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### U.S. Department of Energy

Commercial and Industrial Pumps Negotiated Rulemaking Working Group Meeting Summary—Sixth Meeting Forrestal Building, Washington, D.C. May 28 - 29, 2014

Members in Attendance (Day 1) Lucas Adin U.S. Department of Energy Tom Eckman Northwest Power and Conservation Council (ASRAC Member) Robert Barbour TACO, Inc. Charles Cappelino ITT Industrial Process Greg Case (via web) Pump Design, Development and Diagnostics (Hydraulic Institute) Dan Delaney Regal Beloit (alternate for Howard Richardson) Gary Fernstrom California IOUs Mark Handzel Xylem Corporation Brian Henry Patterson Pump Joanna Mauer Appliance Standards Awareness Project Doug Potts (via web) American Water
Steve Rosenstock Edison Electric Institute Jay Savigny Flowserve Corporation, Industrial Pumps Louis Starr Northwest Energy Efficiency Alliance Greg Towsley Grundfos USA

Doug Brookman Facilitator, Public Solutions, Inc.

Absent Meg Waltner Natural Resources Defense Council

Additional Attendees Ashley Armstrong, Alex Bosenbe rg, John Cymbalsky, Brian He nry, Al Issapon, Erica Johnson, Elizabeth Kohl, Christopher Lau, Brent McMani s, Brent McManis, Steve Thompson, Daniel Weintraub, Sarah Widder and Alison Williams

Author’s note The transcript for the May 28-29 WG meeting #6 was not made available until after the WG’s final meeting #7 on June 17-19. That final meeting result ed in a unanimous agreement on standards levels for in-scope pumps. That agreement is detailed in the WG’s Term Sheet that can be found in Appendix A of Meeting Summary #7, as well as in the public docket (EERE-2013-BT-NOC-0039). Since the regulatory negotiation wa s successfully concluded prior to writing this summary, the following meeting summary will be somewhat abbreviated.

Day 1—Working Group Meeting #6, May 28, 20142 Page | 2 Facilitator Doug Brookman called the Working Gr oup (WG) meeting to order and welcomed all present at 9:05AM. The WG proceeded with introductions around the room.

A member started off the meeting describing the significant amount of time and effort the
manufacturers and their sta ff had devoted to analysis and “trying to keep up with the changes” with a new calculator and between-meeting webinars. He e xpressed his hope that this meeting would bring a lot of clarification on these subjects.

Following, Lucas Adin detailed intended meeti ng outcomes compiled by DOE and the consultant

team:

 Deliver a term sheet to ASRAC with recommended pump standards

 Discuss general aspects of the test proce dure (not authorized ‘in-scope’ for the WG)

 Make progress, move toward closure on metrics

 Provide updated results on the engin eering analysis and lifecycle costs

 Presentation/discussion on shipments data and Ma nufacturer Impact Analysis—the last of the major analytical elements to be considered

 Discussion on comparisons betw een EU and DOE ‘C’ values

 Additional discussion of radi ally-split ve rtical pumps

 The goal for the June meeting: review all information, develop and vote on a term sheet

 DOE clarified it will do a separate rulemaki ng, based on work underway and input, on the pumps test procedure

In discussion, members:

 Asked for a sample term sheet

 Wanted to assure that tested va lues for the efficiencies of pumps exceed the calculated values

 Asked what happened to the questions that emerged following the webinar—DOE said it posted the answers on the SharePoint site

Dan Weintraub began presenting an Engineering Anal ysis update (p.41). He provided updates to the end suction and inline analyses as well as results from the submersible vertical turbines. He also provided a small update to the manufacturer selling price (MSP) versus effici ency relationship. He featured the following results:

 The number of models eligible to be polished were reduced (by approximately one half). A member questioned the resulting number.

 Additional capital conversion co sts required to change to advanced casting was reduced by approximately one half.

 Hydraulic redesign cost decreased by 15%

 Updated model numbers based on new data

 The cost of redesign per unit was adjusted to decrease linearly from PER 40 to PER10

 Described how added precision caused the model numbers to change from month to month

 Reconsidered and refined the estim ated population of ‘failing’ pumps

 Confirmed that the efficiency levels displaye d are independent of the C value—C values and their correspondence to efficiency levels will be determined by the WG

 Described that the presented efficiency levels were illustrative, that they could be easily changed/scaled to meet the WG’s inquiry a nd the analysis could be quickly completed3 Page | 3  Described how the preceding revisions had a very minor impact on the overall results

 Confirmed that “the only design option on the table is hydra ulic redesign.”

Moving on, Dan described changes to two additional pump types:

 Confirmed “not much change” in the analys is for vertical turbine submersible pumps

 Described radial split vertical pumps as a global platform, with the same pumps sold in both the U.S. and in Europe. Europe is in th e process of phasing outanything below MEI 40

 Concluded by describing how the analysis depi cts price differences ba sed on pump efficiency
differences.
A member restated Dan’s conclusi on: “so to really simplify this ....you’re not going to see a (price) premium as a pump manufacturer if you fall anywhere between 21% and the 90% level?”

Returning from the mid-morning break a manufacture r questioned the decision that the WG’s scope
would not include deliberations on th e test procedure. He asked if the WG could insert a one-line statement in the term sheet recommending the use of th e HI test procedure. Lucas Adin clarified that the completed term sheet would be sent to ASRA C for consideration. Then ASRAC would make its
recommendation to DOE. He continued that DOE’s cons ultant had participated in the development of the HI test procedure. A member contributed that one concern was th e ‘extended product’ part of the test metric. Lucas continued that establishing a sub-working group was possi ble and confirmed that, regardless, a test procedure NOPR would be required. Sarah Widder contributed that time had been allocated in Day 2 to discuss key me tric issues, as they related to th e test method such as load points, weights and the general architectur e. Another member restated hi s desire to have a statement endorsing the HI test method in the term sheet.

A manufacturer questioned the statement that the metric was going to be based on the ‘bare pump’ only. Sarah Widder responded that “a given pump can be rated as a bare pump plus a default motor, a pump plus a more efficient motor that it’s sold with, or a pump plus a more efficient motor and
controls. And that will be refl ected in the rating, but the stan dard will be se t....only looking at improvements to pump efficiency.” Another manufact urer described the concer n that introducing “the motor and the drive and taking set e fficiency values....are leading to fa lse calculations that we would
be unable to emulate on a test standard if we we re doing wire-to-water efficiency testing.”

Next, Alison Williams presented updates to the Life-Cycle Cost (LCC) Analysis. She described the fundamental purposes of the LCC, the shipments m odel and National Impact An alysis (NIA) (p.120). She described the following revisions in a detailed presentation:

 Changed the distribution channel weightings , raising the pump OEM to distributor to
contractor to end user from 17% to 70%, which resulted in a change in the mark up and incremental mark up.

 Revised load profile estimates based on manufact urer’s comments (with very little resulting impact), which changed the operating hours distributions

 Restated that the analysis shows that “the en ergy savings dwarfed the costs in almost all
situations”

 Revised the lifetime estimates for vertical turbine submersible and other pump types

 Adjusted average mechanical life hours estimates

 Clarified that repair could mean a full range improvements to an installed pumps4 Page | 4  Showed different sector weights for vertical turbine submersible pumps

Alison moved on to the results, describing two s cenarios: one where no costs are passed on to consumers and another where full costs are passed on to consumers. She conc luded that “the current market structure for pricing is the same in the base case and the standards case. So not surprisingly in this case, the average LCC savings are positive for everything because the delta increase cost is very small (p.149).” She continued describing the pa yback period as being low (for this lower bound scenario).

Alison began to describe the second, full-cost rec overy scenario. Responding to a member’s question, she stated that the full cost recovery is over the full analysis period—30 years, which at a discount rate of 11.8% is approximately 10-11 years. Chris Lau clarified the two scenar ios are meant to bound the mark ups. A member questioned the result s of the upper-bound cal culation (16%).

Moving on to the average LCC savings, Alison described the results: almost all the pumps in different horsepower bins resulted in pos itive LCC savings, while a few di d not (p.166). Manufacturers restated, again, their inability to pass on price increases due to pump redesign. Comments and discussion continued on DOE’s 30 y ear analysis period and the manu facturers’ ability to recover
costs. Alison clarified that some of the confusion was th at the 30 year analysis period is not really applicable to the LCC—it is applicable to th e MIA and NIA. The MIA will describe how the
manufacturers are affected over the 30 year period.

Alison returned to presenting the results of the full-cost recovery scenario—the worst case for consumers. She noted some variability, “but overall across most of the equipmen t classes, there’s still more consumers benefitting than there are being burdened.” She also showed the payback period analysis results (p.183). The WG broke for lunch.

At the lunch break DOE distributed the detailed power point presentation slides that were presented in the morning session. Returning from lunch the manufacturer’s caucus spokesperson Mark Handzel
described how the caucus had reviewed the material at lunch and needed more time to consider the content, especially when consider ing sensitive issues such as pric ing and cost recovery (p.188). A
manufacturer asked if there was a way the industry could learn fr om DOE’s previous experience. John Cymbalsky responded that DOE does this anal ysis in all its rulemakings. The information gathered and analyzed results in lower and upper bounds representing cost recovery that will be presented in the MIA. Several members added co mments based on their experience with standards setting and the unique features of the pumps industry (p.194).

Alison Williams began presenting the shipments analysis, summarizing “national net present value is basically positive for everything across-the-board.” She continued saying the shipments analysis feeds into the national impact anal ysis and the manufacturer impact analysis. And, the shipments model projects shipments over the 30 year analys is period, starting with historical data for each equipment category. What followed was a detailed discussion on a range of shipments issues: speculation on numbers and types of pump s and the impact of imports (p.205).

Alison continued, describing an analytic method that the team ultimately rejected, using AEO projections of investment to pr edict shipments, based on the expe rience of the motors rulemaking.5 Page | 5 Instead, she relied on historical census data, taking current sh ipments data and projecting the shipments forward using various AEO trends such as commercial floor space and the value of manufacturing shipments. This analysis result ed in shipments projections growing from 420,000 in 2019 to approximately 700,000 in 2048. Members noted th e inherent difficulty in projecting 30 years out. Alison also noted that the team was using the same shipments forecast in the base case as in the
standards case.

Alison began presenting the NIA (p. 217). The NI A estimates the national energy savings from new energy conservation standards and the national net pr esent values (NPV) for the nation as a whole. The method is to take the unit lifetime energy savings multiplied by projected shipments and accumulating this over the 30 year analysis period. For the NPV, the team looks at the difference each year between energy bill savings and increased equipment expenditures. The national energy savings is the difference between the base case en ergy consumption in each year and the standards case energy consumption in each year—the differen ce is the national energy savings. Continuing she described the use of Trial Standard Levels (TSLs) and how they corresponded to the PER that the WG had been using.

In discussion, members questioned:

 The sector weightings

 Total installed cost estimates as pumps are pushed to higher efficiency levels

 Changes to the electricity conversion factors

After the afternoon break, Chris Lau began presenti ng the MIA (p. 235). The purpose of the MIA is to assess the impacts of different efficiency stan dards levels on manufacturer s, utilizing a cash flow model. The analysis considers the manufacturer’s pr oduction costs, the shipme nts forecasts, financial parameters and markups to derive the manufacturer s selling price (MSP). C ontinuing, he described the inputs: industry sh ipments and industry pricing that give y ou revenue; subtract cost of capital and operating costs and the result is an estimate of opera ting profit. Then the team utilized a discounted cash flow model (GRIM), modeling a lower bou nd scenario and an upper bound scenario. The industry’s capital conversion costs to meet a new e fficiency standard are sp read over the four year period to the effective date. Res ponding to a question, Chris describe d that the analysis assumes the MPCs would not change as the standard increas ed—however there would be conversion costs and
those conversion costs would drive price increases. Detailed disc ussion on the implications for conversion costs, imports and shipments ensued. Th e team concluded by saying that, while iterations or tweaks could be made, all the rulemaking analyses had no w been presented (p. 257).

As discussion continued, members questioned or added:

 The ability of the industry to execute the necessary changes in the proposed timeframe

 How to consistently achieve the energy effici ency gains in the mark etplace utilizing an extended product approach

 Described how additional motor efficiency standard-setting efforts are underway in Europe, including test procedure development

 Reiterated the desire for the metric and labe ling provisions to inform successful utility

programs The discussion continued on practical matte rs of applying a prospective standard.6 Page | 6 Next Dan Weintraub began presentin g on C values, saying that C values are used to define each efficiency level for each equipment class. The analysis team developed PER C values at each efficiency level for both the DOE and HI data sets . Dan presented charts which compared the two data sets, which were fairly similar. Dan descri bed how they were working on merging the two data
sets. He reviewed the results for each pump class and summarized some results:

 End suction close couple, DOE C va lues are consistently more efficient by an average of half a point

 Frame-mounted are consistently more efficient by 1.1 efficiency points

 Inline are consistently more efficient by an averag e of .25 efficiency points

 For VT-S, it’s flipped, where DOE C values are less efficient by an average of .7 points Member questioned the results, for what should be two data sets that are very similar. Dan clarified
that there was an MEI C value and PER C valu e and they represent different things (p.305).

Dan continued on the topic of MEI, presenting an eval uation of the relative e fficiency of the US and EU populations by comparing the MEI C values from the DOE data set, the HI data set and the EU Lot 11 data set. He described the methodology and the following results: generally, the EU is less efficient, probably because the EU data is older. Dan continued with a de scription of differences
between the DOE and HI data sets.

Moving on, members began to discuss the general sh ape/content of prospective proposals to begin negotiating. One member identifie d several factors that are impor tant to the energy efficiency
advocates caucus: conversion time and resource is sues for the industry, harmonization with the EU, the tradeoffs between manufacturing impacts and consum er impacts and also the effective date of the standard. He questioned whether some phase-in a pproach was possible. Betsy Kohl responded that DOE’s “reading of the statute indicates that we have a five year time lag.” In subsequent comments, members indicated that the timing of implemen tation could be importa nt to the industry.

Another member, summarizing, reiterated some of the factors listed above and asked about enforcement and if that figures into the negotia tion. He continued, raisin g the issue of extended product and what the WG w ould like to do with it.

The facilitator confirmed that the Day 2 agenda w ould start with the standa rds negotiation and then proceed to the metrics discussion. The WG adjourned for the day.

Day 2—Working Group Meeting #6, May 29, 2014 Attendance: All members present for Day 1 were also present for Day 2

The facilitator called the meeting to order at 8:05 AM. The WG proceeded with introductions around the room. The Day 2 Agenda included the following:

 Member’s questions at the outset

 A first round in the standa rd-setting negotiation, and

 Moving toward closure on metrics7 Page | 7 Questions A member led off, asking about the details on impleme ntation of standard. Lucas Adin responded that some of that will need to be addressed in a subsequent rulemaking, but generally DOE sets standard levels, creates a test procedure and adopts specif ic procedures for enforcement. The enforcement process for DOE generally relies on upon manufacturer self-certificatio n. For a give n product that is subject to the standar d, each basic model has to be assigned a rating and its compliance with the
standard has to be certified by the Department. That is the responsibility of the manufacturer. The testing can be done by the manufac turer or a test lab, in accordan ce with the established test procedure.

A manufacturer inquired a bout the number of pumps tested and sa mpling. Lucas de scribed that the testing of each basic mode l is typically based on a sample size of two. He indicated that DOE would create the test procedur e through a rulemaking, subject to normal comment provisions including this WG. A member su ggested that NEMA might serve as a resource on these questions, since they have been re sponding to regulations fo r 20 years. Lucas confir med that DOE would be looking for input from the indust ry as any rulema king proceeds.

Initial Proposals Mark Handzel, speaking on behalf of the manufacturers, restated so me of his member’s concerns
and limitations and offered PER 15 as proposed standard level (P.30) . He continued this level would
not overburden thei r engineering departments a nd would set the bar above the EU’s initial starting point.

Tom Eckman, speaking on be half of the energy efficiency advo cates caucus, respon ded by offering a performance goal proposal. That goal was .25 quads of energy savings. He stated that how the
WG achieves that could be the su bject of lots of discussion.

In discussion, a member asked if the industry’s capacity to redesign was really the determining factor in offering PER 15. Mark indicated there were several factor s. Another member asked if RSV pumps could contribute to the go al. Alison said, because it is a global platform and the baseline is high, the WG prob ably won’t get much savings. Other members talked about the benefits and burdens of synchron izing with the EU, whose standard fo r RS-V rises to MEI 40 in 2015.

Members also discussed th e potential of exte nded product to contribute to the savings (P.56). Lucas commented that the potential gain was inhe rent in the metric and th e label as well. Another member raised the potential benefits of addition al data points—pa rt load values —that would be captured in a DOE database. Anothe r member commented that would be useful in structuring utility programs. There were different interpretations about whether DOE could or would create such a
database. Several member s endorsed the concept and described the benefits of making the data available. A detailed discussion of the potentia l benefits continued. Another member cautioned
that not all manuf acturers, especially small ones, might have th e capacity to offer an extended product.

Next Betsy Kohl provided some additional inform ation on the compliance date issue. Previously DOE had said five years was set. Betsy said, after further review , the Department had determined8 Page | 8 there was no statutory prescription for five years in this case. Co ntinuing, she said that means the period could be three ye ars or seven years—the WG could ha ve different compliance dates for different product classes. Betsy also confirmed that there were still statutory pr ohibitions on ‘tiering’ among the pro duct classes. Alison also clarified that the 2019 compliance date that she was showing is actually only three years from th e publication of the final rule, which is 2016.

Members turned to questions on specific slides re lated to the NIA (P. 95). Alison confirmed the results reflect pump efficiency only. And use the same default (premium) mo tors in the base case and the standard case. Questions and discussion continued on the reasons the advocates caucus settled on .25 quads as their proposal. A member of that caucus summariz ed some of their thinking, saying that harmonization wi th the EU and the fact that they were going to ME I 40 in 2015, “we
kind of saw that as the lowest level we might want to go.” Sh e continued that mo re discussion was
needed based on new information (P. 106)

Metrics (P.107)
Sarah Widder started with a review of the general architec ture of the pr oposed metric. She restated the definition of PER (pump energy rating) and floated new term PEI or pump energy index for consideration. This would mean separate terms for separate pieces of inform ation that go into the metric—“You have a separate term to refer to th at weighted average pump input power and then a unique term for the ratioe d value, and you can be clear when you are talk ing about them.” Members
endorsed the idea of two terms.

Sarah continued describing load ing points of 75%, 10 0% and 110% of the BEP flow rate for constant load application of bare pumps—and e qual weighting those points . For variable load applications she referenced the earlier discussio n, arriving at 25%, 50%, 75% an d 100% of BEP flow rate of the pump, also equa lly weighted. Manufacturers spoke in agreement with this general

construct.

Alison Williams clarified/re stated the three things th e WG should vote on are:

 The general pump energy index as a ratio of the controlled or uncontrolled PER for that pump, and the PER max of the uncontrolled minimally co mpliant pump on the bottom

 The pump weights, where they are equally weighted, and

 The load points The detailed discussion continued on the topic of full load losses (P. 127) and motor sizing and, finally, part-load moto r losses (P. 146).

A member raised the issue of manufacturer’s pub lished data that may not be accurate. In discussion, DOE described that mo tors had a test method for nomin al full load efficiency. A member asked who is responsible for assuring pu mp-motor combination is compliant when the pump manufacturer accepts the motor manufacturer’s da ta. Lucas replied that, while details need to be addressed, generally, pump manufacturers are responsible for the pump rating given to DOE.
Members described how the use of alternativ e efficiency determin ation method (AEDM)—a validated system that shows test data cali brating back to models—coul d be beneficial. Members
reiterated that all of this would need to be articulated in the test proced ure. In discussion, members and the analysis team also confir med that part-load loss testing is a part of the motors test procedure.9 Page | 9 Sarah continued, giving a ve ry detailed presentation on the primary, or de fault, calcul ation option, which requires a part -load loss curve to account for the impact of part loading on motor efficiency (P. 193). She reviewed a very complicated cu bic polynomial equation and explained the major equation elements. What followed was a very deta iled discussion on th e application of this calculation option, that referencing other, existing te st procedures (P. 214). Sarah raised the issue of using a .98 scaling factor. There was additional disc ussion about the use of a PEI rather than a PER
value. After some detail ed exchanges, a manufactu rers’ caucus member stated that they prefer the

PEI construct.

After more detailed discussion, Sa rah suggested that the WG consider and vote on the load points and weighting that had be en discussed earlier. Sh e restated the pr oposal: for uncontrolled pumps the PERcl (for constant load application) ha d load points of 110%, 100% an d 75% and equal weighting of those three points; for pumps sold with controls, ap ply a variable load curve using flow points of 25%, 50%, 75% and 100% of BEP flow and they would also be equally weighted.
As the facilitator moved to call for a vote, the manufacture rs’ spokesperson aske d if the WG could delay a vote until the June meeting.

Interim Report to ASRAC DOE thought it would be a good idea to update ASRAC on the WG’s progress at their next meeting (June 6). The facilitator had been tasked to write the report. He de scribed that he in tended to keep it short, to descri be the information the WG had discussed and, also wh at it had agr eed upon and
describe what lies ahead. The fac ilitator described how he intended to share it with Lucas Adin to assure no major gaps. Members asked if they c ould listen in on the AS RAC meeting—they could.

A manufacturer asked if it was possib le to get a list of deliverables or check list to make sure the WG completed its work. Lucas re sponded that what was needed was for the WG to agree on a standard level (or multiple ones) and any other sp ecific recommendations it wishes to make. A
member described how the manufactu rers would definitely want to give consideration to the test procedure, if time allowed. Othe r members weighed in on additional topics for the WG to consider.

The discussion turned to the June meeting dates and the prospe ct that the schedu led July meeting dates may be shorter or, even, not necessary. There was a question whether the WG should formally seek to include examination of the test procedure in its work stat ement through at request to ASRAC. In discussion, the WG decided to do detailed test procedure work as time allowed. This prompted a question about whether another webinar would be useful. The manufacturers had requested additional info rmation about the fi nancial analyses pr esented previously. In discussing options, Chris Lau offered that he could put together a slide deck that had more complete
information and make that available. Members clarified that the pres entation should be available to all to listen in. Lucas suggested that DOE schedule a webinar. The WG established June 4 at 1:00PM EDT as the proposed webinar time, su bject to confirmation from DOE.

Dan Weintraub began the final pres entation of the day on the VT-S and RS-V product classes. Since RS-V is global product, th e intention was to harm onize with the EU for the C values. He proposed taking the MEI C values and shift them (using an average di fference translation factor) to get as close as possible to the EU in this produc t class (P.287). Manufacturers re quested that Dan
send his best estimate of the value to them so they could do the analys is. The other issue was10 Page | 10 vertical turbine submersi ble pumps. In the EU th ey only regulated two pole pumps (3600 RPM). He described two paths forward: manufacturers can submit data and DOE report back or they can
utilize the calculator for their own calculations on four pole pumps. Manufac turers said that very few (to zero) four pole pumps were sold and they would do the calculations . Dan confirmed that implied, and he anticipat ed, that would resu lt in one set of C values for both equipment classes based off a two pole configuration. Alison, following on, suggested that as a consequence the team would not do analysis on the VT-S four pole or RSV, since there ar e no energy savings.

The facilitator did a brie f summary of WG’s accomplishments du ring the last two days, including:

 Detailed presentations on LCC, shipments and NIA—completing the major analyses for the negotiation

 A first exchange of standards prop osals from the two major caucuses

 A detailed presentation on metrics

 Discussion on a report to ASRAC

 Considered some key issues on the test procedure

The meeting adjourned at 2:58 PM

Meeting Summary compiled by Doug Brookman July 8, 2014 publicsolutions@earthlink.net