U.S. DEPARTMENT OF ENERGY

OFFICE OF ENERGY EFFICIENCY AND RENEWABLE ENERGY

TEST PROCEDURES FORWATER HEATERS, RANGES, OVENS,

COOKTOPSAND MICROWAVE OVENSAND CLOTHES WASHERS

JULY 12 & 13, 1995

VOLUME II JULY 13, 1995INDEX

PAGE

Welcome and Opening Remarks

- Marc LaFrance 5 Manufacturer site visit

- Marc LaFrance 9 LBLAnalysis Explanation

- Peter Biermeyer 19 Clorox Company 43 Questions andAnswers 52 Load Size/Use 70 Reduced RemainingMoisture Content 102 TUFs 144 Horizontal-Axis Market Acceptance 157 General Discussion 1713 1 PRO C E ED I N G S 2 (9:40 a.m.) 3 MR. LaFRANCE: Good morning. I'm 4 Marc LaFrance, the laundry rulemaking program manager 5 in the Office of Codes and Standards. 6 On behalf of the Department of Energy, I 7 thankyou for taking the time to participate in this 8 public workshop, concerning the Department's second 9 round of rulemaking forminimum energy conservation 10 standards for clothes washers. 11 We will begin with introductions around the 12 room. Please state yourname and the company 13 organizationyou represent. 14 I'mMarc LaFrance from DOE. 15 Iguess we canprogress to the right here. 16 MR. BIERMEYER: I'm Peter Biermeyer from 17 LB&L. 18 MR. ROSENQUIST: I'm Greg Rosenquist from 19 Lawrence BerkeleyNational Laboratories. 20 MS. RANDSE: I'm Jane Randse from General 21 Electric Company. 22 MR. JONES: Earl Jones, GE. 23 MR. HAWKINS: I'mLarry Hawkins from GE.4 1 MS. LaCLERIC: Beth LaCleric, GE. 2 MS. PRIOLEAU: Patton, Boggs, Clorox 3 Company. 4 MS. SEMMELMEYER: Florence Semmelmeyer, 5 Clorox Company. 6 MR. ZEIGHAMI: Ali Zeighami, Frigidaire. 7 MR. FOLLETT: Jeff Follett, Frigidaire. 8 MS. GRIENER: Linda Griener, with 9 Frigidaire Company, Washington office. 10 MS. RIGGETT:- Cheryl Riggett, Frigidaire. 11 MR. THIELE: Terry Thiele, Frigidaire. 12 MR. STILWELL: Dick Stilwell, Maytag. 13 MR. WASSON: Michael Wasson, Ashville (ph) 14 Incorporated. 15 MR. JACOBSON: Ron Jacobson, Proctor & 16 Gamble Company. 17 MR. MANTHEI: Bill Manthei, Speed Queen 18 Company. 19 MR. FREESMAN: Mark Freesman, Speed Queen 20 Company. 21 MR. ADAMS: Carl Adams, Department of 22 Energy. 23 MR. MILLER: Peter Miller. NRDC.

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~ ..5 1 MS. SMOZZO: Margaret Smozzo, ACEEE. 2 MR. STEPHENS: Charlie Stephens, Oregon 3 Department of Energy Policy Staff. 4 CURT RIECHMAN: Whirlpool Corporation. 5 MR. ANDERSON: Vince Anderson with 6 Whirlpool. 7 MR. STILES: Rich Stiles, Whirlpool 8 Corporation. 9 MR. MORRIS: Wayne Morris withAHAM staff, 10 Washington. 11 MR. WEIZEORICK: Jack Weizeorick, AHAM. 12 MR. OLDING: Bob Olding, AHAM. 13 MR. McCABE: Michael McCabe, Department of 14 Energy. 15 MR. KOMAR: BJ Komar, Energetics. 16 MR. KAO: Jim Kao, NIST. 17 MR. MARGOLIS: Eugene Margolis, Department 18 of Energy, general counsel's office. 19 MR. LEVY: Ed Levy, the same. 20 MR. LaFRANCE: Thank you. If you have not 21 already done so, please fill out the information 22 requested on the sign-in sheet, with Sandy Cooper. 23 The purpose of today's meeting is to6 1 discuss issues and gather information related to 2 energy efficiency standards for clothes washers. 3 Statements and information submitted here today, or 4 within 30 days, will be added to the public record, 5 and will assist the Department in developing a notice 6 of proposed rulemaking. 7 All statements submitted under issues to be 8 discussed and will be considered before the 9 Department publishes a notice of propose rulemaking. 10 As the presiding official, I will set the 11 guidelines or conducting the meeting and provide 12 other pertinent information. In order to obtain as 13 much relevant information as possible and to enable 14 interested persons to express their views, the 15 meeting will be conducted informally. 16 The focus of this meeting is on technical 17 information related to the energy efficiency of 18 clothes washers. There shall be no discussion of 19 proprietary information or other commercial matters 20 regulated by antitrust law. 21 Please keep side conversations to aminimum 22 to avoid interrupting a presenter. If a lengthy 23 private discussion is needed, please move outside the7 1 room. 2 It may be necessary to cut off discussion 3 on some topics to maintain the schedule. We will try 4 to allow some time at the end of the meeting to 5 complete discussion of these topics. 6 I encourage all persons present to 7 participate as much as possible to that the 8 Department may get a full spectrum of opinions on 9 these issues. 10 Please let me mention a few general items: 11 In keeping with the regulations of this 12 building, there is no smoking allowed in this room. 13 We will take a one-hour lunch break at a 14 convenient time, near twelve noon, as the schedule 15 permits. 16 This meeting is scheduled to end by four 17 p.m., or sooner, if all items have been completely 18 discussed. Items that have not been completely 19 discussed by four p.m., may be addressed in the 20 written statements. 21 Follow up or additional written statements 22 maybe submitted but not later than August 14th, 1995. 23 In approximately two weeks, the written8 1 transcripts of this meeting will be available for 2 inspection at the Department of Energy's Freedom of 3 Information reading room, located in room 1E190, down 4 this main hallway here. 5 Anyone wishing to purchase a copy of the 6 transcript may make arrangements with the court 7 reporter. 8 All written statements will be available 9 for public inspection in the Department of Energy's 10 Freedom of Information reading room. Their telephone 11 number is 202-586-6020. 12 Written statements should be provided to 13 the Department of Energy, as noted in the Federal 14 Register advance notice, November 14th, 1994. 15 We appreciate the time and effort you have 16 taken in preparing for this meeting and are pleased 17 to receive your comments and opinions. 18 Thank you for attending today's workshop. 19 20 21 22 239 1 MANUFACTURER SITE VISIT 2 MR. LaFRANCE: First, the agenda item is to 3 give a little bit of a presentation on the feedback 4 from the manufacturer's site visit. 5 We're here today for the clothes washer 6 rulemaking public workshop. It's the Department's 7 first workshop during an official rulemaking, and 8 it's a process to improve our communications with our 9 stakeholders and customers. 10 This is the second round of rulemaking for 11 clothes washers. It was initiated by the Advance 12 Notice that was published last November. We received 13 considerable amount of comments in response to that 14 notice. 15 Today, we have a listing of all of the 16 comments on record at the information table. 17 We also have a few additional comments that 18 have not been added but will be added shortly. 19 We conducted an initial engineering 20 analysis, which we made available to the 21 manufacturers approximately over a month ago. 22 Then we conducted manufacturer site visits. 23 We visited the top five U.S. laundry manufacturers,10 1 which represented approximately 98 percent of the 2 market share. This entire effort, the manufacturer's 3 site visits and today's workshop, is a new, improved 4 method of exchange of informationwith industry to 5 get the best data that's possible so we can do a 6 thorough analysis. 7 Presently, we will develop a final 8 rulemaking schedule at the conclusion of this 9 workshop in the next fewweeks, dependent upon what 10 happens today. 11 We're encouraging as much participation as 12 possible so that we can address the issues that are 13 remaining before we can go ahead with the additional 14 analyses and get to a point of Proposed Rule. 15 We also understand that this rulemaking is 16 causing uncertaintywithin the industry, as far as 17 what standard level will be imposed and what impact 18 it will have on various companies. We're aware of 19 that, and we're doing the best we can to minimize 20 that uncertainty problem,but obviously we have to do 21 a thorough job in the analysis to make sure it's 22 accurate. 23 Here's some of the matters that we're1 considering from result of the site visits: 2 The first element deals with, virtually all 3 the companies are developing significant improvements 4 in energy efficiency on some type of model. 5 Most companies have invested a significant 6 amount of capital, or will be, in the production 7 process, and they have, and that's the way they've 8 been able to maintain theirproductivity and maintain 9 costs as well. 10 The other part of the cost situation, which 11 we have to be careful today with proprietary 12 information, deals with the large distributors which 13 have been expressed to us. Over the last 10 or 15 14 years, the move from smaller distributors to larger 15 distributors has really made it a difference to the 16 industry, where now the distributor can control the 17 price a lot better than they could in the past. 18 So when people think about pricing, it 19 might not necessarily be controlled by the consumer 20 but more by the distributor to the consumer. So it's 21 a little bit of a concern to us, obviously, and we 22 need to investigate that more. 23 MR. FREESMAN: Marc, when you say12 1 "distributor," do you mean retailer? 2 MR. LaFRANCE: Well, retailer, right. The 3 large retailers that everybody is familiar with, I 4 would imagine. 5 Here's some of the feedback on the analysis 6 and assumptions that we presented on the initial 7 analyses, which are available on the docket. For the 8 people that haven't received them, the non9 manufacturers. 10 The first specific feedback we had was 11 dealing with the design option of reduced clearance 12 or the annulus in between the tub and the basket. We 13 had added this design option with reduced remaining 14 moisture content, the design option, and that is, 15 from what we've learned, technically not feasible, so 16 we've separated that in today's analysis, and Peter 17 will explain more about that. 18 We also got feedback that the 62 percent 19 baseline case of RMC is valid, and there is also a 20 little bit of concern from some companies that they 21 believe it's higher than that; but there's also a 22 question of whether or not they tested with larger 23 test loads versus smaller test loads, so, at this13 1 point, we still believe that 62 percent is valid. 2 We were told that the analysis didnot 3 includegas dryers. When you consider the savings 4 for RMC in the dryer,we were only looking at the 5 electric dryers, so the analysis today, that Peter is 6 going topresent, includes the gas dryers. 7 We alsomade an assumption that there would 8 be zero savings for anyreduction in detergent. 9 There have beenpresentations that have said that the 10 detergent costswill decreasebecause of using less 11 detergent, and from everythingwe've learned, we 12 believe that the assumption should be that there will 13 be zero impact to detergent regardless of the level 14 of the wash water. 15 We also got feedback that the base case for 16 the manufacturer's cost is low, and we were able to 17 get ahold of some public data that generated a 18 highermanufacturer cost which, for the analysis 19 point, has resulted in areducedmarkup rate. 20 That reducedmarkup rate will make the 21 engineering analyses look more cost-effective, or the 22 design options look more cost-effective. However, on 23 amanufacturer's impact analysis, it'll make things14 1 won't look as promising because of the impact to the 2 manufacturer. 3 There's also some sensitivity analysis 4 that's included in the analyses today for higher and 5 lowermarkups. I realize we can't really talk about 6 markups today with the situation of the companies, 7 but we can always discuss that in confidential 8 meetings or in confidential statements if need be. 9 There was also talk about the payback and 10 whywe use the simple payback, and that was something 11 that was provided in the legislation to us about the 12 presumption of economic justification, so that's why 13 we used that. 14 Some feedback on consumer impact issues: 15 We believe there will not be an impact to 16 the washperformance or fabric care for horizontal 17 access to clothes washers. 18 This was not a unanimous opinion, but from 19 what we've learned, we believe, at this point in 20 time, there will not be an impact to the current 21 level of performance with the.traditional clothes 22 washers. 23 We also believe that the loading

15 1 accessibility problems can be overcome by unique 2 design characteristics that any particular 3 manufacturer chooses to implement in their new 4 designs. 5 One of the concerns we have is the initial 6 purchase price for horizontal axis clothes washers. 7 We believe it will be considerably higher than the 8 existing retail price on a percentage basis. This is 9 somewhat of a concern to us, and we're looking for 10 information or opinions on-how to assess that 11 potential impact to a consumer. 12 Presently, we do manufacturing analysis and 13 consumer analysis, which takes into account increased 14 price results and reduced sales, and that type of 15 thing. I'm sure you're all familiar with our past 16 work in that area, and the previous TSF. 17 But we're looking for any new information 18 that you might have that could help us in addressing 19 that potential problem. 20 We are also looking for additional 21 information for the potential energy savings of 22 vertical-axis clothes washers. 23 We've also received, which is not reflected16 1 in the analysis that you have today, additional data 2 from AHAM regarding some of these design options, and 3 we can talk about that a little bit in today's 4 meeting when we discuss some of the issues, but I 5 guess there's still a concern. 6 Right now, we'd like to learn what are the 7 potential savings with automatic fill control, 8 adaptive fill control, and is there any other 9 technology that is available that could save 10 significant amounts of energy in a vertical-axis 11 machine. 12 My last slide deals with request for 13 additional manufacturer impact. We need to conduct a 14 manufacturer analysis, and it's dependent upon 15 primarily proprietary and confidential information 16 from manufacturers. 17 LBL has distributed a survey request with a 18 confidentiality agreement. At this point, we have 19 not received any responses. We have received a few 20 number of questions regarding the survey, but it is 21 really imperative that we obtain feedback from the 22 industry to do a thorough analysis. We believe this 23 is very important.17 1 There is also, depending on what standard 2 level we were to impose, we have a concern about the 3 lead time for manufacturers would be a possible point 4 that we could change fromwhat's been established for 5 other products that's been longer than three years, 6 to justify for the manufacturer analysis for a 7 particular standard level. 8 So there's quite a few things that we need 9 to look at, so we really encourage people to 10 providing that confidential information to LBL, and 11 the Department does not get that information, so will 12 not become part of a FOIA request because it's 13 specifically set up with just LBL and not us. 14 That's all, and we'll move into the next 15 part. 16 MR. JONES: Marc, let me askyou. How are 17 you looking for feedback from the comments you just 18 made, or are you looking for feedback? 19 MR. LaFRANCE: We definitely are looking 20 for feedback. I think, at this point, if we talk 21 about every issue, it could take probably quite some 22 time. 23 Once Peter finishes his presentation and18 1 any individual presentations from organizations, at 2 this point, I'm only aware of one presentation from 3 the Clorox Corporation. If anybody else wants to 4 make presentations, though, there's plenty of time 5 available on the agenda. After those presentations, 6 then we'll open it up towards specific questions. 7 Obviously, you can ask questions right now 8 if you have a quick question, but if it's a lengthy 9 question,maybe we should just hold off until the 10 latter part of the agenda. 11 We know that the presentation part of this 12 agenda is rather large, and that's going to be 13 significantly reduced. 14 For time constraints, this whole workshop 15 may be significantly speeded up, where we might not 16 take a lunch break, if people agree and depending on 17 how things are going. 18 19 20 21 22 2319 1 PETER BIERMEYER 2 LAWRENCE BERKELEY LABORATORIES 3 MR. BIERMEYER: I'm Peter Biermeyer from 4 Lawrence Berkeley Laboratory. You notice we just 5 changed our mind. 6 MR. LaFRANCE: Excuse me, real quick, 7 Peter. I forgot to mention one thing. 8 Also, today, when you speak, you need to 9 say your name and the organization that you 10 -represent, just for the court reporter. 11 The previously discussion was from 12 Earl Jones, General Electric Corporation. 13 MR. BIERMEYER: I'll start with just a 14 quick overview. 15 Oh, by the way, you have, or most of you 16 have, copies of this, and some of the print will be 17 very small. I'm expecting people to kind of follow 18 along. 19 MR. LaFRANCE: Actually, they don't. We 20 need to pass it out. Sorry. 21 MR. BIERMEYER: .They don't. Okay. Well, 22 pass that out. 23 The first part is sort of a general list.20 1 Basically, I'm just like to say where we've been. 2 The first thing at LBL what we do is we try to gather 3 some data frommanufacturers. This usually takes 4 place through AHAM. We send out questionnaires, they 5 send back information. 6 Then what I did is, I did an initial 7 engineering analysis, where I take AHAM data and I 8 combine it. As Marc mentioned, that's been sent out 9 to people. It's publicly available. 10 After looking at that, we have some more 11 questions, so we asked for some more data. 12 While waiting for that, Marc, myself, and 13 some other people from DOE, made all plant visits, as 14 he talked about. 15 After that, what I did is, we revised the 16 analysis. We were going to incorporate the new 17 information from AHAM. I just got it last Friday 18 because I didn't have time to do that. But what I 19 did is, we made some adjustments to the analysis. 20 The new data, as I said, has been sent to 21 us, and that will be used in future analysis, and 22 here we are at the workshop today. 23 Again, this is a little more detail,21 1 nothing new, really. When we sent out a 2 questionnaire to AHAM, they responded by giving us 3 informationbased on two different test procedures: 4 The existing DOE state procedure and a test 5 procedure based on something the AHAM came upwith. 6 At the time it was Revision 6; they since then made 7 some changes. 8 So I took those two sets of data, and I 9 analyzed it four different ways. Basically, as they 10 came directly fromAHAM, basically,without a 11 modified energy factor, and then Iused the same data 12 and added in the energyused to dry the clothes after 13 it comes out of the washer, and came upwith AHAM, 14 with amodified energy factor, and a DOE test 15 procedure with amodified energy factor. 16 Let me go over the changes that were made. 17 I'll call this the RevisedAnalysis. 18 The first four were sent, as Marc said, to 19 all the manufacturers. This is called the Initial 20 EngineeringAnalysis. Just to keep everything 21 separated, I'll call this the PreliminaryAnalysis. 22 If you're not familiar with it, it'll be 23 explained a little bit further on.22 1 But we have a dryer use factor. For the 2 initial analysis, it was .8. AHAM had used .83. My 3 preliminary analysis is .844, and that's just the 4 ratio of washer cycles per year compared to dryer 5 cycles per year. 6 We also made a change in the water inlet 7 temperature. In the DOE test procedure, it's 140 8 degrees. The AHAM data that I received from AHAM it 9 was 130 degrees. We adjusted that to 105, using 10 calculations. 11 There was also some comment that tighter 12 tub tolerance would be better called tighter tub 13 clearance. I think everyone, when they answered the 14 questions concerning tighter tub tolerance design 15 option, they had in mind tighter tub clearances, just 16 a better description I think of what we were all 17 doing. 18 As Marc mentioned, in the initial analysis, 19 I had tighter tub clearance combined with lower 20 remaining moisture content, and we got a lot of 21 comments that these aren't very compatible because 22 one way to get lower remaining moisture content is to 23 use higher spin speed.23 1 To use higher spin speed, the annulus can't 2 be any smaller because you have problems with the 3 dryer drum. So that seems to be pretty universal 4 among all the manufacturers. 5 We added payback and life cycle costs, 6 assuming gas dryers as well as electric dryers. We 7 were asked to do that. 8 We changed themanufacturer retail price 9 markup to 1.7, and we also did some analysis assuming 10 different markups. Then, also, there were some minor 11 math corrections from the initial analysis. 12 MR. JONES: Peter, what was the basis for 13 the change in the assumptions on markup? 14 MR. BIERMEYER: Well, what we did is

-- 15 actually, I was going to get into that. 16 We got some information onmanufacturer 17 costs, andwe had some information previously from 18 retail costs for baseline, and we basically just 19 divided one into the other to come up with the 20 markup. 21 There's probably some difference of opinion 22 as to how that should be done. 23 The information that I just actually have24 1 received from AHAM last Friday includes some 2 additional data on the following design options. 3 Originally, what AHAM does normally is they 4 send us energy costs and energy savings of different 5 design options with respect to the baseline. What 6 LBL does is they combine them. 7 Sometimes when you do that, it can be made 8 more accurate by assuming it's combined already and 9 then getting information from the manufacturers. 10 There was also some disagreement as to what 11 improved fill control meant. Some people considered 12 it one design option, some people considered it be 13 something else, so that had to be clarified and split 14 into different design options. 15 To get into a little bit of the detail 16 where some of the numbers came from in the 17 engineering analysis: 18 The cost data is from the response to the 19 questionnaire we sent out, and AHAM compiles those 20 using shipment weighted averages and sends those to 21 us. That's where the costs came from. 22 There's where we got the markup, 1.7. We 23 used the retail price of $383, which was submitted25 1 with the initial engineering analysis that we got 2 fromAHAM. We got some marketing costs information 3 based onAHAM average sales and gross margin from ADL 4 report. That turned out to actuallybe 1.66. I 5 rounded it to 1.7. 6 Then working backwards, or dividing 383 by 7 1.87, you get $225. 8 Cycles per year, DOE, was 416. DOE 9 proposed is 392 cycles per year. 10 Fuel prices are based on the annual energy 11 outlook. Those are 1994 dollars projected into Year 12 2000. This was based on the 1994 projections. 13 There's probably new numbers out now, so it may be 14 revised slightly. 15 Water and sewage cost is based on Ernst & 16 Young data base. Al Diderman of Seattle water 17 department weighted it for population to get amore 18 accurate number. That's where we got that from. 19 Clothes washer life is 14.1 years. That 20 was used in the previous TSD and, reading that, it 21 said it got it from AHAM, so I have to believe it. 22 Water efficiencies: Also from DOE test 23 procedure.26 1 Water heater type: This was supplied along 2 with the other data from AHAM before the initial 3 engineering analysis. 4 Clothes dryer type: This is something you 5 haven't seen before. We've been asked to look at 6 both gas and electric dryers. I got the fraction of 7 clothes dryers that are electric and gas from just 8 recently submitted, beginning this month, and results 9 from the dryer questionnaire. They had the sales of 10 gas dryers and-the sales of electric dryers. 11 MR. JONES: Peter, what did you do by way 12 of -- what does that say about installed base? What 13 information do you have about that? 14 MR. BIERMEYER: I don't have that 15 information. I just have the -- well, I just did 16 this as a quick number. If you have information on 17 the installed base

-- 18 MR. JONES: Yes, but your assumption here 19 is that

-- 20 MR. BIERMEYER: This is just based on 21 sales. 22 MR. JONES: In 1990 what? 23 MR. BIERMEYER: This is the most recent27 data that AHAM sent me, so I guess it's 1994. Wayne Morris could probably answer that better than I could. MR. JACOBSON: In studies that I have done, just taking the AHAM data, if you go back and look at the last 10 years, that ratio has not changed more than maybe 1 or 2 percentage points over the entire time frame, analyses that I have done. It probably represents installed base, in other words. MR. BIERMEYER: Remaining moisture content:

We used a baseline reference, as Marc said, of 62 percent. That's also from AHAM. Now, in the initial engineering analysis and subsequent analyses, a couple of general assumptions were made: There weren't any differences load handling capacity of the different -- small differences in drum sizes. It was about 2.9 cubic feet; for a vertical-axis was 2.7 something; for horizontal, I

assume they were comparable. I didn't adjust the

energy numbers for those differences. The next paragraph there-had some other changes, just basically common sense type things. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 2328 1 If there was an option that had improved 2 motor efficiency but it showed the water changed by a 3 lot or something, said, well, this doesn't seem 4 right; that's just the statistical reason for that, 5 and so I adjusted it just so things could make sense 6 on a common sense basis. That's what those are. 7 There were some design options that I kind 8 of separated out and looked at individually. 9 These usually had either very high paybacks 10 -or long paybacks, or they had very little effect or 11 some manufacturers said they didn't have any effect. 12 The reason for this is usually we would 13 include those in, but we wanted to get some numbers 14 very quickly, wanted to simplify it, so we take the 15 major, basically, design options. That would really 16 have an effect on the analysis and concentrated on 17 those. 18 I also put sud savers out at the bottom of 19 my table, and there is a table in there and I'll get 20 to that later. 21 Again, with the.preliminary analysis now, 22 which is a revised version of the initial analysis, I 23 only did that for the combination of AHAM, including29 1 lower remaining moisture content. Another way of 2 saying that is with modified energy factor. 3 The reason for that was also a time 4 constraint, basically, and also because, in talking 5 to manufacturers, that's the one they were 6 concentrating at, because we initially did this four 7 different ways, and that's a lot to look at and 8 concentrate on, so we've sort of picked one that 9 would probably be most likely closer what the final 10 version would look like and concentrated on that. 11 Typically, when we do the analysis, we sort 12 things by payback and cumulative payback. There were 13 a few exceptions for other reasons, such as, in some 14 cases -- well, in this case, actually -- I separated 15 things into different paths: A vertical path, into a 16 horizontal path, because some of the costs could be 17 different for the same design option, depending if 18 you're starting out with a vertical base or a 19 horizontal base. 20 The baseline numbers are originated from 21 Wayne Morris of AHAM, an energy factor of the same 22 class. 23 I'll kind of ao over this sort of auicklv30 1 because I'll be here forever if I don't. 2 Basically, what I have on the next couple 3 of overheads is how Iwent through the design 4 analysis, step by step, for each design option. The 5 basic idea is you don't want to count the same energy 6 twice, so you make adjustments as you go along. Most 7 of the time it's taking certain ratios and 8 multiplying it by the last design option to get some 9 adjusted numbers. 10 So, as Iwas saying before, basically, I 11 split this latest revision into three different 12 sections, really. 13 The first one is vertical-axis; the second 14 one is horizontal-axis. In this case, the lower 15 remaining moisture content was actually a faster 16 payback than the horizontal-axis design. Since the 17 baseline was a vertical-axis, I'd be adding lower 18 remainingmoisture content to vertical, and then 19 going to horizontal. 20 To solve that problem, I just put the 21 horizontal first and then added remaining moisture 22 content on this path. 23 So on the last two paths of design options,31 1 you'll notice I didn't include tighter tub clearance 2 because I didn't want to combine that with lower 3 remaining moisture content because of some problems 4 that could happen with higher spin speed. 5 So I still wanted to include that design 6 option, so I started a separate path, using these 7 three design options that don't have any lower 8 remainingmoisture content. 9 That brings me to calculations. I don't 10 think this is anything really new. 11 Energy factor is a combination of hot water 12 energy and mechanical energy. To get amodified 13 energy factor, you included the dryer energy required 14 after the clothes are through being washed. 15 Moisture removal energy, I've mentioned, 16 was based on 62 percent remaining moisture content, 17 and I've got some more equations on that later. 18 What you see here is the equation I 19 actually used for the preliminary analysis in 20 determining the amount of energy needed to completely 21 dry the clothes after they've been washed. 22 We have something called the dryer 23 utilization factor. It's the ratio of dryer cycles32 1 to clothes washer cycles per year. 2 We used the maximum clothes load for 2.9 to 3 3 cubic foot washer; maximum load is 12.1 pounds. 4 That's from the AHAM proposed test procedure. 5 We used an average load fraction of .52, 6 and that originated from some P&G data. 7 Basically, I have the equation there. We 8 used .5 kilowatt hours per pound of moisture. I 9 think most of the manufacturers have seen this. 10 Here again, we changed the dryer use factor 11 from what I initially had used, .8 to .844. There 12 are some examples there. 13 In the initial analysis, I didn't look at 14 gas dryers at all, and I had someone ask me to also 15 look at gas dryers to see what the savings would be 16 in the real world. 17 So I didn't want to make the assumption 18 that gas dryers have exactly the same efficiency as 19 electric dryers, because I didn't know that to be 20 true. So I thought I'd come up with an adjustment 21 factor. 22 The way I did that is, I have just recently 23 gotten, a couple weeks go, again from AHAM, dryer33 1 information from the questionnaires that we sent out. 2 These are just somenumbers that they sent me. These 3 are based on 70 percent remaining moisture content, 4 as the startingpoint. 5 I just took the ratio of the energy, and 6 converted everything.tokilowatt hours; took the 7 ratio of gas to electric andmade that the correction 8 factor. Multiplied that by the kilowatthours per 9 pound for an electric dryer to come up with kilowatt 10 hoursperpound for a gas dryer. 11 It was also interesting to notice on this, 12 after Idivided the total energyby 7pounds, which 13 is the test load for adryer, it's .32, .35, it 14 wasn't .5kilowatthoursper pound, and that'swhat 15 we're using. So maybe someone can answer that. 16 Hotwater inlet temperature adjustments: 17 As Ihadmentioned at the beginning,we wanted to go 18 from 130 degree hotwater inlet to 135 degreehot 19 water inlet, andwe wanted tomake that adjustment 20 with the data wehadwithout having to go back and 21 retest everything. 22 There are several ways of doing this. 23 There's one equation. Basically, if you34 1 multiply itby the initial value, theAHAMvalue 2 received beforeany kind of additions or 3 combinations, multiply that by 75 over 70. It is 4 equivalent to whatyou see there. That will give you 5 anewhotwater energy. 6 So, basically, I justmade adjustments to 7 the hotwater energy, adjustedthat upward. 8 MR. LaFRANCE: Basically, it increases the 9 energy consumption by 7.14 percent. 10 MR.BIERMEYER: I also did this from a 11 completely different perspective, and I got basically 12 the same numbers, so Idid that several different 13 ways. Idid those calculations several different 14 ways. 15 For the thermostatic mixing valve, at the 16 bottom of the overhead here, basically I said the hot 17 water energyuse for a thermostaticmixing valve at 18 135 was the same as itwas at 130 degree inlet, so 19 I'mbasically sayingwhatever you tempered thewater 20 temperature down to, stayed the same, so this option 21 should show increased energy savings because of that, 22 becauseyou're startingwithhigher water 23 temnerature.

--- r--35 1 That bringsme to the engineering analysis 2 tables. Sincewe keep addingmore information to 3 these tables, they got a little bit longer. Now 4 they're fourpages long. These are also on the back 5 of your handout. 6 The firstpage, basically, is information 7 on costs, energy, dryer energyandwater. 8 The secondpage contains cumulativepayback 9 calculations. 10. The thirdpage is the intermediate step 11 that I used to get payback and life cycle costs. On 12 thatpage, I calculate all of the annual operating 13 costs. 14 Then the fourth page is life cycle cost 15 calculations. 16 By the way, don't pay any attention to 17 where it says View 12 orView 8. There were some 18 lastminute changes, andthatnumber doesn't 19 necessarily correspond to my overhead, so you're not 20 missingany pages. 21 Ihave examples here fordryer energy 22 required and some examples for annual operating 23 costs. I sort of talked about those. If there are36 1 further questions, I cango into furtherdetails 2 later. 3 MR.MORRIS: Couldyou explain theuse of 4 the fuelpricemultiplier? 5 MR.BIERMEYER: Sure. What that is, that's 6 the number that was invented by Lawrence Berkeley 7 Lab. One of its first uses was tomake some 8 adjustments in fuel price forwater heater analysis. 9 The reasoningbehind those numbers are, in 10 placeswhere there are electric water heaters, or the 11 electricityprice is lower than say the national 12 average, and that's why peoplehavemore electric 13 waterheaters in a certain area than gaswater 14 heaters. 15 So this was an attempt, and Idon'thave 16 all the details but analysis wasmade of this, and so 17 that adjusts the price closer to what it really is 18 out in the real world forwhatever appliance you're 19 looking at. 20 So like for an electric water heater, 21 peoplewouldmore likelyhave an electric water 22 heater where electricityprices are low and that's 23 why thatmultiplied, for example, is .9.37 1 The gas was -- fuel pricemultiplier was 2 1.01. Itdidn't seem tomakemuch difference. 3 The way Iused them here, to simplify 4 things, was just tomultiply all of the gas prices by 5 the gas fuelpricemultiplier, all the electricity 6 prices by the electric fuel pricemultiplier. 7 MR. LaFRANCE: Also, if you look at the 8 footnotes in the analysis, you can see that we used 9 like .09, you just said, Peter. 10 MR.BIERMEYER: Right. 11 MR. LaFRANCE: And that actually drops your 12 price so itmakes things less cost-effective for 13 electricity, so it'smore conservative analysis is 14 what it comes down to. 15 MR. BIERMEYER: Here's the first page of 16 thepreliminary engineering analysis. What you 17 basically see is this area over here. This is all 18 vertical-axis, with different design options, which 19 is why it's called the vertical-axis path. 20 This rowhere, this is all based on 21 horizontal design. 22 Baseline at vertical; this is horizontal. 23 It's allhorizontal design after that.38 1 This over here is where I look at all of 2 the design options, without remainingmoisture 3 content, so Icould get tighter tub tolerance. 4 Over here are other ones that they either 5 had very high payback, or there's two here -- auto 6 fill and adaptive control,which I just got some 7 information on that. Ididn'thave it at the time I 8 made this chart. 9 I think all of the other headings are 10 fairly explanatory. 11 The energy factoryou seenext to clothes 12 container doesn't include dryer energy. Themodified 13 energy factordoes. 14 The second page of the analysis has all of 15 the paybacks. This time, we looked at more 16 combinations. 17 Wehave electric dryer with electric water 18 heater, electric dryer gaswater heater, and then we 19 tookproportions of electric and gas water heaters 20 and combined themwith electric dryer to get numbers 21 and all these different combinations. 22 So it's just takingproportions ofwhat's 23 out into the field, andwe talked about that before.39 1 Thispage, Idon't believe Ihad these 2 numbers on the initial analysis. This is sort of the 3 intermediate step, where I calculate the dollars per 4 year for different energy use. 5 That includes the hotwater energy, the 6 machine energy, the dollarsper year forwateruse 7 and disposal; dollars peryear for electric dryer, 8 gasdryer, combined dryer, and all the different 9 combinations of dryers with either gas or electric 10 waterheaters. 11 MR. POPE: Excuseme, Peter. 12 MR. BIERMEYER: Yes. 13 MR. POPE: Are the water costs figured into 14 the payback numbers? 15 MR. BIERMEYER: In thepayback? Yes, they 16 are. Theway that works is, Ido page one, then I do 17 page three,where I calculate all the dollars, annual 18 operating costs, and that goes into bothpayback and 19 life cycle costs. 20 The nextpage Ihave here is the life cycle 21 costpage. Theydo all the combinations here. 22 Basically, the same thing as payback, except for life 23 cycle cost, and Ibelieve I showed you that equation.40 1 The 2percent, 6percent, and 15 percent 2 you see at the top are the three different discount 3 rates. Basically, the one to concentrate on is 4 probably the sixpercent one, and the two percent and 5 the fifteenpercent are sort of a sensitivity 6 analysis. 7 I'll skip over the footnotes. 8 Ididn't plot all the different 9 combinations thatyou see on the tables, but here's 10 an example of the electric water heater with electric 11 dryer. Whatwe havehere is three curves. This is 12 the six percent discount rate curve, or sets of 13 curves. This is both twopercent and fifteen 14 percent. 15 The numbersyou see here refer to the 16 design options that correspond to the numbers onyour 17 table. 18 So, basically,here this smaller curve that 19 goes to six has the vertical axis path. The longer 20 curve youwould see down here is thehorizontal-axis 21 path. 22 Ididn't include the one with tub tolerance 23 without remainingmoisture content, but the points41 1 tend to be up in this area, very tightly packed, and 2 I thought itwould just confuse the chart, so I left 3 it off. 4 Here's the same type of chart, life cycle 5 cost versusmodified energy factor. This was for 6 electricwater heaters andgas dryer, so slightly 7 different but in someways similar. 8 This chart here shows combinedwater 9 heaters and combined dryers. So these numbers come 10 basically right off the chart. We're lookingat 11 combinations ofboth electric waterheaters, gas 12 water heaters, gas dryers, and electric dryers, and I 13 took the proportion of each and all the combinations 14 and came upwith this charthere. So this probably 15 reflects what is sort of an average of what's out in 16 the field. 17 This chart here shows payback versus 18 modified energy factor with the clothes washer 19 lifetime represented by adotted line at the top. 20 This is cumulativepayback. That's also 21 data straight from the tables. 22 MR. STILWELL: This was based again on 23 combined?42 1 MR. BIERMEYER: The last chart I showed 2 you, that was a combinationwater heater and dryer. 3 Yes. So it takes into account both gas and electric 4 dryers, gas and electricwater heaters. Using those 5 fractions of each that I showedyou earlier, a 6 certainpercentage of gas, a certainpercentage of 7 electric. 8 This chart, the last chart, is the summary 9 of some analyses withdifferent markups, and so you 10 can see how -- I wanted to get it all one page, so I 11 don't have all of the different combinations here, 12 but it gives you an idea of what effect the different 13 markupshave on life cycle costs and payback. 14 Whether or not you think they're large or 15 not, there'sprobably a large difference of opinion 16 there. 17 That's all Ihave. Thankyou. 18 MR. LaFRANCE: Thank you, Peter. 19 20 21 22 2343 1 MR. LaFRANCE: At this time,we'll ask the 2 Clorox Company to present theirpresentation. 3 CLOROX COMPANY 4 MS. SEMMELMEYER: I'mMary Semmelmeyer, and 5 I'mwith the Clorox Company. Iwould like to thank 6 you forhaving the opportunity to expand a littlebit 7 on the comments that we submitted, and some good 8 news. On the agenda, there is an hour and ahalf 9 slotted for this. Iwill not take that long. 10 We'll be reviewing some facts about bleach 11 and the energydesign options; 12 One option thatwe're promoting thatwe 13 believe is apotential energy saver; 14 A few comments onutility to the consumer; 15 and, 16 Recommendations. 17 First, some facts about bleach: Sodium 18 hypochlorite is the active ingredient in Clorox 19 liquid bleach. The chemical composition is one 20 sodiummolecule, one oxygenmolecule, and one 21 chlorinemolecule, NaOCl. 22 Common names for Clorox liquidbleach 23 include regular householdbleach, and then also44 1 chlorine bleach. 2 Because of this last one, chlorine bleach 3 is often confused withraw chlorine, and that's not 4 the case. Similar to table salt,which is sodium 5 chloride, 1 sodium and 1chlorine molecule, sodium 6 hypochlorite bleachhas the chlorine in the formula 7 but it is not chlorine. 8 47 percent of allU.S. households use 9 bleach in their laundry, and this is because 10 consumers recognize its benefits: stain removal, 11 cleaning and whitening and also disinfectancy. 12 Clorox liquid bleach is one of themost 13 cost-effective and fast working disinfectants 14 availableworldwide. It kills avariety of 15 microorganisms, including E. coli, Salmonella, the 16 organisms that cause cholera, and it also disinfects 17 common cold and flu germs in the home. 18 Very well known forbeing able tokill 19 microorganisms in the home. 20 It is also safe for the environment. We'll 21 go into that a little bitmore. 22 Sodium hypochlorite bleach is derived from 23 saltwater and breaks down into saltwater during use.45 1 This is a littleknown fact. Starting out with 2 saltwater, you run a current of electricity through 3 it, and this generates chlorine, and then also sodium 4 hydroxide for caustic. 5 These two are separated,and then the 6 chlorine is bubbled through the sodiumhydroxide in a 7 solutionwithwater and then, througha chemical 8 reaction, thisproduces sodium hydroxidebleach. 9 By controlling the level of sodium 10 hydroxide and the amount of chlorine that is bubbled 11 through it, you can produce a 5.25 percent, which is 12 whatwe sell for regular householdbleach, and 13 there's ahundred percent reaction to chlorine, goes 14 to completion. 15 This 5.25 percent solution is then used in 16 thehome laundrywhere it reacts with soils, water 17 harness, stains in thewash, and hasvery, very rapid 18 degradation -- 95 to 98 percent of the bleach does 19 degrade back into salt water in the wash, and then 20 any remainingproducts are removedduringwastewater 21 treatment. So it's back to saltwater again. 22 It's avery environmentally friendly 23 process. It's avery environmentally friendly46 1 product. 2 It's the firstproduct that the American 3 Red Crosswill call for if there's adisaster, like 4 Hurricane Hugo is one; theLoma Creator earthquake in 5 California; North Ridge earthquake at Southern 6 California, and they need the bleach because theyuse 7 it to purify thedrinking water for people. 8 If boilingwater is not an option, this 9 getswater out to people that's safe for consumption. 10 One other thing to add: During the 11 circular process, no dioxins are formed; 12 No by-products that have the ability to 13 bioaccumulate to form; and, 14 It is not nontoxic to aquatic life. 15 I just want to point out real quick -- I 16 know you're all familiar with this already -- the 17 design option section. This is what Ireviewed in 18 coming up with the idea for anew design option that 19 can save energy. 20 The list for clothes washers includes a 21 variety of options that you're familiar with. 22 We believe that a sodium hydroxide bleach 23 dispenser shouldbe added to that list. Dispensers47 1 are already an option onmany of today'swashers. 2 Somemodelswill carry it. 3 It can potentiallyprovide energy savings 4 because it's viable in cold water -- bleach usage is 5 viable in cold water -- or unheated water, is another 6 term. 7 Basically, your stain removalperformance 8 doesn't decrease as the water temperature declines. 9 A second option for saving energywouldbe 10 that rewashing is less likely. This is not 11 necessarily an issue in today'smachines, but innew 12 machines whereperformancemightdropwith the new 13 energy factor, this couldbecome an issue. 14 Soyouwoulduse less energyby only 15 washing your clothes once, andyouwould use less 16 energybyhavinga situationwhereyouwouldn't need 17 to heat the water. 18 Another benefit is that soil removal is 19 highwith bleach invery coldwater. 20 I'm going topresent three charts from a 21 study that Idid comparing two products: a liquid 22 detergent and then the same liquid detergentwith 23 Clorox liquidbleach.48 1 I used a liquiddetergentbecause of the 2 wash temperatures that Iwas looking at. Ididn't 3 want any problemwith solubility in colderwater that 4 youmight experience with apowder. 5 So on this particular chart I'm looking at 6 oxidant sensitive stain, which includes redwine, 7 ink, berry, grape juice, coffee, tea, and the like; 8 an average of those stains, looking at thepercent 9 stain removed, and 4different water temperatures, 10 which Ihaveuphere in Celsius. I'll tellyou the 11 Fahrenheit conversion also. 12 The first is 10 degrees, which is very cold 13 water, about 50 degrees Fahrenheit. 14 20 degrees Celsius is 68 degrees 15 Fahrenheit,which is aboutyour average coldwater 16 temperature. 17 30 degrees is 86 Fahrenheit,which 18 depending on the climatewhere you live, a coldwater 19 incoming temperature, ifyou live in awarm climate 20 or, in a colder climate, this might be yourwarm 21 water. 22 Then 40 degrees Celsius, is about 104, 105 23 degrees Fahrenheit,which is your general hot water49 1 temperature, but in a colder climatemight beyour 2 hotwater might get down that low. 3 The green line is liquid detergentplus 4 Clorox liquidbleach, and consistently across all the 5 temperatures, it offers significant performance 6 benefits for stain removal for oxidant sensitive 7 stains. 8 Even in 10 degree Celsius water, 50 degree 9 Fahrenheit, 94 percent of the stains are removed. 10 Liquid detergent gives anicedescription 11 of the effect of temperature on performance. 12 As you increase the water temperature,you 13 consistently increase the performance. It is very 14 low in the colder water. 15 This next slide shows enzyme sensitive 16 stain,which are grass, gravy, and spaghetti. Again, 17 the samepattern. With Clorox liquid bleachand 18 detergent, you consistently get goodperformance. It 19 is a little bit lower in the cold, coldwater, but it 20 still is around 91 percent,very high stain removal. 21 The liquid detergent again shows how increasing the 22 water temperature improvesperformance but it is very 23 low in the coldwaterbecause the enzymes do perform50 1 better inwarmer temperatures. 2 This last graph shows bandy black clay 3 removal, which is a research clay. Again, 4 performance is veryhighwith Clorox liquidbleach 5 compared to detergent alone. It is stressed at the 6 lowerwater temperature, butyour stain removal is 7 close to 90 percent, at around 89 percenthere. 8 It does provide a significant benefit over 9 the liquid detergent in all temperatures. 10 One other thing to add here is Idid this 11 testing in avertical-axis washer, and it does show 12 at ahigher temperature of 40 degrees, whenyou drop 13 to 30 degrees, you do not see adrop inperformance 14 with the soil removal, which is important whenyou're 15 thinking about amachine that might be coming in the 16 futurewhere the water temperature will drop during 17 the load. 18 Vertical-axis washers hold their 19 temperature throughout the cycle. Youmight see a 20 1degreedrop, but in ahorizontal-axis washer,with 21 lesswater, and the clothing, bringingdown the water 22 temperature, yourwater temperaturewill fall off 23 during the cycle, and thiswill not affect the51 1 performancewith Clorox bleach. 2 Now, for bleachusage in lowerwaterwash 3 systems, we know that consumerswillwant to adjust 4 the amount ofbleach.that they're using for the load 5 size and the soil level, just like theydo today. 6 Dispensers that control the amount in the 7 addition ofbleach willmaximize the cleaning and the 8 soil removalbenefits that the consumer can get, and 9 to also synergizewith the detergents, allowing 10 betterwhitening and brightening. They can prevent 11 fabricdamage and alsoprevent dye damage. 12 This is very important forproviding the 13 consumer witha safe and effective way to add bleach 14 to a lowwaterwash system. 15 Iwant tomake some quick comments on 16 utility to the consumer. Rightnow, it includes your 17 cost benefit analysis, your efficiencies, energy 18 consumption, all of these issues. It doesn't 19 actually look athow well these washers clean 20 consumers' clothes. It's not part of the baseline 21 equation. 22 We feel very strongly that increased 23 utility that'sprovided by energy savings shouldnot52 1 be diminished ornegated bypoorperformance for the 2 consumer. 3 We believe that in incorporating actual 4 cleaning performance into the assessment of the 5 machine is critical to ensure that regulating the 6 energy does not translate to poor performance for the 7 consumer. 8 Recommendations are to addbleach 9 dispensers for sodiumhypochlorite bleach to that 10 design option list. This wouldmake this Option P 11 and include actual cleaningperformance in the 12 assessment of utility to the consumer. 13 Now Ican take questions. 14 QUESTIONSANDANSWERS 15 MR. LaFRANCE: Mary,your proposal to add 16 the dispenser as adesign option, areyou referring 17 to like adesign criteria, or a specific requirement 18 to have that type of design feature be regulated, or 19 are youproposing that some type of credit be 20 established for a clotheswasher thathas ableach 21 dispenser, something like that? 22 In otherwords, right now, the test 23 proceduredoes not cover the bleach dispenser53 1 provision. 2 MS. SEMMELMEYER: We like the idea of an 3 optionwith an energy credit, becausewe realize that 4 this does increase themanufacturer's cost in 5 producing the machine, but it is averygood option. 6 It does improve theperformance, itwill be 7 meaningful for the consumer, and we like the idea of 8 it as an option with a credit. 9 MR.LaFRANCE: Okay. So some type of 10 credit in the test procedurewill be provided in the 11 energy rating. 12 MS. SEMMELMEYER: Yes. 13 MR. LaFRANCE: Areyou aware or are the 14 manufacturers aware of whatpercentage of clothes 15 washers todayhave bleach dispensers? 16 MS. SEMMELMEYER: Wehave that information 17 about theClorox. Idon't know the number off the 18 top of myhead. 19 MR. LaFRANCE: If you couldprovide that, 20 thatwould help. 21 MS. SEMMELMEYER: Okay. 22 MR. LaFRANCE: Thank you. 23 MR.WASSON: Over theyears, themachines54 1 with bleach dispensershave declined. Do youhave 2 any comment as towhy the trend has gone from taking 3 that design option off themachines? 4 MS. SEMMELMEYER: Since I'm not an 5 appliancemanufacturer, Idon't know. Iwould 6 imagine itmightbe cost. Iknow they offer a range 7 ofmachines withhigher endmodels carrying 8 dispensers and lower endmodels without, which is 9 more typical. 10 Idon't know of any other appliance 11 manufacturers. That's mybest guess. 12 MR.ADAMS: Iwould assume that the 13 assumption here is that there would be energy savings 14 fromhaving the bleach dispenser because consumers 15 would choose to usemore coldwater washing and lower 16 temperatures. 17 Does Clorox or anyone else have any data as 18 to the differences between consumerusage of hot 19 waterwith machines that do and do not have bleach 20 dispensers? 21 Wewould need something like that in order 22 to assess what sort of credit or benefit would accrue 23 from such a desian ontion. ---- - - 1-

-55 1 MS. SEMMELMEYER: Wehave information on 2 consumerhabits, and coldwater usage, warmwater 3 usage, and hotwaterusage, andwe can correlate that 4 to usage. This is predictive of whatmightbe 5 happening in the newmachines. Also, where 6 performance is lower, theywill want to use something 7 to bring it up, and bleach can definitely offer that. 8 MR.ADAMS: This is informationyou can 9 provide to us? 10 MS. SEMMELMEYER: Thatwould bepredictive, 11 butwe can provide current usage information. We 12 will. 13 MR. STEPHENS: That also, Ipresume, 14 includes a way to get at the different -- the usage 15 of bleach by peoplewhohave the option andwho 16 don't. Obviously,people whodon't have the option 17 may figure out away to use bleach anyway. 18 Idon't knowwhetheryou can tell us that, 19 but perhaps you can tellus what fraction of the 20 peoplewhohave the option in theirmachine actually 21 use bleach? 22 MS. SEMMELMEYER: Okay. Idon'tknow the 23 numbers to your question, but Ido know that I56 1 consumers -- since manymachines don't have bleach 2 dispensers right now and consumers are using the 3 bleach, they typically eitheradd it at the beginning 4 as thewasher is filling and allow it to dilute, or, 5 forbest results, theywill dilute it into a quart of 6 water and add it fiveminutes into thewash cycle. 7 So they can use it right now easilybecause 8 theyhave access to thewasher during the cycle when 9 there's a large amount ofwater in there, and it is 10 very easy for them to usewith orwithout a 11 dispenser. 12 In newmachines, where theremightbe a 13 lockout situation, there might be lesswater. It 14 might be more difficult for them to safely add the 15 product, and ableach dispenser wouldmake that 16 easier for them. 17 As a result, then, they could use cold 18 watermore easily and get better results. 19 MR. ZARGHAMI: Inyourpresentation, you 20 indicated that usage of bleachwould prevent fabric 21 damage.. Wouldyou elaborate on that? 22 MS. SEMMELMEYER: Okay. Because youhave a 23 situationwith lesswater andyou still need to use57 1 the amount of bleachbecause, like detergent, bleach 2 is geared toward the soil and you have the same soil 3 because you're going to be washing the 6pounds of 4 clothes, still. You do have less water soyou need a 5 more controlled addition. Dispensers canpromote 6 that andprevent fabric damage. 7 MR. FREESMAN: So you're saying that the 8 dispenserwill control the damage not the bleach? 9 MS. SEMMELMEYER: The dispenser will 10 prevent the damage. 11 MR. FREESMAN: But the bleach itselfwill 12 not mitigate damage. I thinkwhat isAli's comment, 13 with represented, you're saying bleach -- bleach 14 usage in lower waterwash systems, andyou're talking 15 about prevent dye damage,prevent fabric damage, 16 which also goes to the question of colored clothes, 17 and so forth. 18 How effective andhowuseful is this bleach 19 withdyedmaterials? 20 MS. SEMMELMEYER: It's actually more 21 effective thatmany people realize. We have done 22 work, going out into the stores and buying garments 23 and testing them for safety, andmany garments that58 are colored are bleachable,and we encourage consumers to test thehidden parts of the garment with one tablespoon of bleach and a quarter cup of water, to determine if it can safelybe bleached. If you have ablueOxford cloth shirt and youhave apen that leaked all over thepocket, and the shirtwill not fadebecause it's safe for bleach, many consumers arevery happy that they can restore their garments that way. 46 percent of the color garments that are purchases in the surveywere actually safe for bleach, the internal work that we've done. MR.JACOBSON: I've got a couple of questions. The test data that you showed, didyou

run that, and what procedure did you use? Didyou add the bleach at the beginning of thewash cycle or did you add it halfway through? MS. SEMMELMEYER: Idid a 5-minute addition

on the 14-minute wash. MR.JACOBSON: Okay. Thank you. In responseto the question thatwas asked

aminute ago, we do have some data, as well, as to the number of loads that are typicallybleached. I 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 2359 1 thinkyoumentioned that about 47 percent of 2 householdsuse bleach. Ibelieve our data would 3 confirm that. 4 In terms of the number of loads that are 5 chlorine bleach, the number is down around 15, 17 6 percent, if I recall. 7 MS. SEMMELMEYER: That's correct. 8 MR. JACOBSON: That's because ofmostly 9 white loads, and so on. 10 MS. SEMMELMEYER: We get about 16 percent 11 in ourdata. 12 MR.JACOBSON: Okay. 13 MR. LaFRANCE: You just mentioned about 15, 14 16 percent of the clothes loads bleach are beingused 15 in them. Do you have anyhistorical information at 16 all on that? There's a concern about the temperature 17 use factors. You know, the use of coldwater has 18 been decreasing over time-- I'm increased over time, 19 and the use of hotwater has decreased. 20 Is the use of bleach a fact that's 21 affecting theway consumers areusing the clothes 22 washer orhas the use forbleach beenpretty much 23 constant or has it beendeclining or increasing, I60 1 should say? 2 MS. SEMMELMEYER: It hasbeen pretty 3 constant, and Idon't know thatyou could correlate 4 it today to the increase in coldwater usage because 5 people areusingmore bleach. 6 Traditionally, bleach users dowash inhot 7 water because that's an association that consumers 8 have. However, we do know that it does offer 9 benefits in cold water, and there's an application 10 here. 11 MR. LaFRANCE: Iguess the concern, so you 12 just -- did you want to make? 13 MR.JACOBSON: Iwas going to saythat I 14 think our datawould show that chlorine bleach usage 15 has probably been coming down slightly over the 16 years, and I think it'dbe hardpressed to say that 17 the increase in coldwater has lead to an increase in 18 chlorine bleach as an offsetting factor. Idon't 19 believe that's the case. 20 MR. LaFRANCE: I guess the concern Ihave 21 is ifpeople that use bleach are still using hot 22 water, then obviouslyyou've explained the potential 23 for savings. Obviously, it's rapidly pickedyouvery61 1 well. 2 I guess the concern is how can that 3 translate into real world savings in the consumer's 4 home? That's the concern that Ihave. 5 It goes back to Carl's question about 6 gettingdata thatwould show thatpeoplewho have 7 dispensers that are using bleach are using colder 8 temperatures than the people that don't use bleach. 9 If that doesn't correlate, then Idon't 10 think it -- it wouldn't justify a credit, but 11 obviouslywe've just been getting that data sowe can 12 analyze that, because obviously the potential is very 13 great. 14 MS. SEMMELMEYER: I'm not sure Iunderstand 15 your question. 16 MR. LaFRANCE: My questiongoes back to, I 17 guess, basically supporting Carl's request fordata 18 thatwould justify a credit,because you just 19 indicated thatpeople that areusing bleach tend to 20 use hotwater, andyou've shown that there's a 21 potential for savings, but if it's not really 22 happening, then it reallywouldn't justify a credit. 23 That's my concern.62 1 MS. SEMMELMEYER: Okay. 2 MR.LaFRANCE: Ifyou or P&G couldprovide 3 any data at all relative to this concern, it wouldbe 4 helpful. 5 MS. SEMMELMEYER: This is a situation where 6 wewill need to do consumer education, aswe are 7 already doing now, because we are always trying to 8 increase consumer usage. 9 Obviously; in the newwashingmachines, 10 there's awhole new situation, and there's an 11 opportunity there to get consumers to understand that 12 they canuse the product in cold water. 13 Currently, the push is forhot water 14 because the best cleaningperformance you can get is 15 inhotwater and we recommended for our consumers the 16 bestperformancepossible, which is hotwater, and so 17 that's whyyouhave ahigher percentage now of 18 consumers usinghotwater. 19 But, again, educationwith the newmachines 20 and the new situation will provide the opportunity 21 for increased coldwater usage. 22 MR. LEVY: Iunderstood you to indicate 23 that approximately half of colored fabrics could be63 1 washed withbleach orbleach safe. Doesn't that 2 presenta real practical problemwithusing the 3 productas away of producingwater temperature on a 4 widespread basis? 5 MS. SEMMELMEYER: We wouldn't recommend it 6 on thewidespreadbasis. Wewould continue to 7 recommend testing, becauseyou can't look at a 8 colored garment and know that's bleachable, that's 9 not bleachable, unless you're looking at fiber 10 content. Obviously, silk is not bleachable. 11 Consumers have to test for color garments, 12 but it is something that canbe done thatmany people 13 aren't aware of, and that's anotherpoint of 14 education that wework on. 15 MR. POPE: Mary, Ihave two questions for 16 you. 17 The first question is, in a scenario where 18 you have adispenser,do you foresee using less 19 liquiddetergentbecause youwere adding the bleach? 20 The second question is: Iwasn't aware 21 that themore efficientwashers hada lower 22 performance as far as cleaning goes. Iguess if that 23 were the case,my understanding and the biggest64 1 concernmight be on not somuch stain removal but 2 more onwhiteness retention. 3 I guess by question is: The results 4 presented sound like theyhadmostly to dowith stain 5 removal. What wouldbe the impact on bleach on 6 redeposition of soil and overall whiteness retention? 7 MS. SEMMELMEYER: It improves it. Letme 8 make sure I getyour questions right and in the right 9 order. 10 Towhitening, bleach is a fabricwhitener, 11 and it works best in synergy with the detergent. You 12 wouldn'tneed to reduce detergent usage. You would 13 stillwant touse the same amount. 14 Bleach is a complement to that. It should 15 be added after the detergent to allow fluorescent 16 whitening agents and enzymes in the detergent to do 17 their job in awash and then bleachwould come in and 18 complement that and take soils that are in the water 19 and decolorize them aswell as soils and stains be a 20 part of the soil, it double bonds, it solubilizes 21 them, and improves the soil and stain removal and 22 does improve redeposition, which is the prevention of 23 soil going back onto the clothing.65 1 Withwhitening,when it is added later in 2 thewash, it provides indefinitebenefit because it 3 allows the fluorescentwhitening agents to work, 4 which is amajorpart of detergents. 5 Does that answeryour question? 6 MR. POPE: Yes. Thank you. 7 MR. FREESMAN: When you said that 46 8 percent of the garments that you bought were 9 bleachable, have you done any shipment weighted 10 averages? Because Ithink you'd see a tendency to 11 say that the stuff that moves involume in the stores 12 would not be bleachable. Maybe some of the things 13 that don't sell in highvolumes are bleachable, and 14 what does that do for actual garments sold in stores? 15 Howwould that number come out relative to 16 46 percent of the garments that youpurchased? 17 MS. SEMMELMEYER: I can try and find that 18 out. I think that's an interesting question, the 19 idea being, did we buy agarment that maybe only two 20 consumers in thewhole country happened to own that's 21 bleachable, or is it something that's mainstream. 22 MR. FREESMAN: If youwalk into Wal-Mart 23 and buy some of the products in there, chances are --66 1 MS. SEMMELMEYER: Mostdenim and blue jeans 2 are bleachable, so that's one item that I knowhas a 3 prettyhighmarket permeation. 4 MR. FREESMAN: Indigo doesn't need much to 5 help it run. 6 MS. SEMMELMEYER: Avariety of denim, 7 though -- light colored denim, dark colored denim, 8 depending on -- I wouldn't necessarily bleach it the 9 first time Ibought it, but after a series of time 10 wheremost of the dye is going to bleed off has bled 11 off, you can definitely get stains off your jeans. 12 Let memake anote of that. 13 MR. JACOBSON: Getting back to the issue of 14 fabric damage, Ithink it's the concern for fabric 15 damage that reduces the number of loads andnumber of 16 fabrics that get bleached in the first place. That, 17 alongwith just odor concerns, I think areprobably 18 the two limiters to wider-spread chlorine bleaching. 19 Certainly, I thinkyour points are well 20 made that awell designed bleach dispenserwould help 21 to mitigate fabric damage, but the fact of thematter 22 is chlorine bleach is aggressive to two fabrics, and 23 you do get aweakening of the fabric, and that is a67 1 concern, and that does blend with the use of chlorine 2 bleach, as I think we're all aware. 3 MS. SEMMELMEYER: To a point. Consumers 4 take into account the usable life of the garment, and 5 something that has a stain on it that other products 6 are not going to get out, they will want to use and 7 they want to be able to use it. 8 MR. JACOBSON: That's right. 9 MS. SEMMELMEYER: There's tradeoffs, too. 10 MR. JACOBSON: There are definitely 11 tradeoffs, and I think that leads to why we see 15, 12 17 percent of loads getting bleach as opposed to 100 13 percent of loads. 14 MS. SEMMELMEYER: We see, also, because of 15 consumer miseducation. Most consumers do their 16 laundry the way their mother did the laundry. 17 MR. JACOBSON: Right. 18 MS. SEMMELMEYER: In all of our surveys, 19 how did you learn; that's the number one reason. If 20 mom was afraid of bleach or didn't use bleach, then 21 the adult child won't use it. 22 MR. JACOBSON: I think there's also 23 appointed in that the advancements that have been68 1 made with activated oxygen bleaches have certainly 2 provided an alternative to consumers for going after 3 bleach sensitive stains, and those products have been 4 very effective in themarketplace. 5 MS. SEMMELMEYER: Yes, to apoint. Again, 6 certain stains youmight find compared to performance 7 and certain stains youwon't be able to beat 8 hypochloritebleach. 9 I also don't believe -- you can correctme 10 if I'm wrong -- perhaps to just accomplish 11 disinfectancy in avariety ofwash temperatures, so 12 there are -- 13 MR. JACOBSON: The disinfectancy of 14 chlorinebleach is clearly one of its strengths. 15 MR.MILLER: PeterMiller with NRDC, to 16 pickup on that. There are nonchlorine bleaches in 17 themarket which have different characteristics. How 18 wouldyoupropose taking that into account in this 19 analysis, given that consumers are using both types 20 of bleach atdifferent times? 21 MS. SEMMELMEYER: Isee that as a separate 22 issue than the bleach dispenser, for sodium 23 hypochloritebleach, because they are different69 1 products, and they do have different uses. 2 MR.MILLER: So are youproposing that this 3 would be adispenser solely for chlorine bleach? 4 MS. SEMMELMEYER: Correct. 5 MR. JACOBSON: The oxygen bleach products 6 and the activated oxygen bleach products on the 7 market today are designed to go in, either in the 8 main detergent or as a supplement to the main 9 detergent at the start of thewash and are compatible 10 with thedifferent components of the detergent, so 11 there's not an issue there in terms of the use, and 12 they tend to be milder to the fabric. 13 They're not as aggressive to fabric, and 14 they tend to be virtually across the boardwith very, 15 very few exceptions to dyes. 16 MS. SEMMELMEYER: Yes. Basically, if you 17 canwash it with detergent, you can wash it with 18 color-safe mix. 19 MR. JACOBSON: Right. 20 MR.MILLER: So this dispenser would notbe 21 appropriate for alternatebleaches? Is that what I'm 22 hearing? 23 MR. JACOBSON: Correct.

--- --------- ------- 70 I MS. SEMMELMEYER: Correct. 2 MR.JACOBSON: You wouldn't need it for an 3 alternate bleach. 4 MS. SEMMELMEYER: Any more questions? 5 [No response.] 6 MS. SEMMELMEYER: Okay. Thank youvery 7 much. 8 MR. LaFRANCE: Thank you, Mary. 9 Would anybody else like to make a 10 presentation at all thismorning or go into general 11 discussion? 12 [No response.] 13 MR. LaFRANCE: Ipropose we take a five14 minutebreak. We'll come back in five minutes. 15 [Recess] 16 MR. LaFRANCE: I thought we were moving 17 ratherwell here. We started late, but there weren't 18 thatmanypresentations. We'll go all day if you 19 want to, but we felt thatmaybe the discussionwill 20 only take approximately twohours. In that case,we 21 won't take a lunch break. We'll just keepworking. 22 If people feel as if we want to take a 23 lunch break and go on for the entire afternoon,71 1 that's fine, we're here for as long as you guyswant 2 to discuss the issues. .3 We'll probably wait until 12:30; give it a

4 full hour, and then we'll see if we want to take a 5 break orkeep going on. 6 This morning Ipresented some slides and 7 Peter from LBLpresented the analysis. We alsohave 8 some topicswe'd like to discuss specifically, but, 9 at this point, we can bring up the particular issues 10 that people want and discuss them. 11 Also, the analysis that we've completed, at 12 this point, is our best assessment on the engineering 13 analysis, which provides the basis for all of the 14 other analysis -- being manufacturer, residential, 15 energy impact to the nation, environmental -- all of 16 the other analyses that we've explained in the 17 advanced notice. 18 So if there are issues that you havewith 19 particular analysis that we'vepresented today, it's 20 very important that you provide those issues to us so 21 that we can try to consider them again before, before 22 we finalize the engineering analysis anduse it for 23 the analysis.72 1 For example, there has been a little bit of 2 concern on the temperature use factors on the AHAM 3 proposed test procedure, and the AHAM test procedure 4 that was submitted, dated July 5th, had exact same 5 Tufs (ph) that the data was submitted on. 6 If we adjust those Tufs at all, then we 7 will need to readjust the energy consumption for the 8 analyses, so that's one example of something that we 9 plan on doing if we need to. But it's important that 10 people provide feedback on the analysis, but it's 11 going to provide the basis for all of the other 12 analyses. 13 So I'll just start. The first issue that 14 we have on the agenda deals with the load size for 15 vertical-axis versus horizontal axis. 16 The concern that we have here is we've 17 heard various concerns. One position is that the 18 variation in load size, quote, a fixed capacity drum, 19 would be based on consumer habits. This concern 20 about the European models would be used, larger loads 21 for the same amount of drum size. 22 There is also concern that the existing 23 test procedure and even proposed test procedure,73 1 might have a credit but not by design, justby 2 accident, and that is, wemeasured the capacity of 3 the basket to the uppermost portion, whereyou have 4 the basket ring, which some models arevery small and 5 other models could be rather large, and that doesn't 6 appear that that is actually occupied during the wash 7 cycle, but yet it's used in the calculations, so it 8 may begiving a large credit to the vertical-axis. 9 So that's another side. 10 We'd like to discuss that and get feedback 11 as towhat your thoughts are on that particular 12 issue, between the load sizes and the vertical-axis 13 and thehorizontal-axis, for aparticular fixed 14 capacity. 15 MR. STILWELL: Areyou asking for comments 16 now on that, Marc? 17 MR. LaFRANCE: Yes. It's an open forum, 18 anybody can speak. 19 MR. STILWELL: We talked a little bit about 20 this also, and I think there's an Australian test 21 procedure for washers that takes that factor into 22 account, and Ibelieve they multiply their 23 horizontal-axis washervolume by 1.2, to account for74 1 that difference. 2 Ithink what they're saying is that for any 3 given advertised volume, thewash baskets, the 4 horizontal washer can handle about 1.2 times what a 5 vertical axis can in terms of actual load size. 6 MR. LaFRANCE: What's the fundamental basis 7 behind that 1.2? Is it based on consumer habits or 8 is it based on the method of test or the inherent 9 design characteristics of each? 10 MR. STILWELL: Ithink it's just based on 11 the fact that all of the interior volume of a 12 horizontal axiswasher isusable space, where it is 13 not on avertical axis washer. 14 MR. JACOBSON: Iwould assume that that 15 analysis, with all due respect to the Australians, is 16 likemuchmaterials based on horizontal-axis, theory, 17 as opposed to what actuallyhappens. 18 Everything we know says that consumersmake 19 these decisions based upon their perceptions. 20 I think it's clear that consumers perceive 21 the capacity of thesemachines to be smaller. 22 Therefore, anykind of factorwhich would assume that 23 theywould act counter to thatperception, is75 1 probablywrong and certainly shouldn't be accepted by 2 DOEwithout somevery extensive analysis or basis to 3 support it, aside from onewhich is based purely on 4 the assumptions that there ismore usable capacity, 5 because of theway the washer actually works. 6 Ihave no idea how to get at that 7 information, but it would seem to be, again, that 8 until we can figure that out, that DOE would have to 9 act, or ratherwould not take that fact into 10 consideration with comingup with any kind of 11 standard or as the basis for any action at all. 12 I suppose we could all do some research on 13 that, andmaybe that's not abad idea, but I'm not 14 aware of any which actually would confirm that these 15 machines are necessarily more efficient or even as 16 efficient based on the actual ability of each, use 17 more of its capacity. 18 MR. STEPHENS: Are you suggesting, then, 19 that the P&G load factor of .52 is essentially 20 properly applied from you standpoint, towhatever 21 machine is being considered, no matterwhat it's 22 supposedmanufacturer's suggested capacity? 23 MR.JACOBSON: Well, no, I'm not suggesting76 1 that because we are supporting the AHAM test 2 procedure. I don't think that would be in line with 3 that. If I recollect, the AHAM test procedure is not 4 based on that 1.5 percent. It's a half-pound load, 5 is our [inaudible]. 6 MR. STEPHENS: Well, yes. The average load 7 fraction, I presume, is defined as the fraction of 8 the maximum load capable that a consumer actually 9 tend to wash with. Is that wrong? 10 MR. LaFRANCE: The load fraction represents 11 the max load to average load ratio, based on the test 12 procedure, which should be close to consumer's 13 habits. Now, that could be a point of contention on 14 the test procedure hearing rulemaking. 15 All the .52 says is that the P&G data, 16 let's say for a 2.8 cubic foot machine and the 2.4 17 cubic foot machine, they come up with average and 18 maximum loads, and it's just a ratio of one to the 19 other. So the test procedure tests the RMC using max 20 loads, and then calculates the energy savings based 21 on average load, so it's almost half. 22 MR. STEPHENS: Right. That's kind of what 23 I'm getting at. The point is, given that the vast77 1 majority ofmachines out there today are vertical2 axismachines, then that suggests to me that 3 consumersperceive that thevertical-axis machine can 4 wash, or they just choose to wash, half of the 5 clothes that the machine is actually capable of 6 washing. Is that abad presumption? 7 MR. FREESMAN: I think that's avery unsafe 8 presumption because Ithink what you find is 9 different users use theirproducts differently. 10 At one point in time, they mayhave a full 11 load, they put in a full load. They might put in 12, 12 13, 14 pounds, maybe even stuff that is more than the 13 washer canhandle, and at other times they just have 14 a couple of things but they need something cleaned, 15 and they'll put in two or three pounds of clothes. 16 You average that out, you're getting 7pounds. 17 So you're using two variables in creating a 18 number from those two variables, which is .52 and 19 just represents those twovariables which you've 20 chosen. 21 MR. STEPHENS: Yes, Ithinkyou're right. 22 I guess what we have to come up with is some 23 rationale to suggest that no matter what kind of78 1 machine in question wehave, that that same procedure 2 is what we go through, or that consumers arepicking 3 their load based on what they have to wash, rather 4 than what themachinewill hold. Imean, that's kind 5 of whatyou're sort of leaning towards there, but I 6 don't know that that's true. 7 MR. JONES: They choose what they wash by: 8 (A)the capacity of the machine; and, 9 (B)What they have to wash. 10 If what they have to wash is morethan what 11 the capacity of the machine is, when they have to do 12 two loads ormore. 13 MR. STEPHENS: Except that you just 14 suggested that in some cases they'll overload the 15 machine,horizontal or vertical axis. 16 MR. JONES: Yes. 17 MR. JACOBSON: There's a technical 18 differencehere, though. In avertical-axis machine, 19 if you stuff themachine full while it is still in 20 thewater and the clothes absorb somewater and so 21 on,you canget to thepoint whereyou have somany 22 clothes in there that you cannot get effective 23 washing.79 1 Imean, you will not get the turnover, 2 you'll get the rollover, you'll not get effective 3 washing. 4 In ahorizontal-axis machine, since you are 5 putting the clothes in before thewater starts to 6 come into the machine, typically, that's the 7 operation, you can almost stuff that thing full. 8 Once water comes in, the clothes tend to collapse 9 because of thewetness of the clothes, and you can 10 still get effective tumbling-and action. 11 So there's adifferent functionality that 12 occurs between the two types ofmachines. Ithink a 13 lot of consumerswithvertical-axis machines today 14 certainly know that if they put too many clothes in, 15 overload it, they just don't gt the clothes clean. 16 Imean, the thing sits there anddoesn't do 17 much, and they're very conscious of needing to not 18 overstuff the machine, at least the conscientious 19 housewifewill do that. 20 MR. MILLER: I thinkmore specifically, the 21 point, too, it appears that DOE is nowmeasuring up 22 to the very top of the basket in thevertical-axis 23 machines. Inmy experience, at least, that's80 1 certainly apoint at whichyou'renot going toget 2 effective cleaning. Ibelieve that's an overestimate 3 of the affected capacity, and so that there is 4 clearly, inmymind, a credit to be given to the 5 vertical-axis on that basis alone. 6 MR. POPE: I'd like to mildly challenge the 7 assumption that consumers automatically assume the 8 capacity is smaller in the horizontal-axis. I think 9 if you look at the average load size in Europe,with 10 amuch smaller typical drum size, you see a typical 11 load that's almost as large as that representedhere 12 in the states. 13 I realize they're different consumers, but 14 I'mwonderinghowmuch data there is here in the 15 state, with such a small market share, that really 16 tells us that consumerswill not perceive the full 17 capacity of horizontal-axis design. 18 MR. JACOBSON: The horizontal-axis 19 machines, at least that are sold today in the U.S., 20 do look smaller capacity, and the perception is real, 21 they do look smaller. But Ido support the numbers 22 thatyou stated, that our data shows the average load 23 size in Europe and in theU.S. is virtually81 1 identical, about 3 kilograms in Europe, which is 6.6 2 pounds, very close to the average load size that we 3 find in the U.S. 4 The machines over there are typically rated 5 for smaller capacities, and you'll typically see like 6 a 5 kilogram machine, which would be an 11-pound 7 rated capacity. They will still do about 6 pounds of 8 laundry in that machine. 9 I suppose we have distributional data in 10 Europe for load size distribution, just as we have it 11 here in the U.S., and I could certainly find that 12 information if that would be helpful. 13 MR. LaFRANCE: Yes, it would be. 14 MR. WASSON: We have no actual data that's 15 been collected for load size, however, we do have 16 customer testimonial letters that we could copy and 17 send.in to DOE, stating the fact that they get as 18 much or more in their new machine compared to a 19 vertical axis, and we have not actually done, like I 20 said, data collection, because of the small numbers, 21 but, if need be, those letters, the testimonials, can 22 be sent in. 23 MR. T.a RANCE T think it wonii1 ho h1 -,-i1 ---- ---- -- - - - .. -- - -- L-

-82 1 if you could provide those to give some basis. 2 MR. POPE: Not only does Australia, I 3 think, utilize that correction factor that Dick 4 mentioned, but I think the international European 5 electro-techno commission also utilizes maybe 1.15 6 factor, so it's being acknowledged in more places 7 than just Australia. 8 MR. LaFRANCE: Getting back to the concern 9 about the test procedure and possibly providing a 10 credit for the method of measuring the volume, 11 yesterday at the hearing, the test procedures, I 12 requested AHAM to provide some input on that, and I 13 would also request anybody today to provide input in 14 regards to that rulemaking, so we can use it. 15 Also, maybe a proposed change in the test 16 method that they would recommended adopting to change 17 the method of testing. 18 We also learned yesterday that by just 19 measuring it with the machine's ability to fill the 20 basket would not be fair to the machines that might 21 not fill up the entire basket, and we mentioned 22 something on the record about that'yesterday. 23 So there's a concern that you just can't83 1 use the machine's ability to fill it up, so it would 2 need to be done probablymanually, but some type of 3 language that would explain what height in the basket 4 would be allowable. 5 So maybe once we find information on that, 6 in regards to yesterday's rulemaking, we would 7 appreciate it. 8 The next point I have here deals with the 9 potential energy savings for automatic fill control. 10

- We have just recently received data fromAHAM, I 11 believe, on Friday of last week, which Peter 12 explained is not in the analysis. 13 That information, we can make that 14 available to you at the end of the workshop. We 15 didn't have it in time. I should have made copies 16 for everybody but it's something that I didn't even 17 have a chance to review myself. 18 But it shows virtually zero or very, very 19 low increase in efficiency for adaptive control. 20 Now, a lot of that has to do with the number of 21 copies responding. I believe we had four companies 22 respond to that design option, and the base case we 23 had five.84 1 The stated deviation is relatively low, and 2 I:guess this is a concern to me, because we've seen 3 slides from AHAM in the past the depicted a large 4 potential that was not quantifiable, but from a 5 graphical standpoint it appeared to be a large amount 6 of potential savings, with automatic water fill 7 capability. 8 Also, the proposed load use factors that 9 AHAM has presented in regards to the test procedure 10 rulemaking show approximately use of max fill, I 11 believe something on the order of 14 percent. I 12 don't have it in front of me, but it's 14 to 12 max, 13 and the same for minimum, 14 to 12, and in the middle 14 it was like 64, or something like that, the relative 15 range. We can talk about the exact numbers. 16 It showed that the vast majority of people 17 are using average load sizes, and there's also a 18 graph from P&G that shows the actual data points of 19 people using load size. Very few people in the small 20 size and very few people in the max size. 21 If the average load size is roughly half, 22 we'll say, of the capability of that machine, and I 23 don't know what ball park, but let's say two-thirds85 1 of the water use -- and that's a ball park because I 2 think everybody knows that the minimum fill is about 3 one-third of the water, in that range. 4 Believe me, please jump right in if you 5 have better numbers, because I'm just going on a 6 guesstimate of the industry, and obviously everybody 7 has their own settings, but roughly about a third is 8 used for minimum, and approximately maybe two-thirds 9 for medium, and full for maximum. 10 So if the vast majority of the people are 11 using average load sizes, with only two-thirds of the 12 water savings, then I guess I have amajor concern 13 about the data that was submitted. It only shows a 14 minimum amount of energy savings. 15 If people could provide information here as 16 to what's happening here, why does it only show a 17 minimum amount of savings when it was depicted at 18 some times of being a rather large potential energy19 saving option. 20 MS. RANSDE: One point that I'd like to 21 make on reviewing this data is that baseline is based 22 on five companies all the time. When one of the 23 design options is based on less than the five86 1 companies, four or three companies, the data can be 2 skewed, depending on which company dropped out. If 3 thatwas a lowball figure or a highball figured 4 compared to the average, the data can be skewed in 5 making these comparisons. 6 In fact, when looking at the data that was 7 submitted by AHAM, some of these energy saving 8 options actually showed increases in energy use. 9 One of the suggestions that came out of 10 some of our AHAM meetings was that Wayne Morris from 11 AHAM was going to help us by providing recalculated 12 baseline data for these options. 13 So I'd like LBL and DOE to take into 14 consideration that we might want to recalculate some 15 of these options with a baseline that only included 16 the same companies in the baseline that included data 17 for those options. 18 MR. STEPHENS: Which data were they that 19 you think are affected by that? 20 MS. RANSDE: Any data option that fewer 21 than the five companies submitted data on. 22 MR. STEPHENS: Imean, is it water use or 23 dollars or is it the whole analysis, everything about87 it? MS. RANSDE: Dollars and basically everything, needs to be compared to the same four baseline companies. If you have an option where four companies submitted data on that option, you need to compare the results with a baseline that includes those same four. MR. STEPHENS: Thank you. MR. LaFRANCE: Have the AHAM members agreed to provide that to us? MR. ANDERSON: It's in the submittal. MR. LaFRANCE: Okay. MR. RIECHMAN: It's been done for all that. MR. MORRIS: It's not done for all design options, it can be done. It was done with this latest round of data submission.

MR. JONES: What's the product of the latest? Do we know? MR. LaFRANCE: Let me explain for people that might not understand what's going on here. On the record, we have comments from various organizations, and AHAM has submitted data in the past, and that is on the public record. That is 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 __88 1 the data that Peter uses for the analysis. 2 This last round of data came in, I believe 3 it was last Friday, and actually, because I've been 4 rather busy, I reviewed it last night, so right now 5 we don't have it on the record at this point but we 6 will make it available at the end of this meeting. 7 Everybody is referring to the last 8 submission of data from AHAM. We did not analyze the 9 data yet and it's not part of the analysis. I'm glad 10 that Jane explained this, and Wayne already explained 11 the problemwith the base case have been at least 12 resolved for this particular data submission. 13 I think, even in the base case sense, the 14 standard deviation is still relatively low and the 15 energy savings are very, very low. I guess I just 16 don't understand that. 17 I don't understand how, in one case, people 18 can talk about this being a rather large potential 19 energy savings because most consumers use average 20 load the vast majority of the time. I think it's in 21 the.64 percent range. 22 But, yet, the test procedure tests the max 23 load 72 percent of the time, because when you have a89 1 manual setting, the consumers set max fill 72 percent 2 of the time, based on historical P&G data, or maybe 3 somebody can explain the 72. 4 I guess we can go back and look at it, but 5 it's something that everybody at this point, all of 6 the manufacturers and everybody that's provided 7 comment, believes is valid. 8 It was in the existence of that procedure 9 for over 20 years and we're not changing. 10 So if 72 percent of the time we're using 11 max fill but, in reality -- and this is, I think, 12 based on P&G data -- 64 percent number, people are 13 only using average size loads, then that, to me, is a 14 significant amount of energy savings or hot water 15 savings. 16 MR. LEVY: You mean it's a significant 17 amount of savings if you had automatic fill control? 18 MR. LaFRANCE: Right. Right. But automatic 19 fill control, by design concept, you obviously have 20 to have enough water to saturate the clothing, so if 21 you have an average size.load in the 67-pound range, 22 you have to saturate the clothing. 23 Then, depending on the design type, youmay90 1 have some fixed amount of additional water, or you 2 might have a percentage of additional water, 3 depending on how you design your clothes washer. 4 You may have various methods to control 5 that water fill; you know, all proprietary. 6 But, in any case, it seems to me you would 7 still save some considerable amount of water, and it 8 just seems as if the data that's been submitted, 9 basically, do the manufacturers believe that 10 automatic fill control has minimal savings? I guess 11 I'd like to hear some comment as to where are the 12 potential savings for an automatic fill control 13 machine? 14 MR. STILWELL: I don't think we know, 15 frankly, and I think the formula that we arrived at 16 was the best we could do with what we have to work 17 at. 18 In other words, I'd have to defer to Larry 19 Hawkins at GE, who developed this formula, but I 20 think it was basically a comparison based on average 21 load sizes versus the old test procedure ratio of 22 minimum size to maximum -- or minimum fill to maximum 23 fill, and that's really all we had to work with.91 1 Until these controls are developed and we 2 get them out in the field and actually see what the 3 savings are, I think it's just anybody's guess. 4 MR. HAWKINS: I understand what you're 5 saying, Dick. I guess in some regards I share marc's 6 comments. But if you went through, all of us, if we 7 all did it, and we went through it on a purely 8 theoretical basis, which would be the only basis that 9 maybe some of us have right now, I don't understand 10 why the savings wouldn't reflect, as Marc indicated, 11 it should reflect, based upon the work done in the 12 test procedures and based upon the assumptions made 13 and based upon the data we have available, it would 14 appear that unless someone was discounting the 15 capabilities of the systems, it ought to come out in 16 the numbers to show the energy savings better there. 17 MR. LaFRANCE: I think also, from a 18 technical standpoint, the average size load on a ship 19 to weighted average capacity is a fixed amount. I 20 could pull it out, but it's in the 67-pound range. 21 That clothing only saturates a certain amount of 22 gallons of water. 23 You can look at it from several design92 1 points saying that theremight be three or four ways 2 to look at it for the design capability of the 3 machine, saying okay, you have a fixed amount of 4 water for the clothing. 5 Then you have, let's say, one design option 6 would be 5 percent of additional free water, 10 7 percent of additional free water, 15 percent, 20 8 percent load. 9 So, at some point in time, you have a fixed 10 amount of water for the clothing, and then varying 11 design options of, let's say, how crude the adaptive 12 control may be. 13 So you could actually submit data based on 14 certain percentages of additional free water in the 15 basket or in the tub, and then, with that, provide 16 potential energy savings. 17 So if you design a high-tech unit that only 18 uses 5 percent or 2 percent additional free water, 19 then it provides the maximum savings. 20 But if it's crude and it's 25 percent 21 additional free water, then it's not as good. Maybe 22 there's some way to look at this from a technical 23 standpoint to give us the numbers, I don't know. I93 1 guess I'd like to hear comments. 2 MR. MILLER: To follow up on that, I'm 3 wondering if there's information on the 4 characteristics of the adaptive control was assumed, 5 whether it was an additional percentage, or an 6 additional number of gallons. 7 MR. LaFRANCE: We do not have that. The 8 data that came from AHAM, checked their members, is 9 lumped together on a ship weighted average, and a lot 10 of the specific proprietary information like that, 11 what it was based on, is not provided to us. 12 We encourage that people write to us on a 13 confidential basis just as much as possible to help 14 us assess this. But, from what I've seen -- and, 15 like I said, I've only reviewed this for a short 16 period of time -- relatively speaking, it's a minimal 17 improvement in efficiency, and it doesn't seem to be 18 representative of what was showing in the test 19 procedure, but potential savings. 20 In one case, we're supposed to accept that 21 test procedure that shows a potential large savings 22 for adaptive fill and in the other case, when we get 23 the data submitted, it shows minimal savings, it94 1 doesn't match, and it's a concern. 2 Possibly the manufacturers would be willing 3 to explain a little bit more as to how they submitted 4 it, if they can. I don't know what's proprietary and 5 what's not. 6 MR. STEPHENS: Marc, I think this is a 7 larger issue that's going to rear its head in other 8 appliance rulemaking procedures when we start getting. 9 into adaptive controls and fuzzy logic and the other 10 systems that will, in theory, help the consumer to 11 make better choices. 12 One issue that came up when we were looking 13 at water heaters that were purporting to do some of 14 the same thing, was that we also ended up wanting to 15 know how a consumer knew, how anybody knew, for that 16 matter, that this matter was or was not working; in 17 other words, with absent data that says this thing 18 has a lifetime that's longer than the machine or 19 least as long as the entire machine, how does the 20 consumer know when this adaptive control has failed, 21 and, if it fails, what does it do? What does the 22 machine do if it fails? 23 If the consumer knows right away that95 1 something's not working and can get it fixed, it has 2 minimal impact, but if the consumer has very little 3 way to know if this thing is still functioning on the 4 machine, and the machine's default is fill it to the 5 top every time, then it would potentially have an 6 effect on the savings that we could assume from such 7 features. 8 So I'm just adding that in now as something 9 that if you want to try to get at information for 10 manufacturers to assess the potential savings, you 11 might consider trying to get at some of those notions 12 as well. 13 MR. LaFRANCE: Well, that's a good point. 14 but, in something like that case, you know we could 15 analyze this to the nth degree, where if you're 16 talking about a liability of a new adaptive system, 17 let's say the reliability is less than the life of 18 the machine itself, you have a problem with the 19 machine not be adaptive control. 20 The adaptive control could not provide any 21 water. In that case, the consumer would have to get 22 it fixed. 23 Aln i+ alwavs efault-s t-n -ho "mv f;I1 - -- -- -11- 1 - -- - - - -- ,96 1 you know, consumers are energy conscious, at least 2 some of them are, and quite a few people are. If 3 they see it's going to max fill all the time, 4 occasionally picking up and putting another 5 [inaudible] and they say, wow, this thing's full, 6 then I think the manufacturers would get feedback on 7 that and the market itself would help to prevent that 8 type of default function. 9 It's a good point and it's a valid point, 10 but I mean, at this point in time, we're just trying 11 to quantify the base case when the model leaves the 12 factory and do the best we can and leave the 13 reliability up to the manufacturers, so that's a good 14 point. 15 MR. MORRIS: Marc, I don't know what you 16 mean by not a significant amount of reduction, but 17 the reduction that I calculated was 11.5 percent 18 reduction of the hot water energy, versus the 19 recalculated baseline. 20 The overall total energy was reduced by 10 21 percent, and the energy factor went up by about 12 22 percent, so this is based on the data that was 23 submitted last week on automatic fill control.97 1 So Idon't knowwhat youmeanby not a 2 significant amount or significant amount, or what; I 3 can't comment on that, but those are the numbers that 4 were submitted. 5 MR. LaFRANCE: Thankyou, Wayne. I guess, 6 obviously, Ididn't look at the recalculated baseline 7 because Iwasn't aware. Like I said, didn't look at 8 this recently. 9 I guess 11 percent, which is better than 10 what I thought itwas originally. So I think 11 11 percent actuallymoves in the right direction and 12 maybe it is valid. I'm gladyoumade that available 13 to us, andmaybewe could have some feedback as to 14 whetherpeople think 11 percent is in the range. 15 Obviously,we need to go back and do some 16 ball park calculations. Based on, let's say, if you 17 assume two-thirds for the average load, Idon't even 18 know if that's valid, if two-thirds think is 19 reasonable, though, for an average load with that 20 setting, andwe'll say themedium load size. 21 If we couldget some feedback as towhether 22 two-thirds is high or low, thenwemightbe able to 23 do some assessment as to howvalid the 11 percent.98 1 MS. RANSDE: What is the two-thirds of? 2 MR. LaFRANCE: Imean, this is like aball 3 parknumber. That's.like a subjectiveball park 4 number that I've learned. 5 In a conventional clotheswasher,whenyou 6 select the minimum fill, you get roughly one-third. 7 Thatmight be high or itmightbe low, but if you can 8 say percentagebasis ofnumber of gallons versus 9 total gallons formax fill, and then whenyou set it 10 tomedium fill, I'm saying, ball park,we're talking 11 two-thirds. 12 Somepeople say, well, I'm setting it to 13 medium fill and the consumermight think okay, I'm 14 getting like the middle of the basket being filled 15 withwater, but in reality theymight be getting two16 thirds. I'm not sure if that's right or not, but 17 it's aball park number. 18 Idon't have anything to back that up, and 19 I'm looking for something from you, from all of you 20 in industry, to say okay,what are the percentages of 21 max fill from a gallon standpoint. 22 So, with that, another way toget to the 23 potential savings is basically assuming that your99 1 automatic fill control, no matterhowyou design it, 2 will achieve the appropriate amount ofwater. 3 Actually, it could evenbe possibly lesswater than 4 that, and it could even be additional savings. 5 So just by going at the two-thirds,you're 6 going to save energy in the testprocedure 7 standpoint, but in reality you'reprobably saving 8 additional energy as well. Maybe not. But that will 9 at leasthelp us, to some extent. 10 The next thing is, how much water is 11 displaced by the average size load clothing, and what 12 are reasonable amounts of freewater for an adaptive 13 control machine? 14 Do they range from 5to 20, 2 to 50? Some 15 type of information thatwould helpus calculate 16 adaptive fill capability, in addition to thismission 17 fromAHAM, so we canvalidate that 11 percent, 18 whether it's reasonable orwhether it should be 19 higher or lower. 20 MR.FREESMAN: Ifyou're looking for bigger 21 numbers, don't forget, you've got temperature use 22 factors that come into play, soyou're talking about 23 cuttingdown the hotwater. Youmentionedhotwater100 1 saving. 2 MR. LaFRANCE: Right. 3 MR. FREESMAN: The temperature use factor 4 you're saving, but only apercentage of that is going 5 to behotwater, significant temperature use factors. 6 MR. LaFRANCE: But there's also water 7 savings. That's a goodpoint. There are alsowater 8 savings

-- 9 MR. FREESMAN: Youwere focused on this hot 10 water, Ithink, before. 11 MR. LaFRANCE: Yes. 12 MR. STILWELL: Ibelieve that was factored 13 in. 14 MR. FREESMAN: Oh, itwas, and that's why 15 the numbers were lower than I think Marcwas looking 16 for. 17 MR. LaFRANCE: Maybe that'swhy. Like I 18 said, we just recently received the data, and I'm 19 glad that Waynepointed that out, that it's 11 20 percent, because when I first looked at it, it looked 21 likeminimal. 22 I couldn't understandwhatwas happening, 23 especially when I looked at the combined options with101 1 vertical-axis, automatic fill control, 2 thermostatically controlled mixing, and then RMC. 3 Again, Ididn't look at the recalculated 4 baseline, and Ineed to do that, and I'm glad it was 5 pointed out tome. 6 MR. STILWELL: Ithink the formula thatwas 7 arrived at is apretty fair estimate of the potential 8 savings. As I said earlier, until we actually get 9 units out in the field and get field test results on 10 them,we won't reallybe able to confirm that ordeny 11 that. 12 Based on everything that we know at this 13 point in time,we think that's avery fair estimate 14 of the savings that are available. 15 MR. LaFRANCE: Okay. 16 DR.HAWKINS: And going throughthemath of 17 it, it ought to follow out, to show the savings. It 18 ought to show that there. 19 20 21 22 23102 1 REDUCED REMAININGMOISTURE CONTENT 2 MR. LaFRANCE: Okay. The nextpoint Ihave 3 on the agenda deals with reduced remainingmoisture 4 content. 5 The first topic deals with the potential 6 consumer use. I'd like to get some feedback. 7 Do peoplebelieve that consumers want lower 8 RMC in their clothes washer? And, if so, if it's an 9 option to them, Ineed atime or speed or both of the 10 spin cycle. 11 Do you have any feedback as to whether 12 consumerswill actuallyuse it; and, if so, to what 13 percentage they'll use it? And should this be part 14 of the calculations forMEF? 15 I know thatAHAMhis proposed not to 16 include anything like that. They'vementioned that 17 it shouldbe based on the energy test cycle for 18 cottons and linens. I guess that amanufacturer 19 would provide literature to the consumer, whichwould 20 indicate a recommended spin speed for that cotton and 21 linen load. 22 But we're just looking for any feedback as 23 to do consumers reallywant to produce RMC orwhat's103 1 the feedback on that? 2 MR. STEPHENS: Ican offer one comment. 3 The consumers we've begun to talk to about 4 ourprogram recently haven't somuch zeroed in on 5 remaining moisture, but they've zeroed in on the 6 concept that itmight shorten the dryer cycle and 7 make the dryer cycle closer to the length of the 8 washingmachine cycle, and that forpeoplewho do a 9 lot of successive loads or like to get their laundry 10 done in a shortperiod.of time, they like that idea. 11 So, to that extent, it's kind of an 12 indirect effect but that's what they seem to zero in 13 on. 14 MR.WASSON: In showing higher spin, it's 15 beenmentioned about showing the consumer what speed 16 to spin at, andmost of the European stylewashing 17 machines, it does give ahigh-spin speed for cottons 18 and linens, and then it does show a reduction in spin 19 speedwhenyou're usingperma press type fabric or 20 even wool and even some silks, it'll actually show no 21 spin; have themachine stopwith just adraining, 22 again, forwrinkling in themachine. 23 So vour European style. vour hori7nnta

-- Z __- Z--I

_ ___ _104 1 machineswithhigher spin speeds, do give a selection 2 availability of either avery high to amedium to 3 either ano-spin. 4 We find that, again,no test data 5 available, just consumer comments to us that they're 6 drying time is cut down in the cotton cycle by using 7 the higher spin. 8 That's got to inevitably cut down the 9 energy for the dryer. 10 MR. LaFRANCE: Are there any comments? 11 [No response.] 12 The next point is fabric carewith reduced 13 RMC levels. That's thewrinkling or polka dying, or 14 whatever youwant to call it, and trying to get some 15 feedback as to what people have to say about fabric 16 care with lower RMC. 17 MR.WASSON: Again, I keep referring back, 18 because there's no actual test data for the 19 United States. However, there is test data available 20 from Europe, and if that is needed, as far as the 21 type of fabric, the amount ofwrinkling, the amount 22 of spin speed that is needed, that can be gotten from 23 our laboratory over at the factory, and also from105 1 SAMCO, which is an independent testing company for 2 safety and also performance on themachine. That 3 information can be gotten. 4 We find that there are some complaints as 5 far as wrinklingwhere they use the higher spin speed 6 on certain fabrics but on, again, the cotton and 7 linens, we do not get the complaints of thewrinkling 8 from the high spin of taking themoisture out. 9 Our feeling is it's the fabric that's going 10 to cause.the dryer to run the longest time anyway. 11 It's generallynot the perma press of the 12 other fabrics that cause it to run excessive length 13 of time because the remainingmoisture contentwill 14 be lower on those fabrics than itwill be in the 15 cotton. 16 MS. RANSDE: Our experience is we haven't 17 been able to find a lot ofdata regarding the effect 18 on clothes care fromreducedmoisture content. 19 One concern thatwehave, though, is the 20 increaseduse of irons to press clothing if the 21 wrinkled clothing were in thewashers. 22 MR. JACOBSON: I support that same kind of 23 thought that there's no data. We do know that _106 1 ironing in Europe is a farwider practice,household 2 function

-- 3 VOICE: Art. 4 MR. JACOBSON: -- art -- function, than it 5 is in the U.S. There is already many consumers in 6 the U.S. who have absolutely given up on ironing, and 7 thekids and so on just say Idon't have time for 8 this anymore, and theydon't. 9 The extent to whichyou encourage more 10 irony, you're going to disenchant consumers on the 11 onehand and, to the extent that youdo encourage or 12 achievegreater ironing,you've got an energy factor 13 for ironing that ought to be added into the equation 14 somewhere. 15 MR. POPE: Ihave a question for Ron. 16 Is there a correlation between,was there 17 increase in ironing over in Europe in response to, I 18 think itwas only avery recent increase on the spin 19 speed on the Europeanwashers, or is that just a 20 cultural thing over there? 21 MR.JACOBSON: Ido not have the answer to 22 that directly. It maywell be cultural asmuch as 23 anything. We'dhave to look and see. I just don't107 1 have the data. I can look at it. 2 MR. FREESMAN: Michael made apoint before 3 about the spin speeds goingup, but he alsomade a 4 point aboutvarying the capability of spin speeds 5 that consumershave access to. 6 Ifwe're going to somehow analyze the 7 payback on this type of option and we're going to 8 recognize thatwe cannot bring everything to the 9 level of 50 percent or 40 percent or 30 percent, or 10 how ever low youwant to get the RMC to, we recognize 11 that the consumer needs to have options. 12 If you're going to look at the payback of 13 this option,you've got to recognize that you're 14 going to have spin speedusage factors. How often 15 will they take it down tomaximum and how oftenwill 16 they leave it at anothervariable? 17 Imean, todaywe havevariation in terms of 18 spin speed. You have thehigh and low spin speeds. 19 To assume that they're going to take it to themax on 20 every loadwould be false, and to calculate the 21 payback on that would alsobe false. 22 Ithink ifwe're going to look at that as a 23 viable option, there needs to be a lot of workdone108 1 onRMC usage factors, whatever youwant to call it. 2 MR. JONES: Marc, that was in testimony 3 yesterday, that I guessMichael wants his comments 4 supported. It's apparently in existingmachines 5 where high-spin speed is something which is promoted 6 and gets marketed. There is the provision made for 7 the ability to select it out. 8 Therefore, ifyou're going to rely upon RMC 9 levels, if you're going to analyze that as adesign 10 option, you've got to have somekind of adiscounting 11 factorwhich, again, I suppose could be determined 12 based upon analysis, whether it's field studies or 13 whether it's somekind of justpresumed factor,which 14 automatically would be applied. Ibelieve that's a 15 valid point. 16 Similarly -- and I hadn't thought about 17 that -- but your point is well taken, I think, as 18 well, in terms of the analysis. Our concern has 19 always been that DOE has looked at that as kind of a 20 panacea, and in fact itmight not be. 21 To the extent that it sort ofpush folks 22 and relyuponRMC, we need to look at that possibly 23 differently, both in.terms of payback and consumer109 1 problems. 2 MR.HAWKINS: I'd also like to add to 3 Earl's comments that, aswe mentioned yesterday, our 4 search for informationhas not revealed any of the 5 high-speedwashers that are, in fact, demonstrating 6 lowRMCs through the way the designs are executed. 7 Maybe they're getting the high spin speeds 8 but not at a time length effective enough to get the 9 water out. 10 We'd like to see data from anywhere that 11 says, in fact, they arebeing used effectively for 12 driving down RMC if it's there. 13 MR.WASSON: If Larry doesn'tmind that 14 data beingmore European information thanU.S., that 15 is available showing time to RMC and actually even, 16 one thing that I'll even state, you get to a certain 17 point where there's no more moisture taken out, 18 unless you go well beyond the realm of financial 19 capability. 20 But there is information that says from 21 here, at this length of time, you'll take out this 22 moisture; this length of time this.moisture, and that 23 data can be aiven.

__ _ __ -- - --110 1 MR. HAWKINS: Don't dispute that that is 2 not a relationship,Michael. The question is, is 3 that really being executed in designs in themarket 4 whenyou run it through the cycles, provide it to 5 consumers. In fact, it does run at those speeds for 6 a long enough time to godown to those lower RMC 7 values? 8 Not that there is not a relationship that 9 exists, but is that relationship being executed for 10 product design, and so beingused by customers in the 11 field? 12 MR.JACOBSON: Such as, does it spin at 13 1500 rpm for 30 seconds. 14 MR.JONES: Iam curious. What levels are 15 we talking about are European products that are 16 achieved? What RMC levels are actuallybeing 17 achieved? Doyou have any sense of that? 18 MR.WASSON: Ican get that information for 19 you, Mr. Jones. 20 MR. JONES: Sowhen you speak abouthigh 21 spin speeds in our discussionshere today, we're not 22 surewhether that's 60 percent or 55? 23 MR.WASSON: We've got numbers on it, I111 1 justdon't have it or I can quote it to you right 2 now. 3 MR. POPE: We have some limited data on 4 that with testing mostlyEuropean products, and there 5 is adefinite correlation, at least as tested in the 6 AHAM testprocedure. 7 It's definitely apparent in the graphing of 8 the data, with 50-50 column cotton-poly,you get RMCs 9 correlatingwith the spin Gs. 10 I have -- I guess that's not going to be 11 helpful. 12 MR. LaFRANCE: I guess also getting back to 13 Mark Freesman's question or concern about the various 14 fabrics and the potential use of lower RMC option on 15 themachine, the test procedure right now, as 16 proposed byAHAM, only uses the cotton linen for the 17 entire test. It doesn't use other types of fabric. 18 I'm not saying that's valid or notvalid. 19 Itprettymuch maintains what was in the existing 20 testprocedure already. 21 If you're talking about aparticular fabric 22 that is very delicate, let's say silk, whatever a 23 consumer does with thatparticular fabric is not even112 1 representative in the test procedure. So Ithink I 2 would bemore inclined to learn about howpeople 3 would select RMCwith a cotton-linen test load, 4 becausethat's what's being used for themeasurement 5 of the energy factor or themodified energy factor. 6 Or, if you don't agree with the cotton7 linen fabricbeing used for the test cycle, then that 8 should be used for everything else. 9 So it just seems as if we can't really talk 10 about other fabrics for RMC options and then keep the 11 testprocedure for cotton and linen for the entire 12 energy test to begin with. 13 Ithink it's doubted that consumers mayuse 14 other spin speeds but different fabrics, butwe're 15 assuming that the entire testing is going to be done 16 on cotton and linen. 17 I think we should try to keep it toward 18 that or explain whyusing something else. 19 MR.FREESMAN: Idon't have aproblemwith 20 that, because that's the testprocedure tomeasure 21 its capability. But if youwant to bring the reality 22 with it, ifyou're going to offer a consumer 23 something other than RMC, youhave to recognize that113 1 in the payback you won't get the same kind of -- the 2 consumer willnot be realizing the same paybacks as 3 the analysis indicates, because the analysis assumes 4 100 percent. 5 If you want to get into -- Imean, like you 6 say, you can get into the nth degree and look at all 7 of thepossible things that itwill wash, andget 8 down there and do that analysis, but the test 9 procedure is there tomeasure effectiveness and 10 understandwhere it stands relative to other things. 11 MR. POPE: But, Mark, doesn't the RMC or 12 calculations refer to 50-50 cottonpoly, whereas I 13 assume the savings to be bigger with cotton and 14 linens that are amuch higher proportion of the 15 cotton, sowouldn't that tend to balance the 16 equation? 17 MR. FREESMAN: Unfortunately, I'ma 18 marketing guy not an engineering guy. I'm not in a 19 position to answer that question. 20 [Laughter] 21 MR. LaFRANCE: Is any company in the 22 positionto answer that question about the impact 23 with cotton? How much is the consumption for cotton114 versus -- Imean -- MR. STILWELL: That is avalidpoint, yes, because with themix, the load, the polyester cotton load, you're starting at a lower moisture level to begin with, and even thoughyou reduce both of them from the same percentage, obviously,you're working with lessmoisture to beginwith in thatmix load than you are with a cotton load. So, yes, it does tend to kind ofbalance out. MR.NANTHEIL: The cotton loadmaynot get down to the level of the cottonpoly. MR. STILWELL: No, but Imean percentage wise, they'll both be reducedby about the same amount. MR. POPE: Yes. You start out with a higher RMC with cotton coming out of the clothes washer and you get down to its loads of 50-50, but I think the spread is probably bigger. MR. LaFRANCE: Iguess on this particular issue, I'veheard several companies indicate that therepossibly should be some type of usage factor. Iguess for us to even consider that,we need to get some information, a rationale, as towhat 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23115 1 itwould be andhow itwould be applied andthe basis 2 for it. 3 So ifyou couldprovide that,we'll 4 consider it, andwemay ormaynot accept it, 5 depending on some of the issues that havebeen 6 brought up, and depending onwhat it is andhow it 7 looks. 8 MR.FREESMAN: I'mnot so sure that that 9 data is really going to exist in the NorthAmerican 10 framework. My concern is that to assume that 100 11 percent usage is abit false, and I think it wouldbe 12 erroneous to do that. 13 Ithink it behooves all of us to go out and 14 find, or come up with something, that's appropriate, 15 rather than assume 100 percent until someone proves 16 otherwise. 17 MR. JACOBSON: Iwould presume that from 18 the composition data thatwe have and that kind of 19 thing, that weprobably could go through andmake a 20 pretty reasonable estimate of the percentage of 21 cotton loads and cotton linen loads, and so on. 22 You couldmake apretty reasonable first 23 stab, but Ido believeyou'll have tohavemarket116 1 experience beforeyou find outwhat's really going on 2 here to get it fine tuned. 3 That becomes a question of how does the 4 testprocedurewant to deal with something like that. 5 Doyouwant to go inwith reasonable 6 estimates, to beginwith, or do you reallywant to 7 figure out some otherway of tackling it? 8 MR. LaFRANCE: The considerable load type, 9 fabric type and load type,would be like a 10 sensitivity analysis.on realuse. Obviously, our 11 goal is to establish a test procedure thatmatches or 12 that represents the consumer usage as close as 13 possiblewith reducing test burden. 14 Through that, we've establisheda cotton15 linen type of test load for energy consumption. 16 Now, the entire energy consumption is based 17 on that type of load, everything involved. 18 Nowwe're looking at oneparticular design 19 option for aportion of the energy that's being used 20 on the MEF calculation. 21 So I guess it's still a fundamental 22 concern. Ifwe're going to startworrying about 23 sensitivity for load type, for that one particular117 1 design option, which is one element of the energy 2 consumption, then we shouldbe concerned about it for 3 the entire energy consumption overall. 4 Now, I'm not sayingwe should adopt orwe 5 shouldn't. What I'm saying is that if the industry, 6 which they have, reached consensus that the entire 7 energy testing shouldbe done on a cotton linen 8 basis, then it seems tome that for this one 9 particular design option, to assess thepotential 10 energy savings for it in the future, whichwe all 11 knowwe don't have the data today, then itwould be 12 reasonable to assume the same type of fabric load. 13 Now, ifyou're saying thatwithin the use 14 of the cotton linen load type, some peoplemay not 15 choose to go the higher or the reducedRMC, and if so 16 whatwould thatpercentage be? 17 Ifwe stopmessing aroundwith thevariable 18 of low type for one design option, then it seems as 19 if wewouldhave to bring it up for the entire 20 analysis and the entire test procedure. 21 Now, at this point in time, the industry 22 does not support that because that's not what they've 23 provided, sowe just can't have it both ways.118 1 MR.HAWKINS: Iwould like to comment just 2 a littlebit on that. First of all, the new test 3 procedure that we developed steps off of a test 4 procedure forvertical-axis washers that uses no 5 load -- no clothes, article in the machine at all

-- 6 which has everything to say that load or not, whether 7 it's cottons, whether it's polys, whether it's silks, 8 is not a factor inmeasuring the energy use of that 9 water. 10 That's primarily, Ibelieve, true of our 11 designs. They're insensitive to the kind of articles 12 that's in therewhen they go to fill, amount, not 13 necessarily, type of fabric. 14 We used as a test load in our new test 15 procedures the same load that is currently specified 16 in dryers. 17 Thatwas convenient, itwas there, we all 18 have them; we havedata with them. Again, the belief 19 thatwhetherwe had 100 percent cotton swatches or 20 50-50 blend swatches on the fill part of the washer, 21 would have negligible to no impact up on the 22 measurement. 23 It's different when vou talk about the

---119 1 extractionprocess. Thewater, the mechanics of the 2 way the water comes out of the clothes, is different 3 betweenpolyesters, blends, and 100 percent, and it 4 becomesmoregermane in thatdiscussion of extraction 5 than everwas in the discussion of water consumption, 6 hotwater, cold water, orwhatever temperaturewater. 7 We all know, Ibelieve, in the industry, 8 that it's muchmore difficult to getwater out of 9 cottons than it is off the blends and synthetics. 10 I think that's reallywhat you're talking 11 about therewhen you're talking about extraction. 12 So, to say that we've accepted cottons and lines, 13 historically, the base energy ofwashers is avalid 14 reason for ignoring fabric type, fabric type load 15 size, speed, time, factors Italked aboutyesterday, 16 and even the amount of surfactant that's left in the 17 clothes, I think can completely change theresulting 18 outcome statement of the energy benefit. 19 So I guess Iwould say that it's an 20 oversimplification, say, that we've ignored it 21 previously, sowe should be able to ignore it now. 22 MR. LaFRANCE: I guess Iunderstandyour 23 commentand, in considering that,youhave a cycle120 1 type. So, in thepast, historically, we have always 2 used the normal cyclewhich is based on cotton and 3 linen. Sowhenwe look at fabric type, whichyou 4 havemerit, obviously,youwould look for the type of 5 cycle and fabrics that areused in that type of 6 cycle. 7 This might begoing a littlebit ahead of 8 myself here, but if youhave adelicate cyclewith 9 silk, for example, Idon't think that wouldbe really 10 representative, but if you have an energy test cycle 11 that you're using for cotton and linens, and it 12 happens to be named inRegular, and youput in there 13 permanentpress and youput in there cotton and 14 linen, and youhave different ratio values for both 15 of those, howyouwould usethem, thenmaybe thathas 16 somemerit, because nowyouhave different fabric 17 type by the same type of load size, the same type of 18 cycle that's selected. 19 I guess if you're going to start factoring 20 in adelicate cycle with adelicate fabric that's 21 only used less than 10 percent of the time, then 22 maybe that doesn't have as much merit as it would if 23 itwas different types of fabric but on the same type121 1 of cycle, and thatwould come inwith the historical 2 part of it. 3 MR. THIEL: Ithink, though, that the one 4 distinction thatwemay bemissing in this 5 decision -- and anyone can correctme if I' wrong -- 6 but on all of the design options, we are looking at 7 forwashers, the assumptionwith the design 8 assumption is that themanufacturer will applythe 9 design option so that it washes clothes. That is, 10 theperformance of the design option is a given. 11 The only thing the testprocedure measures 12 when it evaluates that design option is the 13 consumption of energy. 14 Whenyou're talking about RMC, however,you 15 are talking about the performance of aparticular 16 function thatyou aremeasuring,which is the 17 extraction ofwater, and so, qualitatively,whenyou 18 look atRMC as opposed to all of the other design 19 options on the table, it is qualitatively adifferent 20 analysis becauseyou aremeasuringperformance as the 21 necessary outcome. 22 You don'tmeasureperformance of any of the 23 other design options.122 1 Isn't that right? 2 MR. STILWELL: Yes. 3 MR.THIEL: This is the onlyplacewe are 4 measuring performance quality of themachine, with a 5 nexus to energy. In all other cases, theperformance 6 of themachine is a given, that itwill wash clothes. 7 MR.MILLER: The performance of the options 8 is not a given relative to their energy performance. 9 This ismeasured for all options. 10 MR.THIELE: No, that's absolutely right. 11 That's thepoint I'mmaking. The test procedure 12 measures energy and assumeswashingperformance. 13 RMC, however,measures thewater extraction, which is 14 the quality that you are attempting to receive. 15 So this is the only case where you're 16 measuring the performance issue as part of the test 17 procedure. 18 MR.MILLER: I guess I'm not clear onwhy 19 that's

-- 20 MR.THIEL: Because in all the other cases, 21 it's assumed that the machinewashes clothes, andwe 22 could care lesswhat the clothes are, at least as far 23 as the testprocedure is concerned, because the123 1 assumption is that clothes are getting washed,while 2 whateverhere is happening is happening, and all 3 we're going to do ismeasure the energy it takes to 4 achieve that outcome: Clean clothes. 5 Whereas, in this case, the outcome is 6 reducedmoisture, andyou're measuring it, and then 7 you're also measuring the energy that goes along to 8 achieve thatperformance. 9 Here, there is a correlation between energy 10 and performance,whereas, that correlation is not 11 established in the test procedure for any of the 12 other design options. That's why the loadbecomes so 13 important in this case. 14 MR. STEPHENS: I thinkyou've actually 15 wandered off the, it washes clothes path a little 16 already, as soon as you start to use any kind of 17 technology that automatically adjusts fill level or 18 even, for thatmatter,provides some level of fill, 19 based onwhat you'rewashing andhowmuch ofwhat 20 you'rewashing you'rewashing. 21 MR. THIEL: But the assumption is still 22 built in, that themanufacturer is going to adjust 23 his adaptive control in such away that the124 1 manufacturer is getting therequisite performancehe 2 needs to sell that in themarketplace. 3 MR.MILLER: I guess thepoint tomewould 4 be thatyou're saying forRMC the type of fabric 5 affects the performance, and therefore you need to 6 take into account, and that's not true for any other 7 option, and Idon't necessarily agree. 8 For example

-- 9 MR.THIEL: No, no, you're absolutely 10 right. The type of fabricwill affect the 11 performance, but in all other cases we don'tmeasure 12 it in the energy context. 13 MR.MILLER: But that is, Ithink,Marc's 14 case, is that we're not taking it into account for 15 evaluating these other options, why shouldwe only 16 take it into account for evaluatingRMC? 17 MR. THIEL: Because in all other cases it's 18 irrelevant. 19 MR. MILLER: That's notnecessarily true. 20 For example, adaptive control, poly fabrics or 21 fabrics that absorb less watermay actually show 22 better savings, better performance of the adaptive 23 control feature because since they absorb lesswater,125 1 the adaptive control will need to add lesswater, and 2 therefore the adaptive controlwouldn't show any 3 betterperformance with the synthetic loads. 4 MR.THIEL: I'll defer to the engineers on 5 that. You maybe right on thatpoint, but it's my 6 understanding that, by and large, all of the design 7 optionswould go towash andperformance, the 8 assumption built in, but we don't have awashing 9 standard. We don't have aperformance standard for 10 the washingprocess. All we're doing ismeasuring 11 energy consumption. 12 MR. RIECHMAN: One of the thingswe don't 13 measure inRMC is fabric care. We're measuring the 14 remainingmoisture content but we aren'tmeasuring, 15 saying that ithas tomeet a standard onwrinkling or 16 fabric care, whatever thatmay be. 17 So I kind of look at it thatwe are 18 measuring the same types of things in both and not 19 settingperformancemeasures through it. 20 MR.JONES: Do Iunderstand, Terry, that 21 yourpoint, then, is that somehow that it's invalid 22 to focus onRMC because it's performance oriented? 23 MR.THIEL: No. Iwas simply commenting on126 1 the fact that the load of thewash loadmakes a 2 qualitative difference in the consumer-related 3 performance RMC, whereas thewash loadhas no impact 4 whatsoever in the test procedurewhen you're looking 5 at all the other design options, because the 6 assumption is thatwhenyouwash the clothes, the 7 clothes get clean. 8 MR. JONES: What should follow from that? 9 MR.THIEL: Iwas simplyresponding to the 10 discussion that said that the analysis of the types 11 of clothes that consumers wash, whether they're all 12 cottons and linens, orwhether there's some mix, 13 whether you need atough effort for this, that that 14 difference in clothinghad adirect relationship to 15 RMC that you didn't see in any of the other design 16 options. 17 MR. STILWELL: Ithank that inmost of 18 these caseswe're trying tomake the best estimate we 19 can of energy consumption. In this case, by usinga 20 cotton polymixture in the RMC test, we'reprobably 21 understating a little bit, the total amount of water 22 that's carried over on average and actual use. 23 But, by assuming 100 percent usage of that,127 1 we'reprobably overstating it on that side. So I 2 think, all in all, it probably tends to average out 3 somewhat. 4 MR. FREESMAN: I think the issue isn'twhat 5 happens inside thewasher somuch aswhathappens 6 inside the consumer's head. You get 100 percent 7 cottons, but they're not going to want to spin it at 8 full speedbecause they'rewrinkle, and there's 9 certain things they don'twant to wrinkle. 10 Nowyou're going to take cottons and divide 11 them into twodifferent loads, those that Idon't 12 wantwrinkled and those that reallywon't wrinkle, so 13 towels versus shirts. 14 Idon'twant to iron these hundred percent 15 cotton shirts, and if Ispin them at a lower speed, I 16 don't have to iron them. I canput them in the dryer 17 a littlebit, or whatevermethod that Iuse. 18 The issue is that ifyou've got choices for 19 the consumer,you're going tohaveusage factors that 20 need to be taken into account. You can design that 21 testprocedure. Terry'spoint is us need,perhaps, a 22 different testprocedure tomeasure RMCs thanyoudo 23 to measure enervg consumption.128 1 Is that whatyouwere saying, Terry? 2 MR.THIEL: Well, Ididn't have a 3 conclusion to offer. Iwas simply making an 4 observation that they're factuallydifferent 5 explorations thatyou are undertaking. 6 MR. STILWELL: Ithink ultimatelywhat 7 you're going to find -- and it happens in Europe, and 8 I thinkMichael gave testimony to that -- is that you 9 get different usage factors. 10 Therefore, you will not -- and even if you 11 assume that cottons hold a little bit more water and 12 it's a little bitmore difficult to get out, Ithink 13 the percentage of the use factors will be 14 substantially greater than the difference in 15 performance between one type of material and the 16 other. 17 To assume that it's 100 percent,usinga 18 different test methodology and extrapolating that out 19 to here,would just be false and erroneous. 20 MR. POPE: I'd like to comment on that 21 Marc. Ihave some limited data in front ofme here 22 that suggests that cottons compared to 50-50 poly, 23 just looking at ahighball average of some numbers,129 1 it looks like it's abouthigh 80 kilowatt hoursper 2 pound for amixed cotton load versus about .57 3 kilowatthoursperpound ofwater, or 50-50. 4 So it's quite a substantial increase in the 5 energy required to try cottonversus poly, so I 6 suspect that, in fact, the oppositewould happen, if 7 you take your RMC andweight them by energy use or 8 savings to dry those different types of fabrics that 9 are associatedwith thosedifferent TUFs. 10 Obviously, thatwould getvery complicated, 11 trying to break out all those. 12 MR. NANTHIEL: Maybewe're getting a little 13 too hungup on this fabric issue. The realpoint of 14 thematter is, as waspointed out yesterday,we're 15 going into someuncharted territoryhere. Really, 16 consumers are going to expect satisfaction in their 17 laundryprocess untilwe know more about it. 18 Eachmanufacturer is going to probably 19 address that in someway, andwhether they elect to 20 put a switch on to override the high-speed option or 21 high-speeddesign, is yet to be seen. 22 We're going to have toprobably account for 23 that, and that's whywe're suggesting that thatmay130 1 be ausage factor if there is an option switch to be 2 taken into account. 3 It is a risk that each manufacturingmay be 4 accepting. 5 MS. RANSDE: All these comments bringme 6 back to one comment about the LBLdata. It concerns 7 us that the number one and two options listed in the 8 data are the 50 percent RMC and the 40 percent RMC, 9 andperhaps those aren't located in the most 10 appropriate place due to commentswe madeyesterday, 11 in addition to all of theuncertainties regarding 12 those two options. 13 Thesewould be the first two options and 14 all the others options arebuilt. 15 MR.LaFRANCE: Jane, as you know, the 16 reason for the first two is they're themost cost17 effective theway we're analyzing it, and that is 18 based on the AHAM proposed testprocedure,which now 19 we'redebating the question of whether there should 20 be some type of factor for it, the option; if there's 21 an option on themachine, orwhatever. 22 I've also heard other things that are 23 interesting, about the types of fabricbeing actually131 1 tested for the remainingmoisture. 2 Ibelieve that theAHAM testprocedurewas 3 also trying to minimize testburden, whichwe 4 certainly support. 5 For example, they're running a test with 6 themaximum load, and yesterdayGeneral Electric 7 provided a chart that showed that the actual RMC 8 level is reducedwith a larger load or increaseswith 9 a smaller load. 10 So, basically,we're testing at amax load 11 condition and corrating it down to an average load 12 for consumption. 13 Ihad asked the question aboutwhat is the 14 slope of that line that theyprovided orhowmuch of 15 a difference is it, and possibly -- Imean, this is 16 just an Idare suggestion; the testprocedure could 17 be changed to a certain size load, whichwould be 18 closer to average, with acertain type of 19 composition, if needbe. That would be one type of 20 scenario, or it could have some factors. 21 All I'mrequesting is that companies go 22 back and look at it from theirperspective and 23 provide information as to show they thinkwe should132 1 analyze it. 2 Saying something subjectively they should 3 have a credit, that's fine, but tell us what the 4 credit should be and why it should be that andhowwe 5 should apply it, or ifyou think there should be a 6 different type of test loadused, which would require 7 additional test, in that case, it wouldprobably be 8 the average sizenot themaximum side,we wouldneed 9 that as well. 10 There aremanypossibilities, and Irequest 11 from the industry to come back to us their positions 12 on what should we do. In otherwords, not 13 subjectively butwhat we should do, apply X 14 percentage orwe should do a certain thing. If you 15 couldprovide that, itwouldbevery helpful. 16 MR. FREESMAN: Iwant to ask you a 17 question. The waywe'remeasuring -- and I'mnot 18 directly involvedwith the testprocedure 19 development, this is an openquestion -- we're then 20 measuring themoisture extraction on the 12-pound 21 load and relating that to 392 loads of 7-pound usage. 22 So we're actually trying to determine the payback 23 determined on 392 loads of 12-pound extraction when,133 1 in fact, the market is onlyuse 392 loads of 7-pound 2 of washing? 3 VOICES: No, no. 4 MR. STILWELL: We're not that dumb. 5 [Laughter] 6 MR.JONES: This raises another issue 7 again. One of the points that wemade was webelieve 8 that ifyou all come up with a standard, which is 9 predicated upon achievinga certain RMC level. Do I 10 understand that your Design Options 1and 2, of 11 course, are sopredicated? Is that not correct? 12 Then to the extent there's abuildup from 13 that, 5and 6, Iguess it is, and then additional 14 ones beyond that on the horizontal axis as well. 15 MR.BIERMEYER: All the time options are 16 cumulative here, so you startwith 1and then the 17 other options are added on to that. 18 So then ourposition wouldbe ifyou, for 19 example, foundyourself setting a standard based on 20 Design OptionNo. 6, or Design Option No. 12, that 21 thatwould anunlawful standard. 22 We'll continue to pursue that issue 23 otherwise, of course, but I just wanted to make sure134 1 that Iwas not misunderstanding theway this is laid 2 out. 3 MR. LaFRANCE: As you know, these are laid 4 out in the order ofmost cost-effective, and it so 5 happens the waywe analyze the data, these two are on 6 the top of the list. 7 Asyou know, ifwewere to impose a level, 8 let's say, in this case, Level 2 on the design 9 options, then we analyze it, the standard level 10 process wouldbe based on the justification for that 11 type of type of cost and efficiency savings, but the 12 companies wouldbe flexible to how they implemented 13 that. 14 The same as in the past rulemakings; you 15 can implement that inmany ways. You can go ahead 16 and do the improved fill control and control valve 17 and something else, and not do the higher RMC, or you 18 couldgo to ahorizontal axis and not do anything. 19 So, in other words, this is whatwe're 20 using to base the standard on, the standard levels. 21 Butwhat amanufacturer does would be up to them and 22 it would leave it up to themanufacturer's marketing 23 anddevelopment decision as to how they would135 ' 1actuallybuild aproduct to meet a certain standard. 2 Ibelieve that you are concerned thatwe 3 establish that -- you opposed the possibility of 4 establishing this data thatwould require RMC? 5 MR.JONES: That's correct. So Iguess I 6 don't understand how you can -- you're suggesting 7 that we could be in apositionwherewe don't have to 8 do that becausewe can do something that'smore 9 expensive, for example. Spend moremoney. 10 [Laughter] 11 MR. LaFRANCE: Or say it different, Earl, 12 we could do some design options that's not identified 13 yet and not on this list. 14 MR. JONES: Right. Right. 15 MR. LaFRANCE: Provide flexibility to the 16 manufacturer. 17 MR.JONES: Okay. I guess that raises a 18 question inmymind, again, and that is if the basis 19 of the conclusion is somethingwhich maynot be able 20 to be -- if the data.with which you build your 21 determination at the appropriate level can't, in 22 fact, bemandated, Iguess Idon't understandhow 23 thatwouldnot be equally asunlawful, to say, well,136 1 we think you can do this -- the only way weknow if 2 this can be done is by focusing on RMC, but of course 3 we don't have to do that, we could do it some other 4 way. 5 MR. LaFRANCE: No, no, Idon't thinkwe 6 would say that the onlyway this couldbe done is 7 RMC. We'd say, from our analysis, we've determined 8 that themost cost-effective way to do that is with 9 RMC, however, leave the option to themanufacturer to 10 do whatever they want to, anything that they want to 11 meet that standard. 12 MR.MARGOLIS: What are the reasons that 13 you saywe cannot base a standard on RMC? 14 MR. JONES: Because RMC, gettingminimal 15 levels ofRMC, requires the expenditure ofmore 16 energy. You eitherhave to do that by running the 17 machine longer, in the spin cycle, or by increasing 18 the spin,both of which require the consumption of 19 increased energy. 20 MR. MARGOLIS: But the overall energy would 21 be saved. 22 MR. JONES: Well, by thatpoint, ourview 23 is, that the statute-requires you to set a standard137 1 by product, and to the extent that -- Imean, there's 2 no basis in the statute that I'm aware of, that says 3 theproduct is the washing anddrying cycle. 4 Your numbers look to the dryer, so the 5 savingswhich you're projectinghere are based upon 6 savings in the dryer, and it seems tome that that is 7 not -- you cannot do that. 8 You can't say,we're going to require you 9 to spendmoremoney on the washer and expend more 10 energy in thewasher, because we know that'll save 11 energy over the entire cycle; i.e., in the dryer. 12 Youmakeyour analysis on what's effective 13 or cost-effective and technically feasible in the 14 dryer and you come up with a standard or you don't. 15 We think the data doesn't support a 16 standard on the dryer, but that's adifferent story. 17 MR. LEVY: Areyou saying that wehave to 18 disregardwhat happens in the dryer? 19 MR.JONES: Yes. Youdo, ifyour standard 20 level depends upon that being accomplished in the 21 dryer. 22 MR.LEVY: The answer is yes. 23 MR. JONES: Well, Imean, I can't -- you'll138 1 have to answer that. But I'm only saying as far 2 as

-- 3 MR. LEVY: I'm just askingyouwhat you're 4 saying. 5 MR.JONES: I thinkwhat I'm saying is 6 pretty clear. 7 MR.ADAMS: I thinkwe have somewhat of a 8 similar situation between clotheswashers andwater 9 heaters anddishwashers, andwater heaters, where 10 there's an interactionbetween two different 11 appliances and whatyou do in one may affect the 12 energy consumption of the other product. 13 MR.JONES: That's avalid point. Perhaps 14 we ought to resolve this entire question by focusing 15 on savings in the water heater and exemptwashers 16 altogether. 17 [Laughter] 18 MR. JONES: Wewould endorse that. 19 MR.ADAMS: Without addressing that

-- 20 [Laughter] 21 MR. ADAMS: -- let me also say something 22 about themoisture content. The types of standards 23 that DOE has set in thepast have beenperformance139 1 standards, and they havenot required anyparticular 2 design option to be incorporated or not, but the 3 level that we set the standard at was at aparticular 4 scenario, a way -- a possible way -- of getting to a 5 particular performance level at someparticular cost. 6 These products are complicatedproducts, 7 and there'smany aspects to them, and there's 8 obviouslymanyways to skin the cat, so to speak, to 9 get to a certain performance level. 10 Dependinguponwhere aparticular 11 manufacturer is starting from their base case, every 12 manufacturer's base case is going to be somewhat 13 different than everybody else's and certain different 14 from the average base case that we use in the 15 analysis. 16 For some manufacturers, itmaymakemore 17 sense economically to achieve performance 18 improvements down this pathway rather than down some 19 otherpathway, that mightmake sense for some other 20 manufacturer. 21 Sowe're trying to come up with, based on 22 an average base case, a scenario that could be 23 followed to get to a certainperformance level, but I140 1 don't thinkwewouldhave any intention of sayingyou 2 wouldhave to get to someparticular residual 3 moisture content. Youwould have to have aclothes 4 washer that achieved 40 percentmoisture retention 5 rate. 6 Itwould be some energy factor, and 7 whatevermakes themost sense, dependingupon where 8 you are starting from, to achieve that, would be your 9 option to do. 10 MR.JONES: Right. Again,we appreciate 11 that, and Idon'twant to carry this too far. But I 12 guess, at the end, whereveryou all woundup, could 13 only be achieved, couldmost cost-effectivelybe 14 achieved thatway, through RMC. We think there where 15 some legal issues there. 16 MR.MILLER: I guess I, first of all, want 17 to thank GE forwhat I think Iheard was their offer 18 of support for awater heater standards and levels of 19 cost-effectiveness. Sowe'll be contactingyou to 20 work on that. 21 [Laughter] 22 MR.JONES: We'll be glad tohelp you 23 there. Wehaveno technological expertise, as we141 1 don'tmake them. 2 MR. LaFRANCE: We do look forward to your 3 support on that. I think thehistory of the 4 standards and the legislation itself makes it clear 5 that energy that is saved through improvements in the 6 product canbe counted even if they'renot saved 7 directlywithin thatproduct the same way that the 8 hotwater is not heated into the clotheswasher or 9 the dishwasher. The saved energy in the dryer is 10 energy that's saved from improvements in the clothes 11 washer, and that's the real energy that's saved. 12 The electricity that the washingmachine 13 uses is being saved in thepowerplant not in the 14 washer too. Sowewould take adifferentposition. 15 Of course, this will be argued in comments, and I 16 don't know if we need to spendmuch time on it here. 17 At thispoint in time, Iwould like get a 18 feeling from the audience as towhat their thoughts 19 are ofgoing to a lunch break, whether theywould 20 like to stop for lunch now or they feel thatmost of 21 the remaining issues -- and we have only a couple 22 more on our agenda. 23 Like we saidbefore, we're looking forward142 to any comments youhave on our presentations from DOE or LBL this morning and the analysis. Ifpeople.feel they want to discuss things for a significant amount of time, I thinkwe should take abreak now for lunch. Ifpeople feel that this will only go on for somuch, let's say 45 minutes to an hour longer, thenmaybe youwant to just continue and finish it. Iwould like to get a little feedback from people on that. MR. STILWELL: I'd prefer finishing early;

as early as possible. MR.LaFRANCE: Okay. Sounds good. MR.ADAMS: Marc, is the only agenda item left that's written downhere, the horizontal-axis market acceptance? MR.LaFRANCE: We have also adaptive control, which I guess we've kind of touched on that

a little bit, about automatic fill control, and I guess from an adaptive control, looking at soiled conditions, andwehave the AHAMdata. I guesswe needto look at that further to analyze it. We're also requesting thatpeople provide 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23143 1 any additional information that theymight have for 2 soil types. Are consumers presently usingmorehot 3 water than is needed? 4 I guesswe had abigpresentation from 5 Clorox as to ways to improve performance and reduce 6 temperature. Idon't know that you wouldhave an 7 automatic control bleach dispenser as apossibility. 8 There's a lot of things out there. 9 If anybody could provide any input at all 10 relative to this design option,we'd welcome it. 11 MR. POPE: Marc,what about the discussion 12 on TUFs? Canwe cover that quickly today? 13 MR. LaFRANCE: Sure. Did youwant to just 14 talk about that right now? The lastbullet Ihave 15 here is horizontal-axis market acceptance, andwe can 16 talk about that after. 17 Go ahead. 18 MR. POPE: I just want to get some 19 clarification on what the TUF consumptionswere in 20 the calculations. 21 22 23144 1 TUFs 2 MR. LaFRANCE: What has happened, to give 3 everybody a little history on it, AHAM haddeveloped 4 a test procedure. They've beenworking on this for 5 well over ayear now. We support them in their 6 development effort andwe're very appreciative of 7 that, that they have taken this task. 8 When theypresented the Rev 6version, it 9 hadparticular TUFs in it, and that's theversion 10 they used for the submission of the data. The first 11 data submission to us was the Rev 6version. 12 Then they had aRev 8version, which 13 rejected the TUFs forwardwith the regression to the 14 year 1999 or 2000. 15 Then, when they sent in their finalversion 16 on July 5, it had the identical TUFs of the Rev 6

-- 17 revision -- whichmeans whatwe thought to be the 18 final testprocedure, hadthe exact same TUFs as the 19 submitted data. 20 But atyesterday's hearing for the test 21 procedure rulemaking,we learned that they had 22 inadvertentlyput the wrong TUFs into their final 23 submission to us, and there was apresentationmade145 1 as to what the TUFs should be from the AHAM 2 perspective, and that that were based on several 3 regressions and projects to the year 1999 versus 4 2000. 5 So a few things remain: 6 One is: We need towork on what should the 7 final TUFs be from the Department'sperspective, and 8 get comment on that; whether the regression should 9 just go to the currentyear or they shouldbe 10 projected to the year 2000, or somewhere between. 11 We'd be interested in learning about the 12 factors that affect reduction in hotwater use in 13 laundry relative to warmand hot, whether they deal 14 with soil conditions or types of fabrics, orwhatever 15 else is involved. 16 So that wewant to do an analytical 17 analysis of this, and also subjective analysis as to 18 whetherwe expect the trend to continue at the same 19 rate orwhether it wouldbe somewhere in between. 20 Then oncewe get that information, and then 21 we can solidify what the tests should be, thenwe 22 need to look at the submission of the data tous, and 23 if there's adifferencebetween the submitted data146 1 and the final TUFs, thenwe will need tomake a 2 change,whichwillprobably reduce the energy 3 consumption ifwe change the TUFs from theRev 6 4 version. 5 So that's just a littlehistory on the 6 TUFs. 7 Go ahead, Ted. 8 MR. POPE: Okay. Now, just a couple of 9 numbers might clarify. What TUFs were used for the 10 three settingmachine, were used in this version we 11 have now, the final version of these numbers versus 12 what seems to be currently accepted? 13 MR. HAWKINS: What version doyou have? 14 MR. POPE: Okay. I assume Ihave the same. 15 I got faxedyesterday the materials for the 16 engineering analysis. 17 MR. HAWKINS: Is this the engineering 18 analysis thatwas handed out here? The copy Ihave 19 is dated 7-7-95. 20 MR. LaFRANCE: Actually, there was a 21 version this morning 7-9-95. 22 MR. HAWKINS: 7-9-95. 23 MR. LaFRANCE: Ted, the analysis youhave,147 1 the analysis wepresented today, is representative of 2 the Rev 6AHAMTUF data. 3 MR. POPE: Okay. That's the 14 by 50 by 4 36? 5 MR. LaFRANCE: It's 14 forhot, 50 forwarm 6 and 36 for cold. 7 MR.POPE: Okay. So that's what's in the 8 numbers here. 9 MR. LaFRANCE: That's in the analysis. But 10 the testprocedure that waspresented fromAHAM 11 yesterday have differentnumbers. 12 Idon't have it in front ofme, Larry. Do 13 youhave those? 14 MR. HAWKINS: Yes. It's 14 forhot, 47 for 15 warmwash, and 39 -- let me confirm those. 16 MR. JACOBSON: That's correct. 17 MR.HAWKINS: That's correct. Sorry. 18 Numbers are going throughmymind. 19 For thewarm rinse option,we are not in a 20 consensus decision atAHAM. It's a range of 21 to 33 21 percent. 22 MR.POPE: Is there aprecedence for 23 projecting future rates for this kind of standard148 1 setting process? 2 MR.JONES: We had abigdebate on this 3 yesterday. You don'tproject rates, youproject 4 rates. 5 MR.HAWKINS: Ifyou fix it at the '94, '95 6 level, you're essentiallyprojecting no change at all 7 in the rate, soyou can't saybecause we didn't 8 project, we didn'tproject. You're projecting 9 something. It's a question ofwhat you're 10 projecting. 11 MR. STEPHENS: Iwould suggest thatyou 12 need to know why you'reprojecting something, too, 13 and dowe know that? Do we understand why the rate 14 has beenwhat it is, and we can explainwhywe think 15 that ratewill continue in the future? 16 MR. HAWKINS: Ican answer that. The data 17 thatwe usedwas P&G data survey. Goingback to the 18 year 1975, there were some blanks in the earlyyears, 19 but we used the best datawe had, thatwe obtained 20 from P&G. That's the data that went into the 21 originalTUFs, only followed through the years. 22 We analyzed the trend in that data over 23 time. We said that sincewewere working on a test149 1 procedure that was intended to be applicablewith the 2 rulemaking thatwasmost likely going to be 3 forthcoming in 1999, then TUFs at that time would 4 eitherbe out of date and need to be updated or else 5 we could look at ahead toproject what theywould be, 6 based upon the long-term trend thathas existed over 7 that longperiod of time, and project them out. 8 Thatwas the approach we took. Weweren't 9 talking about TUFs that would be applied this year on 10 energymeasure this year,wewere talking about TUFs 11 that would be applicable in the year which the 12 rulemaking took effect, out in 1999, and our concern 13 waswhatwould the TUFs be, given the trend didn't 14 change. 15 Wemade the assumption that the trend that 16 prevailed through that longperiod of timewould be 17 consistent carrying out the next 4 to 5years. 18 Again,we also looked at it and said,well, 19 ifwe didn't do that, ifwe just shut it off in 1995, 20 whatyou endup is, you have ahockey stick ifyou 21 look at the trend curve. 22 It says that starting in 1995, consumers 23 didn't change theirpractices at all, and it really150 1 challenges any belief in the analysis of the data 2 that that's whatwouldhappen. 3 The reality is that itmaybe somewhere in 4 between, but in standard forecasting techniques,you 5 take the trend and project it, extrapolate. There is 6 always -- anyone will tellyou doing forecasting 7 analysis, there is risk that something could change 8 that's a trend andmodify it, butwehave no 9 information to say that it would or wouldn't. 10 Given no major change in the detergent 11 formulations, Iwould assume that line is asatotic 12 (ph)at some point, and Iguess Idon't knowwhere 13 that is, but I thinkyou can assume it flattens out 14 at somepoint down the road. 15 MR. STEPHENS: Iwould also suggest that 16 theprice of oil in 1973 kind of took that hockey 17 stick like bend in itself, and a lot of people, 18 including companies likeArco, were taking that 19 handle on the hockey stick and justprojecting it out 20 into the future, and about every twoyears over the 21 last sixyears, that handlehas been coming down 22 flatter and flatter until, at some point, if youhad 23 been sitting in 1972, youmight have actually reached151 1 the 1999 projection for the price of oil ifyou 2 assumed that there was no hockey stick, itwas flat. 3 So there is a reason, actually, Ithink, 4 given that some of this stuff is actually 5 interrelated to actually analyzewhy you think 6 yesterday's trends can be projected into the future. 7 There's a lot of them right now, 8 especially, that aren't the same as they were ayear 9 ago or even twos or sixmonths ago. People are 10 changing a lot of these trends andprices and 11 people's habits. 12 A lot of other things affectingpeople's 13 choices are changing rightnow, too, and Idon't 14 argue thatyou'rewrong, I argue thatwe better 15 understandwhy we're picking the pathwepick. 16 MR. HAWKINS: Idon't disagree. It's 17 interestingyoupick theprice of oil. Iwould like 18 topoint out that the analysis underlying the design 19 options is also forecasting energy cost out in time. 20 We could argue the same points that we're 21 talking about in TUFs. Is that the appropriate thing 22 to do? Whynot fix it at the current level. 23 MR.JONES: Yes. Ourpoint isyou need to152 1 be consistent, and there is no reasonwhywe should 2 presume thatwhatwe're working on here is so complex 3 that it is not susceptible to some reasonable 4 statistical analysis as we dealwith other things. 5 An alternative approach, and itmight be 6 onewhich is actuallymore suitable, except that this 7 process thatwe're workingon just seems to get hung 8 up. Iwoulduse theword "bureaucracy," but Idon't 9 want to insult anybody so Iwon't say that. 10 But if we could agree on aprocess by-which 11 the DOE commits on an Xbasis every twoyears to 12 readjust these numbers or to take a look at the data, 13 that's perfectly fine. 14 Nobody's out to get to thepoint that's 15 unrealistic, but whatwe are not prepared for is to 16 accept assumptions whichput us at adisadvantage 17 when there's data,when there are twoways of 18 understandingwhere you could be, eitherby recent 19 projections or by relooking at the data. 20 Certainly sort of standingpat andassuming 21 thatyouwere going to be there on the [inaudible], 22 is not realistic, and that's something that is 23 unacceptable.153 1 MS. SMOZZO: What are the explanatory 2 variables that areused inpredicting? 3 MR.HAWKINS: The raw data fromP&G was 4 analyzed over the time period thatwere the 5 variables. 6 MS. SMOZZO: Idon't have that data. 7 MR.HAWKINS: Itwas presentedyesterday, 8 and it's P&G's consumer survey data that says how 9 often the consumers select the water cycles available 10 orhot wash orwarm wash, cold wash,warm rinse or a 11 cold rinse. 12 They tracked that data religiously over a 13 longperiod of time. Itdoes not describe the data 14 itselfwhat are the underlyingderiving factors of 15 why consumers have beenmoving towards coldwater, 16 but it's evident in the data that consumers are 17 moving towards cold water, and allwe didwas took 18 that data and used standard statistical techniques to 19 say, canwe look at it. 20 I'llback up. 21 We originallymade aproposal at TUFsbased 22 on the latest P&G data. We were asked and commented 23 that thatwas probablynot appropriate to do that, we154 1 needed to look atmore years of data in order to 2 adjust to temperature usage factors. 3 We agreed that, yes, thatwould certainly 4 be themore technicallyprecise process to follow and 5 that wewould try to do that. 6 Sowemoved from apoint inRev 6,which 7 was whatMarc talked about, that was in the earlier 8 data analysis, wehad TUFs in there thatwas based 9 upon the latest P&G data, and Ithink thatwas the 10 year 1993, which is whenwe set those TUFs inplace 11 at that time. 12 Wewere asked to go back to look at -- 13 let's take more than oneyear to base whatwe believe 14 is going to be the best estimate of the temperature 15 usage factors that shouldbe applied. We did that 16 andwith faith. 17 We asked P&G to send us the best data that 18 they had over a longperiod of time and just analyzed 19 it. 20 MS. SMOZZO: I'm sorry, just one more 21 point. 22 Howmany data points are there? This is 23 like 1982 or 1980 to 1994?155 1 MR.HAWKINS: It goes 1975, 1978, 1981, 2 yearly through 1994. 3 MS. SMOZZO: Okay. 4 MR.MILLER: Just tomake sure I'm 5 understanding, it sounds like what you're doing is 6 just extending a time trend and not trying to put in 7 other explanatoryvariables. 8 MR. HAWKINS: Exactly. Yes, sir. 9 We did find, in analyzing the data, as is 10 inherent in a lot of time series data, but the data 11 itselfwas exhibited at auto correlation. Ifyou go 12 to auto correlation, it says that there is an 13 inherent relationship between this year's temperature 14 usage number and lastyear's and the onepreceding. 15 To eliminate that as avariable, one 16 standard techniqueused is to take and subtractyear 17 to year and just get the changes; average those and 18 assume that those changes on the average, through 19 that timeperiod,will be the same level of changes 20 thatwill go forward in the future. 21 That's thewaywe did it, because it also 22 allowed us to establish a confidence interval around 23 the data, but we looked at the data using the156 1 difference in technique; we lookedat it using linear 2 and nonlinear techniques. 3 Andwhile, as there are some differences in 4 the numbers that youproject, there wasnot ahuge 5 disagreement in those numbers. 6 Ipresent a curve showing the linear and 7 nonlinear regression andpresented a table so I 8 calculate the differences approach at yesterday's 9 session. 10 MR. LaFRANCE: They're presentation from 11 yesterday is available at the information table, so 12 you can get that after. I'm sorry, wemight have run 13 out of those, but we'll get some more of them. 14 Also, I'd just like to clarify that the 15 data submitted -- andLarry just explained this but 16 to clarify it a littlebitmore -- AHAM data 17 submittedwas on the Rev 6version, whichwas of the 18 recentyear, 1992-93, so those numbers wementioned 19 before, like 14, 50, and 36, those are not from the 20 regression that would go to the year 1994 and 1995. 21 Those numbers are different. 22 NIST has calculated those numbers, one for 23 a series of -- the data for 10 years and data for 16157 1 years. So thatwould be adifference in the TUFs. 2 So are theAHAM final versionTUFs. 3 So, depending onwhatwe decide to do for 4 the test procedure, the analysiswill need to be 5 revised slightly to account for the newTUFs, 6 whatever theymaybe. Even if they're somewhere in 7 between, they still probably willhave to be 8 adjusted. 9 HORIZONTAL-AXIS MARKET ACCEPTANCE 10 The last item on our-agenda is the 11 horizontal-axis market acceptance. We'll try to get 12 some feedback on that. 13 Thepoint Imade in this morning's 14 presentation about the estimated or potentialprice 15 increase, based on apercentage of the retail cost, I 16 think today's analysis is showing, oh, Ibelieve 17 about a $170 increase to a 383. 18 We're looking at from 383 to increase to 19 555. We're looking for some feedback as to how to 20 analyze the impact to the consumer,you know, to the 21 marketplace and somethingnontraditional than whatwe 22 do already,which involves impact tomanufacturer 23 sales and net revenue andprofit to corporations and158 1 everything else. 2 MR. FREESMAN: There's two issues that I 3 would like to get to -- before we get too deep into 4 the horizontal-axis -- two issues that I still want 5 to bring up. 6 One will followup with comments and that 7 relates to yourmarkup of 1.7; Iknow I've mentioned 8 this toyoubefore. 9 In calculatingthat 1.7 and looking at 10 where the average is today, I still think it's 11 appropriate to look at that as an incremental markup. 12 In fact, as you add cost to product,we obviously 13 can't get too deep into that discussion here, but 14 perhaps that markupwill vary,probably increase. 15 So that whenyou look at retail cost of 16 theseproducts, they be substantially higher than 17 whatyou've representedhere. Because, as companies 18 make investments to assist newbusinesses, they look 19 for greater returns and better paybacks, and they 20 impact on retail pricingwill vary by company, but 21 will probably be higher than it is for the average of 22 the business. 23 The other thina that Iwanted to add is. i: n

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---159 1 the analysis of payback, there is no identification 2 here of increase in servicing cost of the products. 3 There is no question that aswe increase complexity 4 of the product to achieve greater results, there are 5 additional risks related to maintaining these 6 products, both to the manufacturer during the 7 warranty period, as well aspost-warranty to the 8 consumer. 9 The analysis is going to assume that the 10 performance -- .Idon't want to say the quality, the 11 quality ismeasuring two different animals -- but as 12 the beast gets more complex, apotential for 13 breakdown is going to increase and that will cost 14 people money in anotherwarranty. 15 That's got to be reflected certainly in the 16 life costs analysis if not between thepayback. 17 There's going to be warranty expense and if there's 18 warranty expense, it's going to be reflected in the 19 cost of the product as well. 20 That's ahole that I think is missing in 21 thiswhole analysis as well. 22 MR. LaFRANCE: Iwould requestthat, to the 23 extentpossible, if we could receive data relative to160 1 that concern about the serviceability ofmore complex 2 products, they will be helpful. 3 MR.FREESMAN: It's not just 4 serviceability, it's frequently of service. 5 MR.LaFRANCE: I should say service costs, 6 maintenance cost. 7 Also, possibly, maybe Asko mighthave some 8 informationbecause Ibelieve youhave ahorizontal9 axis machine that's probablymore complex than the 10 traditional machine, and that maybe they have some 11 information on that. So if anybody has any 12 information at all, wewelcome it so we can analyze 13 it andpossibly add it to the analysis. 14 MR.LEVY: Including any savings thatmight 15 be achieved. Imean, that's not outside the realm of 16 possibility either. 17 MR. JONES: Savings and? 18 MR. LEVY: Servicing costs. Repair. 19 MR.JACOBSON: Certainly one ofus just 20 came outwith anewproduct that talked about being 21 much simpler, fewer component, and that will improve 22 serviceability. Ifyouwant to go the otherway in 23 making theproductmore complex, logic would continue161 1 inthe other direction. 2 MR. LaFRANCE: Yourpoint is well taken 3 that we should look at the serviceability,and if we 4 have data wewill look at the impact tomaintenance, 5 I should say. 6 MR. JACOBSON: We're going out in that 7 blackhole, though again,Marc. 8 MR. LaFRANCE: We're trying to do the best 9 we canwith the information wehave, obviously, and 10 we'rewilling to look at anything else that's 11 reasonable as long aswe have information to look at. 12 Your point about beingmore complexmore 13 automaticallyrelates to less reliable. I guess some 14 people wouldhave a concern about that, because 15 obviously whenyou developanewproduct youdevelop 16 it for obsolescence, for reduced parts. 17 Imean, Iknowyou can't correlate it to 18 the electronic world,but when they develop new 19 productswith electronics, they have significantly 20 less components, higher reliability. 21 Thatmaybe true., thatmay not be true. 22 Allwe're saying is anything you have that would 23 justify an indication that itwill be such a162 1 products,horizontal-axis will be less reliable, and 2 therefore the servicerate will increase. What is 3 the existing service rate now, and what is the cost 4 to consumer of the existingbaseline service? 5 Sowe don't have that either, so if you 6 giveus the baseline andthen some type of rationale 7 as to the reliability either goes up or goes down. 8 But justbecause it's amore complex 9 machine, doesn't always relate to less reliable. It 10 may, but itmaynot, depending on how they design -it. 11 MR. JONES: Doesn't that defy logic? I 12 mean, that sounds nice, Marc, but is there any basis 13 in fact for that statement? 14 MR. LaFRANCE: Certainly in other products 15 there are. Imean, for the -- and I really shouldn't 16 be getting involved in this right now, about 17 components, but for electronic industry it's a 18 totally different issue. So I'll just use that as an 19 example. 20 MR. JONES: Yes, but that's simplification. 21 That's not going tomake itmore complex. 22 MR. LaFRANCE: Well, no. More capability, 23 I should say, instead of complex. Maybe it's the163 1 wrongword, complex for capability. 2 So improved capability. Okay? Whichwe're 3 talking about ahorizontal-axis machine. Now, 4 whether ornot you can build itwith more or less 5 parts, Idon't have a clue. I'm not going to say I 6 do. 7 I'm just saying, in theory,whenyou 8 develop anewtechnology, some types ofproducts can 9 bemade to be more reliable. 10 MR.JONES: Of course. 11 MR. LaFRANCE: Of course. Right. 12 All I'm saying is, thatmaybe true, itmay 13 not be true. I'm sayingwe need information that 14 would prove that, in the case of horizontal-axis, 15 that they are less reliable. 16 Justbecause it's anew technology and it's 17 different fromwhat you're doing now, I'm saying it 18 doesn't necessarilymean it's always going to be less 19 reliable. 20 You have always the start-up costs of a new 21 developmentproject. When it's new,you have bugs to 22 work out and all that. We all know that's part of 23 it, but the analysis is based somany years into the164 1 life of theproduct, after it's been on theproduct. 2 MR.JONES: It'sperhaps apointwhich is 3 very difficult tomake, because, again, wehave 4 building experience. 5 MR. STILWELL: It's all conjecture, at this 6 point. 7 MR. JONES: Exactly. It's all conjecture. 8 MR. STILWELL: There's not even anypoint 9 in talking about it. 10 MR.JONES: ForDOE somehow to assume that 11 this is transition is as simple as adding a 12 component, portrays such anunfamiliaritywith what's 13 involved inmaking thesekind of changes, has to defy 14 the comment on it. 15 MR.LEVY: We're not assuming anything. 16 We're just responding to Marc's comment. 17 MR.JONES: No. No, you are assuming. You 18 are assuming something whenyou say that horizontal19 axis is adesign option onwhich you can simply take 20 what you've got today and flip it on its side or do 21 something else, which sort ofmakes it an add on. 22 MR. LaFRANCE: Earl, Iwas responding to 23 Mark's concern about reliability. I'm not saying165 1 that they're going to be more or less reliable. I'm 2 just sayingprovide some rationale for that. 3 As far as the design option concept, we 4 visited all of the plants. We knowwhat's required 5 tomanufacturehorizontal-axis machine. 6 We realize that requiresmassive capital 7 investment, completely newtooling for themostpart, 8 and it's expensive investment. 9 We also realize thatmany companies retool 10 occasionally just to change the type of product they 11 have, the type ofplatform they have. 12 Sowe realize that it's amajor change, and 13 we want to analyze it, and the concern about whether 14 or not ithas ahigher service rate is a goodpoint, 15 but all I'm saying is, for us to analyze it, we need 16 information. 17 MR.JONES: I understand. 18 MR.LaFRANCE: He brought up the point, 19 maybe it's more reliable, maybe it's less. If you 20 can give us information that justifies that it's less 21 reliable, taking out the initial start-upbugs, 22 because every new designhas that, thenwehavevalid 23 data.166 1 MR.JONES: No, Idon'twant to arguewith 2 you on thatpoint, I agreewith you. I really do. 3 Marc, myquestion was: What areyour 4 assumptions. What are the assumptions inhere about 5 service? 6 MR.MORRIS: I'mnot trying to take away 7 from the suggestion madeby Mark Freesman orwhat 8 you're saying, Earl, at all, but in response to your 9 request for data on this subject, Marc, one small 10 element of thismight be found in the data submission 11 thatwasmade byAHAM to you in the confidence 12 factors. 13 Confidence factors on both the 14 manufacturability and themarketing ability of these 15 design options and/or changes to the product are 16 found in the data that was sent to you and, in fact, 17 Idon't find reflected in the analysis thatPeter has 18 done so far. 19 Itmay be a casewhere youwouldwant to 20 suggest someway of looking at that as one element, 21 one element, of getting at the issue of 22 serviceability or dependability or costs associated 23 with or complexity of design of some of these other167 1 situations that are mentioned as design options. 2 MR. LaFRANCE: Thank you for the 3 suggestion,and Ithinkwe certainly arewilling to 4 do that if somebody could provide us abasiswith how 5 we shoulddo it. 6 Just to get back to Earl's question about 7 what's the assumption, at this point in time, Mark 8 was correct that wehave notmade any adjustment for 9 serviceability, so the basically the underlying 10 assumption that was done -- I don't think really 11 anything. We didn'thave any information sowe 12 didn't analyze it, so basically the resulting 13 assumption is that itmaintained the same. 14 Butwe didn't really sit down and think 15 about this, to be honest withyou. Hebrought up the 16 issue just now. It's an interesting issue. Wewould 17 bemore thanglad to analyze it, if possible. 18 If the confidence factors can be used in 19 anyway at all, wewould bemore than glad to use 20 them. I think, at thispoint, weprobablywould need 21 a little assistance from the industry or non-industry 22 members to give us ameans to do that, andwe are 23 willing to do it if there is ameans to do it.168 1 MR.JONES: Surely some notion of the chaos 2 theory or some other way of doing this, can come up 3 with a number that might be -- I don't know that you 4 have to look to the industry for this answer. 5 Surely,you all have access to information,which 6 talks aboutwhathappens whenpeople or industrymake 7 significant changes. Maybe look auto or look 8 someplace else, Ihave no idea. 9 MR. STEPHENS: Iwould not suggest looking 10 at auto. Youwon't get the answeryou're looking for 11 at the automobile industry. 12 MR.JONES: Well, it depends on whatkind 13 of change you're talking about. 14 MR.STEPHENS: Complete product change. 15 MR.JONES: Like the electric car? 16 MR. STEPHENS: No, to Chrysler, for 17 instance, starting out completelywith an entirely 18 newplatformthat has no basis in theirprevious 19 automobiles -- the LH, the Neon. There's three 20 product lines. 21 MR.JONES: They've still got gasoline 22 engines, as far as Iunderstand. 23 MR. STEPHENS: Yes, but that wasn'treally169 1 their reliabilityproblem in history. Imean, their 2 aremaintenance problems, their warrantyproblems, 3 their reliabilityproblems didn't really come from 4 the power plant. 5 The point is, theyhave done some rather 6 complete technology changes in the automobile, and 7 youwouldbe hardpressed to argue that the 8 automobile is less complicated today than it was 10 9 years ago. 10 MR.JONES: Idisagreewith you. Ithink 11 it is much less complicated. 12 MR. STEPHENS: Toyou,maybe. 13 MR.JONES: Oh, absolutely. 14 MR. STEPHENS: Not to thepersonwho 15 designed it and the personwhohas to put it 16 together. It does a lot more things thatyoudon't 17 have to worry about, but the way it does it is far 18 more complicated than it used to be, but it's 19 manufactured to amuch higher standard, it's much 20 more reliable. We now have vehicles professing 21 100,000milemaintenance intervals. 22 So it's not clear, based on anumber of 23 examples, that complexitybreedsmaintenance costs or170 1 unreliability, but it can. 2 MR.JONES: Your definition of complexity 3 is not an engineer's definition of complexity. 4 That's the only part I leave youwith. 5 MR.MARGOLIS: This issue hasbeen raised 6 by Speed Queen, and the departmentwill analyze it, 7 will then go outwith its results, looking at the 8 data thatwe have, or coming upwith other data, and 9 we'llpresent it to you for comments, just like we do 10 with any otherpart of a Proposed Rule beforewego 11 final with it. 12 If industry doesn't have the data, that 13 doesn'tmean that DOEwill not come upwith some 14 numbers, based on certain assumptions that it makes, 15 which itputs out with its numbers. 16 MR. LaFRANCE: Okay. Are there any other 17 topics that peoplewould like to discuss relative to 18 the entireworkshop today, the analysis, the 19 presentation, new technologies? 20 21 22 23171 1 GENERAL DISCUSSION 2 MR.THIEL: Iwould just simply like to 3 repeat for the record, in theworkshop, apoint or 4 twowhich wehad already made to you directly. It 5 relates back to yourpresentation at the beginning. 6 The firstpoint we'd like to state is that 7 Frigidairewill not be providing any additional data 8 of anymannerwhatsoever on this rulemaking, and the 9 reason for that is the design option,whichwill 10 probably affect over 50 percent of themarketplace is 11 not on the table for consideration, and without the 12 ability to do a technical feasibility and economic 13 justification analysis ofwhatever that design option 14 or combination of options maybe, we don't believe 15 that any of the work-youhave done to date willbe 16 valid or defensible. 17 When that design option and the surrounding 18 data eventuallybecomes available, everybody is going 19 to have to resubmit their data anyway. 20 Wewill not,by providing data, give anyone 21 the inference that we think that this process is 22 defensible. 23 The second noint I would like tomake fnr ---- ml------ -- -172 1 the record is that; in thismarketplace, in this 2 industry,we do not believe it is defensible for the 3 Department of Energy to use an averagemanufacturer 4 analysis, because there clearly is no such thing as 5 an averagemanufacturer. 6 Until the Department of Energy comesup 7 with some other approach for determining economic 8 feasibility, other than average manufacture analysis, 9 again,we don't think anything coming out of this 10 rulemaking is defensible. 11 MR.MARGOLIS: As to Point 1, couldyou 12 tell us what design optionyou're saying is not out 13 on the table? 14 MR. THIEL: Yes. TheWhirlpool design 15 option. 16 MR.MARGOLIS: What do you mean by the 17 Whirlpool design option? 18 MR.THIEL: Ihave no flaming idea, and 19 that's thepoint. And, frankly, Iwas disappointed 20 that the Department's presentation did not recognize 21 the fact that thatmanufacturer,which has over 50 22 percent of themarket share, haspublicly announced 23 that they will be introducing ahigh efficiency173 1 design option,which theyhave declinedto disclose, 2 which will clearly have an impact on the 3 competitiveness of this industry. 4 MR. JONES: Iwould just ask a question, a 5 follow up, byway of point of information, toyou, 6 Marc, and possibly to Eugene. 7 Exactly howdoes DOE deal with that issue? 8 Eugene, you indicated howyouwould deal with the 9 absence of data on serviceability or liability, but 10 how would youdeal with the absence of information 11 regarding this design? 12 MR. LaFRANCE: As far as the exact response 13 to that, Earl, I'm goingto have to defer to our 14 general counsel, to some extent,but Iwant to go 15 back, before Ido that, to Terry's secondpoint about 16 manufacturer analysis. 17 He said thatwe conduct an average 18 manufacturer's analysis, ant that is whatwehave 19 done historically. We do have the capability to 20 conduct an individual manufacturer analysis. The 21 problem is, we can't disclose it. 22 So I'm not saying that wewill do that but 23 the capability exists, andpossiblywe may chooseto174 1 do thatbut not disclose it. Idon't knowhow that 2 wouldwork in rulemaking and Idon't knowwhatwe'd 3 dowith it, but I'm just saying the capability 4 exists. Whatwe dowith it, we don't knowat this 5 point in time. 6 In regards to theWhirlpool announcement, 7 we are certainly going to investigate what we need to 8 do in this rulemaking from a legal standpoint, and it 9 certainly will be considered. We're aware ofwhat's 10 happening,but we can'tpublicly discusswhat they've 11 disclosed to us. 12 MR.MILLER: Ihave a question for 13 Frigidaire, whichwere listed to your statement. 14 That is, wehave in front ofus an analysis 15 with discloseddesign options. Does the existence of 16 anundisclosed design option in anyway, inyour 17 mind, call into question either the technological 18 feasibility or the cost-effective of the design 19 options that are being evaluated? 20 MR.THIEL: Absolutely. Notwith 21 technology feasibility, obviously, but there are two 22 aspects of that analysis that we can't address: one 23 is cumulative and the other is comparative. If175 1 you'll look on that,you'll see that DOE is ranked 2 and then aggregated design options to try to come up 3 with the optimized design upon whichto base the 4 standard. 5 There is a bighole in terms ofmissing 6 designs to do that accumulation. 7 Secondly, it's comparative. 8 MR.MILLER: Couldwe do that first point. 9 MR. THIEL: Sure. 10 MR.MILLER: If there were an additional 11 option inhere, howwould that suddenlymake the 12 options whichhave been evaluated, not cost13 effective? Wouldn't it just show thatyou could get 14 further faster, for less money? 15 MR. THIEL: Well, you'venow gone to the 16 economic side, that was where Iwas going. 17 MR.MILLER: I'm trying to understand your 18 firstpoint. 19 MR. THIEL: The firstpoint is, I can't 20 giveyou any sense as to whether I agreewith the 21 order ofmerit of the design options because they're 22 not all out there. 23 MR.MILLER: But the ones that are out176 1 there, Idon't understandwhy the ones -- 2 MR.THIEL: Theremay be certain design 3 options there that are muchmore valuable or much 4 more usefulwhen they are combinedwith themissing 5 design options. 6 MR.MILLER: But itwouldn't say thatyou 7 couldn't get -- itwould stay but you could still get 8 this level at that cost, so youmight be able to get 9 farther at lower costs. 10 MR.THIEL: You mightdo that. 11 MR.MILLER: Right. 12 MR. THIEL: You're absolutely right. We 13 might do better. 14 MR.MILLER: So that an analysis that said 15 you can get to the levels evaluated in this analysis, 16 and at this cost, thatwould still bevalid,would it 17 not? 18 MR.THIEL: Given the understanding that 19 therewould be an overlayof themissing design 20 accumulated withall the various and other options as 21 well, certainly. 22 There's just awholemissing tier of 23 analysis, so from a technical standpoint, which I'm177 1 speaking to now, the technical feasibility side of 2 the equation,youmay bemissing out on the best and 3 the greatest. 4 MR.MILLER: Isn't that always in terms of 5 technological advance, that we can often find things 6 that wedidn't expect to find in the future? 7 MR.THIEL: It's a question of degree. In 8 an industrywhere everybody is in constant process of 9 finding incremental improvements, you're absolutely 10 right. We're not talking about an incremental 11 improvement,we're not talking about climbing the 12 hill, we're talking about leaping a chasm. 13 We're talking about a step function change 14 in efficiency. 15 MR.MILLER: And I'masking not somuch 16 about that future but about thepresent in terms of 17 looking at discloseddesign options, looking atwhat 18 wehave in front of us today. I reallyhave trouble 19 understandingwhyyou believe that this analysis 20 wouldbe somehow invalidated or that this analysis 21 would show

-- 22 MR.THIEL: It's complete. I'm not saying 23 the numberswould necessarily change on anot design178 1 basis. 2 MR.MILLER: But the levels of efficiency 3 at the cost evaluatedhere would still be achievable 4 andwould still be cost-effective even if they 5 were -- 6 MR.THIEL: No, no. You see, you've just 7 jumped to the second side of the equation, which is 8 economic justification. 9 I couldbuildyou themost technologically 10 feasiblewasher in the world, and I could do all the 11 calculations and giveyouwhat it's going to cost me 12 in terms of material. The question is: Can Irecoup 13 that cost in themarketplace, because if Ican't sell 14 the product, I can't recoupmy cost, and the whole 15 thing is amoot exercise. I've just gone out of 16 business. 17 I've got to be able to produce aproduct 18 that Ican compete with in themarketplace. 19 MR.MILLER: Now you're, inmymind, 20 introducing a third issue. 21 MR.THIEL: No, I'm talking economic 22 feasibility. 23 MR.MILLER: But economically justified.

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### _ --179 1 according to statute, is it cost-effective to the 2 consumer. 3 MR.THIEL: It's alsowhether ornot it's 4 manufacturer impact. 5 MR. MILLER: Manufacturer impact is a 6 separate criteria that the statute discusses. 7 MR. THIEL: But that's part of economic 8 feasibility. 9 MR.MILLER: No, I'm not suggesting thatwe 10 forget about it, I'm just suggesting that it is a 11 separate criteria in-the statute. 12 MR. THIEL: Okay. 13 MR.MILLER: And that economic 14 justification is amatter of cost-effective to the 15 consumer. I'm askingyouwhether that criteria, 16 specifically,would in anywaybe developing. 17 MR. THIEL: The cost-effective to the 18 consumer is one element of economic feasibility. As 19 far as those design options are concerned, obviously, 20 you can go through that cost benefit analysis to the 21 consumer,but you are basing that uponprice 22 assumptions. 23 What I'm tellina vou is those nri-c 

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___180 1 assumptions areworthless. Because I can go out and 2 sell an apple for amillionbucks per, and if I sell 3 one Irecoup my costs. The question is whether I can 4 sell the apple. 5 Every single thingwe've got in terms of 6 that economic analysis, ispredicated uponbeing able 7 to go tomarket at some price in order to sell that 8 product. 9 Now, I've got to be able to determine, 10 before I can give you that price,whether I feel I 11 can sell it. Ihave no way of tellingyouwhether 12 theproduct I can build, I can sell at aprice point 13 which allowme to survive. 14 MR. POPE: Terry, by the same logic, I 15 could tell you that when theh-axis washers come out 16 they are going to be sopopular, thatpeoplewill be 17 pleased to pay $175 orwhatever it is; therefore,we 18 should say that thebaseline for washers should be 19 higher than it's reflected in themarket right now, 20 and therefore the incremental cost is lower. 21 MR. THIEL: I see that, but Idon't believe 22 youbecause, you see, if there is another product on 23 themarketplace that.is just as efficient as that181 1 horizontal-axis product, butyou don't have to spend 2 170 bucks to get it, thenwhy are theygoing to bymy 3 horizontal-axis machine? 4 MR. POPE: Iagreewith you there, but

-- 5 MR. THIEL: Well, therewe are. That's it. 6 MR. STEPHENS: Except aren'tyou 7 presupposing an awful lot? 8 MR. THIEL: Well, if Idon'tpresuppose 9 that, I'm out of business, all right? You're 10 assuming that I can go ahead invest themoney, 11 produce aprice, walk into themarketplace blind, and 12 hope somebodywill buy it. 13 Ihave got to build thatproduct basedupon 14 mybest judgment as towhether I can sell it, and 15 you've got to step back and look at this industry. 16 This is not an industry where you have any 17 ability to do an averagemanufacturer analysis. You 18 have onemanufacturer with over 50 percent market 19 share. 20 Now, you're askingme, with whatmarket 21 sharewehave, which is a quarter, a fifth of that 22 manufacturer; that Ican go out into the marketplace 23 and compete not only in terms of features but price,182 1 withoutknowingwhat thatmanufacturer is doing. 2 You obviously don't have any experience in 3 themarketplace,with all due respect, ifyou don't 4 go through thatprocess first. 5 MR. STEPHENS: Iguess I'm just wondering 6 what this rulemaking process has to do with that. 7 MR.THIEL: Well, if this rulemaking 8 process obsolesces vertical-axis machines, then there 9 is nothing left to competewith whateverWhirlpool is 10 going to come outwith, except horizontal-axis. 11 If the consumer preferswhatever Whirlpool 12 is coming outwith to horizontal-axis, thenyou're 13 not selling anyhorizontal-axis products either. So 14 the only

-- 15 MR. STEPHENS: Well, are you going to sell 16 anyvertical-axis? 17 MR. THIEL: No, because of efficiencies. 18 Now if Whirlpoolhas adesign that is patented, that 19 no one else can get ahold of, I'd like to ask you 20 how it is with the rest of us in themarketplace are 21 going to compete? 22 MR. STEPHENS: Well, I guess I can't -- if 23 the situation is as drastic as you suggest it is, I183 1' don't knowhow you're going to compete nomatterwhat 2 washing machine you're selling, andwe'll know that 3 before 1999. 4 MR.THIEL: Well, I'mgoing to tellyou 5 it's averydifficultmarketplace, and you're 6 absolutely right. 7 MR. STEPHENS: And Ipresumewe'll know the 8 answer to that or we'll have abetter idea of just 9 howyou're going to fare before this standard takes 10 effect,will we not? 11 MR.THIEL: We won't knowuntil we have 12 access to sufficient information to evaluate the 13 cost-effectiveness of theWhirlpool design. 14 MR. STEPHENS: When will that be? 15 MR. THIEL: You'll have to ask Whirlpool. 16 All I'm tellingyou is that this rulemaking 17 can't go forward untilwehave that analysis, because 18 we don't have all the design options on the table. 19 MR. STEPHENS: Idon't get it. I'm sorry. 20 We could call ahalt toprogress immediately on that 21 basis. 22 MR. THIEL: You've got to look at this 23 industry and thismarketplace. If you don't184 1 understand themarket dynamics involved, then you're 2 not going to get it. 3 MR. STEPHENS: Inmy mind -- Imean, I 4 understand,you're in avery competitive industry, 5 and that's true today andwill be true tomorrow. 6 If someone comes out with abetterproduct 7 that consumers prefer at lower costs today, with or 8 without a standard,you're going to have trouble 9 competing. 10 MR. THIEL: You're absolutely right. But 11 themarket is driving down. 12 [Simultaneous conversation.] 13 MR. LaFRANCE: Excuseme for a second. 14 Please, let's continue to keep our names -- state our 15 names before youmake your statement. Thankyou. 16 [Laughter]. 17 MR. JONES: I justwanted to ask one other 18 question. Again, I'm lookingto Gene to help us cut 19 through some of this discussion. It verywell be 20 that the concerns that are being expressed are going 21 to be addressed in the rulemakingprocess, and we 22 just haven't -- we're just not aware of that yet, so 23 whydon'twe just see what the answer to the question185 1 first is from Eugene, ifyou have one. 2 MR.MARGOLIS: The comments raisedby Terry 3 Thiel are such that wehave to look at very odd

-- 4 the issues that he raised, especially the issue, if 5 true, that this design option byWhirlpoolwas 6 patented. 7 Because if his allegation -- well

-- 8 MR. STEPHENS: Well, Ihave no idea. I 9 don't mean it to be an allegation. I just said it's 10 ahypothetical. 11 MR.MARGOLIS: But, Imean, that is 12 something thatwewouldhave to consider in our 13 proposing arule. 14 MR. JONES: Certainly, if you don't, the 15 Department of Justice will. 16 But letme askyou just a followup again. 17 Am I correct that the statute also requires you to 18 examine all of the designs or technologies which 19 exist in order to comeup with which ones make the 20 most sense? 21 MR.MARGOLIS: Well, it's all the ones that 22 weknow of. 23 MR.JONES: Well. yes, and vou knowof one186 1 becauseyou've been told of one, andwe've allbeen 2 told of one. Imean,we're not in the scenario where 3 somebody over herementioned,where somebody's got 4 something on the shelf somewhere and they're waiting 5 to spring it for competitive reasons because that's 6 theway themarket works. We all understand that. 7 We're in adifferent situation here because 8 this statute requires this department to undertake a 9 certain kind of analysis, to look at certain 10 information. 11 Wherewe are today in certain information, 12 which they are aware of, which they're all aware of, 13 which is not beingmade available for that purpose. 14 Therefore, it seems to raise adifferent set of 15 issues. 16 Idon't knowwhat the full implications of 17 thatwould be, but certainly there's adifferent set 18 of questions that I've imposed. 19 Ithink thatwhether Terry'spoint is 20 ultimately avalid one or not, it certainly is one 21 which Ihave a question about, and I thinkwe are 22 looking at some more affirmative guidance from DOE as 23 this process goes ahead, sowe clue it in.187 1 MR.MARGOLIS: What Iwould say at this 2 time is that issue has to be resolve beforewe go out 3 with theproposed rule. 4 That issue is raised and wewouldhave to 5 cover that issue and discuss it in the proposed rule. 6 Whether or not the Secretarywould orwould 7 not go outwith aproposed rule without adiscussion 8 of that design option, I cannot answer for her, but 9 it's something that wewouldhave to, in the proposed 10 rule, discuss and either we.put in adesign option or 11 the information around it, or wouldhave to saywhy 12 we're going forwardwithout that design option. 13 But to giveyou abetter answer now, I just 14 cannot. 15 MR.JONES: I understand. I takeyour 16 answer to be that the pointwhich has been raised is 17 avalid one, the implications ofwhich are not yet 18 fullyknown. 19 That is, Ithink, our last point. 20 MR.MILLER: Can I ask one question of the 21 othermanufacturers. Can anyonehere say that 22 they've disclosed all the options that they're 23 developing for complying?188 1 MR. JONES: Say it again, please? Whether 2 we? 3 MR. MILLER: Can any of themanufacturers 4 state that they havedisclosed all of the 5 technological options that they are investigating for 6 complyingwith future standards. 7 MR.JONES: Well, Imean, I, quite frankly, 8 am not sure -- I don't know the answer to that 9 questionmyself, fortunately. 10 Iwould say to you that the answer to this 11 question is qualitatively different in this 12 particular segment of the industry, given themake 13 dominance of one player. Imean, that's not 14 exactly -- the question, as you put it, is kind of 15 almost -- I won't say irrelevant but it's not 16 completelyrelevant because there'smissing 17 information. 18 If you are the dominantplayer in amarket, 19 the answer to that question I think ismuch more 20 relevant than ifyou're not. 21 MR.ANDERSON: Excuseme. Iwould like to 22 at leastput this dominance in themarket a little 23 bit inprospective, especially for some of folks who189 1 might not be as familiar as our industry. 2 We compete in the appliance industry, not 3 just in the clothes washer industry. We happen to 4 have avery healthymarket share in clothes washers, 5 but we compete in appliances. 6 Whenyou look at the actual size of the 7 fivemajor companies that are representedhere, as 8 far as U.S. production of appliances, especiallywhen 9 we include the total revenue of those companies, 10 we're rankedNo. 4 out of those 5. 11 Maytag is smaller than us. 12 Electrolux,General Electric, and Raytheon 13 are all larger than Whirlpool. 14 Ithink it's important to keep that in 15 perspective, that we are not -- we do not have 50 16 percent of the market share in the appliance 17 industry,nor dowe have 50 percent of the revenues 18 of the appliance industry. 19 MR.JONES: Youknowwhat they sayabout 20 figures. 21 [Laughter] 22 MR.LEVY: That statement could have been 23 mademuch earlier in thismeeting.190 MS. CLARK: Iwould like tomake a statement for the record. Because this is a laundryworkshop andwe aren't talking about the laundry industry, I do happen tohave the 1994 laundrymanufactured share numbers. Whirlpool is at 53.8 percent of the laundry manufactured share. MR. LEVY: Iwant to ask Terry aquestion. Your statement implies that if any firm

were to come upwith anewmethod of complyingwith the standards, some technological advance, that wasn'tpreviouslydisclosed for complyingwith the standards, that thatwould somehow invalidate the standard or the analysis that lead up to it. Imean, that'swhat I infer fromyour comments. Is that correct or not? MR. THIEL: I thinkyouhave toput it in the context of, when you say design whatyoumean. Okay? Let me -- MR.LEVY: Did Iuse theworddesign? I said, you know, some technological advance. MR. THIEL: All right. But Iamputting it 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23191 1 back into DOE's terminology,which is howyou 2 evaluate your rules, which are design options. 3 There are two ways of looking at design 4 option analysis, and this is roughlywhathappened in 5 refrigeration,where you've got a series of design 6 options thatmay overlap and represent incremental 7 improvements. It's a sliding scale. 8 You can pick anypoint along that line and 9 putyourmarkand saythat's wheremy standard is 10 going to be; 11 Now, in that context, people are coming up 12 with new design options all the time -- new 13 condenser,new evaporator,new compressor, new 14 insulation,whathaveyou; some are significant, some 15 are not. 16 But it's part of amelange of design 17 options that all sort of fit together and justify the 18 standard level. 19 Whatwe're looking at here is a step 20 function situation,whereyou have one basic 21 platform,which is vertical-axis, is going to getyou 22 a certain level of efficiency at a certain level of 23 cost.192 1 Thenyouhave adiscontinuity until you get 2 to the next design option,which has a significant 3 improvement in efficiency, and may ormay nothave a 4 significant improvement, but here, I'm saying, 5 horizontal-axis getsyou a lotmore energy and gives 6 you a lotmore cost. 7 Dependingupon the situation as to whether 8 the design option is available to everyone,which 9 horizontal-axis is, it's awell-known,understood 10 concept. 11 Virtually allmanufacturers, Ibelieve, 12 have had it in their product line; 13 Or whetheryou are talking about designX, 14 whichno oneknows about, you are going to have a 15 very,verydifferent conclusion. That's the point 16 I'm trying tomake. 17 Whenyou're talking about the refrigerator 18 industry,you come upwith adifferent analysis and 19 when you're talking about the home laundry industry. 20 The flip side to that is you've got two 21 averagemanufacturer scenarios. 22 You've got one. Well, let's sayyou've got 23 fiveplayers. I justpick somenumbers. The average193 1 is 20 percent, but you're lowhighvariance is 8. In 2 that context, the averagemanufacturer analysis has 3 somevalidity for all of the manufacturers. They all 4 look something like that. 5 In this case -- I'm using older numbers, 6 I'm sorry; I have 52 percent for Whirlpool -- but 7 you'vegot a lowhigh variance of 49 percent. To do 8 any sort of analysis of that number, 4 out of the 5 9 manufacturers aren't accuratelyrepresented by the 10 outcome. 11 Now, if you're talking about a step 12 function rulemaking, whereyou go fromhere to here 13 and everything that was back on this level is now 14 obsolesced, and everybody has to get to abrand new 15 levelwith brand new designs. 16 You're talking literally greenfield 17 investment to buildwhatever that newdesign is. 18 That has a traumatic impact on the 19 industry. It's going tohave a traumatic impact on 20 either of these industries; it's certainly going to 21 make abigger difference here than it does there. 22 In this case, if we have anewdesign that 23 nobody else is able to build or is unable to build194 1 withoutpaying for it, whichputs you at an immediate 2 cost disadvantage, you are inherentlygiving 3 advantage to themanufacturerwith that one design. 4 Now, if itwere the threepercent 5 manufacturer thathad that design, the economic 6 impact of themarketplace certainlywould be 7 profound, but Idon't think itwould be nearly as 8 profound if it's the 600-pound gorilla. 9 That's all I'm saying. 10 Ididn'tmean that we should resolve this 11 today, I'm just putting it on the record. 12 MR. LaFRANCE: Terry,we alsowould like to 13 get copies of those two slides so we can add it to 14 the record. 15 [See attached.] 16 MR. THIEL: Sure. 17 MR.LaFRANCE: Thank you. 18 Are there any other comments at all dealing 19 with the laundry rulemaking analysis? 20 [No response.] 21 Okay. Wewould like to thank everybody for 22 attending today. We encourageyou to submit 23 additional data as requested.195 1 We appreciate the effort that everybodyhas 2 taken in cominghere. We'll do our best andmost 3 objective analysis aspossible. 4 Thankyou. 5 [Whereupon, themeeting was adjourned.] 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

# DOEDESIGNOPTIONANALYSISSCENARIOS

"SLIDING-SCALE" DESIGNOPTIONANALYSIS "STEP-FUNCTION" DESIGNOPTIONANALYSIS 60T 50+ 

### C 0 

### S T 40+ 30+ 20+ 10 0 1% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 

### EnergyConsumptionReduction 0% 10% 20% 30% 40% 

### Energy ConsumptionReduction 

# * Efficiencyimprovementsare 

# relativelycontinuous. * Economicfeasibilitygradually diminishesasefficiencyimproves. * Efficiencyimprovementsare relativelydiscontinuous. * Economicfeasibilityabruptlyends withaquantumleapinefficiency. 

# "CLIMBINGAMOUNTAIN" VS."LEAPING ACHASM"

T T. T.Tli 7/795 

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# DOE"AVERAGE"MANUFACTURERANALYSISSCEflM1IOS

MANUFACTURERSBYMARKETSHARE 21% 16%

19% 20%

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## o

# Average=20% * Low/HighVariance= 8% * "Average"Manufacturer analysishassomevalidity forallmanufacturers. MANUFACTURERS BYMARKETSHARE 12%

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# *Average=20% * Low/HighVariance=49% * "Average"Manufacturer analysisfailstoestablish economicfeasibilityfor 4outof5manufacturers.

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