### 400 North Capitol St., NW, Washington, DC 20001 ∙ Telephone 202 ‐ 824 ‐ 7000∙ Website http://www.aga.org 

## October 11, 2011 To: expartecommunciation@hq.doe.gov(sent via email) Re: Memorandum Summarizing Ex Parte Communication On October 11, 2011, representatives of the American Gas A ssociation met with staff of the U.S. Department of Energy to discuss issu es raised by the Department’s direct final rule and notice of proposed rulemaking prescribing energyconservation standards for residential furnaces, residential central air conditioners and heat pumps (Energy Conservation Program: Energy Conservation Standards for Residential Furnaces and Residential Central Air Conditioners and Heat Pumps , Direct Final Rule, 76 Fed. Reg. 37,408 (June 27, 2011); Energy Conservation Program: Energy Conservation Standards for Residential Furnaces and Residentia l Central Air Conditioners and Heat Pumps , Notice of Proposed Rulemaking, 76 Fed. Reg. 37,549 (June 27, 2011). AGA raised several concerns with regard to the technical analysis underlying the rule, and urged the Department to withdraw the direct final ruleto take a closer look at the analysis. The following persons attended the meeting: Representing the Department of Energy Daniel Cohen John Cymbalsky Roland Risser Eric Stas Jennifer Tiedeman Representing the American Gas Association James A. Ranfone Andrew K. Soto Documents reviewed and discussed at the meeting are attached. Respectfully submitted, /s/ Andrew K. Soto Andrew K. Soto Senior Managing Counsel, Regulatory Affairs American Gas Association"Vl- "Vl-**~ ~**  0**~** 0 0 0 0 

# 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 

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1990 History



# 1995 2000 2009

--



# 2005 2010 Projections $9/MMBtu Updated 

# AE02009

-- $71MMBtu**------- ---~~~** **---------**



# 2015 2020 2025 2030 2035 Sources: EIA, Annual Energy Outlook 2011; EIA, Annual Energy Outlook 2010; and EIA, An Updated Annual Energy Outlook 2009 Reference Case1.4 1 . 3 ;=j 

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### FURNACE DFR TECHNICAL ANALYSIS

80 100 

### va H.184 IC -o.s 17**R~** . O . 9S4

120 Cumulltlve Shipments (millions) 160 

# gti

• Historical

-- Learn i ng Fit



### Figure 62: DOE Projection of Furnace Cost as a Function of Cumulative Historic Shipments Source: DOE Direct Final Rule, Technical Support Document Appendix 8-J6 Furnace Price Trend Learning Curve 1.4 1 ,3



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# ~ Shipments Sh i pments to 2045 0 . 6 60 80 100 120 140 160 180 200 220 240 260 Cumulative Shipments 

### Figure 63: Extension of DOE Learning Rate to Projected Furnace Prices through 2045

Page 41

# Multi-Year Program PlanBuilding Regulatory Programs - 

# u.s. Department of Energy
- Energy Efficiency and Renewable Energy
- Building Technologies Program
- October 2010 [This plan will 

### be updated based on actual appropriations, future budget requests and other program developments; the next significant revision is expected to be completed by spring 2011]

,'- .. '.,**~~r ·t**  . - , --': 111 41 1tl 'h • '( ,

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### Product 

### Life Expectancy 

### Furnace, Electric 14 

### years Furnace, Warm Air, Gas 16 years Furnace, Warm Air, Oil 18 years Transformer 32 

### years The estimated cumulative net present value of consumer benefit amounted to $64 billion at the end of 2005; standards are projected to save $241 billion by 2030, growing to $269 billion by 2045, while the cumulative cost of DOE's program to establish and implement these standards over the past 20 years is in the range of$200-250 million. Annual carbon savings reach 38 million tons by 2020 and the cumulative savings by 2045 is estimated at 1,200 million tons. ll 

### Figure 4-6 shows estimated energy savings through 2045. Figure 4-6 Cumulative Primary Energy Savings for Residential and Commercial Products 90 80 70**~** 

### Commercial 60**~** 

### Residential

# ~ 50**~** 

# a 40 30 20 10

0 2005 2015 2030 2045 

### Since President Obama took office in January 2009, DOE has finalized seven energy conservation standards which may save up to 10 quads of primary energy by 2030. In addition, DOE codified the energy conservation standards prescribed by EISA 2007 which may save up to 15.29 quads by 2030. The seven standards developed by DOE may save consumers up to $103 billion on their utility bills by 2030, while the standards prescribed by EISA 2007 may save consumers up to $159 billion by 2030.

11 

### htm ://efficiencv.lbl . goY / drupalj il es / eesiRealized%20and%20Proje ted%20Jmpacts%202008%209385I O ,pdf**,;-~'** 

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### FURNACE DFR TECHNICAL ANALYSIS 

# gti . Table 12: Summary Results for 90% Condensing Furnace
- Integrated Scenario Analysis North Composite North Retrofit North New Construction LCC Payback LCC Payback LCC Payback Savings Period Savings Period Savings Period Median/Av2 Median/Av2**Median/Av~** 

### AEO 2010 (DOE $155 10 . 1/12 . 8 

### $90 12 . 9/15 . 9 

### $343 2.5 

### 14.3 Baseline) AEO 2011 Ref Case -$4 16.3 /20.5
- $64 20.4 /25.3 $172 4.117.1 

### 13% Fixed Gas Costs AEO 2011 High Shale -$18 18.0/22.8 -$78 22.7/28.1 

### $157 4.3 /7.9 13% Fixed Gas Costs AEO 2011 Ref Case -$39 21.7/28.7 

### -$98 27.0/35.4 $135 5.6/9.9 City gate Gas Price AEO 2011 High Shale -$48 23.9 / 31.3 -$107 29.7/38.8 $125 5.9/10.5 Citygate Gas Price
Northern Retrofit Results
- Integrated Scenario Analysis $100 ,--------------------- ---- -----------------------------------, 50

$50**~------ ----------** **--------------------------------__+** 40**~** 

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### ·s 

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..... ($50) 30**~**

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# • ($100) 10 ($150)**~------------------------ --------------** **--------------------~** 0 AEO 2010 AEO 2011 Ref Case AEO 2011 High Shale AEO 2011 Ref Case AEO 2011 High Shale (DOE Baseline) 13% Fixed Gas Costs 13 % Fixed Gas Costs Citygate Gas Price C i tygate Gas Pr i ce

- lCCSavings - PBP (Median) '" PBP (Average) 

### Figure 77: North Region Retrofit LCC and PBP Results for Integrated Scenarios

Page 52NEW CONSTRUCTION COST FOR VARIOUS HVAC SYSTEMS EXHIBIT B - SMALL- TO MEDIUM-SIZE HOME - 1,500 to 2,200 SQUARE FEET (Costs of HVAC equipment does not include labor or installation; all other categories include material and labor.) Evaporator Outdoor Electrical Base Descri pti o n Air Handler Furnace Coil Condenser Thermostat Vent' Gas Line 4 Duc1lM:lrk4 Wi ri n g 4 Installation
System 1
- ' 80% Gas Furnace and 13-Seer AlC 80%-Efficiency Gas Furnace, 70,000 BTU, 3.0- Ton Evaporator Coil, 3 . 0 Ton, 13 Seer, SingleStage Compressor, 1 ,200-CFM**Mu~i-Speed Blo~r,**  Digital Thermostat, "B" Vent Flue Piping System 2
- 

### ' 90% Gas Furnace ' and 14-Seer 

### Ale 90%-Efficiency Gas Furnace, Single-Stage Burner, 70,000 BTU, 3 . 0 Ton, 14 Seer, SingleStage Compressor, 3 . 0- Ton Evaporator Coil, 1.200-CFM**Mu~i-Speed Blo~r,**  Programmable Thermostat, PVC Flue Piping 95%-Efficiency Gas Furnace, 2-Stage Burner, 70,000 BTU, 3 . 0 Ton, 18 Seer, 2-Stage AlC, 3.0- Ton Evaporator Coil, 1 ,200-CFM Variable-Speed**Blo~r,** 2-Stage Programmable Thermostat, PVC Flue Piping
Sysfem , 4 -**~KW** Electric Furnace 'and 13-SeecAIC 3.0 Ton, 13-Seer AlC, Single-Stage Compressor, 1,200 CFM, Multi-Speed Air Handler, 3.0- Ton Evaporator Coil, 20-KW Heat Package, Digital Thermostat System 5**2~KW 'Etectrfc** **Fumace amt14-SeerAlC** **,** 3 . 0 Ton, 14-Seer AlC, Single-Stage Compressor, 1,200 CFM,**Mu~iple-Speed** Air Handler, 3.0- Ton Evaporator Coil, 20-KW Heat Package, Programmable Thermostat $550

$1,010

$1,940

$950

$980 GAS FURNACE AND ELECTRIC AIR CONDITIONER
$620 $885 $46 $430 ' $1,040

$650 $1,240 $77 $270 2 $1,040

$930 $3,565 $98 $270 2 $1,040
ELECTRIC FURNACE AND ELECTRIC AIR CONDITIONER**Bui~** In $885 $46**Bui~** In $1,240 $46 

# Note: Red numbers in parentheses indicate savings to the builder. $1,480 $185 $1,500

$1,480 $185 $1,500

$1,480 $185 $1,500

$1,480 $490 $1,500

$1,480 $490 $1,500 Total Incremental Cost

$6,736 Base Present Standard
S7,4G**~. :".** **~"e!** 

### Futu ...**DOE~ '** 
$11,008 $4,272

$5,351 ($1,385) Present StandardEvaporator Outdoor Electrical Base Description A i r Handler Furnace Coil CondenSer ThemiOstat Ven( Gas Une ' Duotwork' Wiring' InstaDalion
Svs1etp 6 - 3.O=Toa , 7,7-HSPf 

### HfBC 

### pump 3 , 0 Ton, 7.7-HSPF Heat Pump, Single-Stage Compressor, 20-KW Heat Package, 1 ,200 CFM, Mulli-Speed Air Handler, 3 , 0-Ton Evaporator Coli . Digital Thermostat SVSf!!m 7 - 

### 3.Hoa. 8.3-HSPE H", PumP 3 . 0 Ton . 8 , 3-HSPF Heat Pump , Single-Stage Compressor, 20-KW Heat Package, 1,2QO CFM , Multiple-Speed Air Handler, 3.0-Ton Evaporator SIISt8m 8 - 3.O=Ton. 1f-Seer 

## Hem PumP 3 , 0 Ton, 13-Seer Heat pump, 2"Stage S950

$980
Compressor, 2O-KW Heat Package, 1,200 CFM, $2 , 075 Variable-Speed Air Handler, 3.0-Ton Evaporator
Svs1em,9- OUfl-FueI. 

### BO% G§Eumace-and1B:Seer 

### Heat 

### pump 80% - Effic l ency Gas Furnace , 1-Stage Burner , 70 . 000 BTU , 3 , 0 Ton . 18 Seer . 2-Stage Compressor, 3.0-Ton Evaporator Coil, 1 ; 200 CFM,**Mulli~eed** Blower, 2-Stage programmable Thermostat, "B" Vent Flue Piping SIISt8m 10 - Ouaf.'fuel. 

### 95% Gas 

### Furnace and 18-Seer 

### Heat pumo 95% - Efficiency Gas Furnace. 2-Stage Burner. 70,000 BTIJ, 3.0 Ton, 18 Seer, 2-Stage Compressor, 3 , 0-Ton Evaporator**Coi~** 1,200 CFM, Variable-Speed Blower, 2-Stage Programmable Thermosta t, PVC Flue Venting AIR-SOUR,CE HEAT PUMP WITH AUXlUARV ELECTR!C HEAT

Builtin $1 , 550 $77

Builtin $2,170 $98

Builtin $4,495 $98
DUAL FUEL - HEAT PUMP WITH GAS AUXlUARY HEAT

$550 $930 $4
. 495 $246 $430 ' $1 , 040

$1 , 940 $930 $4 , 495 $246 $270 2 S1 , 040



# Note: Red numbers in parentheses indicate savings to the builder. $1,48Q $490 $1,500

$1,480 $490 $1,500
$1,480 $490 $1,500

$1 , 480 $185 $ 1, 500

$1 , 480 S185 S1,5oo Total Incremental Cost

$6 , 047 ($689) Present Stan dard
",718 CSt8) Future DOE 

## Stand8rd
$10 ; 138 $3,402

$10 , 856 $4 , 120

$12 , 086 $5 , 350

# Figure 3-19. U.S. Residential Energy Consumption by Fuel ELECTRI I C TRANSMISSI 'ON 

# AND DISTRIBUTION ENERGY LOSS GENERA TI O N L OSS ELECTRICITY SALES ) - • N A T URAL GAS TRANSMISSION FUELS N A T URAL GAS • HENE W A B l E ENERGY PETROLEUM

- , . • COAL 

# ) -

) 

# 1950 1 1 960 1 9 70 1 980 1990 200 0 YEA R 2010 lewab l e energy includes woo d l 

# a nd petroleum i ncludes liquefied gases such as p ropane . lergy 

# I nf o rmation Administration. 

# 2020 

# 2C