all in the 

10 life-cycle cost analysis that we presented at the last 

11 meeting. 

12 MS. CLAY: I just want to -- 

13 MR. BROOKMAN: Catherine follow on, yes. 

14 MS. CLAY: I just want to follow up. I 

15 guess I'm also just confused about the purpose of 

16 this that's being presented. Is this going to mean 

17 that DOE is going to amend its technical support 

18 document? Are you pointing out that some of the 

19 figures in the TSD are somewhat arbitrary? 

20 MR. CYMBALSKY: That remains to be seen. 

21 But basically, we are presenting some information that 

22 we think is relevant to the low-income subgroup 
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1 analysis, and we're still looking at it. We're 

2 presenting ideas here for comment. 

3 MR. BROOKMAN: Aniruddh. 

4 MR. ROY: So to Catherine's point, when 

5 there is fuel switching, let's say that occurs, if a 

6 landlord chooses a fuel switching option that is less 

7 efficient compared to a furnace, that analysis then 

8 would impact adversely the low-income housing 

9 subgroup, right? Because the decision is ultimately 

10 the landlord's. 

11 MR. BROOKMAN: Steve Rosenstock? 

12 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

13 The other option for the landlord is to keep 

14 repairing that thing as long as possible and never 

15 replace, correct? 

16 And that's a lowest-cost option to the 

17 landlord and so -- 

18 MR. CYMBALSKY: So no impact to the 

19 consumer from the standard. 

20 MR. ROSENSTOCK: Well -- 

21 MR. CYMBALSKY: Because they're using the 

22 same exact furnace they had. 
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1 MR. ROSENSTOCK: Yeah, but there might be 

2 an efficiency degradation with that same piece of 

3 equipment. 

4 MR. CYMBALSKY: Well, how could that be? 

5 MR. ROSENSTOCK: Some pieces of equipment, 

6 they start out at 80 percent of efficiency. Over 

7 time, for whatever reason, even though they're 

8 maintained, there might be a slight degradation -- 

9 MR. CYMBALSKY: They're repaired and that makes 

10 it less efficient, is that what you're saying? 

11 MR. ROSENSTOCK: Yes. Just over time. 

12 MR. CYMBALSKY: Okay. 

13 MR. ROSENSTOCK: Sometimes that happens 

14 over pieces of equipment. So as a result of the 

15 standard, the landlord -- 

16 (Simultaneous conversation.) 

17 MR. CYMBALSKY: We have a lot of 

18 manufacturers in the room that can talk to how their 

19 equipment degrades over time. 

20 Okay. 

21 MR. ROSENSTOCK: I'm saying, well past the 

22 normal life. 
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1 MR. KREBS: Mark Krebs, Laclede Group. For 

2 the speaker, this paper at the bottom -- 

3 MR. BROOKMAN: Is your microphone on? 

4 MR. KREBS: This paper at the bottom, this 

5 is something that you relied on in coming up with the 

6 TSD? 

7 PARTICIPANT: No. 

8 MR. KREBS: Not at all. Okay. We have 

9 yet to -- you know, if it were, I guess I'd say we 

10 need a hyperlink and this needs to be vetted in order 

11 to discuss it further. 

12 MR. BROOKMAN: Ashley Armstrong? 

13 MS. ARMSTRONG: This is Ashley from DOE. 

14 I think what we're doing here is . . . for the last public 

15 meeting, we presented our analysis for the LCC 

16 subgroup, and there are several commenters that raised 

17 some questions or extra, I would say, considerations 

18 with regards to the LCC subgroup throughout the day. 

19 So one of the things we were trying to do, and the 

20 Department is trying to be pretty responsive in 

21 saying, well, here are some ideas. This is an 

22 economic theory that's out there. There are some 
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1 studies. It was not considered in our analysis, but 

2 what do you guys think about it. And if we were to 

3 consider it, this is what we think the impact would 

4 be on the LCC subgroup analysis. So it's just extra 

5 information. We're going to put it in the TSD. The 

6 link is going to be in the TSD, in case you want to 

7 review it, but that's the purpose. 

8 MR. KREBS: And it makes it hard to 

9 discuss it, you know, when it's just been dropped on 

10 us. 

11 DR. DALE: I'll just jump in for a second 

12 though. I think although that's true, you haven't 

13 seen the study, the study is really just supporting 

14 what I think has been sort of common assumptions in a 

15 lot of papers that have been written for a long time. 

16 This paper is just supporting some of those 

17 assumptions that have been made in the past. 

18 MR. BROOKMAN: Hang on, Steve. Don 

19 Brundage, did you wish to comment? 

20 MR. BRUNDAGE: Don Brundage, Southern 

21 Company. The Department has made similar studies 

22 like this in the past related to the impact of 
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1 renters, and they always choose these short-term 

2 impacts at the time of the implementation of the new 

3 standard. You're not going to permanently extract 

4 economic rent from landlords from now until the end 

5 of time. There will be a lag, but eventually rents 

6 will keep up. You will not be able to permanently 

7 reduce the rate of return for landlords, or there will 

8 be fewer landlords, and that will balance out. 

9 My point is that these are short-term 

10 effects. Long-term effect: rents will balance, and the 

11 proper way to approach it is to not look at whose 

12 winners and losers of parties, but look at the 

13 societal impact as you do with other things. 

14 In the end, long-term, the renters are 

15 going to be experiencing the same economics as non-renters. 

16 Thank you. 

17 MR. BROOKMAN: Thank you. Do you wish to 

18 comment? Maybe you could just get close. 

19 MR. DRUMHELLER: Craig Drumheller, National 

20 Association of Home Builders. There's a couple 

21 problems that I have with this that Don kind of 

22 touched on a little bit. One is, you're saying that 
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1 the renters are going to save money, but it's going 

2 to be free to them, right? There's no impact to 

3 them. And so what happens is that, if they can't 

4 raise their rates, then the value of the rental 

5 properties go down because they don't get the return 

6 on investment that they expect to get. 

7 And then to take that even further, now 

8 when they're going to do an analysis -- when you 

9 build apartments, it's a financial decision, it's a 

10 business decision, can I get return on this money? 

11 If I can't, I'm an investor. I'm not a rental person 

12 per se, I can go invest in the stock market. I can go 

13 do whatever. I don't necessarily have to be in the 

14 housing industry. So they're not going to build new 

15 units, and go back to your supply and demand. Now, 

16 they're not keeping up with supply. The demand is 

17 going to go up. Rents go up, and we haven't saved any 

18 energy, so you have to be really careful when you do 

19 this. 

20 I'm not an economist, but I've been 

21 involved in these types of discussions in the past. 

22 So I think this is a very one-sided, very short-sighted 
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1 approach. So I'd be careful to try to play this up 

2 too much. 

3 DR. DALE: Thanks. 

4 MR. CYMBALSKY: Can I comment? 

5 MR. BROOKMAN: Please do. 

6 MR. CYMBALSKY: Well, there's a couple 

7 thoughts about that. One is, it's true, we're not 

8 talking about what happens to landlords, and it's 

9 reciprocal. The tenants are better off and the 

10 landlords are a little worse off, equally worse off. 

11 But these supply and demand curves that I've shown 

12 here, these are actually drawn reflecting long-term 

13 demand and supply elasticities in the literature. 

14 And it's very hard to come up with supply and demand 

15 curves that are relevant here that would suggest 

16 landlords are going to be able to raise the rent as 

17 much as the cost of the equipment. And then if most 

18 low-income renters are in inner cities, then the 

19 supply curves are even more elastic than usual, and so 

20 it would be yet harder than is suggested here with 

21 this set of supply and demand curves. 

22 MR. BROOKMAN: Frank Stanonick. 
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1 MR. STANONICK: Frank Stanonick, AHRI. A 

2 couple things. First of all, we're talking about 

3 low-income consumers, and maybe I'm the only one that 

4 sees things so black and white here, but, this is an 

5 efficiency standard addressing furnaces, the 

6 manufacturing of furnaces, okay? And so the consumer 

7 is the purchaser of the product being regulated. And 

8 yet we're talking about a situation where the 

9 purchaser of the equipment -- we're doing a life-cycle 

10 analysis or life-cycle cost analysis where the 

11 purchaser of the equipment is potentially getting no 

12 benefit, and we're looking at the benefit to someone 

13 who didn't buy the equipment. I'm just a little 

14 concerned we've kind of distorted what life-cycle cost 

15 analysis is supposed to be in this TSD. I mean, I 

16 recognize that is an issue of the people who can 

17 least afford high energy bills end up having high 

18 energy bills. I don't want to be unsympathetic to 

19 that. But more to the point really is, okay, so what 

20 percentage -- we had an idea of what percentage of 

21 low-income consumers are renters, and then what's the 

22 numbers -- what percentage of those renters pay their 
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1 utility bill as opposed to having it included in the 

2 rent. 

3 MR. BROOKMAN: John Cymbalsky. 

4 MR. CYMBALSKY: So, John from DOE. Sorry, 

5 Victor can chime in with the numbers, but back to the 

6 original thought. I agree with that, but at the last 

7 meeting, as Ashley mentioned, there was a lot of 

8 concern, and we had a statement right at the beginning 

9 about the impact on low-income consumers. We all 

10 know, and you just stated so eloquently that 

11 low-income consumers' energy bills are a larger 

12 proportion of their monthly income than the general 

13 population. And so if we can connect the dot that 

14 these particular people will actually save money on a 

15 monthly basis, that has a multiplier effect on their 

16 monthly income relative to the general population 

17 because there percentage of their monthly income is 

18 bigger for energy bills than it is for the general 

19 population. So this is the theory we're putting out 

20 there for comment, and so before anyone else chimes 

21 in, Victor, please with the statistics. 

22 MR. FRANCO: So let me give you a little 
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1 bit of statistics. So about 20 percent are in -- 

2 this is non-weatherized gas furnaces in RECS, 

3 people having non-weatherized gas furnaces where 

4 they're living at. 20 percent are in public housing; 

5 about 40 percent are in other rental situations, so 

6 that's about 60 percent are rental. Of those in the 

7 public housing fraction, 40 percent pay for their 

8 bills; 60 percent don't; and the rental is about 20 

9 percent don't pay their bills, 80 percent pay their 

10 bills of the rental fraction. 

11 MR. CYMBALSKY: So let me see if I can 

12 clear this up. So 80 percent of people in non-public 

13 housing which represents 40 percent pay for their 

14 energy bills; 20 percent do not. In public housing, 

15 which is 20 percent, 60 percent do not pay their 

16 energy bills. 

17 MR. BROOKMAN: I didn't know that. Find a 

18 microphone and speak right into it. 

19 MR. SHOREY: This may have been answered 

20 the last time. When you did the life-cycle costs, did 

21 you stratify the sample on installation costs 

22 relative to -- okay, I'm seeing an answer. 
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1 MR. BROOKMAN: And your name again? 

2 MR. SHOREY: Everett Shorey. 

3 MR. BROOKMAN: Thank you. 

4 MR. ROSENSTOCK: Steve Rosenstock. Thank 

5 you for those numbers. So again, because you were 

6 reading really fast, okay, 20 percent are in public 

7 housing; 40 percent in other rentals, so they could 

8 be single-family homes or townhouses or something 

9 like that where they're renting a non-apartment and 

10 the other 40 percent are where? 

11 MR. FRANCO: The other 40 percent are 

12 owners. 

13 So owners of single-family mostly, but 

14 they could be multi-family situations. 

15 MR. ROSENSTOCK: So in terms of the 

16 technical support document, and they all say "see 

17 slide" that was just up on slide 83, for those 40 

18 percent that are owners, nothing should change, 

19 correct? 

20 (No audible response.) 

21 MR. ROSENSTOCK: Okay. So that's one 

22 thing in terms of the slides. So these numbers, 
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1 again, don't change, and you're seeing the 8.3 to 11.7 

2 year payback depending on what you're assuming here. 

3 The ones that are paying -- okay, the ones that are 

4 other rental, if they're in single-family homes, as 

5 someone who was -- whoops, sorry. Yeah, okay, as a 

6 former renter in a single-family home, I do remember 

7 that we were responsible for all the energy bills, and 

8 we were responsible for maintenance, and for certain 

9 appliances. If something happened to that appliance, we 

10 were responsible for replacing the appliance. 

11 Now, granted, it didn't cover heating or 

12 cooling, or water heating, but everything else. And 

13 in a lot of the cases, there might be situations where 

14 they're responsible for the maintenance. So if 

15 there's increased maintenance costs, the renter is 

16 going to be responsible for it too. Was that 

17 accounted for in this study? 

18 MR. BROOKMAN: So we've had new material 

19 presented. I thought it was a good, pretty darn clear 

20 explanation there. We have additional questions 

21 and comments here. Andrew deLaski? Because we're 

22 about to move on. 
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1 MR. deLASKI: I just want to applaud the 

2 Department for doing this analysis. This is actually 

3 a point that we made repeatedly over the years that 

4 the analysis for renters has been incomplete. I think 

5 now is a fantastic time to raise it because it is 

6 coming up in this docket in a very -- it's been 

7 raised by many stakeholders. It was raised at the 

8 last meeting, so I applaud you for coming back today 

9 with a description. And what I hear is a commitment, 

10 what I take from this is an intention to do a more 

11 robust analysis of the impact on low-income 

12 consumers. And I think that makes sense, and you've 

13 gotten some good feedback today from different 

14 stakeholders. And I think that will lead to a more 

15 complete and robust analysis of how low-income 

16 families are affected by the standard. So thank you 

17 for doing that. 

18 MR. BROOKMAN: Okay. Thank you. Kathryn? 

19 MS. CLAY: Yeah, I want to underscore 

20 Andrew's remarks. We agree as well. This is a 

21 critical community that should be given due 

22 consideration in the analysis. And if this is a step 
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1 in that direction and this is not the end point, we 

2 fully support it. 

3 I wonder if we could get that commitment 

4 from the Department that there is going to be a more 

5 robust analysis, not simply this small piece that 

6 we've been presented today? 

7 MR. CYMBALSKY: So this is John from DOE. 

8 Absolutely. So I think that what you've seen here is 

9 our first set of thinking to try to really refresh 

10 and make more robust this analysis. I think your 

11 organization and others have brought it to our 

12 attention that this rule in particular could have 

13 some impacts positive or negative that we should 

14 really take a very careful look at. So this is the 

15 first step, and you'll see more as we go through. 

16 And, of course, we would like lots of 

17 comments on this issue so we can build it into the 

18 record and go forward with the analysis based on your 

19 comments. 

20 MR. KREBS: Mark Krebs. At this point, I 

21 just want to stress that it could indeed be positive 

22 or negative. You know, we don't know yet. I 
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1 understand this is your first blush attempt, and while 

2 that's appreciated, you know, this has to have time 

3 to be looked at and vetted completely. 

4 MR. BROOKMAN: Okay. So then we're going 

5 to move on, and I presume we're going to pick up where 

6 we left off, which is slide 83. If we can -- how can 

7 we advance the slides to there? 

8 Thank you, Emily. And we're going to hear 

9 from Victor Franco. 

10 (Pause.) 

11 MR. BROOKMAN: Frank Stanonik, before we 

12 get started here. 

13 MR. STANONIK: Since we ended on slide 83, 

14 could I actually get you to go back to that slide? 

15 And if my memory has failed me, it's very possible, 

16 but at the end of the last meeting, I did ask the 

17 question that seemed to me to be an oddity that the 

18 life-cycle cost savings for senior-only category was 

19 in fact higher than just for all consumers. And 

20 looking at it further, I now see that for the better 

21 than minimum condensing furnace, the 92s and the 95s, 

22 in fact, the life-cycle cost savings for a senior in 
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1 the rest of the country is in fact better than in the 

2 north. And that seems very counterintuitive to me 

3 from just the idea that, first of all, the heating 

4 season is significantly less than the rest of the 

5 country, and I guess, again, I don't know the full -- 

6 let's say the full demographics of senior-only, but 

7 you tend to think of smaller residences, generally 

8 less use. Is there kind of a quick explanation to 

9 that, or did you give it to me already, and I forgot? 

10 MR. FRANCO: No, not at all. This is 

11 Victor Franco. No, we didn't go over that last time. 

12 It mainly has to do with a combination of factors. 

13 So it is where the senior are living. They're mostly 

14 living in a little bit higher, places with higher 

15 heating loads, and also the energy prices. We can 

16 give more details to that in the next version of the 

17 TSD. 

18 So, good morning. I'm Victor Franco 

19 again, from Lawrence Berkeley National Laboratory. 

20 Next, I'll be presenting the shipments model, national 

21 impact analysis, and regulatory impact analysis. The 

22 shipment analysis is an input to the national impact 
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1 analysis, and this is what I'll be focused on the next 

2 few slides. 

3 The purpose of the shipments model is to 

4 forecast non-weatherized gas furnaces and mobile home 

5 gas furnaces that would be expected to be shipped 

6 between the analysis period, the 30-year period between 

7 2021 and 2050, with and without energy conservation 

8 standards. The shipment model considers three market 

9 segments: new construction, existing furnace owners 

10 replacements, and new owners. I'll be talking in more 

11 detail about these in the next slide. 

12 Similar to the LCC analysis, DOE also took 

13 into account product switching of owners of 

14 non-weatherized gas furnaces which may choose to 

15 replace an existing non-weatherized gas furnace with 

16 another type of space-heating product such as an 

17 electric furnace or heat pump. If the non-weatherized 

18 gas furnace efficiency standard is amended, the 

19 fraction of products decreases over the analysis 

20 period. I'll be talking in the subsequent slides in 

21 more detail. 

22 The shipments model also disaggregates 
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1 shipments by different market segments including 

2 product classes and weatherized gas furnaces and 

3 mobile home gas furnaces, residential and commercial 

4 applications, and north and rest of country regions 

5 as defined in Chapter 9. You may recall that there's 

6 this 5,000 heating grade criteria. Chapter 9 

7 includes details about that. 

8 In addition, the shipments analysis helps 

9 develop the base-case and standard-case efficiency 

10 distributions. 

11 So let me go into more details about the 

12 shipments model in this next slide. This flow chart 

13 shows the overall three market segments and the 

14 inputs to calculate those. The first one is the new 

15 construction which is here labeled new installations. 

16 The two main inputs are projected new housing starts, 

17 which come from AEO 2014 projections, and the 

18 historical new construction saturations. Then, there 

19 are the new owners. 

20 New owners are defined as the existing 

21 buildings that acquired furnaces for the first time 

22 during the analysis period. The new owners primarily 
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1 consist of households that during a major remodel add 

2 or switch to non-weatherized gas furnaces. DOE 

3 assumed that there were no new owners for mobile home 

4 gas furnaces. 

5 For non-weatherized gas furnaces, DOE 

6 assumed that new owners correspond or is equal to 

7 half of the new owners observed in the shipments 

8 model from 2009 to 2013. This represents about 7.5 

9 percent of the overall projected shipments. 

10 And I forgot to mention, new construction 

11 represents about 25 percent of non-weatherized gas 

12 furnaces, where it represents 50 percent of mobile 

13 home gas furnaces. 

14 Replacements are defined as existing 

15 buildings with furnaces installed. They are 

16 calculated using historical shipments, as shown here, 

17 and the retirement function. 

18 DOE also took into account demolitions, 

19 houses removed from the housing stock, by tracking 

20 year-by-year changes in the projected housing stock 

21 in the AEO 2014 projections. 

22 Overall, 67.7 -- 67.5 percent of 
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1 non-weatherized gas furnaces are replacements, and 50 

2 percent of mobile home gas furnaces are replacements. 

3

4 MR. BROOKMAN: Steve Rosenstock? 

5 MR. ROSENSTOCK: Steven Rosenstock, Edison 

6 Electric Institute. I'm going to ask a question 

7 about the first asterisk there. Because I'm looking 

8 at U.S. Department -- U.S. Census data that shows, 

9 especially in the northeast, oil was used for a 

10 significant amount of new home heating systems in the 

11 northeast for many years, as much as anywhere -- 

12 until 2005 when it started really dropping off. But 

13 from 1971 until 2005, the number of homes -- new 

14 homes with oil-fired equipment ranged from 11,000 up 

15 to 57,000. So especially new homes, especially in 

16 the northeast, now it's dropped off a lot over the 

17 last several years. 

18 MR. FRANCO: Those are the yearly totals. 

19 MR. ROSENSTOCK: Those are the yearly 

20 totals for new single-family homes completed from the 

21 U.S. Census Bureau. And my question, and I asked it 

22 last time, is, why weren't other types of competing 
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1 heating technology considered for the fuel switching 

2 analysis, especially with the long history of their 

3 use in new homes, especially in the northeast, in the 

4 heating-dominated climates? 

5 MR. FRANCO: Thank you very much for that 

6 comment, and please submit that in your written 

7 comments more detail. 

8 For this analysis, the shipments take into 

9 account a lot of these changes already. The 

10 projections do not take into account further market changes 

11 because the oil market seemed to be fairly low, but 

12 please submit your comment so we can potentially 

13 review that in more detail. 

14 MR. ROSENSTOCK: Okay. I thank you very 

15 much, but, again, for this analysis, again, and we're 

16 going to go into it later on, it seems like it 

17 makes it like it's either gas or electric when other 

18 technologies are available and have been used, 

19 whether they're central systems, whether they're zone 

20 systems, there's a whole array of technologies that 

21 could be used to heat homes. 

22 MR. FRANCO: Okay. 
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1 MR. ROSENSTOCK: Hold on, hold on. And I 

2 believe, again, I'm going to say this, is right now 

3 in my view the analysis is incomplete because you're 

4 only looking at one option when there's multiple 

5 options. I can't stress that enough. Thank you. 

6 MR. CYMBALSKY: This is John from DOE. I 

7 think we went through this at the last meeting, but 

8 if you have data to support the switch from gas to 

9 oil or wood or whatever, other things you're thinking 

10 about -- 

11 MR. ROSENSTOCK: The chart is right here. 

12 MR. CYMBALSKY: Okay. That has the fuel 

13 switching? Can I see that? 

14 MR. ROSENSTOCK: Yeah, it shows the wide 

15 variety of installations by year based on gas, 

16 electricity, or oil. 

17 MR. CYMBALSKY: And it shows switching? 

18 MR. ROSENSTOCK: No, this is just for new 

19 homes. This is new homes, what they've chosen to 

20 install in new homes and the wide variety -- 

21 (Simultaneous conversation.) 

22 MR. CYMBALSKY: Well, that's in the 
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1 baseline. The market shares are developed -- 

2 MR. ROSENSTOCK: But it shows there's been 

3 fuel switching back and forth based on multiple 

4 conditions in the marketplace. 

5 MR. CYMBALSKY: That shows fuel switching? 

6 Can I see that, please? 

7 (Pause.) 

8 MR. ROSENSTOCK: It doesn't say 

9 "switching." It shows installation, but it shows the 

10 wide up and down of the different technologies used 

11 in new homes based on the decision of the home 

12 builders over the years. 

13 MR. CYMBALSKY: It shows the market 

14 disposition in new construction of heating? 

15 MR. ROSENSTOCK: Correct. 

16 MR. CYMBALSKY: We're very aware of that 

17 data. 

18 MR. ROSENSTOCK: And in the future these 

19 technologies are not going away. It's not just 

20 electric -- 

21 MR. CYMBALSKY: And they're in the 

22 baseline. 
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1 MR. BROOKMAN: Frank Stanonik. 

2 MR. STANONIK: Frank Stanonik, AHRI. You 

3 went a little too quick. What was the percentage you 

4 estimate is replacement furnaces? 

5 MR. FRANCO: Replacement furnaces is 67.5 

6 percent of non-weatherized gas furnaces. 

7 MR. STANONIK: Right. Okay. All right. 

8 That seems a little low, but be that as it may. And 

9 just the other point, I want to maybe take a little 

10 different way. 

11 So the new owners as an existing 

12 structure, if you will, that for the first time has a 

13 gas furnace installed? 

14 MR. FRANCO: That is correct. 

15 MR. STANONIK: So that would include 

16 whatever number of conversions have occurred in 

17 recent years from oil to gas? 

18 MR. FRANCO: That is correct. And that's 

19 what we try to model in that number. And just to 

20 clarify, we do use the data Edison Electric pointed 

21 to which is the Census data to come up with the 

22 saturations for the new construction. We'll go over 
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1 those numbers. What we used is the last five years 

2 average, and then we project that as being the future. 

3 MR. BROOKMAN: Victor, thanks for that 

4 clarification. 

5 Mark Krebs. 

6 MR. KREBS: Mark Krebs, Laclede Group. 

7 First of all, Steve Rosenstock, could you give us the 

8 source of that document so we could check it out? 

9 MR. ROSENSTOCK: Steve Rosenstock, yeah, 

10 U.S. Census Bureau Housing -- I got it, Housing 

11 Report, Annual Housing Report. It's online. I'm 

12 happy to send it to you. 

13 MR. KREBS: Forward me the link. 

14 MR. CYMBALSKY: It simply shows the share 

15 of heating fuel in new construction. It does not 

16 make any statements about fuel switching or anything 

17 like that. 

18 MR. KREBS: I trust Steve that it's worth 

19 looking at. 

20 (Laughter.) 

21 MR. KREBS: Next question. Total 

22 shipments, I'm going to use this as an opportunity to 
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1 ask Frank Stanonik a question. I see where you're 

2 going with this, but I would really still like to 

3 compare what you -- you know, total shipments with 

4 AHRI data, you know, raw unadulterated data. I asked 

5 this at the last meeting. I want to ask it again. I 

6 need it to be able to make comparisons. And, Frank, 

7 please feel free to explain, you know, why you don't 

8 do this anymore. A couple of years ago, you pretty 

9 much stopped. I don't know why that is. I know AGA 

10 has been beating on you for it, and I'm going to 

11 continue. But, can you -- why is it so difficult to 

12 get that? 

13 MR. STANONIK: Frank Stanonik, AHRI. I 

14 welcome the opportunity because in fact -- well, just 

15 because I do. There's no way around it. We do what 

16 our members tell us to do, and in this case, a 

17 decision was made that the shipment information on 

18 furnaces would no longer be -- or some of the 

19 detailed information would not be -- made publicly 

20 available. I can tell you right now that's being 

21 reevaluated, and granted, recognizing my initial 

22 statement, I still have a pretty high level of 
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1 confidence that we will be able to fill in the gap. 

2 Because if you notice up until 2009, it was our data, 

3 right? And so I think we will be able to fill that 

4 in. 

5 But, you know, anybody who thinks I get to 

6 tell the members what they need to do, you're just 

7 wrong. 

8 MR. BROOKMAN: Frank, thanks for those 

9 comments. And I'm certain everyone in this room 

10 would appreciate it if your members do agree for you 

11 to follow up and provide that data. That will provide 

12 a lot of clarity. I didn't get your name at the 

13 outset. 

14 MR. MURPHY: Richard Murphy, AGA. 

15 MR. BROOKMAN: Make sure you've got the 

16 microphone on. It's not on yet, I don't think. 

17 MR. MURPHY: You had indicated that for 

18 the new market and the conversions from oil to gas, 

19 you used a period of five years, the last five years, 

20 and projected that going forward. The last five 

21 years has seen an aggressive number of conversions from 

22 oil to gas, so would you anticipate that continuing 
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1 at that same pace in this analysis? 

2 MR. FRANCO: That's what we assumed in the 

3 analysis, and the market share is significantly 

4 less. The market share is constant, so it wouldn't 

5 vary from that. That's our assumption. 

6 MR. BROOKMAN: Charlie. 

7 MR. McCRUDDEN: Charlie McCrudden, ACCA. 

8 I'm still confused on the difference between a new 

9 owner and, I guess, a replacement. A new owner is -- 

10 this is going to sound like I'm thinking way too 

11 basic. You're not suggesting that that's a structure 

12 that has no heat, that has been existing without heat 

13 and you're putting something in, a furnace for the 

14 first time, are you? 

15 MR. FRANCO: Not exactly. So it could be, 

16 for example, that they might have had like oil 

17 equipment. That's one possibility. 

18 MR. McCRUDDEN: Okay. 

19 MR. FRANCO: Another possibility and it 

20 was for a time, as they became part of the market, 

21 they probably didn't have a centralized heating 

22 system. They might have had direct heating, some 
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1 other type of heating system, and they did a major 

2 remodel. 

3 MR. McCRUDDEN: And it looks at both 

4 condensing and non-condensing non-weatherized gas 

5 furnaces? 

6 MR. FRANCO: This is correct. This is 

7 primarily for the base case which is the current standard,

8 and 

9 it does look at both condensing and non-condensing furnaces. 

10 MR. McCRUDDEN: Thanks. 

11 MR. FRANCO: So moving on to the next 

12 slide, this presents the inputs, the actual 

13 references. And so this has some of the references 

14 that we discussed, and further details about these 

15 references are available in the TSD. The links and 

16 the full references are available there. 

17 Let's first discuss the two main inputs 

18 for the retirement function for the retirement shipments, 

19 replacement shipments, which include the historical 

20 annual shipments, and the retirement function. 

21 Before going into too much more detail about that, 

22 because that was a question about the shipments, the 
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1 total shipments that we used in terms of doing our 

2 projections are based on AHRI up to the last year 

3 that we have data. 

4 The disaggregated shipments between 

5 south/north and between condensing and non-condensing, 

6 we only have data up to 2009, and that's the latest 

7 data that we have that on. 

8 First, we started looking at Appliance 

9 Magazine furnace shipments from 1961 to 2012. 

10 Those match, for the most part, AHRI numbers that 

11 we've gotten at various times from 1972 to 2005. The 

12 primary source for the shipments from Appliance 

13 Magazine was AHRI, so that makes sense that they 

14 would match. After that, AHRI did provide from 2005 

15 to 2009 this aggregated north and south values for 

16 that time period. 

17 After that, we're just using total values 

18 from Appliance Magazine and AHRI, which they match 

19 from 2009 to 2012. 

20 It's important to clear up that the numbers 

21 that we got from AHRI are actually combined, 

22 non-weatherized gas furnace and mobile home gas 
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1 furnaces, so we have to disaggregate those, and we 

2 used this method of disaggregating them. Based on new 

3 construction data for mobile home gas furnaces, based 

4 on the lifetime that we assume for mobile home gas 

5 furnaces, and the saturation of mobile home gas furnaces 

6 from the American Housing Survey, we come up with 

7 what we think are the shipment -- historical 

8 shipments for mobile home gas furnaces which range 

9 between 2 to 3 percent, historically, maybe a little bit 

10 higher up to 4 percent of total shipments. 

11 The last time we discussed the lifetime, 

12 based on the lifetime from the LCC analysis, we come 

13 up with a retirement function. 

14 Now, let's talk about the other inputs to 

15 the new construction market. The new construction 

16 market uses the saturations for the characteristics 

17 of new housing data from the U.S. Census Bureau, which 

18 was the source that we've been discussing before. We 

19 also use data from RECS 2009 to come up with 

20 saturations. 

21 In terms of projections, we use data 

22 that's available from AEO 2014 to project the actual 
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1 housing starts in the future. 

2 Lastly, the product switching comes into 

3 play in terms of the standard cases, and that's based 

4 on the consumer choice model in the LCC analysis. 

5 If there are any questions, we'll stop 

6 here. 

7 This next slide shows both the historical 

8 and projected numbers. So, as you can see, the 

9 historical numbers are shown here. They match 

10 exactly the data that's been provided by AHRI. That's 

11 important in terms of total shipments, and also the 

12 Appliance Magazine numbers. 

13 Further details about these numbers are 

14 available in Appendix 9B of the TSD with appropriate 

15 references. 

16 The second part of this chart shows our 

17 projected numbers. Our projected numbers range from 

18 a little bit more than three million to almost about 

19 four million by 2050. 

20 MR. BROOKMAN: Question real quick? 

21 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

22 For the projected, what is your -- for new homes, 
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1 what's your projected rate for new homes completed 

2 by, I'll say 2017? What's your -- because I see how 

3 it really jumps up quite dramatically, I'll say, in 

4 2017 or so? I'm just kind of curious. Again, I was 

5 looking through -- what is the -- does that bump up 

6 because of the huge rise in new home construction? 

7 MR. FRANCO: That is correct. AEO 2014 

8 projects that new homes will rise to an average, more 

9 or less historical, level of about 1.5 to two million new 

10 homes per year. This is in single-family -- 

11 MR. ROSENSTOCK: Single-family new homes? 

12 (Simultaneous conversation.) 

13 MR. FRANCO: And it levels out, yes, and 

14 is constant over time, pretty much. 

15 MR. ROSENSTOCK: You say 1.5 to two 

16 million because -- Steve Rosenstock -- I'm looking 

17 at, again, the Census Data in the American Housing 

18 Survey, and the only years when it was, at least for 

19 single-family homes, when it was 1.5 million were in 

20 the boom years of 2005 -- 2004 through 2006. All 

21 other years, it was around a million, and in 2013, it 

22 said 569,000. So they're assuming that the rate of 
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1 new construction is going to basically triple by 

2 2017. Is that right? 

3 MR. FRANCO: I actually misspoke. That's 

4 the total including multi-family and mobile homes. 

5 MR. ROSENSTOCK: Oh, okay. 

6 MR. FRANCO: Sorry. 

7 MR. ROSENSTOCK: So that's including 

8 multi-family? 

9 MR. FRANCO: Yeah. 

10 MR. ROSENSTOCK: Okay. Got you. So 

11 you're saying 1.5 million including multi-family. 

12 MR. FRANCO: Yes. 

13 MR. ROSENSTOCK: Thank you. 

14 MR. FRANCO: This chart shows the 

15 distribution in terms of the different market 

16 segments that I talked about. So this includes new 

17 owners, new construction replacements, and it also 

18 includes the north versus the rest of the country. 

19 So, again, this relates also to the fractions that I 

20 mentioned earlier in terms of fraction of new 

21 construction, fraction of the owners, and fraction of 

22 replacements. 
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1 MR. DRUMHELLER: So this is assuming that 

2 this goes through, right? That there's a 92-percent 

3 requirement north and south effective January 2021? 

4 Is that -- 

5 MR. FRANCO: Let me clarify. This is 

6 actually the base case which I forgot to mention. This is 

7 the base case. This is without amended standards. 

8 MR. DRUMHELLER: All right. 

9 MR. BROOKMAN: So that was Craig speaking 

10 there. 

11 MR. DRUMHELLER: Craig Drumheller, 

12 National Association of Home Builders. 

13 MR. BROOKMAN: Thank you. Frank Stanonik. 

14 MR. STANONIK: Frank Stanonik. It's 

15 clearly not the major thing driving this chart. But 

16 I think it's the new owners, okay? It seems to me 

17 that the population of new owners is by definition an 

18 ever decreasing base, okay? And so I really question 

19 the fact that it looks to me like your new owner 

20 lines in this graph seem to be pretty much equal as 

21 we go forward. And, again, we're really talking 

22 about whether you want to look at it simply as let's 
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1 say being a little -- bad joke here -- being a little 

2 crude, but assuming every oil customer was a 

3 potential switchover, okay, and also the folks who 

4 don't have central heating, okay, both of those 

5 populations are kind of fixed. They're not going to 

6 be steady. So I think at least part of that, the 

7 assumption that those would be constant through the 

8 succeeding years, is, I think, a little bit of an 

9 overstatement. 

10 Now, again, as I said, I realize that's a 

11 small piece here, but I think it's a little far. 

12 MR. CYMBALSKY: This is John from DOE. 

13 But I guess, Frank, all the new construction that's 

14 going in place in the intervening years that have 

15 electric fall into that pool as well. 

16 MR. FRANCO: Thank you. 

17 So now we're going to be talking about the 

18 fuel switching aspect. So now we're talking about 

19 the standards case. In the standard cases, we're 

20 considering potential for fuel switching. This table 

21 presents the actual percentage of switching from 

22 potential for non-weatherized gas furnaces to other 
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1 equipment, for example, electric furnaces and heat 

2 pump. As you can see from this chart, these fractions 

3 are disaggregated between north, replacement and new 

4 construction, rest of country, replacement and new 

5 construction. 

6 I'll give you a second to ask questions. 

7 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

8 Again, you heard what I said before, and I believe 

9 that this chart is incomplete without looking at 

10 other technologies that are available and on the 

11 market that are especially in the new construction 

12 area. I'm just looking at the Census Bureau data 

13 again, and I remember that in 2005, there were record 

14 wholesale gas prices. I believe it got up to $15 per 

15 million BTUs as a result of the hurricanes, and by 

16 December that year, it was staring to be a cold 

17 winter, the gas prices -- they were just record gas 

18 prices. Okay. That year and next year there were 

19 over one million homes built with gas heat, even in a 

20 time of record gas prices. 

21 Okay. So I mean, even in a time of record 

22 prices when people aren't switching and now gas 
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1 prices are very, very steady, very low at about $2.70 

2 cent per million BTUs the last time I looked on the 

3 Henry Hub, and if gas price projections are pretty 

4 much flat, or very, very steady, or very slow 

5 increasing, I think a lot of these numbers, as much 

6 as I would like to -- a lot of my members would like 

7 to see this, I don't see these numbers as happening. 

8 I'm sorry. Thank you. 

9 MR. BROOKMAN: Okay. Thank you. 

10 Keep going, Victor. 

11 MR. CYMBALSKY: Can I ask a question. So 

12 thank you for that comment. That's the kind of 

13 comments we like to hear, like a definitive 

14 statement. 

15 Do you have a sense? So we're saying here 

16 that, you know, switching is about, say 20 percent in 

17 the south and looks like 11 percent in the 

18 replacement markets, do you have a different 

19 percentage in mind if a 92 percent standard were to 

20 come into effect? Do you think it's half that, a 

21 quarter that? 

22 MR. ROSENSTOCK: Steve Rosenstock. I wish 
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1 I had that data. I don't have that data. All I can 

2 say is I'm just looking at some of the historical 

3 data when the gas prices were very high, and there was 

4 an economic driver to even look at other new 

5 appliances, and it didn't seem to make a difference. 

6 Now, 2008 was another year of record high 

7 gas prices, also right in the middle of the recession, 

8 so everything was going downhill everywhere. But all 

9 I can say is, in my view, of course, it's all about 

10 theories and everything. In my view, I wish I had a 

11 number. I don't have a number. I believe that, you 

12 know, all I can say is, the home builders would have 

13 a better idea of all the technologies that builders 

14 are looking at, not just the electric. It's not just 

15 the one or the other. And, you know, oil furnaces 

16 are an option for these builders. They exist. They 

17 are an option, especially in new construction, and if 

18 their prices are lower than the gas furnace or 

19 electric heating system, I'm guessing that a certain 

20 percentage of builders will look at that option 

21 because they're out there, and there might be other 

22 things like wood, you know, there might be wood 
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1 systems or solar systems they might look at because 

2 of tax incentives. They're out there. So I don't 

3 know how much less the fraction is, but this is a 

4 personal view. I don't have a study. I wish I had 

5 some data. I don't. But in my personal view, I 

6 believe the fraction is less. I can't tell you how 

7 much less. 

8 Thank you. 

9 MR. BROOKMAN: Yeah, Andrew deLaski. 

10 MR. deLASKI: I was sorry I had to leave 

11 last time before we got to the fuel switching 

12 discussion, so I think you went through the methodology 

13 for that at the end of the last meeting that was 

14 discussed, so I don't want to bring us back to that 

15 discussion. 

16 MR. BROOKMAN: Andrew, get close to that 

17 microphone, please. 

18 MR. deLASKI: But I do want to pile on 

19 Frank a little bit. 

20 So I was just thinking out loud here, and 

21 I'm wondering, Frank, to the extent the AHRI members 

22 are able to provide data on heat pump shipments as 
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1 well if that would help, if that would be instructive 

2 to the Department in helping us to understand the 

3 relative shipments of the two competing technologies 

4 in electric furnaces as well, because, again, these 

5 are the same manufacturers making these products by 

6 and large. To the extent that we had time series 

7 data on the shipments of all the competing 

8 technologies, that would be, I think, a big assist to 

9 the Department in helping to validate. I think you 

10 have a good methodology that you laid out last time. 

11 I think it predicts more switching than I would 

12 expect. I think the market is probably a lot more 

13 sticky than you have predicted, that people do what 

14 they've done before, and there's a lot of inertia in 

15 markets and that you've not captured inertia. And I 

16 would expect -- what I would look to, so thinking 

17 about data sources, is the AHRI shipping data seems to 

18 me would be a very valuable resource to you. 

19 So, Frank, as you're talking to your 

20 members and you're optimistic about getting data for 

21 furnaces, I hope you would do the same for heat pumps 

22 and for electric furnaces as well. 
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1 MR. CYMBALSKY: This is John from DOE. So 

2 since there's some AGA folks in the room, back in my 

3 former profession, AGA used to do a fuel switching 

4 study actually mapping which fuel they switched from 

5 and to. It was mostly to gas at the time. So this 

6 was circa 2000, 2002. Unfortunately, when I switched 

7 jobs, I gave up my right to keep the survey, but, 

8 they did have a very nice survey about what fuel 

9 switching actually occurred in their member 

10 companies. I'm not sure they do that particular 

11 survey anymore, but it was very helpful in the 

12 development of the NEMS model for EIA that I did in 

13 my former position to actually try to project fuel 

14 switching. But what I can tell you, counter to what 

15 Steve is kind of thinking about, switching to oil or 

16 wood or whatever, that just didn't happen. You know, 

17 homes that are built in New England, in particular, 

18 they'll be built with oil because they don't have gas 

19 lines available. It is a more -- it's cheaper than 

20 propane per BTU, and they will do that. 

21 Now, if the gas line is there, they're not 

22 going to bury an oil tank. I hate to tell you, it's 
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1 not going to happen. So I don't know if AGA does 

2 that study anymore, but that was a very valuable data 

3 source to look at in terms of fuel switching. Other 

4 than that, I can tell you, there's not too much out 

5 there in terms of real data. 

6 You can make inferences from shipments, 

7 but it's very difficult. 

8 MR. BROOKMAN: Yeah. So, Rick, can you 

9 comment here? 

10 MR. MURPHY: Yes, John, I'm not familiar 

11 with that study back at the time that you're 

12 referring to. But I believe it had to do with the 

13 customers that converted from an alternative fuel to 

14 natural gas, not the other way. 

15 As you know, we did try to improve the 

16 level of intelligence that we have on the switching 

17 going the other direction by going out and speaking 

18 with contractors and builders about a year and a half 

19 ago to give them -- the question is, how would you 

20 react to a national standard that required condensing 

21 equipment? And we have the results of that study 

22 that we share with yourself and other stakeholder 
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1 groups that actually showed that it was actually a 

2 higher percentage of switching than this indicates. 

3 We realized that we did not get the level 

4 of response that we would have liked to across the 

5 country. However, we did get a significant amount of 

6 responses that indicated that because of their 

7 experience in the pricing associated with the 

8 condensing of equipment, that a certain percentage of 

9 the market and a certain percentage of new installs, 

10 they would actually move away from a natural gas 

11 furnace. 

12 MR. BROOKMAN: Okay. Rachel, comment here? 

13 MS. FEINSTEIN: Rachel Feinstein, Hearth 

14 Patio and Barbecue Association. With regard to 

15 wood-fueled furnaces, or wood, forced-air furnaces, 

16 usually there are two different sizes, a smaller size 

17 and a larger size, and they're usually used to -- 

18 they're connected to an existing gas or propane, or 

19 oil-fueled furnace to give an extra supplemental 

20 energy to the system to kind of what we say, turbo 

21 boost the home system. And it's usually in addition 

22 to the gas or oil or propane-fueled systems and not 
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1 a replacement. It's mostly very rural areas, 

2 northwest, Midwest. Wood, forced-air furnaces are 

3 sold in like the Midwest, northwest and not very 

4 urban areas. 

5 MR. BROOKMAN: Do you all have data on 

6 that? 

7 MS. FEINSTEIN: Not -- we do not because 

8 there are just not many sold. It's a very small 

9 market. It's also a newly regulated category by the 

10 EPA as well, wood, forced-air furnaces. 

11 MR. BROOKMAN: John Cymbalsky? 

12 MR. CYMBALSKY: I just want to say thanks 

13 to both Rick and HPBA for providing that information. 

14 It's helpful, and I know we looked at the study, and 

15 we used the study, and as we said in the last meeting, 

16 actually the results overall -- 

17 MR. ROSENSTOCK: What happened to those ground

18 rules?

19 (Laughter.) 

20 MR. CYMBALSKY: My, oh, my. But I think 

21 what we shared last time is that the AGA switching 

22 and the DOE switching, actually, percentage-wise, are 
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1 roughly the same. There are differences in where 

2 they switch and some of the other things we went 

3 through. We're not going to revisit it, but, we do 

4 thank you for that study and thank HPBA for that 

5 information as well. 

6 MR. BROOKMAN: Yes, please, Jim. 

7 MR. MOORE: Jim Moore with Laclede. One 

8 of our concerns is with this switching, and using the 

9 DOE data, we're seeing a huge switch to electric in 

10 particular places like Arizona. And yet we believe 

11 you're including the -- that's an economic decision. 

12 They would have switched without this rule. But, 

13 yet, all those savings are included in your LCC 

14 calculations, and that's a concern for us. We think 

15 you're overestimating the LCC savings in that case. 

16 And then again to Frank, I understand the 

17 proprietary nature of your data and that you don't 

18 want to give up all that. What I would be interested 

19 in seeing is just the breakdown between condensing 

20 and non-condensing, because I firmly believe that 

21 we're already there. That DOE is required to look at 

22 whether or not we should -- what happens without this 
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1 rule. And I believe the market is doing its job, and 

2 we're already there, and I think your data can prove 

3 that. 

4 Thank you. 

5 MR. BROOKMAN: When you say "already there," 

6 be more specific. 

7 MR. MOORE: I don't remember the exact 

8 data point, but if you look in the chart on 8I where 

9 there's a huge drop off, because we don't have AHRI 

10 data and we switched to EPA and then EPA switched the 

11 rules in the middle of the game, and so we have this 

12 huge drop. I believe the starting point of that 

13 curve is much higher than it is. 

14 MR. BROOKMAN: Okay. 

15 MR. MOORE: Did that answer your question? 

16 MR. BROOKMAN: Yes. 

17 MR. MOORE: Thank you. 

18 MR. BROOKMAN: Steve Rosenstock? 

19 MR. ROSENSTOCK: Again, Steve Rosenstock, 

20 EEI. I said this before, but again on the record, as 

21 I recall with the previous rulemakings for electric 

22 heat pumps, I don't remember any fuel switching 
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1 analysis being done by this Department. And now heat 

2 pumps are going up from 10 SEER to 13 SEER, to 14 SEER in

3 the last nine years, so there might be some fuel switching 

4 the other way. To totally ignore that in the context 

5 of this analysis, I believe, is another way of -- it's 

6 just not complete because what about the impact of 

7 that technology going the other way? And I guess 

8 I'll ask from now on for any space heating system, 

9 for any space heating analysis, are you going to do a 

10 fuel switching for every product from now on? 

11 Because to do it for one product and not other 

12 products just seems inconsistent. 

13 MR. BROOKMAN: So all your written comments 

14 on these points will be very, very helpful to the 

15 Department. 

16 Frank Stanonik? 

17 MR. STANONIK: Frank Stanonik, AHRI. And 

18 I'm glad you got this one because the slide we were 

19 looking at was just non-weatherized gas furnaces, and I 

20 was just curious if you've looked at the potential 

21 fuel switching impact on mobile homes from the 

22 perspective, particularly of new mobile homes? 
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1 Because that really is in the hands of the builder 

2 and I mean, not that I have direct contact with those 

3 manufacturers of the manufactured homes, my 

4 understanding, it is already a very price-driven kind 

5 of industry and who isn't, and on top of that, if you 

6 will, there's no way around it, it's a lot easier to 

7 cite a, if you will, all electric manufactured home 

8 than one that needs a secondary fuel whether it's 

9 gas, oil, or whatever. I just wonder if that's been 

10 looked at. What, you know, maybe just talking to 

11 those manufacturers or what happened if their only 

12 option was a condensing furnace. 

13 MR. FRANCO: Thank you for that comment. 

14 We did approach experts, and we did approach people in 

15 that area, especially in the new construction. That 

16 was something that we were looking at. 

17 One of the primary things to consider in 

18 the consideration of what things potentially would be 

19 switching is the installation costs, and, for this 

20 equipment, the installation costs between a 

21 non-condensing and condensing is not very significant 

22 for the mobile home. It's primarily due to the short 
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1 venting length. Usually if you look at a mobile home 

2 furnace, it sits in a kind of closet area, and it's primarily

3 vented vertically, so it's only one story. It's very 

4 short, and so it's not a huge installation cost 

5 differential. It's mainly the equipment costs, so 

6 that was the primary concern. So please provide your 

7 comments so we can take a look at that further. 

8 MR. BROOKMAN: Victor has cued the comment 

9 slide here. As I look at these three, and Victor, I 

10 invite you to call out ones for which you would like 

11 to receive additional comment. We've begun to 

12 address all of these three, I believe, but is there 

13 anything else you wish to seek or emphasize? 

14 MR. FRANCO: The first one I haven't heard 

15 anything about specifically just the fraction of 

16 commercial applications. In our analysis, we assumed 

17 3 percent of residential furnaces are used in 

18 commercial applications. Any additional feedback 

19 would be appreciated. 

20 MR. BROOKMAN: Craig Drumheller? 

21 MR. DRUMHELLER: Craig Drumheller, 

22 National Association of Home Builders. I just wanted 
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1 to kind of go a little bit further with the 

2 methodology. One, I know you have to determine what 

3 the difference is going to be in shipments both 

4 before and after this rule may or may not be in 

5 place. And when you do your cost analysis, your cost 

6 analysis includes the ones that were shipped that 

7 were switching anyway to the higher-efficiency 

8 equipment. So they're the ones that have already 

9 determined that it's cost-effective, and said, you 

10 know what, we're going to go ahead and do this 

11 because it makes sense for us. 

12 I would be very interested in an analysis 

13 that goes after that delta, the people that are now 

14 forced to switch that would not have switched 

15 otherwise, because a lot of them are doing it and 

16 because it doesn't make economic sense. And it might 

17 be a retrofit. It might be a specific location. 

18 There might be other reasons why they're not doing 

19 the switch, and I think you're going to find a huge 

20 difference in the cost effectiveness when you parse 

21 it for that delta of the people that didn't intend to 

22 switch because it didn't make sense for them. And I 
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1 think that's a very important distinction to be able 

2 to do that because when you group them altogether, it 

3 pulls -- the people that it already made sense for 

4 overwhelm the ones that it doesn't make sense for. 

5 And I think we need to let the market kind of dictate 

6 the way that this needs to move forward. 

7 MR. BROOKMAN: Thank you. 

8 MR. CYMBALSKY: So that's already done in 

9 the analysis. Those are the no impacted people that 

10 already did it. 

11 MR. BROOKMAN: Thank you, John. Dave. 

12 MR. WINNINGHAM: This is Dave with Allied 

13 Air. In the NOPR, it says DOE has concluded that a 

14 repair option really wasn't considered in this. In 

15 other instances where we've seen increased product 

16 costs, we see an increase in repair versus replace. 

17 Can you elaborate on how you came to that conclusion? 

18 MR. FRANCO: For this analysis, our primary 

19 focus was on the equipment switching. We saw that as 

20 the -- building that model. Once we built that model, 

21 it was inconsistent with how we presently do what 

22 you're referring to which is the repairing of the 
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1 equipment, which is based on the price elasticity. At 

2 this time, we haven't been able to reconcile both 

3 methods. We assume that a fraction of the people 

4 that we're assuming currently are doing the product 

5 switching, potentially would do the repair, and it 

6 would be a similar impact, or it might be slightly 

7 more advantageous potentially to do the repair. So 

8 we think that we're -- at this point we're 

9 conservative in that regard, but we would like your 

10 feedback to look at that in more detail. 

11 MR. BROOKMAN: Is that in the TSD, Victor? 

12 MR. FRANCO: That's in the TSD. 

13 MR. BROOKMAN: Let me see, Rick? 

14 MR. MURPHY: John, I'd just like to go 

15 back to something you just mentioned just so I 

16 understand it correctly. You said that the customers 

17 who do fuel switching, because it makes economic 

18 sense, are included in the no-impact section of the 

19 -- I need to understand that. 

20 MR. CYMBALSKY: So the baseline shipments 

21 already include sort of the market of switching that 

22 happens naturally without any standards. So the 
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1 shipments forecast builds that in. Okay. That's 

2 baked in. What we're looking at is the marginal 

3 analysis to when you impose the standards, and so 

4 what I was addressing from the NAHB gentleman is that 

5 the people who switched to the higher-efficient 

6 furnace are the no-impacted people. He was saying, 

7 how many people think this is a good thing to do 

8 anyway, right? That's in the model. 

9 MR. MURPHY: Thats in the model, but its included

10 in the 

11 no-impact group? 

12 MR. CYMBALSKY: Correct. Because they're 

13 doing it anyway without the standard. The people who 

14 switch fuels, naturally occurring switching, that's 

15 in the baseline shipment data. So that's baked into 

16 the baseline as well. So we're only looking at what 

17 happens, the delta above that level. 

18 MR. MURPHY: And if that's the case, why 

19 does -- if you choose the selection for no fuel 

20 switching in the LCC that the life-cycle cost benefits 

21 actually go down? 

22 MR. FRANCO: The life-cycle -- this if 
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1 Victor Franco. The life-cycle cost benefits in the 

2 switching situation or the non-switching situation? 

3 MR. MURPHY: Non-switching. 

4 MR. FRANCO: Non-switching situation. So, 

5 in the non-switching situation, you're assuming that 

6 these households that have very large installation 

7 costs don't switch. Those households when you do the 

8 switching do switch and capture those benefits of not 

9 having to have those large installation costs. 

10 MR. CYMBALSKY: So this is the inertia 

11 that Andrew brought up. So they face high costs to 

12 go to the condensing, and they pay it. So they're 

13 impacted, they didn't switch. So those are the 

14 impacted set of people. 

15 MR. BROOKMAN: Thank you, John. Mark 

16 Krebs. 

17 MR. KREBS: Mark Krebs. I want to chime 

18 in with Allied Air's consideration that, you know, 

19 the market is a very innovative device, and I believe 

20 it is probable that as a result of this rule of 

21 banning non-condensing furnaces, that you will 

22 unwittingly develop a cottage industry of firms that 
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1 go around repairing non-condensing furnaces. And 

2 that should be -- that potential should probably be 

3 considered by DOE in this rule. 

4 MR. BROOKMAN: Okay. Thank you. Frank 

5 Stanonik. 

6 MR. STANONIK: Victor, the second box, the 

7 projection of future shipments, one of the earlier 

8 slides was, you know, clearly there was a -- I'll 

9 call it an artificial peak in the relationship of 

10 condensing versus non-condensing in slide 69 driven 

11 by -- I think driven primarily by tax credits, but 

12 other incentives probably. It was in the years like 

13 probably '09 to '12. So in terms of -- okay, so 

14 that's there. Those are now in the field, that, you 

15 know, huge jump there. And so, again, my simplistic 

16 view, let's say they were installed in 2010, okay. 

17 So I look at that, and I say, okay, in 2010, if I go 

18 out about 20 years, I'm going to have this huge blip 

19 that needs to be replaced, and I would argue that if 

20 the person has already bought a condensing furnace, 

21 they're going to replace it with a condensing furnace 

22 or whatevers equal to that in 20 years, and then in 
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1 another 20 years, you've got another blip. So my 

2 question is, is your straight line there factoring in 

3 that blip, or does it not? That's a technical term 

4 "blip" by the way. 

5 (Laughter.) 

6 MR. FRANCO: Thank you so much for that 

7 comment. So actually, when we did the furnace fan 

8 analysis, the actual shipments were decided between 

9 non-condensing and condensing, and there, we actually 

10 did two projections of shipments by non-condensing 

11 and condensing, and you could see kind of those more 

12 clear blips. 

13 This is a little bit of simplification. 

14 It does match the overall shipments, but it does not 

15 include what we could call those blips. And we 

16 appreciate a comment in that regard, and we can look 

17 at that further. 

18 MR. CYMBALSKY: I think the distribution 

19 of the way it retires actually will serve to flatten 

20 out the blip, right? 

21 MR. STANONIK: No, no, no. Absolutely. 

22 Yeah, it would be spread out over the years, but I 
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1 guess I was trying to get a sense of to what extent 

2 it gets rolled into that. 

3 MR. BROOKMAN: Yes, Charlie? 

4 MR. McCRUDDEN: Charlie McCrudden, ACCA. 

5 Your first request for comment box references the 

6 number of furnaces used in commercial applications. 

7 This is sort of the first, I think, that that concept 

8 has been brought up in these slides. Can you sort of 

9 give us some sense of what you think perhaps it is 

10 for 3 percent? And that's in the TSD somewhere? 

11 MR. FRANCO: That is correct. That's 

12 based on -- the methodology is based on looking at 

13 CBECS and RECS data in terms of what we think if they 

14 have a commercial or residential furnace, looking at 

15 those saturations, then we come up with 3 percent. 

16 MR. McCRUDDEN: Thank you. 

17 MR. BROOKMAN: Is it John? 

18 MR. HERSE: Yes, John Herse with Lennox. 

19 Going back to the previous chart that shows the 

20 future projections, no, the other one. No, not that 

21 one. 

22 MR. BROOKMAN: The one that -- 
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1 MR. HERSE: The one that we were just on. 

2 The blip chart. 

3 MR. BROOKMAN: Sixty-three or something. 

4 PARTICIPANT: Sixty-nine. 

5 MR. HERSE: So speaking as a manufacturer, 

6 and one of those entities that I have it on 

7 relatively good authority that the new information 

8 will be released for furnaces. But just an 

9 observation, our experience was that precipitous drop 

10 wasn't as steep as you show, and our belief, based on 

11 prior history, is that that curve is flatter than it 

12 should be. We see adoption through a tax incentive, 

13 but it doesn't drop below. There is actually -- it 

14 moves consumer adoption higher, and I think the data 

15 will show that. So it would be interesting to recast 

16 that with better input data. 

17 MR. FRANCO: That would be really 

18 appreciated. Thank you so much for your comment. 

19 MR. BROOKMAN: Everyone welcomes that. 

20 Thank you very much. 

21 Okay. Final comments on these issue 

22 boxes. We're about due for a break. 
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1 Yes, Greg. 

2 MR. MOORE: Jim Moore from Laclede Group. 

3 Just echoing what Frank said, if you go to the 

4 historical and projected case shipments, the blue 

5 slide, you have a big dip in the '08, '09, '10 

6 timeframe, which is understandable, and likewise 20 

7 years out, you're going to see another dip again. 

8 Now, it might not be as deep, but it's going to be 

9 out there as people go to replace those furnaces. 

10 Just an observation. 

11 MR. BROOKMAN: Okay. Thank you. 

12 Let's take a break. It's now 10:52. Let 

13 me see. Let's resume at 10 minutes after 11 here in 

14 this room. Please make sure to wear your badge. 

15 There are restrooms at both ends of the hall. 

16 (Whereupon, at 10:52 a.m., a brief recess 

17 was taken.) 

18 (Record resumes at 11:14 a.m.) 

19 MR. BROOKMAN: I've received a note. We're 

20 starting back up folks, here we go. 

21 Apparently Neal Leslie who is joining us 

22 on-line has a comment and a question. Neal, you 
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1 should be now unmuted, please speak. 

2 (Pause.) 

3 MR. BROOKMAN: Haven't heard you yet. 

4 Yeah, okay, Neal, you're not coming through here in 

5 the room. So maybe we can figure out what's going on, 

6 and we can try you back later. 

7 We're going to resume where we left off, 

8 and we're going to hear from Victor Franco. 

9 MR. FRANCO: Hi, this is Victor Franco 

10 again. We just finished the shipments analysis, the 

11 primary input to the national impact analysis, which 

12 will be the next topic. The national impact analysis 

13 estimates the national impacts of energy conservation 

14 standards for non-weatherized gas furnaces and mobile 

15 home gas furnaces shipped between 2021 and 2050, this 

16 30-year analysis period. There's two primary outputs 

17 of this analysis. One is the national energy 

18 savings, or NES, which calculates the primary energy 

19 savings, and then net present value or NPV, which 

20 calculates the difference between the net present 

21 value of annual energy expenditures and the present 

22 value of annual equipment expenditures. 
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1 The method is to calculate for each 

2 product class in each of the standard cases, 

3 calculate the per-unit cost increase and per-unit 

4 energy savings. In addition, calculate the number of 

5 units in the stock used between 2021 and 2050 and 

6 combine to determine the NES and NPV. The next few 

7 flow charts will show this approach. 

8 Let's start with the NES or national 

9 energy savings. So the shipments analysis is 

10 one of the primary inputs. Here on this chart, we have 

11 on the right side the base-case projections and on 

12 the left side, the standards-case projections. We 

13 combine the shipments analysis with the base-case 

14 annual energy consumption to come up with the base15 case cumulative energy use. From the standards-case 

16 we do the same. We combine the standards-case annual 

17 energy consumption to come up with the standards-case 

18 cumulative energy use. Then, we use site to source 

19 energy conversion factors to come up with the final 

20 national energy savings. 

21 In terms of the net present value, again, 

22 we start with the shipment analysis numbers. We 
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1 combine them with inputs -- with inputs for energy 

2 costs, maintenance and repair costs, and total 

3 installed costs for both the base-case projections and 

4 standards-case projections to come up with cumulative

5 operating 

6 costs. We combine energy costs and maintenance and 

7 repair costs both for the base case and standards 

8 cases. To come up with the cumulative total consumer 

9 costs, we combine the total installed costs of both the 

10 base case and standards cases. We then use discount 

11 rates to come up with the net present value. 

12 This table summarizes all the different 

13 inputs that go into the analysis. More details are 

14 available in Chapter 10 of the TSD. 

15 A lot of these inputs come from the LCC 

16 analysis. One of the primary inputs is the annual 

17 unit energy consumption which is an average value 

18 that comes from the LCC analysis. It's both for the 

19 product class, but for this rulemaking it's actually 

20 also provided for different market segments that we 

21 discussed earlier. It's provided for new 

22 construction and replacements, and it's also provided 
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1 for commercial and residential and for the regions we 

2 are considering -- north and rest of country. 

3 For the shipments we have discussed earlier, 

4 the product stock is determined as the yearly stock 

5 using the annual shipments and lifetime of each of 

6 the product classes. For this rulemaking, we consider 

7 the rebound effect. It's a 15 percent rebound effect 

8 for this rule. 

9 Base-case efficiency distributions I'll 

10 discuss in further detail in the next slide. 

11 The site-to-source conversion factors come 

12 from AEO 2014 data. We also add full-fuel-cycle 

13 conversion factors that actually also come up from 

14 AEO 2014 data. 

15 The total unit cost -- the total installed 

16 cost per unit and total operating cost per unit come 

17 from the LCC analysis as well and are designated by 

18 the market segments. 

19 Finally, we come up with -- we use two 

20 discount rates that are used by OMB -- 7 percent and 3 

21 percent. 

22 Let me discuss in more detail the base- 
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1 case projections and distributions. As we discussed 

2 earlier in the LCC analysis, we come up with base3 case market shares for 2021 and project that into the 

4 future. The distributions are shown here at the 

5 national level, 55 percent in the baseline, 5 percent 

6 level one, 17 percent level two, and 23 percent level 

7 three. For each of the trial standard levels, we come 

8 up with different market shares as well depending on 

9 whether the standard will require condensing or not. 

10 For some of the trial standard levels, since it's a 

11 regional standard, there will be a mixture. 

12 For example, for trial standard two, there 

13 is not applicable for -- up to the third, since it's the 

14 standard for the north will be condensing. For the 

15 other market shares, non-condensing is still 

16 applicable for the south. 

17 The distribution over time is shown in the 

18 graph for all of the product classes in the base 

19 case. The standards-case distribution is available in 

20 Chapter 10 of the TSD. 

21 MR. BROOKMAN: Andrew DeLaski? 

22 MR. DeLASKI: I'm not sure when a good 
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1 time to raise this is. Maybe now is a good moment. 

2 Victor, in many dockets, the Department will also 

3 model what you typically call a shift scenario which 

4 would typically look at some shift. You know, for 

5 example in this scenario, if the market shifts to a 

6 95-percent standard, for example, manufacturers have 

7 an incentive to be able to offer an approved product 

8 and to sell out, right. The markets typically 

9 exhibit a good, better, best kind of structure, and 

10 that would typically drive a distribution of 

11 efficiency above a new standard level. 

12 So I'm curious . . . in this case, you elected 

13 not to model a shift scenario, and what was the 

14 thinking there? 

15 MR. FRANCO: Thank you so much for that 

16 clarification. It's actually a mixture of -- this is 

17 not reflected in this. It's actually both a rollup 

18 and a shift depending on what was considered. One 

19 example is -- for example, if we're going for the 

20 standard at 90 percent, there is actually a shift to 

21 some of the market going instead of just rolling up 

22 to 90 percent, some of the market actually going to 
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1 92 percent. The consideration there and the details 

2 are in Chapter 10. The consideration there was that 

3 the equipment price differential between 90 and 92 is 

4 small enough that consumers -- that some fraction of 

5 consumers would elect to go directly to 92. 

6 For other potential standards, there's a 

7 certain part of the market that because of this 

8 improved -- because manufacturers want to have a 

9 better/best scenario in terms of the product 

10 segmentations, there will be a slightly higher, for 

11 example, 98 percent efficiency because that will be 

12 the best model that they could potentially offer into 

13 the market. 

14 So if you look at the TSD, you can 

15 actually see, instead of the market share of 98 

16 percent in TSL three, four, or five -- three or four, 

17 sorry, you would actually, instead of being, pretty 

18 much flat around 0 to 1 percent, it actually would 

19 grow over time to say 5 percent or even higher 

20 depending on what TSL level. The details are in the 

21 TSD. 

22 MR. deLASKI: Okay. Thank you. I'll 
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1 look for that. Chapter 10 you said? 

2 MR. FRANCO: Yes. Thank you. 

3 So I kind of jumped ahead of myself 

4 because I did talk about the trial standard levels 

5 without discussing how they were developed. So 

6 here's the development that DOE considered for -- the 

7 criteria that DOE considered for the trial standard 

8 levels. DOE considered five trial standard levels, 

9 two of them have a regional standard, and three of 

10 them have a national standard, TSL three, four, and 

11 five. 

12 DOE is currently considering TSL three. 

13 TSL five has the max-tech efficiency levels. TSL 

14 four yields the maximum NPV at 7 percent for which 

15 the percentage of LCC winners is higher than the 

16 percent of LCC losers. That's the criteria. 

17 TSL three is 92 percent AFUE for both 

18 non-weatherized and mobile home gas furnaces. And TSL 

19 two is a mixture. As I mentioned earlier, 95 percent 

20 for the north, and baseline or 80 percent for the 

21 rest of the country. 

22 TSL one would provide a 90 percent for the 
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1 north, and 80 percent for the rest of the country. 

2 MR. ROSENSTOCK: Steven Rosenstock. I 

3 guess a very quick question. Looking over these 

4 numbers again, for TSL one, why was it the choice to 

5 make different numbers for the north for mobile home 

6 versus non-weatherized? Why is the mobile home number 

7 higher compared to the other? 

8 MR. FRANCO: Thank you so much for that 

9 question. That's a great question. I passed over 

10 that. The baseline condensing that was considered in 

11 terms of the efficiency levels for mobile homes, the 

12 baseline was 92 percent since there are currently no 

13 models at 90 percent. 

14 MR. ROSENSTOCK: There's no models a 91% 

15 either? 

16 MR. FRANCO: No. 

17 MR. ROSENSTOCK: Just 92%, that's the first 

18 one? Okay. 

19 MR. FRANCO: That's the first one. 

20 MR. ROSENSTOCK: Okay. 

21 MR. BROOKMAN: Okay. Thank you. Aniruddh? 

22 MR. ROY: Aniruddh Roy, Goodman. Just a 
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1 question on the discount rate. So, the real discount 

2 rate used in this analysis is 6.4 percent, whereas in 

3 the 2011 direct final rule it was 8 percent. I'm 

4 just curious to know what caused that change from the 

5 2011 analysis to now. 

6 MR. FRANCO: Thank you for that question. 

7 We do use different discount rates in our analysis. 

8 I'm not sure which one you're referring to, so I'll 

9 just clarify first the different discount rates that 

10 we use. We do use a discount rate in the LCC 

11 analysis which we described in the previous meeting. 

12 That's around 4 to 5 percent, and that's used in the 

13 consumer model LCC analysis. For the NIA, as long as 

14 I can remember, we've been using 3 to 7 percent, two 

15 discount rates to kind of give the range, and that 

16 hasn't changed for many, many years. So those are 

17 the ones that are currently used -- 3 percent and 7 

18 percent. The results are presented with those two 

19 discount rates. We'll look at those results in a 

20 little bit. 

21 MR. BROOKMAN: Mark Krebs. 

22 MR. KREBS: Mark Krebs. I am familiar 
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1 with OMB Circular A-4 that you cited, and there's a 

2 footnote in that that -- footnote 8 that says 

3 Circular A-94 also recommends using other discount 

4 rates to show the sensitivity of the estimates to the 

5 discount rate assumption. 

6 From my understanding of discount rates, 

7 it is a number that you use to assume a risk factor 

8 in the lifecycle costs. You can't have a different 

9 number, you know, for one group than another, or for 

10 different years. It has to be one number. And 

11 considering that the economy is not rebounding or at 

12 least using that assumption that it could naturally 

13 get much worse, and, you know, considering all these 

14 groups, I would say that using much higher discount 

15 rates is appropriate. You know, and I know I talked 

16 about this during the last meeting, and I reiterate 

17 that the Georgetown University -- George Washington 

18 University weighed in with some very good comments by 

19 a woman there, Sophie Miller, for the furnace fan 

20 rule who ran a lot of different discount rates to 

21 look at that furnace fan rule. And it really changed 

22 the whole life-cycle savings, you know, in a major 
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1 way. 

2 And so, again, I think that DOE, according 

3 to the OMB, is required to look at vastly different 

4 scenarios than just three and seven, three and seven, 

5 three and seven. 

6 MR. BROOKMAN: Thanks, Mark. Aniruddh? 

7 MR. ROY: Aniruddh Roy. So, Victor, thank 

8 you for pointing that out on the discount rates. 

9 Actually just to clarify, this discount rate pertains 

10 to the INPV analysis, or maybe Navigant can answer 

11 that question whenever we get to that section again. 

12 MR. FRANCO: Oh, yes, that relates to the 

13 MIA which will be coming up later. 

14 MR. ROY: Yes. So just to clarify, it was 

15 8 percent in the 2011 rulemaking for the same 

16 product, but 6.4 for this analysis. So I'm just 

17 curious to understand what caused that change? 

18 MR. FRANCO: Thank you, yeah. That will 

19 be coming up in a little bit. 

20 So, now let's discuss the trial standards 

21 for standby mode and off mode. These are the 

22 different TSLs that were developed. Essentially, it 
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1 maps the efficiency levels. These are the power 

2 watts for each of them, and DOE is proposing TSL three 

3 for the proposed standard. 

4 We . . . in the engineering analysis, we went 

5 over the technologies and the power for these. So 

6 now, let's go over the results. So this shows the 

7 national energy savings, the primary energy savings, 

8 and the fuel cycle energy savings for both of the 

9 prior classes, as well as the total. DOE is currently 

10 proposing TSL three. As you can see, the primary 

11 energy savings are 2.25 quads for primary, and for the full 

12 fuel-cycle energy savings, it's 2.78 quads. 

13 Again, the net present value is presented 

14 with two different discount rates, one at 3 percent 

15 and another at 7 percent. At 3 percent at TSL three, 

16 the total NPV is $16 billion. At 7 percent, the total 

17 NPV is $ 3.1 billion. 

18 MR. STANONIK: Frank Stanonik. Just -- 

19 you don't have to go back to the slide, but on your 

20 estimates of national energy savings, does the TSD 

21 have information on separating that out by north and 

22 the rest of the country? 
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1 MR. FRANCO: Yes, we do provide as much 

2 details as possible. Additional details are in the 

3 analysis tools. 

4 MR. MOORE: Jim Moore from Laclede Group. 

5 You said that in that chart that you've converted 

6 source to site -- or site to source, I'm sorry, and 

7 I've been going through the NIA spreadsheet, and I'm 

8 just not seeing it. Can you tell me what number you 

9 used? You know, standard numbers like three on going 

10 from site to source. Or did you use some other kind 

11 of analysis? Because my analysis isn't jiving with 

12 yours, and I actually show CO2 going up, not down. 

13 MR. FRANCO: Thank you so much for that 

14 question. This is a very important clarification 

15 question. The actual total and primary energy 

16 savings of full-fuel-cycle are provided in a 

17 different tool which is called the NIA plus. Those 

18 numbers are available in that spreadsheet. 

19 MR. MOORE: That's what I'm looking at 

20 right now. 

21 MR. FRANCO: Yes, and those numbers vary 

22 over time. The primary resource for that is AEO 2014, 
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1 which calculates those values. I don't exactly know, 

2 but at the beginning of the trend, it probably is 

3 close to three, but further over time it decreases 

4 over time. 

5 MR. MOORE: Okay. Thank you for that. 

6 And a follow up on EIA's release of AEO 2015 

7 tomorrow. Is DOE going to look at that and see if 

8 changes are in order? 

9 MR. FRANCO: Yes. Thank you for that 

10 comment. Definitely are. 

11 PARTICIPANT: You will? 

12 MR. FRANCO: Yes. 

13 MR. MOORE: Thank you. 

14 MR. BROOKMAN: Steve? 

15 MR. ROSENSTOCK: Steve Rosenstock. For 

16 this, you know, EPA is going to be coming out with 

17 their final rule, the Clean Power Plan by June or 

18 July, which will have a huge impact on the electric side. 

19 The Mercury Rule has already had impact. I'll talk 

20 about that later, but, you know, that estimated ratio 

21 is overstated for electricity significantly. And 

22 will DOE do some sort of sensitivity analysis to 
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1 adjust for the probability of the impacts of the 

2 Clean Power Plan? 

3 MR. CYMBALSKY: This is John from DOE. So 

4 the analysis you see here is based on current laws 

5 and regulations. So if that becomes a current law 

6 and regulation, we will incorporate it. If it stays 

7 a proposed rule, it will not be incorporated. 

8 MR. BROOKMAN: Aniruddh? 

9 MR. ROY: Just a question on slide 99. 

10 The 8.5 watts, that's specific to off mode and 

11 standby, right? 

12 MR. BROOKMAN: We can just barely hear you 

13 down here? 

14 MR. ROY: So it's 8.5 watts each, correct? 

15 MR. FRANCO: That is correct. That would 

16 be the maximum if that becomes a standard. That's 

17 standby and off mode. 

18 MR. ROY: Okay. Thank you, it came across 

19 as just being a combined wattage for both, so I just 

20 wanted to clarify that. 

21 MR. FRANCO: Oh, thank you. Thank you for 

22 that. 
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1 Oh, yeah, sorry about that. So these are 

2 the results for the standby. 

3 MR. BROOKMAN: Before you move on, we have 

4 some questions or comments from an individual joining 

5 us online. The first is from Terry Small who says, 

6 Manufactured housing or motor home housing gas 

7 furnaces and their markets (new and replacement) is 

8 very different from non-weatherized gas furnaces. It 

9 does not appear to me you are really analyzing it 

10 fairly on its own, rather automatically assuming it 

11 is just like NWGF for your analysis ease. And 

12 following up, Terry continues, It appears there is not 

13 really solid justification for the MHGF to move to 92 

14 percent. 

15 Okay. Thank you. 

16 MR. FRANCO: Thank you for those comments. 

17 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

18 Again, on the standby and off mode, as I'm looking 

19 through the technical support document in the NOPR, 

20 you're saying the baseline is 11 watts and the 

21 choices are 9.5 and 9.2 and 8.5 watts. And I asked 

22 this before and if it was in the TSD, I should have 
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1 brought that chapter, but what is the range in the 

2 baseline? I know you're showing 11 watts, but what's 

3 the range of what's out there right now? 

4 MR. FRANCO: This would be in Chapter 8 

5 which would have the base -- which would have the base6 case efficiency distributions, and actually, there's 

7 an appendix related to that which would show a little 

8 bit of the details. It depends on what type of motor 

9 you're using because mobile home gas furnaces are -- 

10 the furnace fan center does not require going to 

11 higher technology such as X13 or ECM. A lot of them 

12 already meet the standard, so most of the market is 

13 already at that lower level. 

14 In terms of non-weatherized gas furnaces, I 

15 believe it's about 50/50 that would be at the 

16 baseline versus the max -- 

17 MR. ROSENSTOCK: 60/40 is what -- Steven 

18 Rosenstock. I'm showing about 60/40, and I guess, you 

19 know, when you're getting down to .3 watts for some 

20 of these or .5 watts, it's like, you know, the 

21 variations in technologies, you know, there could be 

22 a technology that meets level one that is below 
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1 what's in level two. And so you're not really saving 

2 any energy. And, again, the reason I was asking 

3 about the range was within each product category, if 

4 the ranges are overlapping, are you always assuming 

5 electricity savings even though they might overlap, 

6 the technology choices overlap? 

7 MR. FRANCO: So if the technology, for 

8 example, is already below, it's higher than the max 

9 step, there's no savings. So it's not impacted. If 

10 there is potential savings regarding, for example, 

11 from a baseline to higher efficiency, there would be 

12 savings. 

13 MR. ROSENSTOCK: Well, I guess if there's 

14 a technology, let's say for a TSL one which you show, 

15 you know, in slide 99, you know, the max is 9.5 

16 watts, but what if the better ones out there are 

17 actually at 9.0 watts, or 8.7 watts which are 

18 actually below TSL two, how are you accounting for 

19 that in the analysis? 

20 MR. FRANCO: We account for the base-case 

21 efficiency distribution. We came up with those 

22 distributions based on a limited set of data that we 
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1 had in terms of models. We would request 

2 manufacturers, if they have a better set of data, to 

3 come up with those estimates. 

4 MR. CYMBALSKY: The short answer is, the 

5 same way we do it with the AFUE. So we know that a 

6 percentage of the market is already there, similar in 

7 standby. So, again, if they're already beyond what 

8 the numbers indicate here, they don't -- you don't 

9 see savings. 

10 MR. FRANCO: Thanks, John. 

11 So the next couple of slides are the same 

12 results in terms of national energy savings and NPV 

13 for standby mode and off mode. DOE is currently 

14 proposing TSL three. The total energy savings for 

15 primary is .26 quads, for full fuel-cycle is .77 quads. 

16 In terms of net present value, TSL three 

17 would yield at a 3-percent discount rate, $3.3 billion 

18 and $1 billion at a 7-percent discount rate. 

19 MR. ROSENSTOCK: Over the 30-year period, 

20 correct? 

21 MR. FRANCO: Over the 30-year period. 

22 MR. ROSENSTOCK: Steve Rosenstock, EEI. 
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1 MR. BROOKMAN: Thank you. 

2 MR. FRANCO: So moving on to the 

3 regulatory impact analysis. DOE investigated 

4 national impacts of regulatory alternatives to 

5 mandatory amended energy conservation standards. 

6 This is available in Chapter 17 of the TSD. To 

7 conduct . . . that is, the method is using a modified 

8 version of the NIA spreadsheet to evaluate different 

9 non-regulatory alternatives including 

10 no new regulatory action, consumer 

11 rebates, consumer tax credits, manufacturer tax 

12 credits, voluntary energy efficiency targets, and 

13 government purchases. DOE identified 155 programs 

14 from 65 organizations offering rebates ranging from 

15 $50 to $800 to purchase condensing furnaces. 

16 No alternative was found to be as beneficial 

17 as the proposed energy conservation standards. 

18 Again, further details are provided in Chapter 17, as 

19 well as the results. 

20 DOE requests comments on the 

21 reasonableness of the value that DOE used to 

22 characterize the rebound effect with 
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1 higher-efficiency non-weatherized gas furnaces and 

2 mobile home gas furnaces. DOE currently uses a 15 

3 percent rebound. 

4 MR. BROOKMAN: Andrew deLaski. 

5 MR. deLASKI: So I'll reiterate the 

6 comments I made at the last public meeting, which is 

7 we think this number is too high. The TSD and the 

8 NOPR paper by Steve Nadel suggest that the range is 

9 -- that 15 percent is the very high end of the range 

10 and that the range, based on our examination of the 

11 literature, is 1 to 15 percent and that you've 

12 developed a very conservative estimate of this energy 

13 savings because you've used probably the outer limit 

14 of the rebound. And I'll refer you back to that 

15 paper. 

16 MR. BROOKMAN: Okay. Thank you. 

17 MR. FRANCO: Thank you. 

18 That actually concludes that section, the 

19 NIA. 

20 And if there are any comments regarding 

21 the shipment -- 

22 MR. STANONIK: Frank Stanonik, AHRI. I'm 
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1 back on slide 104. So you identified in the analysis 

2 several different, let's say, non-regulatory 

3 alternatives were identified. I'm trying to figure 

4 what the right question is here. How did you factor 

5 in these alternatives into the -- okay, so the 

6 concept is that the analysis is supposed to look at 

7 the effect of the standard, so the baseline versus 

8 the market driven by the standard. So how did you 

9 factor in these alternatives into your future 

10 shipment projections? As an example, how would you 

11 factor in -- okay, I mean, 155 programs -- let's take 

12 the discussion, let's say there are currently 30 

13 active utility programs pushing incentives for high 

14 efficiency products. How does that get factored into 

15 the future shipments? 

16 MR. FRANCO: That's a good question. In 

17 Chapter 17, the details will be provided there. You 

18 can actually see the different market penetrations 

19 that would be applied. So, for example, let's say 

20 that we currently assume that the base case is 40 

21 percent, going to condensing. Some of these might 

22 increase it by a few percentage points and that would 
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1 be the impact of that program. 

2 MR. CYMBALSKY: Well, the short answer is, 

3 it's in the baseline market efficiencies that we 

4 presented earlier. So we know that in all, as it states 

5 here, there's 155 programs that are actually rebating 

6 consumers. So the fact that 60 percent of the market 

7 is already at condensing reflects the fact that these 

8 programs are in fact helping to achieve that 60 

9 percent. And so what the RIA does is it looks at 

10 side scenarios for the rest of these types of things 

11 and evaluates what the energy savings would be and 

12 compares them to our standards case. 

13 MR. BROOKMAN: Mark Bays, there's a 

14 question. The question is, why so much weight is 

15 being given to 90 percent furnaces compared to 90 

16 percent? Pardon me, 92 percent. And he continues, 

17 are these based on existing furnaces because the 

18 electrical requirements will require a 95-percent 

19 efficient furnace to meet? 

20 MR. CYMBALSKY: So this is John from DOE. 

21 I think the question seems to either have been 

22 transcribed incorrectly or I'm not understanding. 
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1 But actually, there's not a lot of weight given to the 

2 90-percent furnace because as our market share data 

3 indicated, the market has moved beyond -- if it's 

4 going to go condensing, it goes higher than 90%, and 

5 we've seen that in the market data. So actually, 92% 

6 and 95% get higher market shares than 90%, and I don't 

7 understand the other question about the electrical 

8 requirements. 

9 MR. BROOKMAN: Okay. 

10 Yes, Steve Rosenstock? 

11 MR. ROSENSTOCK: Question real quick. You 

12 know, going back to that blip slide, it showed that 

13 condensing furnaces, you know, went up from like 40 

14 to 60 percent primarily as a result of the tax 

15 credits during the stimulus, as a result of the 

16 stimulus bill. It's at slide 69. It took a huge bump 

17 up. There it is, right there. Both, you know, in the 

18 north and especially nationally, you see the huge 

19 run up, and the tax rate was very generous at that 

20 time. So for the RIA, again, I don't have it right 

21 in front of me, what kind of tax credit was 

22 considered in terms of that for that analysis? Was 
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1 it as generous as during the stimulus bill, or was it 

2 a lot less? 

3 MR. FRANCO: Thank you for that question. 

4 It was actually a lot less. But the details are -- I 

5 don't know the exact numbers, the details are in 

6 Chapter 17. 

7 MR. ROSENSTOCK: Again, Steve Rosenstock. 

8 Thank you. Again, because we have this history here 

9 of a generous tax credit, why wasn't that part of the 

10 analysis? 

11 MR. FRANCO: The analysis considers the 

12 current kind of scenario of tax credits that are available. 

13 The tax credit I think you are referring to are 

14 the Federal tax credits? 

15 MR. ROSENSTOCK: Yes. 

16 MR. FRANCO: These are mainly utility 

17 programs. 

18 MR. ROSENSTOCK: Okay. 

19 MR. FRANCO: This is the range between $50 

20 and $800. 

21 MR. ROSENSTOCK: Okay. But, again, I 

22 guess there's a current Federal tax credit that 
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1 expires -- I'll say $200 Federal tax credit, but 

2 during the stimulus years, it was 1,000 or whatever, 

3 and it shows a significant market response to that 

4 tax credit as result of that. To not consider 

5 it, seems, again, partially incomplete. 

6 MR. BROOKMAN: Yes, Charlie. 

7 MR. KREBS: Got a quick one, go ahead. 

8 Mark Krebs. Going back to that same slide 

9 that Steve was just talking about -- 

10 MR. BROOKMAN: The famous blip slide. 

11 MR. KREBS: Yeah. Yeah. There you are. 

12 You know, you look up to about, oh, what is it, 2008 

13 when President Obama went into office. Then you look 

14 for the next few years, and, you know, the slope 

15 changed, but really not totally. It wasn't night and 

16 day. The slope increased; it got steeper, but not 

17 that much steeper than it was from 2000 to 2008. So, 

18 again, the reason I bring this up is just let's get 

19 the raw data from AHRI, which as Frank said is forthcoming, 

20 and then we can debate this in depth if there's -- of 

21 course, there won't be any more meetings, so it's 

22 kind of a moot point. 
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1 The other point I'd like to make real 

2 quick is just another issue about discount rates. 

3 You know, what do you think 7 and 5 percent 

4 represent? Then I'll tell you what I think they 

5 represent. Do they represent average American -- 

6 what is it? 

7 MR. CYMBALSKY: You mean 7 and 3 percent? 

8 MR. KREBS: Seven and 3. 

9 MR. CYMBALSKY: The OMB? These are social 

10 discount rates. So societal. But I think people are 

11 confusing what is known as hurdle rates versus 

12 discount rates. 

13 MR. KREBS: No. No. That's not where I'm 

14 coming from. What part of society does 3 and 7 

15 represent? The homeowners or something broader? 

16 MR. CYMBALSKY: I think, you know, if we 

17 read the OMB Circular, we could read what they espouse 

18 about what those mean. 

19 MR. KREBS: Well, it just so happens that 

20 I just did that. 

21 MR. CYMBALSKY: Then you can read it for 

22 the group. 
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1 MR. KREBS: I'm not going to read the 

2 whole thing. It just goes back to that footnote 8 

3 and that the Circular goes -- says that the DFR was 

4 based on 1992 numbers for corporate capital. You 

5 know, that was a long time ago, and we're not talking 

6 corporate capital here. We're talking average American 

7 consumers. 

8 MR. BROOKMAN: Mark, what are you 

9 suggesting it should be? 

10 MR. KREBS: You should run a robust range 

11 of discount rates. You know, and then we could pay a 

12 little more attention to what it really should be for 

13 this long period of time on the average for all 

14 consumers. You know, I would say 10% is probably 

15 still too low. It depends. You know, it really 

16 depends on the type of consumer. If you're up 

17 against the wall consumer, teetering on the edge of 

18 going on welfare, you know, it's infinitely higher. 

19 You know, it could be 100 percent. 

20 MR. BROOKMAN: Jim Vershaw has a question 

21 which is, from joining us online, For RIA, does DOE 

22 include all other ongoing regulatory actions like 
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1 commercial furnaces, commercial rooftops, standby 

2 power on AC/HP's commercial fan and blowers as all 

3 affect most OEMs or a subset of those? 

4 MR. CYMBALSKY: This is John from DOE. So 

5 that's more of an MIA question that -- 

6 MR. BROOKMAN: Which we're about to get to 

7 shortly. 

8 MR. CYMBALSKY: That's our chief engineer 

9 fixing the light. 

10 (Laughter.) 

11 MR. BROOKMAN: Okay. We're going to move 

12 on. 

13 Yes, Charlie, before we do. 

14 MR. McCRUDDEN: So this is Charlie with 

15 ACCA. So back to slide 104 and the regulatory impact 

16 analysis. You looked at the consumer rebates and 

17 utility programs, and I think I'm guessing most of 

18 those utility programs are incenting the homeowner to 

19 go to a condensing furnace. So when we go to a 

20 condensing furnace, what happens to -- have you 

21 looked at what happens to those incentives, and then 

22 would they still essentially be effective? Or if 
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1 they're not effective, then what impact does that 

2 have on that sort of 2021 to 2050 regulatory 

3 analysis? 

4 MR. FRANCO: Just to clarify that 

5 question, you mean after if it's kind of linear or if 

6 it decreases over time? 

7 MR. CYMBALSKY: Let me take a stab at it. 

8 This is John from DOE. So I think what we do, and 

9 Victor will throw something at me if I'm wrong, you 

10 know, when we get to 2021, to keep that share of 

11 condensing market share that we see, we're saying 

12 that these programs still exist when we get to 2021. 

13 What happens after that clearly, we've seen it in 

14 other products like lighting, for example, when the 

15 Federal standard came in, the CFL compact fluorescent 

16 lamp rebates that were very widespread went away. 

17 What will happen here is that our standard that we're

18 proposing keeps the good, better, best scenario for both

19 manufacturers and people -- programs who would like to keep

20 their rebate programs in place. They will just be rebating 

21 at the 98% maybe instead of the 90% or 92% where they 

22 may be doing it today. 
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1 MR. McCRUDDEN: Okay. I guess the 

2 assumption is the rebates will remain. In your sort 

3 of nonregulatory action -- 

4 MR. CYMBALSKY: To maintain that level of 

5 condensing. 

6 MR. McCRUDDEN: Okay. 

7 MR. BROOKMAN: Yes, Steve Rosenstock? 

8 MR. ROSENSTOCK: Steve Rosenstock, Edison 

9 Electric Institute. I'll just take on speaking as 

10 somebody who's worked on a lot of DSN programs. 

11 Whenever Federal standards have gone up, utility level 

12 incentives change, and if they go up significantly, because 

13 the delta has gone down between the baseline and the 

14 higher-efficiency product, the incentives go down, and 

15 they can go down significantly because there's less 

16 energy to save. Therefore, that energy savings is 

17 less. It's worth less to the utility to save that 

18 small increment of energy. 

19 MR. CYMBALSKY: This is John from DOE. So 

20 the utility -- since the States still have their 

21 standards in place for a lot of these regulated 

22 utilities, what they will often do is look for 
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1 opportunities to get a similar bang for the buck. 

2 Like, for example, they've switched from lighting to 

3 maybe air conditioning because now the rebate dollars 

4 that they were given for lighting, they're not 

5 getting that anymore. The standards actually took 

6 that opportunity away from them. But they still have 

7 requirements. Certain States have requirements to 

8 meet certain efficiency levels, and they have the 

9 dollars to spend to get to those levels, so they will 

10 explore new opportunities. 

11 MR. BROOKMAN: We're about to move on to the 

12 manufacturing impact analysis. Before we do, Neal 

13 Leslie has a comment. Neal, let's try it again. 

14 MR. LESLIE: Sorry I wasn't on before. 

15 Can you hear me now? 

16 MR. BROOKMAN: You sound good. 

17 MR. LESLIE: And my apologies for not 

18 being on when you called on me the first time. I was 

19 unavailable. Anyway, my question has to do with 

20 slide 80. Okay. So if slide 80 -- shows that the 

21 average LCC savings jumped from $238 without fuel 

22 switching up to $305 with fuel switching, which is 
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1 approximately 20 percent of the rule benefit accruing 

2 due to fuel switching, my first question is, is that 

3 statement a correct statement that I made? 

4 MR. CYMBALSKY: That is correct, they are 

5 higher LCC savings. Yeah. 

6 MR. LESLIE: So then the next thing, 

7 assuming that's true, is that I want to make sure I 

8 understand this as well, carefully, and that is, if we 

9 were to deal with what I'll call rational technology 

10 switching to the 92 percent premise, it's my 

11 understanding from your earlier discussion that those 

12 folks are deemed to be not affected by this 

13 rulemaking because that would have been considered as 

14 part of the shipment data. Am I interpreting that 

15 correctly? 

16 MR. CYMBALSKY: In the baseline, there's a 

17 natural level of switching that occurs without any 

18 standard in place. Those are the unaffected -- those 

19 are not part of the table that you're reading here. 

20 MR. LESLIE: Okay. And I guess we -- 

21 still an issue for me on that particular one -- I 

22 want to make very sure I'm correct on that -- that I'm 
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1 not far off in the corner here and that is that those 

2 folks who would have, without the rule, gone ahead 

3 and put in a 92-percent furnace anyway are not in the 

4 affected class -- 

5 MR. CYMBALSKY: That's correct. Correct, 

6 they're not affected. 

7 MR. LESLIE: So, I'm sorry, I call those 

8 rational technology switches, that's what I'm 

9 categorizing them as. The other one that has given 

10 me pause was the statement about what I would call 

11 rational fuel switching and that is fuel switching 

12 that is done to avoid the higher costs of a gas 

13 furnace option and a fuel switch to, say, an electric 

14 heat pump. What I would deem to be another part of 

15 what a reasonable consumer would do absent the rule 

16 and that is to make a fuel choice away from natural 

17 gas technology toward electric technology absent the 

18 rule. And what I heard this morning was that, at 

19 least some of those are considered effective to avoid 

20 the high cost of a furnace -- I'm not sure I have 

21 that correctly. 

22 MR. CYMBALSKY: The baseline shipments 
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1 reflect those people, so they're not part of this at 

2 all. They're choosing electricity. They're choosing 

3 electric in the baseline, so they're not part of this 

4 at all. 

5 MR. LESLIE: Okay. So anything in which 

6 there would have been a really strong benefit to fuel 

7 switching to avoid that high cost is considered to be 

8 not affected? 

9 MR. CYMBALSKY: Right. Because they're 

10 doing it now, and they'll continue to do that, if that 

11 in fact is true what you said. It's already 

12 reflected in the shipments. 

13 MR. LESLIE: So then my question is, given 

14 that, how could there be positive benefits to fuel 

15 switching caused by the rule? 

16 MR. CYMBALSKY: Because the people who -- 

17 (Simultaneous conversation.) 

18 MR. LESLIE: A lot of people that would 

19 rationally fuel switch and a lot of those potential 

20 benefits that are not affected -- that's my -- 

21 MR. CYMBALSKY: So I guess we'll step back 

22 to let you consider these rational people who are 
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1 right now, currently today, how many people are 

2 replacing their gas furnaces with some other form of 

3 fuel in their house? What would you suggest that 

4 percentage is? 

5 MR. LESLIE: I'd have to go back and lean 

6 on the fuel switching survey information that was 

7 provided in 2014 to get a number. I do not have it 

8 off the top of my head. 

9 MR. CYMBALSKY: I would suggest that 

10 number is single digits if that at all frankly. So 

11 you're saying someone who . . . Let's say a household 

12 comes in, and they have, let's say, a 78%-AFUE furnace. It 

13 breaks tomorrow. Their choices are an 80%, a 90%, 92%, 

14 95%, 98%. You're saying nationwide there's a large 

15 subset of people who will replace that gas furnace 

16 with some other form of fuel? 

17 MR. LESLIE: So that is ultimately the 

18 question. 

19 MR. CYMBALSKY: And I think if you look at 

20 the shipment data -- 

21 (Simultaneous conversation.) 

22 MR. CYMBALSKY: Right. So we can look at 
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1 the shipment data and figure, you know, make some 

2 rules of thumb, but frankly that number is very, very 

3 small. Again, and people have mentioned it here 

4 today, the price of natural gas today is a how low 

5 can you go, kind of thing. But, we don't see a large 

6 level of shipments of switching. So if you have 

7 data, and, again, I pointed to that now 15-year-old 

8 AGA study that I remember seeing that talked about 

9 fuel switching. It was very helpful to look at. 

10 Switching away from gas to a different fuel currently, 

11 I don't think, is a big number. If you have 

12 information to say that it is, we'd love to have it. 

13 And then my next point is, so we think the 

14 shipments reflect that. And what the table that you 

15 pointed to is showing, and the reason LCC gets positive 

16 is that those people who get into the situation where the 

17 venting costs are very high, if they switch to the 

18 electric, they do not lose -- you know, they are 

19 definitely cutting down whatever loss that may have 

20 been there with the high venting costs. So that's 

21 why you get that difference. 

22 MR. LESLIE: I guess the only issue is 
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1 whether those people should be considered affected or 

2 not affected, and we'll just leave that for comments. 

3 I just wanted to make sure I understood the 

4 underlying logic and rationale for a positive LCC 

5 benefit associated with fuel switching. 

6 MR. CYMBALSKY: Right. 

7 MR. LESLIE: That's pretty much -- what we 

8 saw from the fuel switching survey that was done in 

9 the 2014 timeframe was that those respondents did not 

10 expect that to be a beneficial fuel switch. They 

11 expected that to be a fuel switch that was driven not 

12 in the consumer's best interest according to those 

13 that were surveyed. 

14 From my perspective, it's probably as good 

15 as we have right now on the topic to determine 

16 whether or not you have a distinction between what 

17 people would do absent the rule and what people would 

18 do with the rule. 

19 MR. CYMBALSKY: And so it's important what 

20 you said. So on your survey, you said that it was not 

21 in the consumers' best interest to switch. So if 

22 they're going to be worse off financially, why would 
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1 they switch? What is driving that switch then? 

2 MR. LESLIE: There is a behavioral 

3 economics question in play here that I don't know that 

4 we want to get into here in the discussion today, but 

5 it essentially -- the behavioral economics theory 

6 allows that consumers make choices based on more than 

7 just their economic wellbeing. 

8 The cost of becoming better off comes into 

9 play as well in their mind. You know, there are time 

10 costs. There are other perceived costs within 

11 behavior economics that drive consumers to behave in 

12 a certain way, and that is what the fuel switching 

13 survey information was intended to define. It is a 

14 very challenging issue to deal with, but it does not 

15 suggest that the end result of fuel switching was a 

16 positive thing. I'm not sure how far we want to go 

17 with this. 

18 MR. BROOKMAN: Okay. Thank you for that. 

19 Steve Rosenstock? 

20 MR. ROSENSTOCK: Steve Rosenstock, Edison 

21 Electric Institute. And with all due respect, part 

22 of the reason that there's going to be positive 
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1 economic impact is number one, the installation costs 

2 or the equipment costs might be lower when they make 

3 that choice depending on their situation, depending 

4 on the contractor. Number two, it all really depends 

5 on the local rates, local gas rates versus the local 

6 electric rate. Typically electric rates are lower in 

7 the wintertime than the summertime. And if they're 

8 on a time use rate, you know, they're lower at night 

9 than during the day typically. So, therefore, the cost 

10 of heating during the coldest time period is going to 

11 be lower. And, again, and the technical support 

12 document just shows basically State by State all the 

13 different prices they were using to run the scenario. 

14 And third, you know, the heat pump technology has 8.2 

15 HSPF or higher. If they were going not 8.5, 9 HSPF, 

16 very high efficiency technologies, then that's also 

17 lowering their costs of heating. 

18 Thank you. 

19 MR. BROOKMAN: Rick, do you have a comment 

20 here? 

21 Okay. Yes, Kathryn? 

22 MS. CLAY: Yes, I fear I'm missing 
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1 something, so I appreciate the opportunity to 

2 clarify. So if I understand correctly the 

3 discussion, a consumer who say has a non-condensing 

4 furnace today and then is able to fuel switch and so, 

5 therefore, can avoid the extra costs of reventing, et 

6 cetera, that they would otherwise have to pay by 

7 going to a condensing furnace. But that's counted as 

8 a benefit -- that their ability to avoid those venting 

9 costs is counted as a benefit. And what troubles me 

10 is, that is entirely a cost imposed by the rules. So 

11 I don't understand how avoiding a cost that is 

12 imposed by the rule can possibly be construed as a 

13 benefit? 

14 MR. CYMBALSKY: So there's costs, but it's 

15 relative to what their other option is. So it's a 

16 lesser cost to switch the fuel than to do the 

17 venting, et cetera. So let's say the 80% furnace breaks, and

18 I 

19 have to get a 95% furnace, and I have a difficult venting 

20 situation, and it's going to cost $7,000. Or I can do 

21 the heat pump, and it's only going to cost $5,000. 

22 There're still costs, but it's $2,000 less costs in 
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1 scenario B. 

2 MS. CLAY: But that choice scenario is 

3 entirely caused by the rule. If it were not for the 

4 -- so the proper way to evaluate whether the consumer 

5 is better off or worse off is, what choices could 

6 they have made if not for the rule? And if it would 

7 be more economical to replace their furnace with a 

8 non-condensing furnace, that's the -- that's the 

9 number you should be comparing to, not the avoided 

10 costs because they didn't purchase a condensing. 

11 MR. deLASKI: What if non-condensing is 

12 not available because the standard has made it not 

13 available? 

14 MS. CLAY: But that's what I'm saying. 

15 We're counting a benefit here, but it's a circle. 

16 We're saying that because the rule is making it 

17 expensive for that person to replace -- making it 

18 expensive because they've got to replace a 

19 non-condensing with condensing. If they can fuel 

20 switch and not pay that higher cost that's been 

21 forced on them by the rule, it does -- you can't 

22 count that as a credit. You can't say, well, I 
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1 jacked the prices up, but then I gave you a discount, 

2 so you ended up with a net benefit. 

3 MR. deLASKI: The question is, what this 

4 is, is an electrical cost analysis. Right. So the 

5 question is, is the electrical cost lower than it 

6 would have been in the base case? 

7 MS. CLAY: No, that's right. 

8 MR. deLASKI: That's what this analysis is 

9 evaluating. 

10 MS. CLAY: It's what it should be 

11 evaluating, but I think I heard that's not what it's 

12 evaluating. It should be comparing the cost of that 

13 consumer who replaced their condensing with a 

14 non-condensing furnace to that consumer who then went 

15 to an electric heat pump or other choice and then had 

16 higher energy costs associated with that. 

17 MR. BROOKMAN: John. 

18 MR. CYMBALSKY: That's exactly what we do. 

19 So the base case is without the standard, and 

20 everything here is the cost differential relative to 

21 what you just described. 

22 MS. CLAY: So, again, I think I must have 
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1 misunderstood because I thought that I heard that you 

2 were counting the benefits a consumer would receive, 

3 quote/unquote benefits of avoiding the costs of 

4 reventing. 

5 MR. CYMBALSKY: It is cheaper in that 

6 scenario, and so, yes, there's less cost. 

7 MS. CLAY: But you shouldn't be comparing 

8 it to the scenario that is artificially constructed 

9 by the rule. It should be what the consumer actually 

10 does versus what they would have done in absence of 

11 the rule. 

12 MS. ARMSTRONG: This is Ashley from DOE. 

13 So that's the difference between the with switching 

14 and without switching scenarios, right? Because you 

15 will see a higher estimated impact for if they had to 

16 do these really hard installations with high cost of 

17 the venting versus if you compare the delta between 

18 those two, is what are you seeing it get cheaper for 

19 the consumer. Both are compared to the base case, 

20 the base case of them buying a new non-condensing 

21 furnace. So we're doing exactly what you said. We've 

22 done multiple scenarios though, one that takes into 
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1 account all these different venting situations and 

2 one that takes into account all these different 

3 venting situations as well as the fuel switching. 

4 MS. CLAY: Again, I think I have to try to 

5 understand -- the way it's being presented, it sounds 

6 very illogical. It sounds like the argument is, 

7 because this could have imposed greater harm, we're 

8 going to count that as the lack of greater harm as a 

9 benefit which just defies logic. 

10 MR. FRANCO: Hi, this is Victor Franco. I 

11 just wanted to point out a number that might clarify 

12 a little bit your questions. So, you see, the 

13 percentage or fraction of people impacted, it doesn't 

14 actually vary between the two scenarios. So people 

15 are still impacted. As John and Ashley have pointed 

16 out, they're impacted less compared to again 

17 purchasing that 80 percent AFUE, if the standard 

18 wasn't a higher efficiency. It's always compared to 

19 them choosing being able to do what they can do in the base

20 case -- installing an 80 percent -- 

21 MR. BROOKMAN: Ashley. 

22 MS. ARMSTRONG: So there is a cost. It's 
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1 not just calculating benefits without the cost. 

2 There is a cost. But what we're saying is, that cost 

3 is different if you consider fuel switching versus if 

4 you don't. 

5 MR. BROOKMAN: Mark Krebs. I want to move 

6 on to MIA pretty quick here. 

7 MR. KREBS: I'll make it quick. Actually, 

8 not that I understand where these numbers come from, 

9 but I am seeing, you know, an obvious economic 

10 benefit from switching in these numbers on the chart. 

11 And that might explain questions that we have had of 

12 DOE going back to the preliminary spreadsheets, you 

13 know, when I think it was a question 1A that had this 

14 complicated table that compared 2011 determinations 

15 with the present determinations. And, you know, so 

16 like in the case of a 90-percent furnace, national 

17 all installations average life-cycle savings went 

18 from $87 to $236. So maybe, and there it is $236. I 

19 don't know, it may be totally coincidental, but, you 

20 know, this just underscores some basic questions that 

21 we've been trying to get addressed and answered 

22 clearly so we understand, and we're still quite a ways 
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1 from that obviously. 

2 But I did go to the trouble of updating 

3 the numbers from the preliminary spreadsheet values 

4 to the ones that are the most recent ones, and I 

5 brought copies to hand out. I'm going to hand them 

6 out at this time. 

7 MR. BROOKMAN: Okay. 

8 MR. KREBS: And if I can get it posted on 

9 regulation.gov. . . If youd pass them down that way, 

10 please. 

11 MR. BROOKMAN: And, Mark, will you state 

12 what these are? 

13 MR. KREBS: These compare the average 

14 life-cycle savings and various scenarios from the 2011 

15 DFR to the present 2015 numbers that were put on the 

16 spread -- put in the spreadsheets on regulations.gov 

17 this year. So, we see in the case of a 90-percent 

18 furnace in 2011 an $87 savings and the same furnace 

19 in 2015 a $236 savings, a change of 171 percent that 

20 we'd like to understand how that happened. 

21 MR. BROOKMAN: Okay. We're going to move 

22 on now to manufacturer impact analysis. 
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1 And we're going to hear from Chris Lau. 

2 MR. LAU: Thank you, Doug. 

3 My name is Christopher Lau, I'm with 

4 Navigant. I'll be presenting the manufacturer impact 

5 analysis today. 

6 The prime purpose of the MIA is to assess 

7 the impact of amended standards on furnace 

8 manufacturers as an industry. The second purpose is 

9 to identify and qualify impacts on manufacturer 

10 subgroups such as small business manufacturers, and 

11 the final portion of the MIA involves the discussion 

12 of direct employment, potential capacity constraints, 

13 and other Federal regulations that go into effect 

14 around the compliance date of this rule. 

15 In terms of methodology, the primary tool 

16 used is the government regulatory impact model, also 

17 known as the GRIM. It's a cash-flow model used to 

18 represent the industry as a whole. The major output 

19 of the model is the industry net present value or 

20 INPV, a metric used to quantify impacts of the 

21 standard on manufacturers. 

22 We also conduct interviews to validate and 
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1 refine inputs to the GRIM and to better understand 

2 qualitative issues. In general, we do our analysis 

3 in three phases. In phase one, we build an industry 

4 profile from publicly-available information including 

5 Census data, SEC filings, manufacturer websites, and 

6 product listings data. 

7 In phase two, we use public data and inputs 

8 from the engineering and shipments analyses to outline 

9 the industry in the GRIM. And in phase three, key 

10 inputs are validated with manufacturers and 

11 qualitative issues are discussed in interviews. We 

12 use this content to refine the GRIM. 

13 I'll take a moment here to pause to 

14 address an earlier question from Goodman about the 

15 cost of capital. The discount rate used in the GRIM 

16 is based off of SEC filing data, and so in the 2011 

17 DFR, the data would have been based off of probably 

18 data from roughly 2003 to 2008, whereas the data in 

19 this rulemaking would have been based off of data 

20 from 2007 to 2013. 

21 That SEC filing -- from the SEC filing 

22 data, we estimate a discount rate of roughly 7 percent 
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1 which is, you know, cost of capital from 

2 manufacturers. And then through manufacturer 

3 interviews, we revise that estimate downward to the 

4 -- I think we said it was 6.4 percent in the model 

5 today. 

6 In interviews, you know, we heard several 

7 common concerns raised across manufacturers. The key 

8 issues raised -- we identified four key issues raised 

9 by the industry. There was broad concern about 

10 installation costs in the replacement market which 

11 we've discussed at length, but in general, 

12 manufacturers want to be sure that DOE properly 

13 captured the potential range of installation costs in the 

14 replacement market. There was concern about product 

15 switching which we've just had a long discussion on. 

16 I will not rehash this right now. 

17 There's concern about regional standards 

18 and enforcement of such, but that is not being 

19 proposed today. And there's concern about reduced 

20 product differentiation which we'll address through 

21 markups, as I'll describe shortly. 

22 These are some of the qualitative issues 
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1 raised. There's also extensive quantitative feedback 

2 which would have been incorporated into the GRIM. 

3 Let me talk about that model a little bit. 

4 To model the industry, we rely on contact from 

5 several analyses we've already discussed today. That 

6 includes financial and product data from the MTA 

7 market/technology assessment, manufactured production 

8 costs from the engineering analysis, and shipments 

9 forecasts from the shipments analysis. These inputs 

10 are essentially locked-in before we run our model. To 

11 complete the model, we supplement manufacturer markups 

12 and conversion costs. For this rule, the Department 

13 modeled three different markup scenarios, and here 

14 they are. 

15 The preservation of gross margin 

16 percentage markup scenario. Under this scenario, 

17 manufacturers maintain the same gross margin 

18 percentage before and after the standard goes into 

19 effect. This implies that the manufacturers pass 

20 through all cost compliance to their customers. 

21 The preservation of operating profit 

22 scenario. In this scenario, manufacturers are only 
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1 able to maintain the same per-unit operating profit 

2 in absolute dollars after the standard goes into 

3 effect. This means the markup decreases after MPCs 

4 increase. In this scenario, manufacturers are not 

5 able to pass on all costs of compliance as the level 

6 of investments increase with the various trial 

7 standard levels. 

8 The final markup strategy model was called 

9 the three tier. DOE models a good, better, best 

10 markup. As the standard level increases, we see less 

11 differentiation in the markets. Manufacturers are 

12 not able to maintain the same premium markups. As a 

13 result, premium markups erode with higher standards, 

14 and we see a drop in industry profitability. 

15 When we run these three options, what we 

16 found was that the best case scenario or the upper 

17 bound is the first one, the gross margin scenario. 

18 And the lower bound is the three-tier market where we 

19 see this compression and loss of premium markups for 

20 the industry. 

21 Here, we see the results. It's a fairly 

22 dense table. I suppose I could walk through it. 
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1 Here in the second row, what you see is the industry 

2 net present value both for the base case and for the 

3 five trial standard levels considered. For the 

4 standards case, you will see there's a range of 

5 values. That range is due to the markup scenarios. 

6 At the lower end, the smaller number is the INPV based 

7 on the three-tier. At the upper end, the higher 

8 number is the INPV based on the preservation of gross 

9 margin percentage scenario. 

10 And the third row, you will see the 

11 percent change in INPV relative to the base-case 

12 value of roughly $1 billion. Also germane to the 

13 change in INPV are the change in conversion costs, 

14 both the R&D expenses, as well as the capital 

15 expenditures, and here are the total conversion costs 

16 required. 

17 The total conversion costs come out to 

18 roughly $5 million per manufacturer. This was based 

19 on a top-down model where we took the feedback directly 

20 from manufacturer interviews. However, you know, I 

21 think this is probably the first time folks have seen 

22 both the industry value and that rough average of 
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1 $5 million per manufacturer. We would love to hear 

2 some feedback on whether that's appropriate. 

3 MR. BROOKMAN: Frank Stanonik. 

4 MR. STANONIK: Well, I've got a different 

5 question. 

6 MR. BROOKMAN: Let's see if anybody -- this 

7 is just a comment on the question, manufacturers 

8 particularly reflecting on the figures that are up 

9 here that Chris was just describing. 

10 MR. LAU: And understanding that exact 

11 figures may be hard to provide, I imagine 

12 manufacturers look to their own operations to provide 

13 a high/low, or at least a qualitative indicator. 

14 MR. BROOKMAN: Yes, Aniruddh. 

15 MR. ROY: Aniruddh Roy, Goodman. So this 

16 is based on the interviews also? 

17 MR. LAU: That is correct. 

18 MR. BROOKMAN: Yes, please, Everett. Get 

19 close to that microphone. 

20 MR. SHOREY: Hi, this is Everett Shorey. 

21 So in the GRIM analysis that you've done, you're 

22 looking only at the furnace regulations? 
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1 MR. LAU: That is correct. 

2 MR. SHOREY: So how do you handle the fact 

3 that manufacturers have had to redesign their 

4 furnaces for the furnace fan regulations and now have 

5 to redesign them again for the furnace regulation? 

6 MR. LAU: Sure. So the analysis focuses 

7 on the impacts of this rule and not combined rules. 

8 However, there are two things I would like to point out. 

9 One, is in the years preceding 2019 which is the 

10 effective date of the furnace fan rule, we have a 

11 different MPC, a lower manufacturer production cost, 

12 and then the manufacturer production costs increase 

13 when the standard goes into effect. However, if you 

14 wanted to look at the combined impacts of the two 

15 rules, it would be possible to look at the drop in 

16 INPV on the furnace rule which was, and I can -- 

17 which was roughly $60 million and add that to the 

18 drop in INPV of this rule. So if we're proposing TSL 

19 three, it's roughly a drop of $80 million. 

20 MR. SHOREY: Well, actually that's not 

21 technically correct because the drop in INPV for the 

22 furnace fan rule is based on the assumption that the 
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1 life of that rule of that change is essentially 

2 indefinite. And by turning the furnace fan rule into 

3 a rule that only lasts for about three years, you 

4 would have changed substantially the INPV in the 

5 furnace fan regulation so that you don't really have 

6 a question of looking back. 

7 I will say that the person who first wrote 

8 the GRIM made an assumption that a regulation would 

9 last essentially forever because the next round would 

10 occur at a natural cycle. And that may have been 

11 short-sighted by the person who did that. People are 

12 laughing. The person who did that was actually me. 

13 (Laughter.) 

14 MR. SHOREY: So the question is -- 

15 MR. LAU: To defend that person, it can be 

16 hard to forecast regulatory cycles. 

17 MR. SHOREY: Oh, I'm well aware, but 

18 what's happened is that there's no particular way of 

19 looking back. Now to say what's the -- there's no 

20 really good way of recapturing the fact that people 

21 have made an investment and are now making an 

22 incremental investment that was not -- that didn't 
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1 particularly affect the furnace rulemaking but has 

2 changed substantially the economics of the furnace 

3 fan rulemaking. And we may get to the same thing as 

4 we go forward with the air conditioning rulemaking 

5 which may again change the indoor unit. So we may 

6 need to rethink that set of assumptions. 

7 MR. BROOKMAN: Okay. Thank you. 

8 MR. LAU: It's an interesting intro to the 

9 next slide, but I think there may be another comment 

10 or two out there. 

11 MR. BROOKMAN: Yeah, let's go to John 

12 first. 

13 MR. HURST: Yeah, John Hurst, with Lennox. 

14 Just a question. On the three scenarios, do you know 

15 what the blended markup would be for each scenario? 

16 MR. LAU: Sure. So in the preservation of 

17 gross margin scenario, the flat markup was roughly -- 

18 it was 1.34 for non-weatherized gas furnaces and 1.27 

19 for manufactured home furnaces. 

20 In the preservation operating profit 

21 scenario, give me one moment. 

22 MR. HURST: Sure. 
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1 MR. LAU: Yeah, I'll solve it over break. 

2 So for the three-tier, the good, better, best for 

3 non-weatherized gas furnaces was 1.29, 1.37, and 1.45. 

4 MR. HURST: Yeah, just to comment. You 

5 know, you look at one of the concerns of the 

6 manufacturers would be commoditization, you look at 

7 the span of products that are out there today, the 

8 bottom end 80 percent, the top end 98, that's an 18 point 

9 AFUE spread. You compress that down to six. And so 

10 from a differentiation standpoint, yeah, you could say 

11 there's a good, better, best, but it's kind of a 

12 best, better, better-er option. 

13 (Laughter.) 

14 MR. HURST: There's not a lot of -- it 

15 doesn't give you a lot of marketing. 

16 MR. LAU: Sure. Recognizing that there 

17 are a lot of factors that manufacturers use to 

18 justify premium products, among them is efficiency. 

19 What we do is we do this good, better, best. And 

20 where there are multiple levels, the lowest level was 

21 good, the top level is best and then everything in 

22 between was better. 
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1 (Simultaneous conversation.) 

2 MR. HURST: What were the other ones, just 

3 out of curiosity? 

4 MR. LAU: Say again? 

5 MR. HURST: What are the other ones 

6 besides efficiency? What color of gray you can get 

7 it in? 

8 MR. LAU: I mean, there's reputation, 

9 warranty. 

10 MR. HURST: I understand. I'm being a 

11 little facetious. 

12 (Laughter.) 

13 MR. HURST: But it is very challenging 

14 because that's, unlike automobiles, these things arent 

15 sexy to drive. You can't put the top down and feel 

16 better. That's all. 

17 Thank you. 

18 MR. LAU: I guess where I was going, I 

19 think we tried very hard to capture that. And as the 

20 number of efficiency levels dropped, there was less 

21 and less ability to justify higher markups. In fact 

22 at 95 percent, for example, there was only room for a 
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1 good and better, there was no premium markup. 

2 MR. BROOKMAN: Frank Stanonik? 

3 MR. STANONIK: All right. So I'm going to 

4 get to my question. So standard level two was 90 

5 something in the north and 80 rest of the country. 

6 And the change in INPV in that case potentially is 

7 very largely negatively, almost . . . What are those in 

8 millions of dollars, right? $22 million almost? Oh, 

9 percent. That's probably worse. 

10 So yet when you go to trial standard level 

11 three, so potentially at that second standard level, 

12 again, looking at it somewhat simply, the 

13 manufacturer in a sense really only has to address, 

14 let's say, roughly half of his product line. Because 

15 it's 80 in the south, right? 

16 And yet that appears to have a much larger 

17 potential negative effect on his value as opposed to 

18 trial standard level three where essentially he has 

19 certainly the potential to have to redo rough 

20 numbers, probably at last 75 percent of his line. 

21 How does that work? 

22 MR. BROOKMAN: Mike Rivest? 
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1 MR. RIVEST: Frank, we've scratched our 

2 head, and we asked ourselves exactly that question. 

3 So really what's impacting, what's creating the 

4 impacts here are the good, better, best assumptions 

5 and the market shares of the various efficiencies 

6 after standards. Not so much the investment numbers 

7 because the investment numbers relative to the 

8 revenues are not that large compared to the other 

9 rules where I've seen investments of $400 million for 

10 a $1 billion industry. Here, we're seeing investments 

11 of $80 million for a 1.1 -- you know, for a $1 

12 billion industry. 

13 And if you think about the 92-percent AFUE 

14 level, a lot of the R&D has been done and given -- 

15 you know, we talked about earlier the cyclical, you 

16 know, the boom-bust nature of the production. You 

17 know, a lot of the production capacity is there. So 

18 that's why those investment numbers are not 

19 irrational. So what's driving this analysis right 

20 now is the shipments assumptions and the shipment 

21 distribution numbers. And what John was getting at 

22 earlier, you know, we're continuing to assume the 
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1 ability to do a good, better, best, and what I was 

2 hearing in this comment is, well, maybe we'll get a 

3 good, better, best, but the spread in margins won't 

4 be as good as it was. So under a different set of 

5 mark ups, for example, and looking under a different 

6 set of shipments which I think we'll be getting as 

7 well, you know, I think we'll be seeing more 

8 differentiation between a national standard and a 

9 regional standard for the impacts. 

10 MR. BROOKMAN: Frank, keep going. 

11 MR. STANONIK: Frank Stanonik. So, Mike, 

12 and things are clicking in. So I guess I was ignoring 

13 that standard level two in the north is 95%, which would 

14 require investment. 

15 MR. RIVEST: There's actually not much 

16 difference on the manufacturing side from a 92% to a 

17 95%. A lot of the incentives right now are at 95%, 

18 and if you look at the production costs, they're not 

19 much different than 92%. What's really driving 

20 investments is going to be 98% because that's a different 

21 product. 

22 MR. LAU: But at 95%, you see that loss of 
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1 -- 

2 MR. RIVEST: But there you're losing 

3 margin. 

4 MR. LAU: Yes. 

5 MR. BROOKMAN: Thanks, Chris. Thanks a lot. 

6 (Simultaneous conversation.) 

7 MR. STANONIK: So in a sense, it is what it 

8 is, so the fact is that one of the levels that wasn't 

9 looked at was 92% in the north and 80% in the south. 

10 We would have probably seen -- just at least on this 

11 slide, we probably would have seen a change in net 

12 present value more like either one or three? 

13 MR. RIVEST: More like the 92s, you know. 

14 MR. STANONIK: Okay. 

15 MR. RIVEST: But, you know, it's based on 

16 those stated assumptions and the shipments which, you 

17 know, we all need to look at. 

18 MR. BROOKMAN: Okay. Mike, thanks, that 

19 was helpful. 

20 Chris, keep going. 

21 MR. LAU: Let's see. So here you can see 

22 DOE proposes TSL three. It did consider -- the 
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1 notice does say DOE strongly considered TSL four. 

2 Contributing to the selection of TSL three is 

3 cumulative regulatory burden and, in particular, the 

4 overlap of the furnace fans rule on the residential 

5 furnaces rule. 

6 What's unique about such circumstance for 

7 this rulemaking is that both rules take effect at a 

8 similar timeframe, 2019 and 2021. The rules impact 

9 design and manufacture of essentially the same 

10 product, and as DOE understands it, the cost of the 

11 two rules are additive with little overlap. And so 

12 you're basically adding on -- you're combining the 

13 variable cost increase and variable costs, as well as 

14 increases in conversion costs. 

15 Here, we see the impacts of the two rules. 

16 Impacts with TSL four, impacts with TSL three, and 

17 impacts from the furnace fan rule. What we see here 

18 is the effective year, the incremental MPC, and then 

19 the industry conversion costs. I guess Id like to 

20 start by asking the industry whether that's a good 

21 assumption, the costs are largely additive? I think 

22 I saw some heads nodding earlier, and I see them 
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1 again. So, DOE's assumption there was good. 

2 MR. BROOKMAN: Just for the record, I only see

3 one head nodding. 

4 (Laughter.) 

5 PARTICIPANT: I see two. 

6 MR. BROOKMAN: Okay. Okay. Good. Thanks 

7 for that silent confirmation. 

8 MR. STANONIK: Frank Stanonik. I mean, 

9 fan efficiency is clearly looking primarily at the 

10 efficiency of the blower fan combination, or motor 

11 blower combination which is primarily an electrical 

12 consumption, and this really doesn't have a huge 

13 effect on the AFUE. So, yeah, that's pretty 

14 separate. 

15 MS. ARMSTRONG: This is Ashley from DOE. 

16 I think that's true. I think one of the issues that 

17 we teed up in the NOPR specifically that we asked for 

18 comment on was, is there any possible synergy? So 

19 would there be one round of testing? Would there be 

20 one round of marketing material changes? I mean, are 

21 there things that doing these things together or 

22 roughly at the same time would actually be helpful? 
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1 Well, some of the costs and some of the design 

2 differences may be separate in terms of the 

3 investments. Are there other things in terms of 

4 conversion costs that would actually be done 

5 together? 

6 MR. BROOKMAN: John? 

7 MR. HODGES: There are synergies, but 

8 don't accelerate the timing. 

9 (Laughter.) 

10 MR. BROOKMAN: Well, thanks for the comment 

11 though. 

12 Helpful. Okay. Any additional comments 

13 on potential synergies or confirmations? 

14 (No response.) 

15 MR. BROOKMAN: Okay. We're going to move 

16 on. 

17 MR. LAU: Sure. We also looked at the 

18 small business impact of the standard. DOE 

19 identified three domestic small business 

20 manufacturers of covered product, one of which was a 

21 manufacturer of non-weatherized gas furnaces, and two 

22 which were manufacturers of mobile home gas furnaces. 
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1 DOE notes that the small non-weatherized 

2 gas furnace manufacturer sells a condensing product 

3 today; however, it does not have the same number or 

4 proportion of offerings as large competitors. The 

5 small mobile home furnace manufacturers, both of them, 

6 neither offer -- do not offer a condensing product 

7 today and probably need to undertake a development 

8 effort to remain in the market. 

9 We can invite comment on the number, 

10 potential impacts, and severity of impacts on these 

11 affected manufacturers. 

12 MR. ROSENSTOCK: Steve Rosenstock, EEI, and 

13 again I'm looking through the NOPR. I was wondering, 

14 where was the estimated -- the impact on domestic 

15 employment? Which table was that in the NOPR? 

16 MR. LAU: So it would be in section five, 

17 B(2), I believe. 

18 MR. ROSENSTOCK: B(2)? 

19 (Pause.) 

20 MR. ROSENSTOCK: No, it's not there. 

21 MR. BROOKMAN: We'll look it up. 

22 MR. LAU: At the high level, roughly 
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1 there's some small increase in employment due to 

2 increased labor content at the high end. And then at 

3 the low end, there's -- what we've seen is a trend of 

4 production moving overseas from some manufacturers. 

5 We extend that trend out. 

6 MR. ROSENSTOCK: So your impact is a 

7 negative domestic employment impact? 

8 MR. LAU: Right. There's a range of very 

9 negative to slight gain. 

10 MR. ROSENSTOCK: Okay. I just wanted to 

11 see what that range was. Thank you. 

12 MR. HURST: A question to follow up on 

13 that. Is that -- yeah, John Hurst, with Lennox, I'm 

14 sorry. Is that assembly, or is that componentry as 

15 well? 

16 MR. LAU: What we take into account is 

17 direct production labor of the folks with a compliance 

18 burden, so it's just the manufacturers. 

19 MR. HURST: Okay. 

20 MR. LAU: So it's basically everyone who 

21 touches a product. 

22 MR. HURST: Thank you. 
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1 MR. BROOKMAN: Steve, go ahead. 

2 MR. ROSENSTOCK: Steve Rosenstock, I found 

3 it. It's Table V-20, and it says, potential changes, 

4 domestic production workers in 2020 for TSL three, 

5 negative 2,692 to 210. So basically as many as 2,692 

6 job losses in the U.S. in 2020. 

7 MR. LAU: That would be the lower -- 

8 MR. ROSENSTOCK: The worst case. 

9 MR. LAU: -- half -- 

10 (Simultaneous conversation.) 

11 MR. ROSENSTOCK: And in the best case, 

12 there might be a 210 increase at the best case? 

13 MR. LAU: That's correct. 

14 MR. ROSENSTOCK: Thank you. 

15 MR. LAU: Okay. Next is the results from 

16 the standby mode. And we looked at standby mode 

17 standards independent of the AFUE mode standard. On 

18 the whole, the standby impacts are small relative to 

19 the active mode standard, but we took into account 

20 the engineering costs adders, conversion costs, and 

21 changes in markups. However, we did not think that 

22 there would necessarily be shipment changes given 
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1 that the cost adders were $1 to $10 per unit. And so 

2 as you can see, the impacts are much, much smaller 

3 than for the active mode standard. 

4 But we put that in here for completeness 

5 sake. 

6 MR. BROOKMAN: Yes, Andrew deLaski? 

7 MR. deLASKI: So I just want to confirm 

8 that for the manufactured impact analysis, the 

9 analysis is looking at the net present value of the 

10 furnace division of these companies? 

11 MR. LAU: That's correct. 

12 MR. deLASKI: Okay. Thank you. 

13 MR. BROOKMAN: Dave, comment? Nope, Okay. 

14 Okay. Yes. We're moving to the 

15 environmental employment and addition -- 

16 MR. LAU: We have one more question in the 

17 back. 

18 MR. BROOKMAN: Yes, please, Rick. 

19 MR. MURPHY: (Off microphone.) 

20 MR. BROOKMAN: Start again, Rick. 

21 MR. MURPHY: Rick Murphy, AGA. Chris, you 

22 had indicated you looked at a number of factors that 
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1 were previously raised, one of which was installed 

2 costs in the manufacturer impact analysis. How did 

3 that come into play? 

4 MR. LAU: It actually comes into play 

5 through the shipments. So one of the things -- what 

6 it was, it was a key issue that manufacturers raised in 

7 interviews that they asked DOE to consider. And so as you 

8 may recall, Victor went through an extensive 

9 discussion of all the different venting types and 

10 installation costs that were considered. So those 

11 factors affected the shipments analysis and consumer 

12 choices of what they purchased, and that flows into 

13 our model in terms of what is bought and how that 

14 affects manufacturer revenue. 

15 MR. MURPHY: Okay. So in the lifecycle 

16 cost analysis that Victor went through, we had a lot 

17 of discussion about costs of equipment at the retail 

18 level and costs of installation at the retail level. 

19 And we had a discussion as to how did that bottoms-up 

20 approach come up with a number? How is that 

21 reconciled, or is there reasonable test to see what's 

22 actually playing out in the market? 
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1 Did you look at that? Because I believe 

2 the answer to that back in the discussion was that 

3 there is nothing that is done right now to do a 

4 reasonableness test -- 

5 MR. LAU: Right. In order to make the 

6 analyses consistent, we used the exact same shipments 

7 forecast as is used in the NIA. So we don't do anything 

8 -- we do not use a different -- we don't use 

9 different factors or different installation costs than 

10 were considered previously. 

11 MR. MURPHY: And I guess just one last 

12 question if I could. John and Ashley mentioned at 

13 the last meeting that we are trying to get more 

14 information from the field as to what we're seeing as 

15 far as equipment costs and installation costs. If 

16 we're able to provide that information to you, how 

17 will that actually be used in your work going 

18 forward? 

19 MS. ARMSTRONG: We would welcome any data 

20 or information that you or any other stakeholder 

21 could provide to help inform our analysis. So we 

22 would take it and look at our analysis and revise if 
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1 necessary and as appropriate. So we would appreciate 

2 it. 

3 MR. BROOKMAN: So that was Ashley, and we 

4 have a comment or a question from Terry Small online. 

5 We have found that a $6 cost increase going 

6 from PSC to improved PSC is ridiculous, especially 

7 where a BPM motor is required for a conditioned or a 

8 conditional MHGF for furnace fan compliance regarding 

9 slide 113. 

10 MS. ARMSTRONG: All right. Thank you. 

11 MR. BROOKMAN: Thanks for your comment, 

12 Terry. 

13 MS. ARMSTRONG: Yeah, if he wants to 

14 comment in more detail, especially when he sends in 

15 his written comments and/or through a confidential 

16 nature since it has to do with specific costs, we 

17 would welcome feedback on those costs. 

18 MR. BROOKMAN: Okay. And everybody, I 

19 think knows how to execute an NDA through Navigant. 

20 Frank Stanonik? 

21 MR. STANONIK: Frank Stanonik, pretty 

22 quick question for DOE. Particularly with the GRIM 
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1 model, and going back to the meeting we had about 

2 your analytical tools, and you mentioned certain 

3 things are locked, would it be possible for us to get 

4 a copy that would allow us and our consultants to 

5 perhaps put in some different values for some of the 

6 locked things? 

7 MR. BROOKMAN: Ashley Armstrong? 

8 MS. ARMSTRONG: So this is Ashley from 

9 DOE. We'll take the request under advisement and get 

10 back to you with a yes or a no. I think DOE's 

11 position has been in the past that currently while 

12 the GRIM has some locked cells, it doesn't have any 

13 hidden cells, so you can actually see the equations 

14 that are being implemented, you know. It's very 

15 transparent in nature. They are locked for a reason, 

16 because the model only works to calculate certain 

17 types of cash flow and different scenarios. And if 

18 you were to change things and put different shipments, 

19 then it wouldn't necessarily be the GRIM as DOE has 

20 created it and function in the same matter. It could 

21 confuse things. So that's one of the reasons we do 

22 lock certain cells, but we keep them -- we make sure 
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1 that they're unhidden so you can see everything and 

2 to provide transparency, and all of our equations are 

3 outlined in the TSD. So we'll take it under 

4 advisement and get back to you. 

5 MR. CYMBALSKY: And to follow on, this is 

6 John from DOE. We'd be happy to do different 

7 scenarios for you, so if you would like to provide 

8 different numbers for those cells, we will run them 

9 for you. In fact, the locked cell prevents that from 

10 happening. 

11 MR. BROOKMAN: Okay. Thank you. Thanks, 

12 John. 

13 Then we're going to move on to the next 

14 segment. Victor Franco. 

15 MR. CYMBALSKY: We're going to forego 

16 lunch for an early dismissal for cherry blossom 

17 viewing for those of you who are from out of town. 

18 MR. BROOKMAN: At a peak right now. 

19 MR. FRANCO: This is Victor Franco again. 

20 I'll be going through the environmental/employment analysis. 

21 First we do the emissions analysis. This 

22 is in Chapter 13, the details. The purpose of the 
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1 emission analysis is to estimate the emissions 

2 reductions resulting from amended standards. It 

3 includes full-fuel-cycle emissions, including power 

4 plant and upstream emissions. It includes fugitive 

5 methane emissions. 

6 The method for determining these emission 

7 factors is using the output from the AEO 2014 

8 reference and standard cases to assess marginal 

9 emission factors. The results for this analysis you 

10 will find in further detail in Chapter 13, but here 

11 are the results for TSL three for both the AFUE and 

12 standby and off mode. 

13 MR. BROOKMAN: Steve Rosenstock? 

14 MR. ROSENSTOCK: Steve Rosenstock. Some 

15 people probably wish they had gone to lunch now when 

16 I'm about to start talking here. There's significant 

17 problems with this analysis, especially where it's 

18 showing increase in emissions. When I've looked at 

19 the impact, that's assuming that there's increase 

20 from emissions on electric generation side from the 

21 estimated electric increases from fuel switching. 

22 This just really just goes against everything that's 
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1 happened. On the institute side, emissions have been 

2 regulated since 1990 under the Clean Air Act. 

3 And the data that I got from our 

4 environmental folks, electric use since 1990 to 2013 

5 has gone up 35 percent. SO2 emissions absolute, not 

6 per kilowatt hour or megawatt hour, but the absolute 

7 SO2 emissions have gone down 80 percent. Even last 

8 year with the polar vortex and some utilities having 

9 to use oil rather than gas, emissions went down for 

10 SO2 NOX, and CO2 nationally last year even with the 

11 polar vortex. 

12 Looking at mercury, the MATS rule goes 

13 into effect on Thursday. A lot of utilities have 

14 already put in controls on mercury. I've seen data, 

15 basically mercury emissions from an NRDC document. 

16 Mercury emissions for power plants decreased 51 

17 percent since 2000, and according to the 

18 environmental folks I talked to, most of the plants 

19 have already been retrofitted. Some are going to be 

20 retrofitted as of April next year. Then there's a 

21 power plant retirement. The environmental people told 

22 me that by next year, mercury emissions from power 
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1 plants are going to go down another 80 percent from 

2 this year -- from last year's level. 

3 So when I see these numbers about, quote, 

4 increasing in emissions, it's just -- I see what 

5 they're doing in the analysis, but it's totally 

6 ignoring the environmental regulations, the actual 

7 impacts. 

8 Now, you might say, well, wait a minute, 

9 what if there is an increase? Well, when I look at 

10 the numbers in here, and I'm seeing the potential, 

11 they're saying that, well, there might be an increase 

12 in power plant capacity. That's in the utility impact 

13 analysis in Chapter 15. I'm seeing numbers like, you 

14 know, that there's going to be an increase of 50 

15 megawatts in coal-fired power plant capacity by 2050, 

16 and that's just insane. That's not going to happen. 

17 Coal plants are closing right and left, and this 

18 analysis assumes there's going to be 50 megawatts of 

19 new coal-fired generation in the U.S. as relative to 

20 this standard. It's not going to happen. 

21 MR. CYMBALSKY: So your point is well 

22 taken on what's trending. Those trends will be 
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1 picked up both in the baseline and the standards 

2 case. What we're trying to do here is just show that 

3 all else is equal. And I mean, polar vortexes and 

4 all that kind of good stuff, if you add -- and I'm 

5 going to make up a number here, two million electric 

6 heating devices versus not having those two million 

7 heating devices. And everything else is the same. 

8 Then you will have -- if you burn one lump of coal 

9 more in that case, you will have greater SO2 

10 emissions. That's a fact regardless of what is going 

11 on in the trend in both of those cases. Your point 

12 is well taken, but what we're looking at here is just 

13 the difference in case A that has more electric 

14 heating devices than case B that doesn't. And so all 

15 else is equal. The trends that you see with coal 

16 plants closing et cetera, et cetera, are in both of 

17 those cases, so, that's just a fact. As for the 

18 number of coal plants being built, is that an 

19 artifact of the AEO or is that security -- 

20 PARTICIPANT: This comes from everything 

21 -- 

22 MR. CYMBALSKY: SO that's what they're 
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1 building in the 2014 baseline. I know someone 

2 mentioned at the break that the AEO will be released 

3 tomorrow, I believe, 2015, so we will pick up -- you 

4 know, to the extent that those trends change based on 

5 some other things that you've talked about, we will 

6 pick them up in the next round of analysis. But it 

7 still remains the fact that if you add two million 

8 electric heating devices, all else equal, there is 

9 going to be some coal generated at this point in time 

10 to meet that extra demand. 

11 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

12 Now it's getting in the weeds of . . . well, it depends on 

13 which region of the country you're in and what is the 

14 generation. And in terms of marginal generation, if 

15 you look at some of the FERC or EIA data, for 

16 example, in terms of "marginal," they put out 

17 something today in Energy a little while ago saying 

18 that about 13,000 megawatts of coal plants are going 

19 to be retired this year, and the increase is going to 

20 be 9,800 of wind, 2,200 of solar, 1122 in nuclear, 

21 471 of other renewables, and 4318 of gas. I mean, it 

22 just -- 
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1 MR. CYMBALSKY: Are you saying no baseline 

2 capacity will be used at all to service these extra 

3 furnaces that we have in our standards case? 

4 MR. ROSENSTOCK: No, I'm saying that the 

5 base-load capacity is changing quite rapidly, and of 

6 that base load capacity, they all have controls to 

7 minimize their production of either SO2 or mercury. 

8 MR. BROOKMAN: Steve, those details would 

9 be especially helpful on your written comments. 

10 MR. ROSENSTOCK: Okay. 

11 MR. BROOKMAN: Okay. Thank you. 

12 MR. FRANCO: Thank you so much. So let's 

13 move on to the monetization of the emission 

14 reductions. So based on the emission results from 

15 Chapter 13 and Chapter 15, we provide the 

16 monetization of emissions. The purpose of this is to 

17 estimate the monetary benefits of reduced emissions 

18 resulting from a proposed energy conservation 

19 standard. 

20 The method used is using the social cost 

21 of carbon values as determined by interagency reviews. 

22 The social cost of carbon is intended to be a 
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1 monetary measure of incremental damages resulting 

2 from greenhouse gas emissions including, but not 

3 limited to agriculture production losses, human 

4 health effects, property damage from rising sea levels, 

5 and changes in ecosystem. 

6 The interagency estimates are 

7 provided as part of the TSD Chapter Appendices 14A 

8 and 14B. The values for the emissions are provided 

9 here, and they're calculated in those reports. 

10 DOE also estimated NOX emission reductions 

11 resulting from the amended standards, and the values 

12 are provided here as well. 

13 DOE is still evaluating appropriate values 

14 to use for monetized avoided SO2 and mercury 

15 emissions. 

16 MR. BROOKMAN: Jim? 

17 MR. MOORE: Jim Moore. We would like the 

18 last bullet point to consider actual cost from 

19 trading markets. If you look at the EUC, the REGI 

20 program, the California program, the voluntary 

21 programs, they are all way lower than those numbers 

22 there. They tend to be in the single digits. And 
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1 we'd encourage you to look to markets for pricing as 

2 opposed to the societal cost of carbon. Thank you. 

3 MR. BROOKMAN: Thanks, Jim. Steve 

4 Rosenstock? 

5 MR. ROSENSTOCK: On your slide for the NOX 

6 values, you say an OMB Report to Congress 2006, and 

7 as I remember in that report that was -- I looked in 

8 the technical support document that's on the 

9 emissions impact not the monetization, but I believe 

10 that report kind of looked at the studies from 

11 1990 through like 2004 in terms of what the estimate 

12 was. So I was wondering, is DOE going to lock in 

13 with those numbers from 20 years ago, or is DOE ever 

14 going to try to look at maybe reanalyzing those 

15 numbers to update them for 2015 maybe? 

16 MR. FRANCO: Definitely. If any input comes 

17 in that we could revise those values, definitely, 

18 DOE will definitely consider that. 

19 These are the results for the monetized 

20 emission reductions. Again, DOE is proposing TSL 

21 three. The values presented here are for CO2 and NOX at 3 

22 percent and 7 percent discount rates. 
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1 DOE seeks input on the approach of 

2 collecting emissions analysis. DOE seeks input on 

3 the approach for estimating the monetary benefits 

4 associated with the emission reductions. 

5 MR. BROOKMAN: Comments on these two 

6 requests? 

7 (No response.) 

8 MR. BROOKMAN: Okay. 

9 MR. FRANCO: In Chapter 15, DOE presents 

10 the utility impact analysis. The purpose is to 

11 assess the impacts on the electric installed capacity 

12 and generation resulting from the adoption of 

13 potential energy conservation standards. 

14 The method is to model energy savings 

15 impacts for each TSL using AEO 2014 to generate the 

16 forecasts that deviate from the AEO referenced case. 

17 The results are changes in total 

18 electricity generation, changes in the mix of 

19 electricity generation by fuel type, and changes in 

20 total installed capacity. 

21 The full description of this is available 

22 in Chapter 15, as well as the results. 
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1 MR. BROOKMAN: Steve. 

2 MR. ROSENSTOCK: Steve Rosenstock, Edison 

3 Electric Institute. It's a gas furnace standard, and 

4 I was wondering why Chapter 15 doesn't talk about the 

5 impact on gas utilities upstream? 

6 MR. FRANCO: This is just looking in terms 

7 of the utility of electricity. 

8 MR. ROSENSTOCK: What about the utility of 

9 the gas or the propane? That's a primary impact of 

10 this standard. 

11 (Simultaneous conversation.) 

12 MR. BROOKMAN: Mark. Mark, please. 

13 MR. KREBS: You know, way back when at the 

14 table, you know, when they were setting up EPCA, you 

15 know, I don't think AGA was quite as vociferous as 

16 they could have been, you know, so maybe that 

17 explains why they still today when they do utility 

18 impact analysis don't consider gas utilities. 

19 MR. BROOKMAN: Okay. Final comments on 

20 utility impact analysis? 

21 Jim? 

22 MR. MOORE: Yeah, Jim Moore, Laclede. We 
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1 believe there will be a substantial impact on gas -- 

2 (off microphone) -- 

3 MR. BROOKMAN: Jim, apparently it's not on. 

4 MR. MOORE: Sorry, I thought I had turned 

5 it on. I apologize. It's Jim Moore from Laclede. 

6 And we believe that there will be a substantial 

7 impact, especially in the south due to electric 

8 switching on gas utilities in particular, and we would 

9 like to see that addressed. 

10 Additionally, I've done a lot of looking 

11 at marginal rates, and we believe that the AEO data 

12 grossly overestimates the marginal price for gas and 

13 electric, and I'm hoping to see it fixed tomorrow in 

14 the AEO 2015, but I have my doubts. I look back to 

15 1998, and they've consistently, almost every year, 

16 underestimated electric rates and overestimated gas 

17 rates for the past ten years. So I'm hoping they'll 

18 fix it, but I have my doubts, and I would like to see 

19 DOE consider true marginal prices when they do this 

20 rulemaking. Thank you. 

21 MR. BROOKMAN: Okay. Thank you. 

22 MR. FRANCO: Thank you. The last part of 
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1 the analysis is in Chapter 16, where we consider indirect 

2 employment impact analysis. The purpose of this is 

3 to assess the overall impact on indirect national 

4 employment from the proposed energy conservation 

5 standards, which results from shifting consumer 

6 expenditure among goods and services and changing 

7 product and energy costs. 

8 To do this, DOE used the impact of sector 

9 energy technologies, ImSET model, for the valuation of 

10 indirect employment impacts. The results of this is 

11 that DOE anticipates net labor impacts from the small 

12 over time due to small magnitude of short-term 

13 effects. See Chapter 16 of the TSD for further 

14 details. 

15 MR. BROOKMAN: Employment impact comments? 

16 (No response.) 

17 MR. CYMBALSKY: Okay. So the next two 

18 slides talk about some additional research DOE has 

19 funded in the area of venting. I know it's been a 

20 big topic of conversation about the potential costs 

21 of some tricky venting situations that might exist 

22 when requiring condensing furnaces. So this slide 
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1 points out, and we had put this in the TSD, some links 

2 to some research that we've done in the area of 

3 venting. I just want to point out that this is side 

4 research and shows what could be in the future. It 

5 is not incorporated into the baseline numbers in the 

6 analysis that we presented in the last two meetings. 

7 If you go to the next slide, so this was 

8 just some pictures of some venting solutions from M&G 

9 DuraVent that have been also looking into different 

10 potential solutions to venting strategy. So you can 

11 see, the one on the left is certainly further up 

12 along. It is a solution that is for sale now. It 

13 has been UL listed, and so basically, it's a drop-in 

14 approach to the B vents. And I'm not going to go 

15 into detail. This is just to show you that sometime 

16 in the future, it is our hope that there is a bigger 

17 market for different retrofit technologies that could 

18 go for venting and to make the venting a little less 

19 costly than what we see in our analysis today. So 

20 I'd point everybody to the documents that are listed 

21 in the previous slide. 

22 And then finally, that's really it on 
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1 that. If there are any comments on the venting 

2 strategy, we will take them now, and then we'll move to 

3 closing remarks. 

4 MR. BROOKMAN: Thank you. Mark. 

5 MR. KREBS: Mark Krebs, Laclede Gas. AGA 

6 is the secretariat for I think it's the NFGC and -- 

7 and I asked them to look into this, this DuraVent 

8 thing, you know, what the status is, and I'm not going 

9 to say you're wrong, but what I will try to do is get 

10 you his analysis. 

11 MR. CYMBALSKY: That's helpful. That's 

12 exactly what we're looking for, and that's why we 

13 threw this out here. 

14 MR. BROOKMAN: Okay. So now Andrew 

15 deLaski? 

16 MR. deLASKI: Yeah, we did a little 

17 looking at manufacturing websites, and these parts in 

18 many cases are already approved by the manufacturers 

19 for use with their products. So it's not in the 

20 future; it's here today. So things that are here 

21 today should be in today's analysis. So I would 

22 certainly encourage the Department in revising its 
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1 analysis to include venting technologies that are 

2 approved by UL, recommended -- not recommended, but 

3 also approved by the manufacturers for individual 

4 products should be incorporated into the main 

5 analysis to reflect the actual costs that consumers 

6 are going to face. They're going to choose a 

7 low-cost option for installation, so I think that's 

8 an update that's needed for the analysis. 

9 MR. BROOKMAN: Okay. Frank? Yes. 

10 MR. STANONIK: Frank Stanonik, just maybe 

11 to complete the loop on this. The complete standards 

12 process that manufacturers have to deal with, yes, 

13 they have to deal with the fuel gas code. Yes, 

14 venting systems get approved as venting systems, but 

15 there also needs to be appropriate or corresponding 

16 requirements in the appliance equipment safety 

17 standard that will be used to evaluate or determine 

18 for which venting systems the equipment will be 

19 listed. As an example, today, furnaces would be 

20 listed for use with either type B vent or stainless 

21 steel vent or PVC or so on. And so the fact that 

22 this, at least on the one slide it's been UL Listed, 
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1 that's kind of half the equation. And as far as I 

2 know, we won't have the other part yet where the 

3 equipment standards would recognize this system and 

4 then also have that coverage that says, this 

5 appliance can be installed on a venTing system that 

6 looks like this. There's more to be done. It's not 

7 fully there. 

8 MR. BROOKMAN: Mark? 

9 MR. KREBS: One short comment on that. 

10 What that AGA briefing essentially concluded is, 

11 yeah, this new DuraVent stuff, you know, it can be 

12 installed, but it basically has to be done on a 

13 case-by-case approval basis. I think that's a fair 

14 summary of the status of it. And like I said, I'll 

15 try to get that to you for the record. 

16 MR. BROOKMAN: Okay. Thanks for doing 

17 that. 

18 So I think Andrew deLaski? 

19 MR. deLASKI: I'll circle back with you, 

20 Frank, but my recollection of that, I've seen the 

21 DuraVent material approved by individual 

22 manufacturers, you know, in their literature. So I 
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1 need to understand what that means. So maybe you and 

2 I need to circle back off-line. 

3 MR. BROOKMAN: Okay. Now, we wish to 

4 receive any final comments. Oh, Ashley has a comment 

5 before we go there. 

6 MS. ARMSTRONG: So I just want to bring up 

7 one issue that was brought up at the last public 

8 meeting with regards to the engineering, just to let 

9 you know kind of what's coming. 

10 We had some questions with regards to how 

11 the aggregated manufacturing production costs were 

12 generated -- specifically some additional questions 

13 about the cost model -- and we had previously described 

14 generally how we got the cost in terms of the 

15 aggregated MPCs in great detail, and obviously that's 

16 well documented in the TSD. You know, they're based 

17 generally at a high level on physical teardowns. 

18 Then we use the manufacturing cost model. We've 

19 aggregated MPCs, and we've gone through the 

20 manufacturing interview process to go through 

21 individual costs with the manufacturers themselves. 

22 We've gotten feedback on those costs, component 
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1 costs, material costs. We've incorporated that into 

2 our analysis. We've aggregated it up, so we do intend 

3 -- there was a request for some additional 

4 information and if DOE could provide some additional 

5 information underlying those aggregated MPCs. So DOE 

6 does intend to place in the docket specifically in 

7 response to those stakeholder requests some 

8 additional info regarding the major subassemblies and 

9 how they break down with regards to the manufacturing 

10 production costs. We're also going to place a couple 

11 of slides that kind of walk through that, so you'll 

12 see that in the docket as well as the key material 

13 prices. And obviously all that, as well as all the 

14 other aspects of our engineering analysis, is open for 

15 comment, and we would actually welcome your comment on 

16 it. 

17 So I just wanted to highlight that so you 

18 can note to go to the docket. We'll send out an email blast 

19 to let you know it's available, and that will be 

20 there for you to look at. 

21 MR. BROOKMAN: Okay. Thank you. 

22 Closing remarks. Aniruddh? 
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1 MR. ROY: Aniruddh Roy, Goodman. So I 

2 have a question on the engineering analysis. If you can 

3 go back to slide 19. 

4 MR. BROOKMAN: Nineteen? 

5 MR. ROY: Yeah. 

6 (Laughter.) 

7 PARTICIPANT: What are you doing? 

8 MR. ROY: I had to do some of my homework 

9 after the initial public meeting. 

10 PARTICIPANT: I put all my stuff away. 

11 (Laughter.) 

12 (Pause.) 

13 MR. ROY: So while they're pulling up the 

14 slide, I'll just brief everyone on what's going on. 

15 So the assumption here for non-weatherized gas furnace 

16 is that the combustion system type will be a 

17 two-stage as a baseline, whereas in Chapter 5, Table 

18 5.4.3 specifies the baseline being a single-stage 

19 equipment. And then eventually, a cost adder of 

20 $34.72 is being added to move from a single-stage to two21 stage. There is also a statement in the TSD which 

22 says, following the 2014 furnace fan rulemaking, in 
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1 2019, all non-weatherized gas furnace units will be 

2 required to include multistage operation in addition 

3 to higher-efficiency blower motors. For this reason, 

4 DOE included the $34.72 cost adder to change from a 

5 single-stage to a two-stage. 

6 Now, the question I have is that when you 

7 did the test procedure NOPR, there was a statement 

8 made by Ingersoll Rand saying that the two-stage 

9 operation will be affected based on the test 

10 procedure improvements. So it looks to me in the 

11 engineering analysis, single-stage is the only one 

12 that has been tested, and then the $34.72 has been 

13 applied as a cost adder. So, I guess, has DOE 

14 evaluated the impact of the new test procedure on a 

15 two-stage? That's the first question. 

16 The second question being -- is that we feel 

17 that the furnace fan rulemaking can be adhered to by 

18 manufacturers using single-stage equipment. So my 

19 question is, why was the assumption made that only 

20 multi-stage operation can meet the 2019 levels? 

21 MS. ARMSTRONG: So this is Ashley from 

22 DOE. I'm going to address the first part, and then 
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1 Adam is going to address the second part. With 

2 regards to the test procedure, DOE did do some 

3 testing with regard to the potential impact on the 

4 proposed changes to the test procedure. DOE did talk 

5 about that at the test procedure public meeting, and I 

6 think, in an aggregate form, DOE found that the ratings 

7 would not change. We came to a conclusion or at 

8 least a tentative conclusion that the ratings -- the 

9 AFUE ratings if they still existed would still be 

10 valid under all of the proposed changes that we were 

11 making. Some manufacturers commented with respect to 

12 that, so obviously, we welcome your data. The data 

13 that we have shows in an aggregated fashion that 

14 those rating remain valid. 

15 MR. BROOKMAN: Adam. 

16 MR. DARLINGTON: This is Adam Darlington 

17 from Navigant. So as to your question about the 

18 assumptions in the engineering, basically what we 

19 started from was what was done in the furnace fan 

20 rule. So in the furnace fan rule, the assumptions 

21 there were that to meet that standard, manufacturer would 

22 have to implement two-stage designs and X-13 fan 
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1 motors, basically. So when we started out looking at 

2 the analysis, you know, we did teardowns of single3 stage, two-stage, fully-modulating, ECMs, you know, 

4 full-modulating ECMs, X-13s, PSCs, and everything in 

5 between. And so we did all these combinations, and 

6 basically, what we had in our baseline initially was 

7 that single-stage PSC that's in the TSD. And then we 

8 looked at the cost differential for what was going to 

9 happen from the furnace fans rule and just sort of 

10 added on so it's considered in the analysis. 

11 Now, if you're going to be able to meet 

12 the furnace fans rule with a single-stage, that would 

13 be excellent information to know. And certainly we 

14 would welcome those types of comments so we could 

15 revise the assumptions about what's going to happen, 

16 but we were just going off of what was done in the 

17 furnace fans rule for what they would assume would 

18 need to be done to meet that standard. 

19 MR. BROOKMAN: Okay. Now, let's take 

20 closing remarks. 

21 Summary remarks here as we move towards 

22 closure. Please Kathryn. 
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1 MS. CLAY: Thank you. This is Kathryn 

2 Clay with the American Gas Association. I wanted to 

3 take the opportunity as we conclude our many hours of 

4 discussion to thank the Department for taking the 

5 time to not only hold a public hearing but extend it 

6 for this amount of time to give adequate opportunity 

7 for all of our questions and to cover all of the 

8 material. 

9 I have to say I'm in some ways very 

10 encouraged. I think we've made some very positive 

11 steps in our conversation. Some of the things in 

12 particular that I've heard as a response to some of 

13 the questions we put to you include major new topics on the 

14 table like the impact on low-income consumers, like 

15 better transparency on the manufacturer costs and the 

16 ability to get transparency there through greater 

17 aggregation to protect proprietary information, and 

18 also I've been encouraged, although this is not 

19 within the Department's purview, but the encouraging 

20 signs that we may be seeing better shipment data. 

21 That gives us a better sense of the condensing and 

22 non-condensing markets. So I think very, very 
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1 encouraging things have come out of these two days 

2 that we've all spent together. 

3 And I think that we are moving towards 

4 that more open, transparent process that, you know, is 

5 so valuable. So just appreciation for that. 

6 I have been -- I want to say though that I 

7 believe we're still in a dialogue. We've gotten 

8 those issues on the table, but they're big ones. 

9 They're complicated. We're going to need some time to 

10 iterate with you to understand how you put those 

11 forward and to give you some honest feedback on how 

12 things could be improved. I'll just touch briefly on 

13 the conversation we had earlier about the lifecycle 

14 cost benefits from fuel switching and the fact that in 

15 the analysis the Department has presented, those 

16 become positive. 

17 I have a gut feeling that it's just a 

18 mismatch of -- that the kind of analysis, it's a 

19 valid analysis, but perhaps not in this context. I'm 

20 thinking of the way that, you know, in accounting you 

21 might enter your revenue and your liabilities and it 

22 turns out to be a wash. I feel like there might be 
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1 something there going on. 

2 But if we take a step back and think about 

3 that one, at the moment if we leave that analysis as 

4 it stands, we end up with the perverse result that 

5 actually the more fuel switching that occurs under 

6 this rule, the more cost beneficial this rule becomes. 

7 And I think we all agree that that is not at all the 

8 intention of this rule -- to move people away from 

9 natural gas. 

10 That says to me that there's a structural 

11 problem with the analysis, but I think that it's 

12 something that we can address together by finding the 

13 appropriate way to capture those fuel-cycle impacts. 

14 And given the responsiveness that you all have shown 

15 on these other major issues, I'm confident that we 

16 can keep working together in a positive way. 

17 Having said all that, and I'm going to say 

18 this as an informal request and reiterate what I had 

19 said at the previous public hearing, I really think 

20 we're going to need more time on the comment period. 

21 And I will go back and check with my membership, but 

22 I believe that you will be receiving a more formal 
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1 request from AGA to extend the comment period given 

2 these new issues that we've identified together and 

3 the need to address them adequately. 

4 Thank you very much. 

5 MR. BROOKMAN: Thank you. Additional 

6 comments here in closing. Frank -- pardon me, Mark. 

7 MR. KREBS: I urge everybody to review the 

8 Process Improvement Rule, particularly Part G, to use 

9 transparent and robust analytical methods. I'm going 

10 to read this real short part of it. "The Department 

11 seeks to use qualitative and quantitative analytical 

12 methods that are fully documented for the public and 

13 that produce results that can be explained and 

14 reproduced so that the analytical underpinnings for 

15 policy decisions on standards are as sound and 

16 well-accepted as possible." Well, that sets a really 

17 high bar for the Department, and it's a lofty goal. 

18 I'm not sure that we're exactly headed in that 

19 direction, however, you know, and I think there are 

20 some clear alternatives to all this that it would 

21 help us cut to the chase that ought to be 

22 seriously considered. 
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1 You know, when I talked about it last 

2 time, I talked about just going with that rough simple 

3 payback criteria, you know, and getting away from all 

4 this controversy of life-cycle costs, because, let's 

5 face it, it's hard to predict the future. 

6 The other thing that I want to bring up in 

7 closing is that in every rule, every NOPR, there's a 

8 section in the back where DOE has to jump through all 

9 these different Executive Orders and things that you 

10 know, we really didn't touch on in this series of 

11 meetings. But one in particular, Executive Order 

12 12866, tells Federal agencies to look at all these 

13 different alternatives and all -- you know, all these 

14 different impacts, and, you know, in there, I guess 

15 even, you know, you could probably -- the Secretary 

16 could read into that that it also includes looking at 

17 carbon emissions. But the last part of the last 

18 sentence, it says, "to include the alternative of not 

19 regulating." Okay. And that's why we want to look 

20 at the shipment data, you know, to see if the markets 

21 had merit in that trajectory, you know. Do we really 

22 need this rule? And, you know, you're required by 
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1 Executive Order 12866 subchapter 1A to do it and, you 

2 know, I realize it's pretty much anathema for a 

3 regulator to not regulate, but nevertheless, that's 

4 what this Executive Order calls for. 

5 MR. BROOKMAN: Okay. Frank, do you have 

6 comments? Oh, I thought you did. 

7 John Cymbalsky, please. 

8 MR. CYMBALSKY: This isn't my closing 

9 remark, but I just wanted to address that we spent, I 

10 think, a good half hour talking about the regulatory 

11 impact analysis which included what you said. So, 

12 one of our favorite Executive Orders is 12866. I can 

13 tell you that flat out. But we did. However, your 

14 point is well taken. I think once the AHRI data come in, 

15 obviously, we will revise those analyses that are part 

16 of the 12866 mandate. 

17 MR. BROOKMAN: Yes, Charlie? 

18 MR. McCRUDDEN: This is Charlie with ACCA. 

19 One of my disappointments in looking at some of this 

20 stuff was that there was no outreach to contractors 

21 specifically. And I don't know if it's a PRA [Paperwork

22 Reduction Act] issue. I don't know if it's an antitrust
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1 issue, but to me, the fact is that there was no outreach to

2 contractors specifically on a rule that does not only impact 

3 contractors, but also impacts how the products would 

4 be installed by those contractors. So maybe that's 

5 something that we can work on in the future, but to 

6 me, that's a real deficiency here. 

7 MR. BROOKMAN: Okay. Final comments? 

8 (No response.) 

9 MR. BROOKMAN: So then I'm going to turn it 

10 back to John Cymbalsky, and for my part, I thank all of 

11 you. I think we really covered a lot of ground 

12 and very constructive comments across the board. 

13 John Cymbalsky. 

14 MR. CYMBALSKY: Thanks, Doug. And thanks 

15 everyone for participating in these two days of 

16 public meetings on this topic. I think we've all 

17 learned that this rule is complicated, analytically 

18 and otherwise. But I think from what we've heard 

19 from stakeholders and what I do believe to be true, I 

20 think DOE has been very, very open and transparent 

21 about all of its analytical processes, and we continue 

22 to get as transparent as possible. I mean, that is 
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1 definitely a goal of ours. The more data we make 

2 available, and the more data we get in response to 

3 that, the better the rule. So we're going to 

4 continue down that path. But, again, the comment 

5 period I believe is June 10th currently, and I 

6 understand we'll get an extension request. So we'll 

7 consider that if and when that comes in, but let's 

8 all keep June 10th in mind until you hear otherwise, 

9 and please provide the data and comments as you see 

10 fit. 

11 If you're traveling, travel safe. If not, 

12 you have the afternoon. It's nice out. Go out and see 

13 the cherry blossoms, full bloom. I believe I'll be 

14 strolling over there myself. 

15 So thanks again. 

16 MR. BROOKMAN: Thank you all. 

17 (Whereupon, at 1:19 p.m., the meeting was 

18 adjourned.) 

19

20

21

22
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A

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84:5 87:20 88:10

88:12 96:20 97:2

97:16 98:11 102:7

103:3 111:13

113:16 114:22

115:3 159:1 160:1

161:1 168:5

174:17,18 177:6

basic 47:11 126:20

basically 19:21 53:1

120:12 144:12

148:20 149:5

157:15 168:13

171:12 176:18

177:1,6

basis 28:15 171:13

Bays 103:13

beating 45:10

becoming 119:8

beginning 28:8 94:2

begun 69:11

behave 119:11

behavior 119:11

behavioral 119:2,5

belief 78:10

believe 41:2 56:8,14

58:11 59:6 62:12

65:10,20 66:1,12

67:5 69:12 74:19

97:15 147:17

152:1 160:3 163:9

166:1,6,11 179:7

180:22 184:19

185:5,13

beneficial 100:16

118:10 180:6

benefit 7:16 12:4

27:12,12 113:1

115:6 118:5 121:8

121:9,13 122:15

123:2 125:9

126:10

benefits 14:10 73:20

74:1,8 115:14,20

124:2,3 126:1

161:17 164:3

179:14

Berkeley 2:15 3:15

3:16 8:3 9:8 11:11

16:14 35:19

best 6:15 85:9 86:12

110:18 118:12,21

132:9,16 138:2,11

138:12,19,21

141:4 142:1,3

149:11,12

better 7:21 8:7

12:10 19:1 26:9

34:20 35:1 58:13

78:16 85:9 98:16

99:2 110:18 119:8

122:5 129:1 132:9

138:2,11,12,19,22

139:16 140:1

141:4 142:1,3

178:15,20,21

185:3

better-er 138:12

better/best 86:9

beyond 99:7 104:3

big 60:8 79:5

117:11 167:20

179:8

bigger 28:18 168:16

bill 14:3 15:2 28:1

104:16 105:1

billion 92:16,17

99:17,18 133:12

141:10,12

bills 7:17 9:17,22

10:7,13 11:17

12:4 14:4 15:3

17:17 27:17,18

28:11,18 29:8,9

29:10,14,16 31:7

bit 5:11 9:13 19:6

24:22 29:1 35:14

50:9 51:18 55:8

59:19 70:1 76:13

89:20 91:19 97:8

125:12 131:3

black 27:4

blast 173:18

blended 137:15

blip 75:18 76:1,3,4

76:20 78:2 104:12

106:10

blips 76:12,15

bloom 185:13

blossom 155:16

blossoms 185:13

blower 145:10,11

175:3

blowers 109:2

blue 79:4

blush 34:1

board 184:12

boom 52:20

boom-bust 141:16

boost 63:21

bore 12:11

Bornstein 11:11

bottom 15:17 22:2,4
The Energy Conservation Standards for Residential Furnaces

April 13, 2015

202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509

Page 188

138:8

bottoms-up 151:19

bought 75:20

151:13

bound 132:17,18

box 75:6 77:5

boxes 78:22

BPM 153:7

break 78:22 79:12

138:1 160:2 173:9

breakdown 65:19

breaks 116:13

121:17

brief 79:16 174:14

briefing 171:10

briefly 179:12

bring 59:14 106:18

172:6 182:6

broad 130:9

broader 107:15

Brookman 2:9 4:3,8

5:4,8 8:11,16,22

14:15 16:21 19:4

19:13 20:3,11

22:3,12 23:18

24:17 26:5,22

28:3 29:17 30:1,3

31:18 32:18 34:4

34:11 39:4 43:1

44:3 46:8,15 47:6

51:20 54:9,13

57:9 59:9,16 62:8

63:12 64:5,11

65:6 66:5,14,16

66:18 67:13 69:8

69:20 71:7,11

72:11,13 74:15

75:4 77:3,17,22

78:3,19 79:11,19

80:3 84:21 88:21

89:21 91:6 94:14

95:8,12 96:3

100:1 101:4,16

103:13 104:9

106:6,10 108:8,20

109:6,11 111:7

112:11,16 119:18

120:19 123:17

125:21 126:5

127:7,11,21 134:3

134:6,14,18 137:7

137:11 140:2,22

142:10 143:5,18

145:2,6 146:6,10

146:15 147:21

149:1 150:6,13,18

150:20 153:3,11

153:18 154:7

155:11,18 156:13

161:8,11 162:16

163:3 164:5,8

165:1,12,19 166:3

166:21 167:15

169:4,14 170:9

171:8,16 172:3

173:21 174:4

176:15 177:19

181:5 183:5,17

184:7,9 185:16

brought 33:11

74:11 77:8 97:1

127:5 172:7

Brundage 2:10

23:19,20,20

BTU 61:20

BTUs 56:15 57:2

buck 112:1

build 25:9,14 33:17

129:3

builder 68:1

builders 24:20

42:12 54:12 58:12

58:13,16,20 62:18

69:22

building 4:7 16:17

71:20 160:1

buildings 37:21

38:15

builds 73:1

built 56:19 61:17,18

71:20 159:18

bulk 7:2

bullet 162:18

bump 52:5 104:16

burden 144:3

148:18

Bureau 39:21 44:10

50:17 56:12

burn 159:8

bury 61:22

business 25:10

128:10 146:18,19

buy 9:18 10:22

12:17 27:13

buying 9:20 12:2

124:20

C

C 4:1

calculate 37:14 81:1

81:3,4 154:16

calculated 38:16

162:9

calculates 80:18,20

94:1

calculating 126:1

calculations 65:14

California 16:13

162:20

call 69:10 75:9

76:15 85:3 113:9

114:7,10

called 93:17 112:18

132:8

calls 183:4

capacity 128:12

141:17 158:12,15

161:2,5,6 164:11

164:20

capital 108:4,6

129:15 130:1

133:14

capture 13:14 74:8

139:19 180:13

captured 17:11

60:15 130:13

carbon 161:21,22

163:2 182:17

careful 25:18 26:1

33:14

carefully 113:8

Caroline 3:5

case 11:19 12:8,15

13:2,17 16:1,10

17:3 19:3 23:6

45:16 48:7 54:6,7

55:19 65:15 73:18

79:4 81:15 82:7

82:10 84:1,3,19

85:12 97:6 102:20

103:12 123:6,19

124:19,20 125:20

126:16 127:17

132:16 133:2,4

140:6 149:8,11,12

159:2,9,13,14

161:3 164:16

case-by-case 171:13

cases 17:6,9 31:13

51:3 55:19 81:2

82:8,10 156:8

159:11,17 169:18

cash 154:17

cash-flow 128:17

categorizing 114:9

category 34:18 64:9

98:3

Catherine 16:21

18:16 19:13

Catherine's 20:4

caused 89:4 91:17

115:15 122:3

CBECS 77:13

cell 155:9

cells 154:12,13,22

155:8

Census 39:8,21

43:21 44:10 50:17

52:17 56:12 129:5

cent 57:2

center 97:10

central 40:19 55:4

centralized 47:21

certain 31:8 46:9

58:19 63:8,9 86:7

112:7,8 119:12

154:2,16,22

certainly 12:5 16:1

140:19 168:11

169:22 177:13

cetera 121:6,17

159:16,16

CFL 110:15

challenging 119:14

139:13

change 30:18 31:1

89:4 91:17 111:12

127:19 133:11,13

133:13 136:1

137:5 140:6

143:11 154:18

160:4 175:4 176:7

changed 89:16

90:21 106:15

136:4 137:2

changes 17:17

38:20 40:9,10

94:8 145:20 149:3

149:21,22 162:5

164:17,18,19

176:4,10

changing 10:5

161:5 167:6

chapter 37:5,6

82:14 84:20 86:2

87:1 97:1,4 100:6

100:18 102:17

105:6 155:22

156:10 158:13

161:15,15 162:7

164:9,22 165:4

167:1,13 174:17

characteristics

50:16

characterize 100:22

Charles 2:20

Charlie 47:6,7 77:3

77:4 106:6 109:13

109:14 183:17,18

chart 37:12 41:11

51:16 53:14 54:15

56:2,9 66:8 77:19

78:2 81:10 93:5

126:10

charts 81:7

chase 181:21

cheaper 61:19

124:5,18

check 10:13 44:8

180:21

cherry 155:16

185:13

chief 109:8

chime 6:18 28:5

74:17

chimes 28:20

choice 51:4 88:4

114:16 120:3

122:2 123:15

choices 18:13 96:21

98:6 116:13 119:6

122:5 151:12

choose 24:1 36:14

73:19 170:6

chooses 20:6

choosing 115:2,2

125:19

chosen 41:19

Chris 128:1 134:9

143:5,20 150:21

Christopher 3:10

128:3

circa 61:6

circle 122:15 171:19

172:2

Circular 90:1,3

107:17 108:3

circumstance 144:6

cite 68:7

cited 90:1

cities 26:18

clarification 44:4

85:16 93:14

clarify 43:20 54:5

89:9 91:9,14

95:20 110:4 121:2

125:11

clarity 46:12

class 81:2 82:19

114:4
The Energy Conservation Standards for Residential Furnaces

April 13, 2015

202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509

Page 189

classes 37:2 83:6

84:18 92:9

Clay 3:7 16:22 18:2

18:4,9,12 19:12

19:14 32:19

120:22 122:2,14

123:7,10,22 124:7

125:4 178:1,2

Clean 94:17 95:2

157:2

clear 5:13 29:12

31:19 49:20 76:12

181:20

clearer 17:14

clearly 54:15 75:8

110:13 126:22

145:9

clever 11:12

click 14:18

clicking 142:12

climates 40:4

close 24:18 59:16

94:3 134:19

closet 69:2

closing 158:17

159:16 169:3

173:22 177:20

181:6 182:7 183:8

closure 177:22

CO2 93:12 157:10

163:21

coal 158:17 159:8

159:15,18 160:9

160:18

coal-fired 158:15,19

code 17:8 170:13

Cohen 2:5

coincidental 126:19

cold 56:16

coldest 120:10

collecting 164:2

color 139:6

combination 35:12

145:10,11

combinations 177:5

combine 81:6,13,16

82:1,6,9

combined 49:21

95:19 135:7,14

combining 144:12

combustion 174:16

come 8:8 26:14

37:17 43:21 50:6

50:12,19 57:20

77:15 81:14,17,19

82:4,8,11,15

83:11,13,16,19

84:2,7 99:3 126:8

133:17 151:3,20

179:1 183:14

comes 51:2 82:18

116:12 119:8

151:4 159:20

163:16 185:7

coming 22:5 32:6,8

80:4 91:13,19

94:16 107:14

172:9

comment 20:2

23:19 24:18 26:4

28:20 40:6,12

57:12 62:9 63:12

68:13 69:8,11

76:7,16 77:5

78:18 79:22 94:10

112:13 120:19

134:7 137:9 138:4

142:2 145:18

146:10 147:9

150:13 153:4,11

153:14 171:9

172:4 173:15,15

180:20 181:1

185:4

commentary 4:11

commented 176:11

commenters 22:16

comments 31:21

33:17,19 40:7

46:9 57:13 67:13

69:7 78:21 90:18

96:4,16 100:20

101:6,20 118:2

146:12 153:15

161:9 164:5

165:19 167:15

169:1 172:4

177:14 181:6

183:6 184:7,12

185:9

commercial 37:3

69:16,18 77:6,14

83:1 109:1,1,2

commitment 32:9

33:3

commoditization

138:6

common 23:14

130:7

community 32:21

compact 110:15

companies 61:10

150:10

Company 2:10

23:21

compare 45:3

124:17 127:13

compared 20:7 88:7

103:15 124:19

125:16,18 126:14

141:8

compares 103:12

comparing 122:9

123:12 124:7

comparisons 45:6

competing 7:19

39:22 60:3,7

competitors 147:4

complete 4:12 6:19

32:15 67:6 131:11

170:11,11

completed 39:20

52:1

completely 34:3

completeness 150:4

compliance 128:14

131:20 132:5

148:17 153:8

complicated 126:14

179:9 184:17

component 172:22

componentry

148:14

compress 138:9

compression 132:19

concept 77:7 102:6

concern 28:8 65:14

69:6 130:9,14,17

130:19

concerned 27:14

concerns 65:8 130:7

138:5

conclude 178:3

concluded 71:13

171:10

concludes 101:18

conclusion 71:17

176:7,8

condensing 17:9

18:5,18 34:21

48:4,9 49:5 62:20

63:8 65:19 68:12

68:21 74:12 75:10

75:20,21 76:9,11

84:9,14 88:10

100:15 102:21

103:7 104:4,13

109:19,20 110:11

111:5 121:7

122:10,19 123:13

147:2,6 167:22

178:21

conditional 153:8

conditioned 153:7

conditioning 112:3

137:4

conditions 42:4

conduct 100:7

128:22

confidence 46:1

confident 180:15

confidential 153:15

confirm 150:7

confirmation 145:7

confirmations

146:13

confuse 154:21

confused 19:15 47:8

confusing 107:11

Congress 163:6

connect 28:13

connected 63:18

conservation 1:2

4:5 36:7 80:13

100:5,17 161:18

164:13 167:4

conservative 72:9

101:12

consider 23:3 68:17

83:6 106:4 115:22

126:3 143:22

151:7 162:18

163:18 165:18

166:19 167:1

185:7

consideration 6:8

32:22 68:18 74:18

86:1,2

considerations

22:17

considered 19:8

23:1 40:1 71:14

75:3 85:18 87:6,7

87:8 88:10 104:22

113:13 114:19

115:7 118:1 133:3

144:1 151:10

152:10 177:10

181:22

considering 55:20

83:2 87:12 90:11

90:13

considers 36:8

105:11

consist 38:1

consistent 152:6

consistently 166:15

constant 47:4 52:14

55:7

Constantin 3:13

constrained 11:4

13:6,9,17

constraints 128:12

constructed 124:8

construction 36:9

37:15,18 38:10

42:14 43:22 44:15

50:3,15,15 52:6

53:1,17,21 55:13

56:4,5,11 58:17

68:15 82:22

constructive 184:12

construed 121:12

consultants 154:4

Consulting 3:11

consumer 20:19

27:6 51:4 78:14

82:8 89:13 100:10

100:11 108:16,17

109:16 114:15

121:3 122:4

123:13,14 124:2,9

124:19 151:11

167:5

consumer's 118:12

consumers 8:6 9:12

27:3,21 28:9

32:12 34:19 86:4

86:5 103:6 108:7

108:14 119:6,11

170:5 178:14

consumers' 28:11

118:21

consumption 81:14

81:17 82:17

145:12

contact 68:2 131:4

content 129:12

148:2

context 67:4 179:19

continuation 4:4

continue 45:11

115:10 184:21

185:4

CONTINUED 3:1

continues 96:12

103:16

continuing 46:22

141:22

contractor 120:4
The Energy Conservation Standards for Residential Furnaces

April 13, 2015

202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509

Page 190

contractors 62:18

183:20 184:2,3,4

Contributing 144:2

controls 157:14

161:6

controversy 182:4

conversation 21:16

41:21 52:12

115:17 116:21

139:1 143:6

149:10 165:11

167:20 178:11

179:13

conversion 81:19

83:11,13 131:12

133:13,15,17

144:14,19 146:4

149:20

conversions 43:16

46:18,21

convert 19:7

converted 62:13

93:5

cooling 31:12

copies 127:5

copy 154:4

corner 114:1

corporate 108:4,6

correct 8:20 15:12

20:15 30:19 42:15

43:14,18 48:6

52:7 73:12 77:11

95:14,15 99:20

113:3,4,22 114:5

114:5 134:17

135:1,21 149:13

150:11

correctly 72:16

113:15 114:21

121:2

correspond 38:6

corresponding

170:15

cost 4:22 5:17 10:11

11:20 13:1,4 14:5

14:5 17:21,22

19:7,10 26:17

27:10,14 34:18,22

69:4 70:5,5,20

73:20 74:1 81:3

83:15,16,16

114:20 115:7

119:8 120:9

121:10,11,16,20

121:21 122:20

123:4,5,12,20

124:6,16 125:22

126:1,2,2 129:15

130:1 131:20

135:11 144:10,13

150:1 151:16

153:5 161:20,22

162:18 163:2

172:13,14,18

174:19 175:4,13

177:8 179:14

180:6

cost-effective 70:9

costly 168:19

costs 10:1,22 11:19

12:6,15,17,20

13:8,18,19 17:18

29:20,21 31:15

68:19,20 69:5

71:16 74:7,9,11

82:2,2,3,6,6,7,9,9

90:8 114:12

117:17,20 119:10

119:10 120:1,2,17

121:5,9,14,22,22

122:10 123:16

124:3 130:10,13

131:8,12 132:5

133:13,15,17

135:12 142:18

144:13,14,19,21

146:1,4 149:20,20

151:2,10,17,18

152:9,15,15

153:16,17 167:7

167:20 170:5

172:11,21,22

173:1,1,10 178:15

182:4

cottage 74:22

Council 16:18

count 122:22 125:8

counted 121:7,9

counter 61:14

counterintuitive

35:2

counting 122:15

124:2

country 35:1,5 37:4

53:18 56:4 63:5

83:2 87:21 88:1

92:22 140:5

160:13

couple 7:9 17:1

24:20 26:6 27:2

45:8 99:11 173:10

course 33:16 58:9

106:21

cover 12:6 31:11

178:7

coverage 171:4

covered 5:17 6:6

146:20 184:11

Craig 2:13 24:19

54:9,11 69:20,21

created 154:20

creating 141:3

credit 104:21 105:9

105:13,22 106:1,4

122:22

credits 75:11

100:11,12 104:15

105:12,14

criteria 37:6 87:7

87:16 182:3

critical 32:21

crude 55:2

cued 69:8

cumulative 81:15

81:18 82:4,8

144:3

curiosity 139:3

curious 52:4 67:20

85:12 89:4 91:17

current 48:7 95:4,5

105:12,22

currently 9:11 72:4

87:12 88:12 89:17

92:9 99:13 101:2

102:12,20 116:1

117:10 154:11

185:5

curve 11:6 12:12,15

12:18 13:10,12

66:13 78:11

curves 26:11,15,19

26:21

customer 55:2

customers 62:13

72:16 131:20

cut 181:21

cutting 117:19

cycle 92:8 136:10

cycles 136:16

cyclical 141:15

Cymbalsky 2:3 4:16

4:17 5:5,5 7:3,4,5

18:15 19:9,20

20:18,21 21:4,9

21:12,17 26:4,6

28:3,4 29:11 33:7

41:6,12,17,22

42:5,13,16,21

44:14 55:12 57:11

61:1 64:11,12,20

71:8 72:20 73:12

74:10 76:18 95:3

99:4 103:2,20

107:7,9,16,21

109:4,8 110:7

111:4,19 113:4,16

114:5,22 115:9,16

115:21 116:9,19

116:22 118:6,19

121:14 123:18

124:5 155:5,15

158:21 159:22

161:1 167:17

169:11 183:7,8

184:10,13,14

D

D 4:1

D.C 4:7

Dale 3:16 8:2,21 9:1

9:3 15:4,7,13,16

15:22 16:7,15,19

17:13 18:3,7,10

23:11 26:3

damage 162:4

damages 162:1

Dan 2:5

Daniel 2:17

Darlington 2:11

176:16,16

darn 31:19

dash 12:19

data 11:14 39:8

41:8 42:17 43:20

43:21 45:4,4 46:2

46:11 49:3,6,7

50:3,17,19,21

51:10 52:17 56:12

58:1,1,3 59:5,22

60:7,17,17,20

62:2,5 64:5 65:9

65:17 66:2,8,10

73:15 77:13 78:14

78:16 83:12,14

98:22 99:2 104:2

104:5 106:19

113:14 116:20

117:1,7 129:5,6,7

129:16,17,18,18

129:19,22 131:6

152:19 157:3,14

160:15 166:11

176:12,12 178:20

182:20 183:14

185:1,2,9

date 4:12 128:14

135:10

Dave 3:4,14 19:4,5

71:11,12 150:13

Davidson-Hood 3:5

day 22:18 106:16

120:9

days 179:1 184:15

DC 1:8

deal 4:10 113:9

119:14 170:12,13

debate 106:20

December 56:16

decided 76:8

decision 20:9 25:9

25:10 42:11 45:17

65:11

decisions 181:15

deck 8:10

decreased 157:16

decreases 36:19

94:3 110:6 132:3

decreasing 54:18

deem 114:14

deemed 113:12

deep 79:8

deeper 5:1 7:12

defend 136:15

deficiency 184:6

defies 125:9

define 119:13

defined 37:5,20

38:14

definitely 94:10

117:19 163:16,17

163:18 185:1

definition 54:17

definitive 57:13

degradation 21:2,8

degrades 21:19

deLaski 2:12 31:21

32:1 59:9,10,18

84:21,22 86:22

101:4,5 122:11

123:3,8 150:6,7

150:12 169:15,16

171:18,19

delta 70:13,21

73:17 111:13

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172:20 173:18

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108:3 131:18

132:2 135:13

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14:6 16:8,8 19:16

19:17 23:5,6 24:3

24:15 25:1,1,8,14

25:17 26:16 31:16

33:4 34:4,5,8 39:6

40:16 41:2 42:19

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77:19 79:7,8 80:5

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85:22 93:7,9,12

94:7,16 97:10

102:21 104:4,12

106:8 108:1,18

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119:22 120:10,15

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126:12 127:5,21

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140:3 142:10,20

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152:17 153:5

154:1 155:13,15

155:20 157:19

158:1,14,16,18,20

159:5,10 160:9,18

160:19 163:12,14

168:14 169:8

170:6,6 173:10

174:14 175:22

176:1 177:8,11,15

177:16 179:9

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110:18 112:16

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April 13, 2015

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April 13, 2015

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57:1 108:15 117:4

148:3

low-cost 170:7

low-income 7:10,20

8:6 9:6,12,15

10:10,17 12:7,8

13:20 14:8,11

18:22 19:22 20:8

26:18 27:3,21

28:9,11 32:11,15

178:14

lower 9:22 10:6

11:16 12:4 13:22

16:2 58:18 97:13

120:2,6,8,11

123:5 132:18

133:6 135:11

149:7 162:21

lower-cost 14:4

lowering 120:17

lowest 138:20

lowest-cost 20:16

lump 159:8

lunch 155:16

156:15

M

M 2:10

M&G 168:8

Magazine 49:9,13

49:18 51:12

magnitude 167:12

main 9:14 37:16

48:17 170:4

maintain 111:4

131:17 132:1,12

maintained 21:8

maintenance 17:22

31:8,14,15 82:2,6

major 38:1 48:1

54:15 90:22

128:18 173:8

178:13 180:15

making 60:5 122:16

122:17 136:21

176:11

manager 5:6

mandate 183:16

mandatory 100:5

manufacture 144:9

manufactured 68:3

68:7 96:6 131:7

137:19 150:8

manufacturer 6:1

78:5 100:11

127:22 128:4,9

129:5 130:2

131:11 133:18,20

134:1 135:11,12

140:13 146:21

147:2 151:2,14

176:21 178:15

manufacturers

21:18 60:5 68:3

68:11 85:6 86:8

99:2 110:19 128:8

128:10,21 129:10

130:2,7,12 131:17

131:19,22 132:4

132:11 134:7,12

135:3 138:6,17

146:20,22 147:5

147:11 148:4,18

151:6 169:18

170:3,12 171:22

172:21 175:18

176:11

manufacturing 27:6

112:12 142:16

169:17 172:11,18

172:20 173:9

mapping 61:4

maps 92:1

March 4:9

margin 131:15,17

132:17 133:9

137:17 143:3

marginal 73:2

156:8 160:14,16

166:11,12,19

margins 142:3

mark 3:8 8:12 22:1

33:20 44:5,6

74:15,17 89:21,22

91:6 103:13 106:8

108:8 126:5

127:11 142:5

165:12,12 169:4,5

171:8 181:6

market 13:15,16

25:12 36:8 37:1

37:13 40:10,11

42:1,13 46:18

47:3,4,20 50:15

50:16 53:15 56:11

60:12 63:9 64:9

66:1 71:5 72:21

74:19 82:20 83:18

84:3,8,15 85:5,21

85:22 86:7,13,15

97:12 99:6 102:8

102:18 103:3,6

104:2,3,5,6 106:3

110:11 130:10,14

132:18 141:5
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April 13, 2015

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168:17

market/technology

131:7

marketing 138:15

145:20

marketplace 42:4

markets 7:14 8:5

57:18 60:15 85:8

96:7 132:11

162:19 163:1

178:22 182:20

markup 131:13,16

132:3,8,10 133:5

137:15,17 140:1

markups 130:21

131:11 132:12,13

132:19 139:21

149:21

match 49:10,14,18

51:9 76:14

material 4:10 5:14

31:18 145:20

171:21 173:1,12

178:8

MATS 157:12

matter 154:20

max 97:16 98:8,15

max-tech 87:13

maximum 87:14

95:16

McCabe 2:18

McClive 2:19

McCrudden 2:20

47:7,7,18 48:3,10

77:4,4,16 109:14

111:1,6 183:18

mean 19:16 27:15

56:21 68:2 102:11

107:7,18 110:5

139:8 145:8,20

159:3 160:21

184:22

meaning 12:7

means 132:3 172:1

measure 162:1

meet 97:12 103:19

112:8 160:10

175:20 176:21

177:11,18

meeting 1:1 2:1 4:6

4:9,18 5:2,13 6:2

6:4,7,15,20 8:15

8:17,18 19:11

22:15 28:7 32:8

34:16 41:7 45:5

59:13 64:15 89:11

90:16 101:6

152:13 154:1

172:8 174:9 176:5

185:17

meetings 106:21

168:6 182:11

184:16

meets 97:22

megawatt 157:6

megawatts 158:15

158:18 160:18

member 61:9

members 45:16

46:6,10 57:6

59:21 60:20

membership 180:21

memory 34:15

mention 38:10 54:6

mentioned 8:13

28:7 53:20 72:15

87:19 117:3

152:12 154:2

160:2

mercury 94:19

157:12,14,15,16

157:22 161:7

162:14

merit 182:21

methane 156:5

method 50:2 81:1

100:7 156:6

161:20 164:14

methodology 59:12

60:10 70:2 77:12

128:15

methods 72:3 181:9

181:12

metric 128:20

Meyers 15:17

MHGF 96:13 153:8

MIA 6:1 91:13

109:5 126:6 128:6

128:11

Michael 2:18,21

microphone 22:3

29:18 46:16 59:17

134:19 150:19

166:2

microphones 6:22

middle 58:7 66:11

Midwest 64:2,3

Mike 140:22 142:11

143:18

Miller 90:19

million 51:18,19

52:9,16,19,21

53:11 56:15,19

57:2 133:18 134:1

135:17,19 140:8

141:9,11 159:5,6

160:7

millions 140:8

mind 10:3 57:19

119:9 185:8

minimize 161:7

minimum 34:21

minute 158:8

minutes 79:13

mismatch 179:18

missing 120:22

misspoke 53:3

misunderstood

124:1

mix 164:18

mixture 84:11

85:16 87:19

mobile 4:18 36:4

37:3 38:3,12 39:2

49:22 50:3,4,5,8

53:4 67:21,22

68:22 69:1 80:14

87:18 88:5,6,11

97:9 101:2 146:22

147:5

mode 91:21,21

95:10,17 96:18

99:13,13 149:16

149:16,17,19

150:3 156:12

model 5:21 35:20

36:3,8,22 37:12

38:8 43:19 51:4

61:12 71:20,20

73:8,9 85:3,13

86:12 89:13

128:16,17,19

130:4 131:3,4,10

131:11 132:8

133:19 151:13

154:1,16 164:14

167:9 172:13,18

modeled 131:13

models 88:13,14

99:1 132:9

Moderator 2:9

modified 100:7

moment 85:1

129:13 137:21

180:3

monetary 161:17

162:1 164:3

monetization

161:13,16 163:9

monetized 162:14

163:19

money 25:1,10

28:14

monthly 28:12,15

28:16,17

Moore 3:9 65:7,7

66:7,15,17 79:2,2

93:4,4,19 94:5,13

162:17,17 165:22

165:22 166:4,5

moot 106:22

more- 17:8

more-efficient 9:18

10:1,22 12:2,17

more-energy-effic...

17:4,5 18:6

morning 4:3 5:9,12

8:10 12:11 16:22

35:18 114:18

motor 96:6 97:8

145:10 153:7

motors 175:3 177:1

move 6:2 31:22 34:5

63:10 71:6 96:3

96:13 109:11

112:11 126:5

127:21 146:15

155:13 161:13

169:2 174:20

177:21 180:8

moved 104:3

moves 78:14

moving 48:11 100:2

148:4 150:14

179:3

MPC 135:11 144:18

MPCs 132:3 172:15

172:19 173:5

MTA 131:6

multi-family 30:14

53:4,8,11

Multi-Housing

16:18

multi-stage 175:20

multiple 41:4 42:3

124:22 138:20

multiplier 28:15

multistage 175:2

Murphy 46:14,14

46:17 62:10 72:14

73:9,18 74:3

150:19,21,21

151:15 152:11

muted 6:10

N

N 4:1

Nadel 101:8

NAHB 2:13 73:4

name 4:8 6:21 30:1

46:12 128:3

national 2:15 3:15

3:16 5:21 8:3

16:18 24:19 35:19

35:20,22 54:12

62:20 69:22 80:11

80:12,13,17 81:8

81:20 84:5 87:10

92:7,20 99:12

100:4 126:16

142:8 167:3

nationally 104:18

157:10

nationwide 116:14

natural 62:14 63:10

113:17 114:16

117:4 136:10

180:9

naturally 72:22

73:14 90:12

nature 65:17

141:16 153:16

154:15

Navigant 2:11,19

2:21 3:10,13

91:10 128:4

153:19 176:17

NDA 153:19

Neal 79:21,22 80:4

112:12,13

necessarily 25:13

149:22 154:19

necessary 153:1

need 22:10 45:6

46:6 71:5 72:19

137:6 143:17

147:7 172:1,2

177:18 179:9

180:20 181:3

182:22

needed 170:8

needs 22:10 68:8

71:6 75:19 170:15

negative 33:13,22

140:17 148:7,9

149:5

negatively 140:7

neither 147:6

NEMS 61:12
The Energy Conservation Standards for Residential Furnaces

April 13, 2015

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NES 80:18 81:6,8

net 80:19,20 81:21

82:11 92:13 99:16

123:2 128:19

133:2 143:11

150:9 167:11

never 10:13 20:14

nevertheless 183:3

new 8:20 17:2 24:2

25:14 31:18 36:9

36:10 37:14,15,16

37:18,19,20,22

38:3,6,7,10 39:10

39:13,15,20 40:3

41:18,19,20 42:11

42:14 43:11,22

44:15 46:18 47:8

47:9 50:2,15,15

50:17 51:22 52:1

52:6,8,9,11 53:1

53:16,17,20 54:16

54:17,19 55:13

56:3,4,11 58:4,17

61:17 63:9 67:22

68:15 78:7 82:21

85:11 96:7 100:10

112:10 124:20

158:19 171:11

175:14 178:13

181:2

newly 64:9

NFGC 169:6

NIA 5:21 89:13

93:7,17 100:8

101:19 152:7

nice 5:10 61:8

185:12

night 106:15 120:8

nine 67:3

Nineteen 174:4

no-impact 72:18

73:11

no-impacted 73:6

nodding 144:22

145:3

non-apartment

30:9

non-condensing

48:4,9 49:5 65:20

68:21 74:21 75:1

75:10 76:9,10

84:15 121:3 122:8

122:11,19 123:14

124:20 178:22

non-public 29:12

non-regulatory

100:9 102:2

non-renters 24:15

non-switching 74:2

74:3,4,5

non-weatherized

4:18 29:2,3 36:4

36:14,15,17 38:2

38:5,11 39:1 43:6

48:4 49:22 55:22

67:19 80:14 87:18

88:6 96:8 97:14

101:1 137:18

138:3 146:21

147:1 174:15

175:1

nonregulatory

111:3

Nope 150:13

NOPR 71:13 96:19

101:8 145:17

147:13,15 175:7

182:7

normal 21:22

north 35:2 37:4

49:15 53:18 54:3

56:3 83:2 84:14

87:20 88:1,5

92:21 104:18

140:5 142:13

143:9

northeast 16:10

39:9,11,16 40:3

northwest 64:2,3

note 79:19 173:18

notes 147:1

notice 4:5 46:2

144:1

NOX 157:10 162:10

163:5,21

NPV 80:19 81:6

87:14 92:16,17

99:12

NRDC 157:15

nuclear 160:20

number 39:13

43:16,19 46:21

58:11,11 77:6

81:4 88:6 90:7,9

90:10 93:8 101:7

116:7,10 117:2,11

120:1,4 122:9

125:11 133:6,8

139:20 147:3,9

150:22 151:20

159:5,18

numbers 7:18 27:22

28:5 30:5,22 44:1

49:10,20 51:8,9

51:12,13,17,17

57:5,7 81:22 88:4

88:5 93:9,18,21

99:8 105:5 108:4

126:8,10 127:3,15

140:20 141:6,7,18

141:21 155:8

158:3,10,13

162:21 163:13,15

168:5

NWGF 96:11

O

O 4:1

Obama 106:13

observation 78:9

79:10

observed 38:7

obvious 126:9

obviously 127:1

172:15 173:13

176:12 183:15

occur 136:10

occurred 43:16 61:9

occurring 73:14

occurs 20:5 113:17

180:5

oddity 34:17

OEMs 109:3

off-line 172:2

offer 85:7 86:12

147:6,6

offering 100:14

offerings 147:4

office 106:13

oh 18:7 53:5 64:20

91:12 95:21 96:1

106:12 136:17

140:8 172:4 183:6

oil 39:9 40:11 41:9

41:16 43:17 46:18

46:22 47:16 55:2

58:15 61:15,18,22

63:22 68:9 157:9

oil-fired 39:14

oil-fueled 63:19

okay 5:8 16:3,20

21:12,20 22:8

27:6,19 29:22

30:6,21 31:3,5

32:18 34:4 40:14

40:22 41:12 43:7

47:18 53:5,10

54:16,18 55:3,4

56:18,21 57:9

63:12 66:14 73:1

75:4,13,16,17

78:21 79:11 80:4

86:22 88:18,20,21

94:5 95:18 96:15

101:16 102:5,11

104:9 105:18,21

109:11 111:1,6

112:20 113:20

115:5 119:18

120:21 127:7,21

137:7 143:14,18

145:6,6 146:12,15

148:10,19 149:15

150:12,13,14

151:15 153:18

155:11 161:10,11

164:8 165:19

166:21 167:17

169:14 170:9

171:16 172:3

173:21 177:19

182:19 183:5

184:7

OMB 83:20 90:1

91:3 107:9,17

163:6

on-line 79:22

once 71:20 183:14

one-sided 25:22

ones 31:3,3 69:10

70:6,8 71:4 89:17

98:16 127:4,4

139:2,5 179:8

ongoing 108:22

online 5:11 44:11

96:5 108:21 153:4

open 173:14 179:4

184:20

opening 8:14,16

operating 82:5

83:16 131:21

132:1 137:20

operation 175:2,9

175:20

operations 134:12

opportunities 112:1

112:10

opportunity 8:18

44:22 45:14 112:6

121:1 178:3,6

opportunity,again

6:4

opposed 28:1

140:17 163:2

optimistic 60:20

option 18:6 20:6,13

20:16 41:4 58:16

58:17,20 68:12

71:14 114:13

121:15 138:12

170:7

options 41:5 132:15

order 22:10 94:8

152:5 182:11

183:1,4

Orders 182:9

183:12

organization 33:11

organizations

100:14

original 28:6

ought 181:21

outer 101:13

outline 129:8

outlined 155:3

output 128:18

156:7

outputs 80:16

outreach 183:20

184:1

outset 46:13

overall 12:6 37:13

38:9,22 64:16

76:14 167:3

overestimated

166:16

overestimates

166:12

overestimating

65:15

overlap 98:5,6

144:4,11

overlapping 98:4

overseas 148:4

overstated 94:21

overstatement 55:9

overview 4:15 5:15

overwhelm 71:4

owner 47:9,9 54:19

owners 7:16 14:1,7

14:11 16:17 30:12

30:13,18 36:9,10

36:13 37:19,20,22

38:3,6,7 43:11

53:17,21 54:16,17

P

P 4:1

p.m 185:17

pace 47:1
The Energy Conservation Standards for Residential Furnaces

April 13, 2015

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papers 14:18 23:15

Paperwork 183:21

pardon 103:16

181:6

parse 70:20

part 9:10 14:11

19:8 47:20 49:10

51:16 55:6 86:7

105:9 107:14

113:14,19 114:14

115:1,3 119:21

162:7 166:22

171:2 175:22

176:1 181:8,10

182:17 183:15

184:10

partial 14:6

partially 106:5

PARTICIPANT

22:7 78:4 94:11

145:5 159:20

174:7,10

participate 6:14

participating

184:15

particular 28:14

33:12 61:10,17

65:10 113:21

136:18 144:3

166:8 178:12

182:11

particularly 13:9

67:22 134:8 137:1

153:22 181:8

parties 24:12

parts 169:17

pass 127:9 131:19

132:5

passed 17:18 88:9

path 185:4

Patio 63:14

pause 9:2 34:10

42:7 80:2 114:10

129:13 147:19

174:12

pay 7:14,16 9:17

10:1 11:20 27:22

29:7,9,9,13,15

74:12 108:11

121:6 122:20

payback 31:2 182:3

paying 15:2,3 31:3

peak 6:10 75:9

155:18

pen 14:18

penetrations 102:18

people 7:14,20

18:13,22 27:16

28:14 29:3,12

56:22 60:13 68:14

70:13,21 71:3,9

72:3 73:5,6,7,13

74:14 79:9 107:10

110:19 115:1,16

115:18,22 116:1

116:15 117:3,16

118:1,17,17

125:13,14 136:11

136:20 156:15

157:21 180:8

per-unit 81:3,3

132:1

perceived 119:10

percent 13:21 21:6

29:1,4,5,6,7,8,9,9

29:12,13,14,15,15

30:6,7,10,11,18

38:9,11,12,22

39:2 43:6 50:9,10

57:16,17,19 69:17

77:10,15 83:7,20

83:21 84:5,5,6,6

85:20,22 86:1,11

86:16,18,19 87:14

87:16,17,19,20,22

88:1,12,13 89:2,3

89:12,14,17,18

91:15 92:14,15,15

92:16 96:14 101:3

101:9,11 102:21

103:6,9,15,16,16

104:14 107:3,7

108:19 113:1,10

125:17,20 127:19

129:22 130:4

133:11 138:8

139:22 140:9,20

157:5,7,17 158:1

163:22,22

percentage 27:20

27:20,22 28:17

43:3 55:21 57:19

58:20 63:2,8,9

87:15 99:6 102:22

116:4 125:13

131:16,18 133:9

percentage-wise

64:22

period 36:6,6,20

37:22 46:19 49:16

80:16 99:19,21

108:13 120:10

180:20 181:1

185:5

permanently 24:3,6

person 25:11 75:20

122:17 136:7,11

136:12,15

personal 59:4,5

perspective 67:22

118:14

pertains 91:9

perverse 180:4

phase 129:3,7,9

phases 129:3

Philadelphia 3:12

phones 6:10

physical 172:17

physically 17:7

pick 4:20,21 34:5

160:3,6

picked 159:1

pictures 168:8

piece 21:2 33:5

55:11

pieces 21:5,14

pile 59:18

Pinto 2:7

place 55:14 70:5

110:20 111:21

113:18 173:6,10

places 35:14 65:10

Plan 94:17 95:2

plant 156:4 157:21

158:12,15

plants 157:16,18

158:1,17 159:16

159:18 160:18

play 26:1 51:3

119:3,9 151:3,4

playing 151:22

please 6:8,10,21

16:21 26:5 28:21

40:6,12 42:6 45:7

59:17 65:6 69:6

79:14 80:1 127:10

134:18 150:18

165:12 177:22

183:7 185:9

plus 12:20 93:17

podium 8:9

point 9:14 10:2,5

13:5 20:4 24:9

27:19 32:3 33:1

33:20 43:9 66:8

66:12 72:8 106:22

107:1 117:13

125:11 135:8

138:8 158:21

159:11 160:9

162:18 168:3,20

183:14

pointed 43:20 117:7

117:15 125:15

pointing 19:18 91:8

points 67:14 102:22

168:1

polar 157:8,11

159:3

policy 181:15

polygon 14:17

pool 55:15

population 7:11,21

14:12 28:13,16,19

54:17

populations 55:5

portion 128:11

position 61:13

154:11

positive 4:11 33:13

33:21 115:14

117:15 118:4

119:16,22 178:10

179:16 180:16

possibility 9:20 10:6

10:21 11:2 47:17

47:19

possible 14:20

20:14 34:15 93:2

135:15 145:18

154:3 181:16

184:22

possibly 18:22

121:12

posted 127:8

potential 10:19 55:3

55:20,22 67:20

75:2 86:6 98:10

115:19 128:12

130:13 140:17,19

146:13 147:10

149:3 158:10

164:13 167:20

168:10 176:3

potentially 27:11

40:12 68:18 72:5

72:7 86:12 140:6

140:11

power 92:1,5 94:17

95:2 109:2 156:3

157:16,21,22

158:12,15

PRA 183:21

preceding 135:9

precipitous 78:9

predict 182:5

predicted 60:13

predicts 60:11

preliminary 7:3

126:12 127:3

premise 113:10

premium 132:12,13

132:19 138:18

140:1

present 80:19,20,21

81:21 82:11 92:13

99:16 126:15

127:15 128:19

133:2 143:12

150:9

presentation 17:1

presented 7:9 19:10

19:16 22:15 31:19

33:6 89:18 92:13

103:4 125:5

163:21 168:6

179:15

presenting 19:21

20:2 35:20 128:4

presently 71:21

presents 48:12

55:21 164:9

preservation 131:15

131:21 133:8

137:16,20

President 106:13

presume 34:5

pretty 9:12 10:18

22:20 31:19 45:8

45:22 52:14 54:20

57:3 86:17 118:7

126:6 145:13

153:21 183:2

prevents 155:9

previous 66:21

77:19 89:11

168:21 180:19

previously 151:1

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price 12:22 13:2,16

57:3 72:1 86:3

117:4 166:12

price-driven 68:4

prices 35:15 56:14

56:17,18,20,22

57:1 58:3,7,18

120:13 123:1

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April 13, 2015

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primarily 37:22

48:7 68:22 69:2

75:11 104:14

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80:11,16,18 81:10

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93:15,22 99:15

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prime 128:6

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probability 95:1

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133:21 140:9,20

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172:20 179:4

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130:19 161:18

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proposing 92:2,10

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120:14 121:21

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125:12 126:11,20

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140:13 141:3
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April 13, 2015

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revenues 141:8

review 23:7 40:13

181:7
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revising 169:22

revisit 65:3

RIA 5:22 103:9

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rules 64:18 66:11

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saturation 50:5

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second 23:11 51:16

56:6 75:6 128:8

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secondary 68:8

secretariat 169:6

Secretary 182:15

section 72:18 91:11

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57:15 70:11,16,22

71:3,4 72:18 77:1

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sensitivity 90:4

94:22

sentence 182:18

separate 145:14

146:2

separating 92:21

series 60:6 182:10

seriously 181:22

serve 76:19

service 161:2

services 167:6
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April 13, 2015

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sets 181:16

setting 165:14

seven 91:4,4,5 107:8

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Severn 11:11

sexy 139:15

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62:22 86:15 104:2

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shares 42:1 84:3,8

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shift 85:3,4,13,18

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shipment 35:22

36:8 45:17 50:7

73:15 81:22

101:21 102:10

113:14 116:20

117:1 141:20

149:22 178:20

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shipments 5:21

35:20 36:3,22

37:1,8,12 38:7,9

38:16 40:8 44:22

45:3 48:18,19,20

48:22 49:1,4,9,12

50:8,10 51:11

59:22 60:3,7 62:6

70:3 72:20 73:1

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79:4 80:10 81:9

81:13 83:3,5

102:15 114:22

115:12 117:6,14

129:8 131:8,9

141:20 142:6

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152:6 154:18

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29:19 30:2,2

134:20,20 135:2

135:20 136:14,17

short 68:22 69:4

99:4 103:2 171:9

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short-sighted 25:22

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81:7 90:4 93:12

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103:10 142:16

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110:9 125:10

151:8,16 155:14

155:19

view 41:3 58:9,10

59:4,5 75:16

viewing 155:17

vociferous 165:15

voluntary 100:12

162:20

Von 3:13

vortex 157:8,11

vortexes 159:3

W

wait 158:8

walk 8:3 132:22

173:11

wall 108:17

want 9:5 19:12,14

23:6 27:18 32:1

32:19 33:21 43:9

45:5 54:22 59:14

59:18 64:12 65:18

74:17 86:8 113:7

113:22 119:4,16

126:5 130:12

150:7 168:3 172:6

179:6 182:6,19

wanted 8:14 69:22

95:20 118:3

125:11 135:14

148:10 173:17

178:2 183:9

wants 153:13

warranty 139:9

wash 179:22

Washington 1:8 4:7

90:17

wasn't 71:14 78:10

105:9 106:15

112:14 125:18

143:8

water 31:12

wattage 95:19

watts 92:2 95:10,14

96:20,21 97:2,19

97:20 98:16,17,17

way 10:10 12:8

13:17 24:11 43:10

45:15 47:10 62:14

67:4,5,7 68:6 71:6

76:4,19 91:1 99:5

119:12 122:4

125:5 127:9

136:18,20 162:21

165:13 179:20

180:13,16

ways 126:22 178:9

we'll 8:1 43:22 51:5

89:19 115:21

118:2 130:20

142:2,6,7 147:21

154:9 155:3 169:2

173:18 185:6,6

we're 4:13,14 5:1,2

7:18 8:1 13:11

16:11 18:21 20:1

20:1 22:14 23:5

26:7 27:2,8,9,12

28:19 31:21 34:4

34:5,8 40:15

42:16 49:17 54:21

55:17,18,19 57:15

65:3,9,21 66:2

70:10 72:4,8,8

73:2,16 78:22

79:19 80:7,8

85:19 108:5,6

109:6,11 110:11

110:17 112:11

122:15,16 124:21

125:7 126:2,22

127:21 128:1

135:18 141:10,22

146:15 150:14

152:14,16 155:13

155:15 159:2,12

169:12 173:10

179:7,9 180:20

181:18 185:3

we've 7:12 27:14

31:18 33:6 49:11

50:18 69:11 71:15

89:14 104:5

110:13 124:21

126:21 130:11,15

131:5 141:1 148:3

168:2 172:18,19

172:22 173:1,2

178:10 179:2,7

181:2 184:16,18

wear 79:14

weatherized 37:2

web 6:14

websites 129:5

169:17

weeds 19:7 160:12

week 9:7

weeks 7:9,12

weighed 90:18

weight 103:14 104:1

welcome 4:4,17 6:14

45:14 152:19

153:17 173:15

176:12 177:14

welcomes 78:19
The Energy Conservation Standards for Residential Furnaces

April 13, 2015

202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509

Page 208

welcoming 4:14

welfare 108:18

well-accepted

181:16

wellbeing 119:7

went 5:15 41:7 43:3

59:12 65:2 92:4

104:13 106:13

110:16 123:14

126:17 151:8,16

157:9

Wentzel 3:13

weren't 39:22

whatevers 75:22

white 27:4

wholesale 56:14

whoops 31:5

wide 41:14,20 42:10

widespread 110:16

Wiley 2:16

win 7:10

wind 160:20

winners 24:12 87:15

Winningham 3:14

71:12

winter 56:17

wintertime 120:7

wish 8:19 23:19

24:17 57:22 58:10

59:4 69:13 156:15

172:3

wishes 6:5

woman 90:19

wonder 33:3 68:9

wondering 59:21

147:13 163:12

165:4

wood 19:5,5 41:9

58:22,22 61:16

63:15 64:2,10

wood-fueled 63:15

work 11:10 140:21

152:17 184:5

worked 111:10

workers 149:4

working 14:17

180:16

works 3:12 154:16

worse 26:10,10

90:13 118:22

122:5 140:9

worst 149:8

worth 44:18 111:17

wouldn't 15:5 47:4

154:19

written 23:15 40:6

67:13 153:15

161:9

wrong 46:7 110:9

169:9

wrote 136:7

X

X-13 176:22

X-13s 177:4

X13 97:11

Y

yeah 15:4,19,22

17:13 21:1 31:5

32:19 41:14 44:9

53:9 59:9 62:8

76:22 80:4 91:18

96:1 106:11,11

113:5 137:11,13

138:1,4,10 145:13

148:13 153:13

165:22 169:16

171:11 174:5

year 12:1 15:10,11

31:2 41:15 49:2

52:10 56:16,18,18

58:6 62:18 127:17

144:18 157:8,10

157:20,22 158:2

160:19 166:15

year's 158:2

year-by-year 38:20

yearly 39:18,19

83:4

years 32:3 39:11,17

42:12 43:17 44:1

45:8 46:19,19,21

52:18,20,21 55:8

55:14 67:3 75:12

75:18,22 76:1,22

79:7 89:16 90:10

106:2,14 135:9

136:3 163:13

166:17

yield 99:17

yields 87:14

youd 127:9

Z

zone 40:19

0

0 86:18

08 79:5

09 75:13 79:5

1

1 86:18 99:18

101:11 133:12

141:10,11 150:1

1,000 106:2

1.1 141:11

1.27 137:18

1.29 138:3

1.34 137:18

1.37 138:3

1.45 138:3

1.5 52:9,15,19 53:11

1:19 185:17

10 67:2 79:5,13

82:14 84:20 86:2

87:1 150:1

10% 108:14

10:52 79:12,16

100 108:19

1000 1:7

101 12:13

104 102:1 109:15

10th 185:5,8

11 57:17 79:13

96:20 97:2

11,000 39:14

11.7 31:1

11:14 79:18

1122 160:20

113 153:9

12 75:13

12866 182:12 183:1

183:12,16

13 1:12 4:6 67:2

155:22 156:10

161:15

13,000 160:18

14 67:2

14A 162:7

14B 162:8

15 56:14 83:7 101:2

101:9,11 158:13

161:15 164:9,22

165:4

15-year-old 117:7

155 100:13 102:11

103:5

16 92:16 167:1,13

17 84:6 100:6,18

102:17 105:6

171 127:19

18 138:8

19 174:3

1961 49:9

1971 39:13

1972 49:11

1990 157:2,4 163:11

1992 108:4

1998 166:15

1A 126:13 183:1

2

2 50:9

2,000 121:22

2,200 160:20

2,692 149:5,5

2.25 92:11

2.70 57:1

2.78 92:12

20 29:1,4,8,14,15

30:6 57:16 75:18

75:22 76:1 79:6

113:1 163:13

200 106:1

2000 61:6 106:17

157:17

2002 61:6

2003 129:18

2004 52:20 163:11

2005 39:12,13 49:11

49:14 52:20 56:13

2006 52:20 163:6

2007 129:20

2008 58:6 106:12,17

129:18

2009 38:8 46:2 49:6

49:15,19 50:19

2010 75:16,17

2011 89:3,5 91:15

126:14 127:14,18

129:16

2012 49:9,19

2013 38:8 52:21

129:20 157:4

2014 37:17 38:21

50:22 52:7 83:12

83:14 93:22 116:7

118:9 156:7 160:1

164:15 174:22

2015 1:12 4:6,10

94:6 127:15,19

160:3 163:15

166:14

2017 52:2,4 53:2

2019 135:9 144:8

175:1,20

2020 149:4,6

2021 36:7 54:3

80:15 81:5 84:3

110:2,10,12 144:8

2050 36:7 51:19

80:15 81:5 110:2

158:15

20585 1:8

210 149:5,12

22 140:8

23 84:6

236 126:18,18

127:19

238 112:21

25 38:11

26 99:15

27th 4:9

3

3 50:9 69:17 77:10

77:15 83:20 89:14

89:17 92:14,15

97:19 107:7,8,14

163:21

3-percent 99:17

3.1 92:17

3.3 99:17

30 102:12

30-year 36:6 80:16

99:19,21

305 112:22

34.72 174:20 175:4

175:12

35 157:5

4

4 50:10 89:12

40 29:5,7,13 30:7,10

30:11,17 102:20

104:13

400 141:9

4318 160:21

471 160:21

5

5 84:5 86:19 89:12

97:20 107:3

133:18 134:1

174:17

5,000 37:6 121:21

5.4.3 174:18

50 38:12 39:1

100:15 105:19

158:14,18

50/50 97:15

51 157:16

55 84:5

569,000 52:22

57,000 39:15

6

6 153:5
The Energy Conservation Standards for Residential Furnaces

April 13, 2015

202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509

Page 209

6.4 89:2 91:16 130:4

60 13:21 29:6,8,15

103:6,8 104:14

135:17

60/40 97:17,18

65 100:14

67.5 38:22 43:5

67.7 38:22

69 75:10 104:16

7

7 83:20 87:14 89:14

89:17 92:15,16

107:3,7,14 129:22

163:22

7-percent 99:18

7,000 121:20

7.5 38:8

75 140:20

77 99:15

78%-AFUE 116:12

8

8 89:3 90:2 91:15

97:4 108:2

8.2 120:14

8.3 31:1

8.5 95:10,14 96:21

120:15

8.7 98:17

80 21:6 29:9,12

87:20 88:1 112:20

112:20 125:17,20

135:19 138:8

140:5,15 141:11

157:7 158:1

80% 116:13 121:17

143:9

800 100:15 105:20

83 30:17 34:6,13

87 126:18 127:18

8E-089 1:9

8I 66:8

9

9 37:5,6 120:15

9,800 160:20

9.0 98:17

9.2 96:21

9.5 96:21 98:15

9:00 1:14

9:30 4:2

90 85:20,22 86:3

87:22 88:13

103:15,15 140:4

90-percent 104:2

126:16 127:17

90% 104:4,6 110:21

116:13

91% 88:14

92 57:19 86:1,3,5

87:17 88:12 96:13

103:16 113:10

92-percent 54:2

114:3 141:13

92% 88:17 104:5

110:21 116:13

142:16,19 143:9

92s 34:21 143:13

95 87:19 139:22

95-percent 85:6

103:18

95% 104:6 116:14

121:19 142:13,17

142:17,22

95s 34:21

98 86:11,15 138:8

98% 110:21 116:14

142:20

99 95:9 98:15

9B 51:14
210 

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