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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### U.S. DEPARTMENT OF ENERGY **+ + + + + ENERGY CONSERVATION STANDARDS:**  **PRELIMINARY ANALYSIS FOR REFRIGERATED BEVERAGE VENDING MACHINES**  **+ + + + + PUBLIC MEETING**  **+ + + + + TUESDAY**  **SEPTEMBER 16, 2014**

**+ + + + + The Public Meeting was held in Room GH-019,**  **1000 Independence Avenue, S.W., Washington, D.C., at 1:15 p.m., Doug Brookman, Meeting**  **Facilitator, presiding. PRESENT:**  **DOUG BROOKMAN, Meeting Facilitator, Public Solutions, Inc.**  **ASHLEY ARMSTRONG, Department of Energy SARAH BUTLER, Department of Energy**  **DAVE CASE, Department of Energy JIM COLLINS, Automated Merchandising**  **Systems, Inc. DOUGLAS DRENTEN, Crane Merchandising**  **Systems*** **DAVID EDWARDS, Navigant Consulting JEREMY GREEN, The Glover Park Group**  **LARRY HIEB, SandenVendo America, Inc. CHRISTOPHER LAU, Navigant Consulting**  **RONALD MAJETTE, Department of Energy SUBARNA MALAKAR, Crane Merchandising**  **Systems***

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### PRESENT: (cont'd) **MICHAEL MAU*, Royal Vendors, Inc.JOANNA** **MAUER*, Appliance Standards Awareness Project** **(ASAP SCOTT MITCHELL, Southern California Edison**  **MICHELLE NIEMEYER, Pacific Northwest National Laboratory**  **ELIZABETH NOLL, Natural Resources Defense Council**  **ELAINA PRESENT, Navigant Consulting CATHARINE CYR RANSOM, The Glover Park Group**  **GREGORY ROSENQUIST, Lawrence Berkeley National Laboratory**  **LOUIS STARR, Northwest Energy Efficiency Alliance**  **MVUALA SUAMI, Natural Resources Canada COLLIN WEBER, Navigant Consulting**  **SARAH WIDDER, Pacific Northwest National Laboratory**  **ROLANDO WILLIAMS, SandenVendo America, Inc. SCOTT YOUNG, Lawrence Berkeley National**  **Laboratory** ***Participating telephonically**

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### TABLE OF CONTENTS

**Introduction . . . . . . . . . . . . . . . . . 4 Market and Technology Assessment . . . . . . .19**  **and Screening Engineering Analysis . . . . . . . . . . . . .27**  **Preliminary Manufacturer Impact. . . . . . . .53 Analysis** 

**Markups and Energy Use Analysis. . . . . . . .65**

**Life-Cycle Cost and Payback. . . . . . . . . .83 Period Analysis** 

**Shipments and National Impact. . . . . . . . 113 Analysis** 

**Next Steps . . . . . . . . . . . . . . . . . 122**

**Closing Comments from Participants . . . . . .--**

**Closing Remarks. . . . . . . . . . . . . . . 123**

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### P-R-O-C-E-E-D-I-N-G-S **2** 

### (1:15 p.m.) **3** 

### FACILITATOR BROOKMAN: Let's start **4** 

### back up. We are going to resume. **5** 

### This is the second meeting of the **6** 

### day. This would be Energy Conservation **7** 

### Standards Public Meeting, Preliminary Analysis **8** 

### for Refrigerated Beverage Vending Machines. **9** 

### Today is September 16th, 1:15 in **10** 

### the afternoon. We're here in the Forrestal **11** 

### Building of the Department of Energy in **12** 

### Washington, D.C. **13** 

### My name is Doug Brookman, Public **14** 

### Solutions in Baltimore. **15** 

### We have already done introductions **16** 

### once around the room. I don't think I -- are **17** 

### there any new persons in the room? So I think **18** 

### we are just going to proceed with the content **19** 

### here at hand. **20** 

### You can see the agenda on Slide **21** 

### 73. We are going to proceed with market **22** 

### technology assessment and screening,

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### engineering analysis, and then preliminary **2** 

### manufacturer impact analysis, then mark-ups **3** 

### and energy use analysis, life-cycle cost and **4** 

### payback period analysis, shipments and **5** 

### national impact analysis, next steps, and then **6** 

### closing remarks from participants and any **7** 

### other issues that need to be raised, and **8** 

### closing remarks. **9** 

### I would note that there is no **10** 

### afternoon break in here. Probably we will **11** 

### take one around about 3:00 or so. **12** 

### Questions and comments before we **13** 

### get into the content here? I think all of you **14** 

### have seen these requests for comment boxes. **15** 

### And also, if you look at slide 75, for those **16** 

### of you in the room and also joining us via the **17** 

### webinar, this is how you submit written **18** 

### comments. It's very important that you kind **19** 

### of get this done properly, so that all of your **20** 

### input is -- finds its way into the docket in **21** 

### the right place. **22** 

### Anybody that wishes to make an

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### opening statement, an opening -- brief summary **2** 

### comments about issues that you wish to bring **3** 

### to the fore here at the outset? You can do **4** 

### that now. **5** 

### Okay. No preliminary comments. **6** 

### Do you want to do the regulatory history, Ron, **7** 

### or should -- **8** 

### MR. MAJETTE: No. You know what? **9** 

### Since we had the same participants, the **10** 

### regulatory history actually mirrors pretty **11** 

### much or is very, very close to what we did **12** 

### this morning with the test procedures. So -- **13** 

### MS. PRESENT: Similar. **14** 

### MR. MAJETTE: -- they are very **15** 

### similar. Is there much difference? **16** 

### MS. PRESENT: If you look back -- **17** 

### instead of seven years, look back at -- **18** 

### MR. MAJETTE: Okay. **19** 

### MS. PRESENT: -- there's a few **20** 

### differences. **21** 

### MR. MAJETTE: Okay. **22** 

### FACILITATOR BROOKMAN: Do you want

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### to just bring us -- walk us through that very **2** 

### quickly? **3** 

### MS. PRESENT: I'm doing the next **4** 

### section, too, so I might as well stay. **5** 

### FACILITATOR BROOKMAN: I think **6** 

### sometimes it's important to note for those **7** 

### that are either sticklers for detail or are **8** 

### new to these proceedings. So, please proceed. **9** 

### MS. PRESENT: Okay. So the -- it **10** 

### starts the same. Energy Policy and **11** 

### Conservation Act of 1975 is the ultimate **12** 

### authority, set forth and providing a variety **13** 

### of provisions designed to improve energy **14** 

### efficiency and -- of various products and **15** 

### equipment. **16** 

### Part B of Title 3 is the same, and **17** 

### the direction to DOE to prescribe energy **18** 

### conservation standards for beverage vending **19** 

### machines. However, the first energy **20** 

### conservation standards were published in **21** 

### August 2009 as directed, and EPCA requires, **22** 

### different than their test procedure, within

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### six years after issuance of any final rule **2** 

### establishing or amending a standard, DOE must **3** 

### publish either a determination that existing **4** 

### standards do not require amendments or a **5** 

### notice of proposed rulemaking with new **6** 

### proposed energy conservation standards. So **7** 

### DOE is undertaking this rulemaking to meet **8** 

### this six-year review requirement. **9** 

### The EPCA definition of **10** 

### refrigerated, bottled, or canned beverage **11** 

### vending machine is the same as it was for the **12** 

### test procedure. It is on the slide here. **13** 

### The standards that were set in **14** 

### 2009 are on this slide here. They are the **15** 

### current standards in place for BVMs, and the **16** 

### compliance date was August 31st of 2012. **17** 

### Standards are in place for Class A, 0.055 **18** 

### times the refrigerated volume plus 2.56; Class **19** 

### B, 0.073 times the refrigerated volume plus **20** 

### 3.16. Standards are not in place for **21** 

### combination vending machines, though they were **22** 

### reserved in the 2009 BVM final rule.

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### Combination vending machines in that rule were **2** 

### found to be beverage vending machines that DOE **3** 

### could put standards in place for, but they did **4** 

### not at that time. **5** 

### And then this is just a timeline, **6** 

### an overview of this rulemaking. The framework **7** 

### document was last year, last June. We are now **8** 

### at the preliminary analysis stage, and then **9** 

### projected we have the NOPR next year, and the **10** 

### final rule for 2016. And that's our overview. **11** 

### So we're going to go on and talk **12** 

### about the various analyses that go into the **13** 

### energy conservation standard. This is an **14** 

### overview of all the analyses that take place **15** 

### at the pre-analysis stage. There are **16** 

### additional analyses that take place at the **17** 

### NOPR stage. **18** 

### We will be going through each of **19** 

### these today and discussing the pre-analyses **20** 

### that were performed, starting with the market **21** 

### and technology assessment. The market and **22** 

### technology assessment is where we define the

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### product or equipment classes. DOE **2** 

### characterizes the refrigerated beverage **3** 

### vending machine industry, identifies existing **4** 

### regulatory and voluntary efficiency programs, **5** 

### gathers historical shipments and other **6** 

### relevant market data, and identifies **7** 

### technology options for improving efficiency. **8** 

### When DOE is evaluating and **9** 

### establishing energy conservation standards. **10** 

### The covered product is generally divided into **11** 

### classes by the type of energy used or by the **12** 

### capacity or other performance-related features **13** 

### that affect efficiency. **14** 

### In this pre-analysis, DOE used the **15** 

### same product classes that were established in **16** 

### the 2009 BVM final rule. As mentioned **17** 

### earlier, they are as follows: Class A means **18** 

### a refrigerated, bottled or canned beverage **19** 

### vending machine that is fully cooled and is **20** 

### not a combination vending machine, Class B is **21** 

### not fully cooled but otherwise similar, and **22** 

### combination vending machine means a

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### refrigerated, bottled, or canned beverage **2** 

### vending machine that also has non-refrigerated **3** 

### volumes for the purpose of vending other **4** 

### non-sealed beverage merchandise. **5** 

### Within this pre-analysis, DOE **6** 

### further broke down combination vending **7** 

### machines in some portions of the analysis to **8** 

### separate them, to disaggregate. We referred **9** 

### to "Combo A" as combination vending machines **10** 

### whose refrigerated compartment is fully **11** 

### cooled. And I believe there is a typo on the **12** 

### slide. "Combo B" units were combination **13** 

### vending machines whose refrigerated **14** 

### compartment is not fully cooled. **15** 

### Going on to the characterization **16** 

### of the market, DOE identified at this point **17** 

### seven manufacturers that make refrigerated **18** 

### beverage vending machines for the American **19** 

### market. They are listed here. DOE took a **20** 

### look into the market shares. There is a very **21** 

### wide range of market shares held by the **22** 

### various manufacturers. Generally, the largest

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### market share is held by manufacturers that **2** 

### supply beverage vending machines to bottlers. **3** 

### And then, also DOE looked into the **4** 

### current spread of efficiency on the market. **5** 

### So this particular graph is the units that are **6** 

### currently in the certification database that **7** 

### is publically accessible on the DOE website. **8** 

### These are only the Class A units, and then on **9** 

### -- we have also plotted both the current Class **10** 

### A DOE standard and the current E-STAR, ENERGY **11** 

### STAR standard, just for comparison purposes. **12** 

### So this gives an idea of the **13** 

### spread of efficiencies currently available at **14** 

### different sizes of Class A, and then there is **15** 

### the same graph for Class B units. Spread of **16** 

### efficiency, different sizes. Again, this is **17** 

### based on the certification data for DOE. **18** 

### Moving on to the technology **19** 

### assessment, the basic purpose of the **20** 

### technology assessment is to develop a **21** 

### preliminary list of technology options that **22** 

### could improve the efficiency of the equipment.

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### And this list is preliminary. It is broad, **2** 

### and through further analyses it is examined in **3** 

### greater detail. Technologies that are **4** 

### inappropriate for the analyses are removed, **5** 

### but at this point for the technology **6** 

### assessment it's broad. **7** 

### The method for identification, DOE **8** 

### goes -- looks through literature, equipment **9** 

### literature, as well as technical literature, **10** 

### looks at what equipment is currently available **11** 

### on the market, and of course looks heavily at **12** 

### the comments that are provided on these **13** 

### rulemakings and on other rulemakings at the **14** 

### technologies that are available. **15** 

### The technology options are **16** 

### described in detail in Chapter 3 of the TSD. **17** 

### I'm not going to go into them now in detail, **18** 

### but there is a list of the ones that were **19** 

### considered here. These are the technology **20** 

### options that were initially identified at the **21** 

### end of the technology assessment for **22** 

### consideration in this preliminary analysis.

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### They are higher efficiency **2** 

### lighting, higher efficiency evaporator fan **3** 

### motors, higher efficiency evaporator fan **4** 

### blades, improved evaporator design, low **5** 

### pressure differential evaporators, improved or **6** 

### thicker insulation, improved glass packs for **7** 

### transparent front machines, higher efficiency **8** 

### compressors, improved condenser design, higher **9** 

### efficiency condenser fan motors, higher **10** 

### efficiency condenser fan blades, variable **11** 

### speed compressors, liquid suction heat **12** 

### exchangers, higher efficiency expansion **13** 

### valves, improved anti-sweat heaters, and low **14** 

### power states. Low power states, of course, **15** 

### would be contingent on the test procedure. **16** 

### This leads us to the first request **17** 

### for comment. So DOE welcomes input on **18** 

### additional technology options that could **19** 

### reduce BVM energy consumption as evaluated by **20** 

### the DOE beverage vending machine test **21** 

### procedure. And of course -- and anything that **22** 

### would work with the current test procedure,

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### any potential amended test procedure, will be **2** 

### taken into account as appropriate depending on **3** 

### which way the test procedure ends up. **4** 

### FACILITATOR BROOKMAN: Louis **5** 

### Starr? **6** 

### MR. STARR: So, two things. One, **7** 

### I had a question on the graphs that -- **8** 

### MS. PRESENT: Sure. **9** 

### MR. STARR: The ENERGY STAR -- **10** 

### FACILITATOR BROOKMAN: Which **11** 

### graphs? **12** 

### MR. STARR: 88 and 89. So both of **13** 

### those. The ENERGY STAR is supposed to capture **14** 

### the top 25 percent of the market, but it looks **15** 

### like it is capturing not that much. Or am I **16** 

### reading that wrong or -- **17** 

### MS. PRESENT: I mean, so ENERGY **18** 

### STAR has been in place for a year and a half **19** 

### now. But, yes, BVMs have a high percentage of **20** 

### -- you know, of models that are ENERGY STAR **21** 

### listed. **22** 

### MR. WEBER: This is Collin Weber.

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### I mean, we can't speak to it -- on behalf of **2** 

### the ENERGY STAR program. It has been **3** 

### historically the case with BVMs that it stays **4** 

### at higher than 25 percent of models based on **5** 

### -- **6** 

### MR. STARR: And then, I guess the **7** 

### other question was about the technology. So **8** 

### I think -- I think I read in the preliminary **9** 

### technical support document you didn't consider **10** 

### the SNAP part of -- SNAP gases for -- as a **11** 

### technology thing, because it wasn't approved **12** 

### by the EPA. Is that right? **13** 

### MS. PRESENT: SNAP gases? **14** 

### MS. BUTLER: This is Sarah Butler **15** 

### from DOE. We are aware or apprised of -- you **16** 

### know, that the SNAP rulemaking is going on. **17** 

### We have to look at what is current, and we **18** 

### will keep looking at the rulemaking. And if **19** 

### something changes, then that will be reflected **20** 

### in our analysis. But right now we just are **21** 

### looking at what is current. **22** 

### MR. STARR: So do you know what

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### the timing would be with -- what would have to **2** 

### happen in order for you to take a look at it **3** 

### or -- **4** 

### MS. BUTLER: I mean, SNAP would **5** 

### have to issue a final rule. **6** 

### MR. STARR: Okay. So that would **7** 

### have to happen by the time you're finished **8** 

### with this preliminary technical support **9** 

### document? **10** 

### MS. BUTLER: To be considered, I **11** 

### mean, we have to look at what is -- what is **12** 

### current and what is legal now. And then, we **13** 

### will -- if things change, then we will be **14** 

### apprised of what is going on in the SNAP **15** 

### rulemaking and adjust our analysis. **16** 

### MS. PRESENT: We did -- carbon **17** 

### dioxide refrigerant, R-744, is currently SNAP **18** 

### approved for BVMs, and that played into the **19** 

### engineering analysis. But there was no **20** 

### refrigerant-based -- it didn't play into the **21** 

### technology analysis based on the current SNAP **22** 

### list.

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### 1 MR. STARR: So it didn't play in **2 because it wasn't seen as being advantageous, 3 or what didn't --**  **4 MS. PRESENT: There was -- we 5 didn't -- CO2 is not generally shown to**  **6 increase efficiency over current baseline 7 models.**  **8 MR. STARR: Okay. 9 MS. PRESENT: Of course, if there**  **10 is anything that we should be aware of, we 11 would welcome comment on that front.**  **12 FACILITATOR BROOKMAN: Jim, did 13 you have a comment?**  **14 MR. COLLINS: Yes. Jim Collins, 15 AMS. Just a point of order here. Slide 75,**  **16 the comment period is noted as closing on 17 October 7. Is that correct? The NOPR says**  **18 October 27. 19 MS. BUTLER: I think that is for**  **20 the -- this is Sarah Butler, DOE. I believe 21 October 27th is for the test procedure NOPR,**  **22 and October 7th is the date for the comments**

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### on the preliminary technical support document. **2** 

### We would encourage you to submit any requests **3** 

### in writing regarding the comment period. **4** 

### MR. COLLINS: Okay. **5** 

### FACILITATOR BROOKMAN: So the **6** 

### question is that -- and the one that Elaina **7** 

### just put to you -- what about this list of **8** 

### technology options? Do you like them? Is it **9** 

### complete? Are there others the Department **10** 

### should consider? How about some feedback on **11** 

### that list. **12** 

### MS. PRESENT: Yes. At this stage **13** 

### particularly, anything that is not included **14** 

### here that should be. **15** 

### All right. I'm going to move **16** 

### forward for now, but this may come up again **17** 

### later as we go through some more of the **18** 

### analyses. **19** 

### The next analysis that I'm going **20** 

### to speak to is the screening analysis. **21** 

### Screening analysis is one of the analyses **22** 

### where we take a look at the technologies that

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### have been identified, and we -- DOE in many **2** 

### cases will eliminate some of them. **3** 

### DOE screens based on four factors, **4** 

### which are -- in the screening analysis, which **5** 

### are technological feasibility; practicability **6** 

### to manufacture, install, and service; impacts **7** 

### on product utility to consumers; and effects **8** 

### on health or safety. **9** 

### Upon application of these four **10** 

### screening factors, no technologies were **11** 

### screened out at this stage of the rulemaking. **12** 

### However, two technologies were eliminated in **13** 

### the screening analysis due to not affecting **14** 

### tested daily energy consumption due to either **15** 

### the current or proposed test procedures. **16** 

### These were higher efficiency expansion valves **17** 

### and liquid suction heat exchangers. **18** 

### I am going to move right along to **19** 

### the engineering analysis at this point, unless **20** 

### there is any comments. **21** 

### So the engineering analysis, the **22** 

### inputs are the results of the market

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### assessment or analysis and the screening **2** 

### analysis. And the output eventually is a set **3** 

### of cost efficiency curves looking at the **4** 

### energy consumption of units and the model or **5** 

### manufacturer selling price of those units at **6** 

### those energy consumption levels. **7** 

### So the purpose we -- for DOE, they **8** 

### evaluate the design options that improve **9** 

### efficiency, and we characterize the **10** 

### manufacturing production cost versus **11** 

### efficiency associated with those design **12** 

### options for higher efficiency BVMs. **13** 

### These results, then, are the **14** 

### inputs for three later analyses conducted by **15** 

### the Department of Energy -- the life-cycle **16** 

### cost and payback period analysis, the national **17** 

### impact analysis, and the manufacturer impact **18** 

### analysis. All three of these downstream **19** 

### analyses will be discussed later in this **20** 

### presentation. **21** 

### The basic process that DOE used in **22** 

### the engineering analysis for this preliminary

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### analysis is on this slide. Product testing **2** 

### was conducted, followed by teardowns of some **3** 

### beverage vending machines, leading to design **4** 

### options, modeled performance through energy **5** 

### modeling, and then modeled cost and price, **6** 

### leading finally to cost efficiency curves. **7** 

### These will be gone into -- well, **8** 

### the first one not so much, so for the product **9** 

### testing DOE conducts tests according to the **10** 

### current -- both the current and the proposed **11** 

### DOE test procedures on a variety of beverage **12** 

### vending machines. The other five I will be **13** 

### going into in the following slides. **14** 

### So for teardowns, DOE disassembles **15** 

### completely several beverage vending machines **16** 

### from different manufacturers. DOE then **17** 

### creates bills of materials, which describe the **18** 

### product components in detail including **19** 

### estimates of materials, labor, capital **20** 

### equipment, and overhead costs. **21** 

### Teardowns provide information **22** 

### regarding the baseline machine configurations

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### that are currently on the market, as well as **2** 

### equipment case costs and design options that **3** 

### are currently being used to achieve both **4** 

### baseline and higher efficiency energy **5** 

### performance. **6** 

### Chapter 5 of the technical support **7** 

### document provides significant additional **8** 

### details on DOE's teardown and cost **9** 

### methodology. **10** 

### After the screening analysis, **11** 

### there were 16 technology options remaining, **12** 

### and of those, six were removed from **13** 

### consideration during the engineering analysis **14** 

### due to a variety of factors, including **15** 

### competing effects, lack of data on performance **16** 

### or other factors. The six that were removed **17** 

### are listed here. On the next slide I believe **18** 

### I have the 10 that remain, and I'll go ahead **19** 

### and read those. **20** 

### So for the analysis conducted, the **21** 

### following 10 technology options were included: **22** 

### higher efficiency lighting, higher efficiency

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### evaporator fan motors, improved evaporator **2** 

### design, improved or thicker insulation, higher **3** 

### efficiency compressors, improved condenser **4** 

### design, higher efficiency condenser fan **5** 

### motors, improved glass pack designs for Class **6** 

### A machines, and actually combo A machines as **7** 

### well, lighting controls, and low power **8** 

### refrigeration controls, timers and/or sensors. **9** 

### I will note, however, that on the **10** 

### -- for the six technologies that were removed, **11** 

### we are certainly very interested in if there **12** 

### is more information available on their use in **13** 

### the BVM industry. We would welcome that and **14** 

### could incorporate that into future analyses. **15** 

### FACILITATOR BROOKMAN: Louis **16** 

### Starr? **17** 

### MR. STARR: I just had a question **18** 

### on the microchannel heat exchangers. Did you **19** 

### run into any products out there that have **20** 

### that, or is it just not -- there wasn't enough **21** 

### information on products out there to really do **22** 

### analysis on? Is that the problem?

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### MS. PRESENT: I don't believe we **2** 

### saw any BVMs that -- **3** 

### MR. WEBER: So this Collin Weber **4** 

### from Navigant. Our experience has been that **5** 

### on the evaporator side there is an issue of **6** 

### icing, and on the condenser side, there is the **7** 

### issue of clogging and fouling. Manufacturers **8** 

### that deal with that -- are there R&D efforts **9** 

### in those areas? **10** 

### FACILITATOR BROOKMAN: Did you see **11** 

### microchannel? **12** 

### MR. WEBER: Not in the products on **13** 

### the market due to the kinds of reliability **14** 

### issues that are cited. **15** 

### FACILITATOR BROOKMAN: I see a few **16** 

### heads nodding yes. Any additional comments on **17** 

### this or other issues that are listed there, **18** 

### the six that were removed from consideration? **19** 

### MR. STARR: And the other ones, **20** 

### the variable speed -- **21** 

### FACILITATOR BROOKMAN: Louis, **22** 

### please, yes.

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### MR. STARR: The variable speed **2** 

### motors, is that the thing where they weren't **3** 

### much -- they weren't on the market, really? **4** 

### MS. PRESENT: Variable speed **5** 

### compressors? **6** 

### MR. STARR: Yes. **7** 

### MS. PRESENT: We did not see any **8** 

### in any of the BVMs that we looked at. And we **9** 

### don't have any data at this point on how they **10** 

### affect BVM performance in actual use. **11** 

### MR. STARR: Okay. So it may not **12** 

### actually help in the -- I think I heard this **13** 

### in icemakers, how the variable speed motors **14** 

### don't necessarily -- or motors don't **15** 

### necessarily help, but there is probably some **16** 

### kind of design reason why it's not a good **17** 

### technology to apply. **18** 

### MS. PRESENT: That's a place where **19** 

### we would definitely welcome any information **20** 

### about whether they may be entering the BVM **21** 

### market, or, if they are not, why. **22** 

### FACILITATOR BROOKMAN: Yes, Jim.

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### MR. COLLINS: Jim Collins, AMS. **2** 

### We did use a variable speed compressor for a **3** 

### short time. And it was made obsolete by the **4** 

### supplier. Generally speaking, they are just **5** 

### not available in the United States for use in **6** 

### the fractional horsepower range of our **7** 

### industry. **8** 

### MR. STARR: So ECM motors would be **9** 

### the same? Those are essentially variable **10** 

### speed motors, right? **11** 

### MR. COLLINS: No. ECM motors **12** 

### aren't necessarily variable speed, but they **13** 

### are electronically controlled and highly **14** 

### efficient. In our case, we have to use them. **15** 

### FACILITATOR BROOKMAN: Louis, look **16** 

### at the list. Do you see -- **17** 

### (Simultaneous speaking) **18** 

### MR. STARR: Elaina, did you guys **19** 

### -- the ECM motor technology, is that -- did **20** 

### you consider that variable speed, or how did **21** 

### you look at that particular technology? **22** 

### MS. PRESENT: So we certainly used

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### 1 

### ECM motors and fan motors. **2** 

### MR. STARR: Okay. **3** 

### MS. PRESENT: Compressors, I -- **4** 

### that didn't come up. **5** 

### MR. STARR: Okay. Just -- **6** 

### MS. PRESENT: Collin, anything **7** 

### that I should add at that point? **8** 

### MR. WEBER: I mean, ECMs are used **9** 

### on the evaporator and condenser fan side as **10** 

### the highest efficiency fan technology **11** 

### available. I mean, in a context, some -- I **12** 

### mean, variable speed compressors, if available **13** 

### in the market, would most likely integrate **14** 

### ECMs. But our understanding is the same as **15** 

### Jim's and other members of industry, that they **16** 

### are not available in the purchasing volumes **17** 

### and sizing requirements of the domestic BVM **18** 

### history. **19** 

### FACILITATOR BROOKMAN: Okay. **20** 

### MS. PRESENT: All right. So going **21** 

### on, in the engineering analysis, in order to **22** 

### conduct the analysis, we used 10

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### 1 

### representative beverage vending machines, **2** 

### representative sizes and dimensions that were **3** 

### used throughout the analysis. **4** 

### These were broken down three Class **5** 

### As, three Class Bs, small, medium, and large **6** 

### each. These are -- were set up to be the same **7** 

### as were used in 2009 rulemaking. We don't **8** 

### have any information showing that -- **9** 

### significant market shifts that would make **10** 

### those unrepresentative. **11** 

### And then, we also developed combo **12** 

### A and combo B representative sizes, for a **13** 

### total of four representative combination **14** 

### vending machine sizes. We called these each **15** 

### medium and large. It could have just as well **16** 

### been small and large. It is just a matter of **17** 

### nomenclature. **18** 

### The combo A sizes align slightly **19** 

### better with the medium and large of Class A **20** 

### than with the small and large, and that's how **21** 

### that came to be. We have -- but there is two **22** 

### sizes each for combo A and combo B.

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### 1 

### The performance modeling in the **2** 

### engineering analysis used representative unit **3** 

### and design option data to create the **4** 

### performance model. It is an Excel-based **5** 

### model, and it calculates equipment performance **6** 

### under the DOE test procedure in terms of **7** 

### kilowatt hours per day with 75-degree test **8** 

### procedure conditions, for both the baseline **9** 

### and the improved equipment configurations. **10** 

### The representative sizes in each **11** 

### class are modeled at the baseline and at the **12** 

### efficiency levels corresponding to **13** 

### implementation of each applicable design **14** 

### option for each representative unit in order **15** 

### of ascending payback period. **16** 

### We actually ended up modeling 20 **17** 

### units. Each of the representative sizes were **18** 

### modeled both with R-134a and R-744 or carbon **19** 

### dioxide refrigerant. And the output was the **20** 

### set of performance results consisting of the **21** 

### modeled energy consumption in kilowatt hours **22** 

### per day for each level analyzed.

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### The details of the performance **2** 

### analysis are included in the next slides. **3** 

### FACILITATOR BROOKMAN: We have a **4** 

### question or a comment online from Joanna **5** 

### Mauer. Hello, Joanna. You're up next. **6** 

### MS. MAUER: I'm probably going to **7** 

### go back a little bit, but I had a comment on **8** 

### variable speed compressors. I know that the **9** 

### TSD indicated that most vending machines on **10** 

### the market today use the same compressor, an **11** 

### Embraco model, and it looks to me like Embraco **12** 

### does offer a variable speed compressor. It **13** 

### certainly indicates that it can be used with **14** 

### vending machines. Is this something that DOE **15** 

### looked into at all? **16** 

### MS. PRESENT: Without any actual **17** 

### in situ data, we ended up not analyzing that **18** 

### design option at this stage for variable speed **19** 

### compressors. **20** 

### MS. MAUER: Okay. And have you **21** 

### tried talking with compressor manufacturers? **22** 

### MS. PRESENT: Was that directed at

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### DOE or at the manufacturers? **2** 

### MS. MAUER: At DOE. **3** 

### MS. PRESENT: Not to my knowledge. **4** 

### Not in a standards capacity. **5** 

### FACILITATOR BROOKMAN: Okay. **6** 

### Additional questions, comments here? Okay. **7** 

### So, please proceed, Elaina. **8** 

### MS. PRESENT: This is more **9** 

### information on the energy performance modeling **10** 

### of the beverage vending machines. The **11** 

### performance model used was originally **12** 

### developed for the 2009 rulemaking, and DOE **13** 

### updated it for this rulemaking. **14** 

### There is two main parts. There is **15** 

### the case heat load model, which accounts for **16** 

### thermal loads, including conduction through **17** 

### the doors and the walls, radiation, heat and **18** 

### moisture addition due to warm air **19** 

### infiltration, and it calculates the heat **20** 

### introduced into the case by the electricity **21** 

### use of internal components, namely evaporator **22** 

### fans, lighting, defrost, and anti-sweat

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### measures. **2** 

### The second part is the **3** 

### refrigeration system performance model where **4** 

### the compressor power input is calculated using **5** 

### compressor performance data from compressor **6** 

### manufacturers, and the modeling of the heat **7** 

### exchanger effectiveness for that model is -- **8** 

### was used to estimate compressor operating **9** 

### conditions. **10** 

### The energy use of auxiliary **11** 

### components, such as the lighting and the fans, **12** 

### is based on both component power input and the **13** 

### runtime of those particular components at that **14** 

### particular design option level. And the **15** 

### system energy is calculated as the sum of the **16** 

### refrigeration system and the direct auxiliary **17** 

### component energy consumption. **18** 

### So the heat load calculations are **19** 

### done based on the geometry, the design **20** 

### parameters of the unit, and on the conditions **21** 

### in the DOE test procedures. So they include **22** 

### the lighting power that is emitted into the

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### case, the lighting usage based on lighting **2** 

### wattage per fixture, the number of fixtures, **3** 

### the run time, the radiation through the glass, **4** 

### or the glass part of the machines, the **5** 

### evaporator fan power, conduction through walls **6** 

### of glass, and the warm air infiltration into **7** 

### the case. **8** 

### The case geometries and design **9** 

### parameters were based on manufacturer **10** 

### literature. As I mentioned before, we used **11** 

### the 10 different representative units in our **12** 

### calculations, and the thermal performance of **13** 

### the case and components were based on **14** 

### manufacturer or supplier literature. **15** 

### So the system performance **16** 

### simulation is driven by compressor modeling. **17** 

### The compressor energy consumption is based on **18** 

### the compressor performance maps that are done **19** 

### based -- by ANSI/AHRI Standard 540. They **20** 

### provide compressor performance including **21** 

### capacity, power input, and such, based on **22** 

### operating conditions.

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### And within the engineering model, **2** 

### suction and discharge conditions are **3** 

### calculated as a function of the design air **4** 

### temperature and the design of the heat **5** 

### exchangers. The heat exchanger design **6** 

### parameters were developed through first**7** 

### principles modeling by an outside subject **8** 

### matter expert, and the auxiliary component **9** 

### performance completes the energy assessment. **10** 

### It is added to the compressor use, **11** 

### which is based on -- so you have the heat load **12** 

### in the cabinet, compressor use, energy use, **13** 

### estimated based on the heat load of the **14** 

### cabinet, and then you add onto that the fan, **15** 

### lights, and the standby money accepting -- I **16** 

### mean, money processing power, anything else **17** 

### that DOE has included in the test procedure, **18** 

### to come up with the final energy consumption **19** 

### for that performance level. **20** 

### A note regarding refrigerants. **21** 

### DOE modeled each representative unit using **22** 

### both R-134a and R-744 refrigerants. At this

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### time, those are the refrigerants that we are **2** 

### aware of being on the market for BVMs. And we **3** 

### are -- DOE found the share of non-HFC units to **4** 

### be very small at present, but aware that it's **5** 

### growing rapidly. **6** 

### And as mentioned previously, DOE **7** 

### is remaining aware of what is happening with **8** 

### the SNAP programs and will adjust accordingly **9** 

### as needed. **10** 

### FACILITATOR BROOKMAN: Is 744 CO2? **11** 

### MS. PRESENT: Yes. **12** 

### FACILITATOR BROOKMAN: Okay. **13** 

### MS. PRESENT: And then, in **14** 

### accordance with the performance modeling that **15** 

### was done, cost modeling happened on each **16** 

### performance level, and the costs were modeled **17** 

### in several phases. The core case of the **18** 

### cabinets, which includes all **19** 

### non-energy-consuming components, were **20** 

### developed based on the teardowns that were **21** 

### conducted. **22** 

### The costs for energy-consuming

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### 1 

### components and design options were developed **2** 

### through research based on industry literature, **3** 

### supplier price quotes, manufacturer **4** 

### information, and then estimates of **5** 

### manufacturer markup to go from the **6** 

### manufacturer production cost to the **7** 

### manufacturer selling price, were developed in **8** 

### the 2009 rulemaking and were used, again, in **9** 

### this preliminary analysis due to a lack of any **10** 

### additional information. **11** 

### Design option costs were applied **12** 

### to core case costs at each modeled efficiency **13** 

### level to yield the manufacturing production **14** 

### cost values. We call those the MPCs. Markups **15** 

### and outboard freight -- outbound freight were **16** 

### added to yield manufacturer selling price **17** 

### values. **18** 

### So this brings us to our next **19** 

### request for comments slide. DOE requests **20** 

### information regarding the costs associated **21** 

### with the design options under consideration, **22** 

### as well as for any technology options which

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### should be considered at the NOPR stage, the **2** 

### next stage. DOE also requests comment and **3** 

### data regarding the cost and performance of **4** 

### compressors, heat exchangers, and other **5** 

### refrigeration system components for carbon **6** 

### dioxide and hydrocarbon refrigeration systems **7** 

### in the beverage vending machine capacity **8** 

### range. **9** 

### And this information in some cases **10** 

### may be more conducive to written comments, but **11** 

### we would also welcome comments at this time. **12** 

### FACILITATOR BROOKMAN: Louis? **13** 

### MR. STARR: I had a question on -- **14** 

### on the 134a, is that -- I mean, that's **15** 

### probably the baseline. The reason you're **16** 

### choosing that refrigerant is that that's the **17** 

### most common one that is made in terms -- **18** 

### MS. PRESENT: That one is found in **19** 

### more models than anything else. **20** 

### MR. STARR: Do you have an idea of **21** 

### what the percentage of mix between 134 and **22** 

### then the other classifications of refrigerants

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### -- in general, what that breakdown is? **2** 

### MS. PRESENT: So as far as DOE is **3** 

### aware, the only other refrigerant currently on **4** 

### the market in the U.S. is carbon dioxide, and **5** 

### it accounts for well under half and probably **6** 

### under a quarter of the models available. **7** 

### MR. STARR: Okay. **8 9**  

### MS. PRESENT: I would probably **10** 

### even say well under a quarter, but I would be **11** 

### less confident in that statement. **12** 

### MR. STARR: All right. So the **13** 

### SNAP program, if EPA published regulation on **14** 

### that within essentially -- the analysis would **15** 

### depict that half the ones with 134a or with -- **16** 

### how would that -- how would that adjust your **17** 

### analysis? **18** 

### MS. PRESENT: We have not -- we **19** 

### are working with the market as it is right **20** 

### now. **21** 

### MR. STARR: Okay. **22** 

### MS. PRESENT: What we did for the

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### carbon dioxide is, of course, the baseline **2** 

### technology options included are slightly **3** 

### different, slightly more efficient technology **4** 

### options in order to meet the same baseline **5** 

### energy consumption, but still within -- still **6** 

### well within what is currently on the market. **7** 

### FACILITATOR BROOKMAN: Before you **8** 

### move on -- **9** 

### MS. PRESENT: Yes. **10** 

### FACILITATOR BROOKMAN: -- as **11** 

### Elaina suggested, these comment boxes may be **12** 

### better served by detailed written responses, **13** 

### but perhaps there is some overview. Is there **14** 

### some trend line kind of comment that you could **15** 

### make, for example, about costs? **16** 

### Okay. I guess we will move on. **17** 

### MS. PRESENT: I will say this **18** 

### much: DOE is aware that in the future modeling **19** 

### hydrocarbon systems may become necessary, and **20** 

### any information that can be provided that **21** 

### would make that -- any analysis DOE would do **22** 

### as accurate as possible would be greatly

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### appreciated. **2** 

### FACILITATOR BROOKMAN: Chris Lau? **3** 

### MR. LAU: This is Chris Lau with **4** 

### Navigant. Also, I will make the comment that **5** 

### if folks would -- if it is enabling, folks can **6** 

### submit that comment under NDA also, protecting **7** 

### technology. **8** 

### FACILITATOR BROOKMAN: And how do **9** 

### they do that, Chris? **10** 

### MR. LAU: So we will get into this **11** 

### a little bit later, but at the NOPR phase we **12** 

### can do it with manufacturer impact analysis **13** 

### interviews. And when manufacturers **14** 

### participate in those interviews, they sign an **15** 

### NDA with Navigant, so they can show **16** 

### proprietary information. Proprietary content **17** 

### is not shared with DOE. However, any **18** 

### aggregate content that can be rolled up and **19** 

### averaged across the entire industry or across **20** 

### different manufacturers who participate, those **21** 

### values do get published. **22** 

### FACILITATOR BROOKMAN: If they

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### wanted to submit this information soon as the **2** 

### deadline suggests, they would not have had **3** 

### that manufacturer interview in place yet. So **4** 

### -- **5** 

### MR. LAU: That is correct. **6** 

### FACILITATOR BROOKMAN: So they **7** 

### would need to initiate an NDA separate from **8** 

### that process. **9** 

### MR. LAU: If they want to submit **10** 

### it as part of -- before this -- typically the **11** 

### MIA interviews are done during the NOPR phase. **12** 

### If they want to submit comment -- if they want **13** 

### to submit information -- **14** 

### MS. WIDDER: I think there is **15** 

### instructions in the NOPR about how to submit **16** 

### comments and just note to DOE which part of **17** 

### the comments you are submitting or what data **18** 

### you have that may be proprietary or you would **19** 

### not want to be shared, and DOE can react to **20** 

### that. But there is instructions in the NOPR, **21** 

### I think, with regard to how to submit -- **22** 

### MS. PRESENT: So, to summarize,

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### 1 

### there are -- I guess comments can be made **2** 

### public. Comments can also be made to DOE, but **3** 

### with notes that certain portions will not be **4** 

### made public. And then, separately there are **5** 

### interviews that are conducted in the next **6** 

### phase of rulemaking which are under **7** 

### non-disclosure agreements, generally with **8** 

### Navigant, and that material directly never **9** 

### gets directly to DOE. It is used only in **10** 

### aggregate form, even between Navigant and DOE. **11** 

### FACILITATOR BROOKMAN: Okay. **12** 

### MS. PRESENT: So there are three **13** 

### different avenues I guess that -- **14** 

### FACILITATOR BROOKMAN: Questions? **15** 

### MR. HIEB: Yes, one comment. **16** 

### Larry Hieb from SandenVendo. And it is not in **17** 

### regard to cost, but in regard to ECM motors **18** 

### and the size constraints of certain evaporator **19** 

### fan motor applications, for example, in a **20** 

### glass for a vendor where there may be a very **21** 

### tight area to package the evaporator system **22** 

### and fan motors. It may not lend itself to an

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### 1 

### ECM-style motor because of its physical size. **2** 

### MS. PRESENT: So you are saying **3** 

### there are space constraints. **4** 

### MR. HIEB: Very much so. **5** 

### FACILITATOR BROOKMAN: Okay. **6** 

### Thank you. Additional comments before we move **7** 

### on? Okay. **8** 

### MS. PRESENT: All right. The **9** 

### final output of engineering analysis is a set **10** 

### of cost efficiency curves, one for each **11** 

### analyzed equipment configuration and **12** 

### refrigerant, depicting equipment cost and **13** 

### performance at each efficiency level model. **14** 

### So it is 20 in total. **15** 

### These serve as the inputs to the **16** 

### downstream analyses and as the basis for **17** 

### development of trial standard levels in the **18** 

### NOPR. I put one -- there is one here on this **19** 

### slide of the 20. This is the general format **20** 

### you will see. So you have daily energy **21** 

### consumption. Each of these corresponds to a **22** 

### single design option. For example, I am just

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### making this up, but going to LED lighting, or **2** 

### one single change in technology. And this is **3** 

### the corresponding change in DEC and the **4** 

### corresponding model change in price -- or, **5** 

### yeah, in price. **6** 

### And there are 20 of these. They **7** 

### are all in the TSD, and we would be very **8** 

### interested in feedback. **9** 

### All right. Any further questions **10** 

### or comments regarding -- **11** 

### FACILITATOR BROOKMAN: Louis **12** 

### Starr. **13** 

### MS. PRESENT: -- the engineering **14** 

### analysis? **15** 

### MR. STARR: Just one last question **16** 

### on that graph you had on page 111. So that **17** 

### line looks pretty flat. It actually is moving **18** 

### down, right? In other words, as things are **19** 

### added, the cost does -- or it almost looks **20** 

### like the same price across, once you hit about **21** 

### 3.5 and above? I did not get what the -- how **22** 

### that works. The cost looks like it stayed the

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### same even though -- **2** 

### MR. WEBER: This is the graphical **3** 

### representation of the cost. **4** 

### MR. STARR: Oh. **5** 

### MR. WEBER: There is not an **6** 

### increase in basic -- **7** 

### MR. STARR: Oh, okay. **8** 

### MR. WEBER: This is just a scaling **9** 

### issue. If you look at the picture -- **10** 

### MR. STARR: Oh, okay. **11** 

### MS. PRESENT: Each point on the **12** 

### graph is at a unique energy consumption price. **13** 

### MR. STARR: Okay. **14** 

### MS. PRESENT: Though perhaps our **15** 

### projection makes it look otherwise. **16** 

### MR. STARR: Okay. Got it. **17** 

### FACILITATOR BROOKMAN: Subarna, **18** 

### you are on. Please speak. We cannot hear **19** 

### you. Subarna, whatever you are doing, it is **20** 

### not working. You are not -- we are not **21** 

### hearing you. **22** 

### MR. MALAKAR: All right. The

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### question I have was on modeling. I did not **2** 

### get a chance to ask about the modeling. **3** 

### FACILITATOR BROOKMAN: We can go **4** 

### back. It is okay. **5** 

### MR. MALAKAR: The modeling **6** 

### question, I was going to ask if all the models **7** 

### were -- if any of those were verified, the **8** 

### actual testing, the results? **9** 

### MS. PRESENT: There was a range of **10** 

### testing conducted, which was in line with the **11** 

### model. It is actually -- there are not -- **12** 

### most of the units that were tested were not **13** 

### strictly at baseline energy consumption. As **14** 

### noted previously, most of the market meets the **15** 

### ENERGY STAR requirements. **16** 

### So there was -- the testing and **17** 

### the modeling are checked against each other, **18** 

### but the modeling is based on the energy model **19** 

### and not directly on the testing. **20** 

### MR. MALAKAR: Okay. Thank you. **21** 

### MS. PRESENT: All right. **22** 

### FACILITATOR BROOKMAN: Thank you.

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### 1 Yes, Jim. **2 MR. COLLINS: Jim Collins, AMS. 3 Again, back to Louis' point, this curve just**  **4 looks wrong. I mean, we are getting 40, 5 50-odd percent improvement for no cost. It**  **6 just does not seem right to me. 7 MS. PRESENT: So I will say one**  **8 technology option, for instance, that is 9 included that may be -- the low power states,**  **10 which are currently -- which are included in 11 these cost efficiency curves, because these**  **12 are intended for use with the new test 13 procedure, the revised test procedure, are**  **14 really low cost is our understanding. 15 And, again, it -- we very much**  **16 welcome comment. All of the numbers are 17 actually in the notice. Are relatively low**  **18 cost for relatively high gain. So the first 19 couple of design options are, in all**  **20 likelihood, the low power states. 21 MR. COLLINS: So these MPCs, the**  **22 calculations for these curves, were not done**

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### using the procedure in place today? **2** 

### MS. PRESENT: Correct. These were **3** 

### done -- because -- as was mentioned earlier, **4** 

### the new procedure was expected to be used with **5** 

### any amended energy conservation standards. **6** 

### Likewise, the energy conservation standards **7** 

### would need to be based on the new test **8** 

### procedure. **9** 

### So at baseline, it is assumed that **10** 

### the test was conducted without any low power **11** 

### states because the analysis for the original **12** 

### -- for the 2009 BVM by rule -- did not assume **13** 

### any low power state availability in the **14** 

### testing. So those design options were modeled **15** 

### as part of this engineering analysis. **16** 

### FACILITATOR BROOKMAN: Larry? **17** 

### MR. HIEB: Larry Hieb, **18** 

### SandenVendo. I do not know how you could do **19** 

### that when many of the manufacturers' units do **20** 

### go into a low power state in the current test **21** 

### procedure by turning off lights prior to the **22** 

### energy consumption portion of the cuts.

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### MS. PRESENT: I will say that in **2** 

### the 2009 analysis it was assumed that lights **3** 

### were on throughout the test. **4** 

### MR. HIEB: That is not the case. **5** 

### MS. PRESENT: Well, thank you for **6** 

### that comment. That is information that is **7** 

### useful for us to have. **8** 

### FACILITATOR BROOKMAN: Additional **9** 

### -- yes. **10** 

### MR. WEBER: Do you mind if I just **11** 

### dig into that a little more? I mean, could **12** 

### you elaborate on a specific concern? I mean, **13** 

### it seems like right now what we are getting is **14** 

### we are getting alignment of the industry, the **15** 

### modeling, and the test procedure, which in **16** 

### theory is what should be happening. So is **17** 

### there a concern there? **18** 

### MR. HIEB: Yes. The concern is **19** 

### that we are putting something in the bank that **20** 

### is already being spent. **21** 

### MR. WEBER: Well, I mean, it is **22** 

### not accounted for in today's assessments that

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### -- **2** 

### MR. HIEB: But it is accounted for **3** 

### in the actual results and in the consumption **4** 

### that is being reported. **5** 

### MR. WEBER: I mean, depending on **6** 

### how people are conducting it, what they are **7** 

### using -- **8** 

### MR. HIEB: It is fact. **9** 

### MR. WEBER: Okay. I mean -- **10** 

### MR. HIEB: And it is a significant **11** 

### fact as well. It makes a significant impact **12** 

### to the energy consumption. **13** 

### FACILITATOR BROOKMAN: Sarah? **14** 

### MS. WIDDER: So I have a **15** 

### clarifying question on that, too. So you are **16** 

### saying that the majority of beverage vending **17** 

### machines have lighting controls that cannot be **18** 

### adjusted by the machine operator? **19** 

### MR. HIEB: No, I would not **20** 

### necessarily say the majority, but a good **21** 

### percentage of them do. And they are -- and **22** 

### the energy consumption data that has been

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### generated in the test of those units is **2** 

### without lighting or reduced lighting. **3** 

### MS. WIDDER: But then there are **4** 

### also BVM models available that the controls **5** 

### can be adjusted by the machine operator or do **6** 

### not have controls. **7** 

### MR. HIEB: I would say they were **8** 

### maybe in addition to. They have secondary **9** 

### tiered energy modes that can be activated by **10** 

### programming, but yet they also have set modes **11** 

### that will take in -- or kick in during the **12** 

### normal course of the energy consumption **13** 

### testing that is currently specified. **14** 

### MS. WIDDER: For some BVM models. **15** 

### MR. HIEB: Yes. **16** 

### MS. WIDDER: And there are also **17** 

### BVM models available that do not have lighting **18** 

### -- **19** 

### MR. HIEB: Yes. **20** 

### MS. PRESENT: So they would **21** 

### typically be tested with lights on all the **22** 

### time?

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### 1 MR. HIEB: Yes. **2 MS. PRESENT: Okay. 3 MS. WIDDER: Thank you.**  **4 FACILITATOR BROOKMAN: Thanks for 5 the clarification. That is helpful. Any**  **6 other comments here? Okay. 7 MS. PRESENT: All right. I am**  **8 going to move on, then, to the preliminary 9 manufacturer impact analysis. The**  **10 manufacturer impact analysis is conducted in 11 three main phases; it is intended to identify**  **12 the impacts of energy conservation standards 13 on manufacturers.**  **14 And DOE starts with Phase 1, 15 creating an industry profile to characterize**  **16 the industry and identify important issues 17 that require consideration. Do you want to**  **18 stop at -- 19 FACILITATOR BROOKMAN: Yes,**  **20 please. Subarna, please, go ahead. 21 MR. MALAKAR: Hey, I was going to**  **22 make a comment on the earlier slide. You**

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### know, some of this stuff we have -- you have **2** 

### listed there as a new technology or things we **3** 

### can do, low power mode, you know, turning the **4** 

### light off, and also ECM motor. Those are **5** 

### already included. We are already utilizing **6** 

### that technology. So I do not think -- I do **7** 

### not think we can count on those things to make **8** 

### any sort of improvement. **9** 

### MS. WIDDER: I think there is **10** 

### maybe a point that is worth clarifying here is **11** 

### that these design options were considered **12** 

### exclusively because they are being implemented **13** 

### in some equipment that is available on the **14** 

### market today. But DOE started its analysis **15** 

### with equipment that minimally complied with **16** 

### the standard. **17** 

### So if you go back to that, there **18** 

### was like a slope and a line, and there is a **19** 

### lot of equipment that performed significantly **20** 

### better than DOE's standard. And that would **21** 

### potentially continue to be the case, and those **22** 

### equipment may already implement some of these

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### design options, but DOE is starting back at **2** 

### equipment that is right on the line that -- **3** 

### MS. PRESENT: I can expand on that **4** 

### a little bit. So for -- I did not talk a lot **5** 

### about the baseline, the concept of a baseline. **6** 

### The baseline is where DOE starts its analysis. **7** 

### It is the energy -- when there are standards **8** 

### already in place, such as the case for Class **9** 

### A and Class B equipment, it is the standard **10** 

### level. **11** 

### When there is not a standard **12** 

### already in place, such as combination vending **13** 

### machines, it is sort of a reasonably low **14** 

### energy performance. And that is where DOE **15** 

### starts its analysis, and it moves forward from **16** 

### there. **17** 

### The analysis is technology-neutral **18** 

### in that the baseline energy consumption, we **19** 

### modeled one way to get there, but there are **20** 

### myriad ways to achieve that baseline energy **21** 

### level. Most equipment on the market currently **22** 

### significantly exceeds the DOE standard.

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### So that equipment is going to be **2** 

### including design options. And as we said **3** 

### before, there are -- when there was no **4** 

### information on a design option, we did not **5** 

### include it. Therefore, most of the design **6** 

### options we included are based on equipment **7** 

### that is already on the market. Most equipment **8** 

### on the market is not implementing all of them. **9** 

### Most equipment is implementing some of them, **10** 

### and that equipment is already, as Sarah said, **11** 

### well beyond the baseline model of performance **12** 

### that we were discussing. **13** 

### So that flat part of the curve may **14** 

### already be largely gone. Or not. Especially **15** 

### as the test procedure may or may not be **16** 

### static. **17** 

### Shall I continue? All right. So **18** 

### as I said, the first phase of the manufacturer **19** 

### impact analysis, DOE creates an industry **20** 

### profile to characterize the industry and **21** 

### identify important issues that require **22** 

### consideration.

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### Phase 2 -- and DOE is about at the **2** 

### beginning of Phase 2 right now -- Phase 2, DOE **3** 

### prepares an industry cash flow model and an **4** 

### interview questionnaire to guide subsequent **5** 

### conversations with manufacturers. **6** 

### Those materials, the interview **7** 

### questionnaire, takes into account what happens **8** 

### at this meeting, what happens in the comment **9** 

### period after this meeting. That is where this **10** 

### process is. **11** 

### Phase 3, it has to be finished **12** 

### before the NOPR publishes. So that the DOE is **13** 

### right in the middle of this process as we **14** 

### speak. Phase 3 is the DOE interview process. **15** 

### DOE interviews manufacturers and assesses the **16** 

### impacts of standards both quantitatively -- **17** 

### using the government regulatory impact model **18** 

### -- and qualitatively -- impacts on **19** 

### competition, manufacturing capacity, **20** 

### employment, and regulatory burden. **21** 

### This manufacturer impact analysis **22** 

### is the primary place where, as is stated, the

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### manufacturer impact is considered, and the **2** 

### primary input to that is the interviews with **3** 

### manufacturers to understand the impact that a **4** 

### standard could or would have on the **5** 

### manufacturers. **6** 

### These interviews take place **7** 

### generally, as Chris stated, in the notice of **8** 

### proposed rulemaking phase, generally under a **9** 

### notice -- a non-disclosure agreement between **10** 

### Navigant and the manufacturer. And the **11** 

### information, as previously stated, is then **12** 

### used in aggregate to inform the notice of **13** 

### proposed rulemaking analyses. It is not used **14** 

### directly -- is not given directly to DOE. It **15** 

### is not shared with DOE. **16** 

### At this point in the MIA analysis, **17** 

### DOE has identified the following general areas **18** 

### of interest to be investigated during the MIA. **19** 

### These include customer impacts and performance **20** 

### requirements, current market conditions, the **21** 

### cumulative regulatory burden, including this **22** 

### energy standard and any other standards that

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### may be affecting the BVM industry. **2** 

### The split incentive problems that **3** 

### were alluded to earlier in today's **4** 

### conversations -- profitability and small **5** 

### business impacts. **6** 

### And at the present time we have **7** 

### two extra comments related to the MIA. DOE **8** 

### requests comments on its identification of key **9** 

### issues and requests data and information from **10** 

### interested parties that can assist in **11** 

### evaluating the potential impact on **12** 

### manufacturers. And DOE considers the impacts **13** 

### on certain manufacturer subgroups, including **14** 

### small business manufacturers that have **15** 

### different cost structures or operate within **16** 

### different regulatory frameworks. **17** 

### In the notice of proposed **18** 

### rulemaking stage, DOE requests feedback on **19** 

### subgroups to analyze and/or characteristics **20** 

### appropriate for subgroup analysis. **21** 

### If there is nothing at present, **22** 

### please do not hesitate to bring up things as

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### they come to mind. But at this time, I will **2** 

### hand it over to Scott. **3** 

### MR. YOUNG: Do we go directly into **4** 

### these sections, or is there agreement on -- **5** 

### FACILITATOR BROOKMAN: Just keep **6** 

### going. **7** 

### MR. YOUNG: Okay. My name is **8** 

### Scott Young. I am from Lawrence Berkeley **9** 

### National Laboratory. And so I will be going **10** 

### over the last sections here. All these **11** 

### sections address the economic impact of **12** 

### standards on customers. **13** 

### And so the first one that we are **14** 

### going to be looking at is the markups **15** 

### analysis. And this is the part -- as you can **16** 

### see, we have two different sets of lines here. **17** 

### This is getting to the overall prices that **18** 

### consumers are going to have of the products **19** 

### that come out of the engineering analysis. **20** 

### So the overall idea of the markups **21** 

### analysis is to characterize the distribution **22** 

### channels for these products, and then estimate

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### the customer prices that customers actually **2** 

### pay for products that come out of the **3** 

### engineering analysis. **4** 

### So looking at this diagram here, **5** 

### DOE identified three main different **6** 

### distribution channels. The first one consumes **7** 

### about 85 percent of product, goes directly **8** 

### from beverage vending machine manufacturers to **9** 

### bottlers or distributors. The other one -- **10** 

### other two go through a wholesaler along the **11** 

### way. And so one of them goes to vending -- 10 **12** 

### percent go to vending machine operators, and **13** 

### 5 percent go to site owners. **14** 

### So, in this case, the first **15** 

### distribution channel has no markup other than **16** 

### the manufacturer markup to it, as well as **17** 

### sales tax. The other two have wholesaler **18** 

### markup in addition to sales tax on the **19** 

### manufacturer. **20** 

### And so DOE was looking at Census **21** 

### data in order to try to assess the wholesaler **22** 

### markets.

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### So there are two different markup **2** 

### types that we address. The first one is the **3** 

### baseline markup. This is the markup that is **4** 

### applied to the baseline products. We talked **5** 

### about the baseline products in the engineering **6** 

### curve, and this relates the baseline price in **7** 

### the engineering curve to the price that a **8** 

### customer would pay. And it encompasses all of **9** 

### the expenses and profit that a wholesaler **10** 

### would have. **11** 

### The second type is an incremental **12** 

### markup, and this is applied to just the **13** 

### incremental costs in that cost efficiency **14** 

### curve that we saw. And so this would only **15** 

### cover what DOE would believe would be an **16** 

### incremental -- the parts that might change in **17** 

### a markup as a result of differences in **18** 

### efficiency. **19** 

### And so it would not take into **20** 

### account things that a wholesaler -- it would **21** 

### not change in a wholesaler's operation because **22** 

### that wholesaler might be off handling -- the

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### overall idea is that DOE applies the baseline **2** 

### markup to the MSP of the baseline products, **3** 

### and then an incremental markup to the **4** 

### incremental increases in price that go above **5** 

### the baseline. **6** 

### FACILITATOR BROOKMAN: Yes. **7** 

### Subarna, you are next. Please speak. **8** 

### MR. DRENTEN: We just wanted to **9** 

### make the comment here that there is a third **10** 

### channel. **11** 

### MR. YOUNG: Oh, yes. **12** 

### MR. DRENTEN: Third channel is **13** 

### absolutely directly to large food service **14** 

### operators. **15** 

### MR. YOUNG: Okay. And do you have **16** 

### any idea -- **17** 

### FACILITATOR BROOKMAN: Pardon me **18** 

### for interrupting. Do you have a sense of the **19** 

### scale of that channel? **20** 

### MR. DRENTEN: It is fairly large. **21** 

### I mean, they are not what in the industry you **22** 

### would consider to be a bottler, and they are

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### also not a wholesaler, because they do not **2** 

### resell equipment. But there is, you know, **3** 

### large national food service operators that **4** 

### purchase equipment directly. **5** 

### FACILITATOR BROOKMAN: Okay. **6** 

### Thank you very much. That is helpful. **7** 

### MR. YOUNG: And relative to the **8** 

### numbers that you see here, would you feel like **9** 

### -- where would they fit in, and do you see **10** 

### them taking a particular market share out of **11** 

### any of those channels, or how would you see it **12** 

### split up more accurately? **13** 

### MR. DRENTEN: I am not really in a **14** 

### position to be able to talk from a percentage **15** 

### standpoint how that breaks down, but I can **16** 

### tell -- I can tell you that there is a direct **17** 

### from manufacturer to what we would call **18** 

### vending machine operator. **19** 

### FACILITATOR BROOKMAN: Okay. **20** 

### Thank you. **21** 

### MR. YOUNG: Sounds good. **22** 

### FACILITATOR BROOKMAN: All right.

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### MR. YOUNG: And so these are the **2** 

### overall markups that DOE estimated for **3** 

### beverage vending machines. So let's talk **4** 

### about the manufacturer, bottler, distributor. **5** 

### Only a manufacturer markup -- manufacturer **6** 

### markup was estimated as part of the **7** 

### engineering analysis as well as sales tax, and **8** 

### then the manufacturer to a wholesaler to **9** 

### either the operator or site owner would have **10** 

### the manufacturer markup, and then a baseline **11** 

### markup of about 1.48, and an incremental **12** 

### markup of about 1.3, plus the sales tax. So **13** 

### those are the overall numbers that DOE used **14** 

### for estimating customer prices. **15** 

### FACILITATOR BROOKMAN: Comments on **16** 

### markups? No comments here. Okay. **17** 

### MR. YOUNG: Okay. So next we will **18** 

### move on to the energy use analysis. This is **19** 

### the stage of the analysis where DOE estimates **20** 

### the actual field energy use for products. So **21** 

### the whole idea is that DOE would like to **22** 

### develop a distribution of field energy uses of

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### products that would be typically in -- in use **2** 

### in the U.S., so sample energy uses. And then **3** 

### these distributions are used as part of the **4** 

### LCC and payback period analyses to calculate **5** 

### annual operating costs. **6** 

### Overall idea -- the method DOE **7** 

### used is to develop one -- a distribution of **8** 

### volumes of products that are in the market, **9** 

### develop a distribution of the percentage of **10** 

### products that are indoor versus outdoor, and **11** 

### then use those two sets of numbers to estimate **12** 

### energy use using the DOE test procedure as **13** 

### well as a simulation model that took into **14** 

### account climate factors. **15** 

### Okay. So for -- the first thing **16** 

### was determining the distribution of **17** 

### refrigerated volume. And for Class A and B, **18** 

### DOE estimated that by looking at the models **19** 

### that were available in the CCMS database and **20** 

### the ENERGY STAR database, assuming that the **21** 

### model -- the number of shipments are **22** 

### proportional to the number of models that are

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### out there, and also weighting the products **2** 

### that are on the ENERGY STAR list more heavily **3** 

### than the products that are not ENERGY STAR. **4** 

### DOE estimated that approximately 93 percent of **5** 

### shipments would be ENERGY STAR models. **6** 

### So these two -- these **7** 

### distributions that we see here for Class A **8** 

### products fit largely in the sort of medium to **9** 

### large category, and the Class B products are **10** 

### spread from the small all the way to the **11** 

### large. **12** 

### For the combination A and **13** 

### combination B products, there is less **14** 

### information, and so DOE used the two sizes **15** 

### that were modeled as part of the engineering **16** 

### analysis and just estimated that -- I think **17** 

### the engineering analysis modeled a medium and **18** 

### a large for each combination A and combination **19** 

### B, and DOE estimated that 50 percent of the **20** 

### market would be in the medium and 50 percent **21** 

### of the market would be the large. **22** 

### And so I think this leads to the

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### first request for comment in this section, **2** 

### Issue 4.14. Should DOE continue to use the **3** 

### CCMS and ENERGY STAR model databases to **4** 

### estimate the shipments and weight those by an **5** 

### estimated ENERGY STAR proportion of 93 **6** 

### percent? And then, also, for the combo A and **7** 

### combo B, should DOE assume that 25 percent of **8** 

### the market for each of those -- each of those **9** 

### sizes that were modeled as part of the **10** 

### engineering analysis. **11** 

### Any comments? **12** 

### FACILITATOR BROOKMAN: I am **13** 

### wondering if anybody can speculate about combo **14** 

### A and combo B if DOE's assumption that 25 **15** 

### percent of equipment shipped, if that is on **16** 

### target. Larry, do you have a thought on that? **17** 

### MR. HIEB: Larry Hieb from **18** 

### SandenVendo. Yes. As far as combo A and B, **19** 

### I cannot provide any information. Our company **20** 

### does not manufacture those products. I would **21** 

### think that 25 percent is a high number **22** 

### relative to bottle vending machines, if that

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### -- **2** 

### MR. YOUNG: Maybe I can -- it is **3** 

### not clear in -- when we looked at combo A and **4** 

### combo B, there were four models that were **5** 

### modeled of combo A. And so out of each -- of **6** 

### the whole combo market share, we assumed that **7** 

### each of those models would take up 25 percent. **8** 

### That is not saying anything about how -- how **9** 

### large of a market they would have relative to **10** 

### -- **11** 

### FACILITATOR BROOKMAN: Okay. **12** 

### MR. YOUNG: All right. So the **13** 

### next thing DOE did was estimate the proportion **14** 

### of machines that would be indoor and outdoor **15** 

### for Class A and combo A. We assumed that 100 **16** 

### percent of those machines would be indoor. **17** 

### And then, for Class B and combination B, DOE **18** 

### estimated that 84 percent would be indoor and **19** 

### 16 percent would be outdoor. **20** 

### This was done looking at some **21** 

### information from college campus information **22** 

### where they indicate where there are beverage

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### vending machines available on campus and **2** 

### trying to use that as a proxy for where the **3** 

### beverage vending machines might be used **4** 

### typically. **5** 

### Then, based upon that information, **6** 

### DOE estimated annual energy use. First, DOE **7** 

### estimated baseline energy use for Class A and **8** 

### B. They used values from the current standard **9** 

### that is measured in the DOE test procedure. **10** 

### And then for combination, they used values **11** 

### that came out of the engineering analysis, and **12** 

### then converted daily energy use to annual **13** 

### energy use for the indoor -- excuse me, indoor **14** 

### models; it just multiplied daily by 365 to **15** 

### come up with an annual, assuming that the DOE **16** 

### test procedure would be the same as what you **17** 

### would see in the field. **18** 

### For outdoor machines, DOE **19** 

### multiplied that by 365 and then also used a **20** 

### sort of -- a climate adjustment factor. So **21** 

### that adjustment factor adjusts the DOE energy **22** 

### use based upon the climate of each state. And

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### it is based upon the simulation model used in **2** 

### the 2009 BVM final rule. **3** 

### It resulted in an average **4** 

### adjustment per state of about .8, so just **5** 

### below 75 degrees overall, and ranged between **6** 

### .6, say, in Alaska, up to 1.04 in Hawaii. **7** 

### So this leads us to our next **8** 

### request for comment, Issue 4.16. Should DOE **9** 

### rely on data from six U.S. college campuses to **10** 

### determine the fraction of outdoor use of the **11** 

### BVMs? And should it also use regressions **12** 

### based upon the 2009 BVM final rule engineering **13** 

### analysis to scale the daily energy use to **14** 

### energy use for outdoor models? **15** 

### Any comments on that, those two? **16** 

### FACILITATOR BROOKMAN: Louis? **17** 

### MR. STARR: Well, there are a **18** 

### couple of things. I guess -- I think of some **19** 

### of the things where the vending machines -- **20** 

### like in vestibules and lots of retail places **21** 

### where you see them, so I kind of wonder **22** 

### somewhat if 16 percent really represents the

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### outdoor use, just kind of thinking about the **2** 

### campuses and how they might be representative **3** 

### of the rest of the population. So kind of **4** 

### wondering about that still. **5** 

### The other question I had -- **6** 

### FACILITATOR BROOKMAN: Do you **7** 

### think campuses might overstate the -- **8** 

### MR. STARR: Well, students tend to **9** 

### spend their time inside studying, right? **10** 

### (Laughter) **11** 

### Well, one might think that anyway. **12** 

### I mean, it may not -- well, I do not know. **13** 

### There are just a lot of things to think about **14** 

### that, but -- **15** 

### FACILITATOR BROOKMAN: We can **16** 

### probably take this sample size here. It would **17** 

### probably be -- go ahead. Keep going, Louis. **18** 

### MR. STARR: Yes. I mean, **19** 

### actually, I do not really know, but I would **20** 

### certainly need to think about that some more **21** 

### as to whether that would be representative. **22** 

### MR. YOUNG: Sure. Yes.

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### MR. STARR: The other question I **2** 

### had was on the .8, the adjustment factor. So **3** 

### was the outdoor adjustment, a factor of .8, **4** 

### what are you doing with that number? **5** 

### MR. YOUNG: Oh. So in -- so, **6** 

### basically, in order to get annual energy use, **7** 

### you have to get a daily energy use from the **8** 

### test procedure, and then multiply that by 365 **9** 

### to get annual energy use, assuming that the **10** 

### climate conditions around the BVM are the same **11** 

### as what they are in the test procedure. And **12** 

### then we have to multiply it by an adjustment **13** 

### factor. **14** 

### So if it is colder outside than it **15** 

### would typically be during the test procedure, **16** 

### then there would be less energy required. And **17** 

### if it is hotter outside than it typically is **18** 

### in the test procedure, it should be -- take **19** 

### more energy. **20** 

### MS. WIDDER: Essentially, what you **21** 

### are talking about, your lowest application **22** 

### product temperature. That same type of

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### approach where you are scaling -- you are **2** 

### assuming that the energy use scales linearly **3** 

### with the delta between the -- **4** 

### MR. STARR: So, in other words, 75 **5** 

### is saying that if you have something outside, **6** 

### chances are it is going to be cooler than 75 **7** 

### degrees outside rather than warmer than 75 **8** 

### degrees, since that is what the test **9** 

### procedures have. **10** 

### MS. WIDDER: Yes. Nationally, but **11** 

### this was done on -- as you can see by the **12** 

### range, state level. So looking at the state **13** 

### level TMY data, outdoor data. **14** 

### MR. STARR: So like, in hours over **15** 

### the course of the year, how many and what is **16** 

### the average temperature. Okay. Get it. **17** 

### MS. WIDDER: Exactly. **18** 

### MR. STARR: All right. Thanks. **19** 

### MR. MITCHELL: This is Scott **20** 

### Mitchell from Southern California Edison. **21** 

### Does it take into account some of the **22** 

### accessories that may be left off by cold

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### weather heaters? Because that -- you know, **2** 

### that -- if the machines are put in Minnesota, **3** 

### it might be kind of in the .8 range there **4** 

### where, you know, during the winter it is not **5** 

### working too hard. But it now has this heater **6** 

### on it to provide -- in winter that would maybe **7** 

### change that value. So is that taken account **8** 

### of or valued? **9 10**  

### MR. YOUNG: Are you familiar at **11** 

### all with the model that was used in the 2009? **12** 

### MS. WIDDER: So the 2009 model did **13** 

### account for the use of auxiliary heaters for **14** 

### those hours that would be -- that would **15** 

### require them, is my understanding. I did not **16** 

### myself do the modeling, but that is my **17** 

### understanding. We can certainly look back at **18** 

### that. **19** 

### And then the other base would -- **20** 

### based on this slide and the subsequent request **21** 

### for comment, the other thing that I think we **22** 

### would really appreciate data on is the extent

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### to which the number of outdoor machines or **2** 

### percentage of machines installed out there **3** 

### varies with state or with region. **4** 

### So if more machines are installed **5** 

### outdoors in colder climates versus warmer **6** 

### climates or warmer climates versus colder **7** 

### climates. **8** 

### So 60 percent might not be exactly **9** 

### correct, but we did -- and the other thing **10** 

### that there used to be a slide on, but **11** 

### apparently there is not now, is this -- this **12** 

### adjustment factor is basically a linear **13** 

### regression of the modeling that was done in **14** 

### 2009 for specific units that were modeled, **15** 

### looking at the MDEC that comes out of the test **16** 

### procedure, and then based on the climate **17** 

### modeling that was done in 2009 on the other **18** 

### axis, and then regressing those, however many, **19** 

### five, equipment or different models that were **20** 

### looked at. So there is a linear regression **21** 

### developed, and then that was applied sort of **22** 

### universally.

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### So to that point, also, you know, **2** 

### and the point I made about lowest application **3** 

### product temperature, that is an estimate. And **4** 

### in this case, it might be more appropriate **5** 

### because we are doing a big annual nationwide **6** 

### average anyways, but there will be some **7** 

### equipment that the energy use is not scaling, **8** 

### you know, linearly because there is that base **9** 

### of, you know, lights do not scale with outdoor **10** 

### temperature. **11** 

### FACILITATOR BROOKMAN: Louis? **12** 

### MR. STARR: The other thing, too, **13** 

### to consider is that if you think about it, **14** 

### there are -- probably most of the things -- **15** 

### with cold drinks, they are probably going to **16** 

### sell more of it when it is hot. In other **17** 

### words, the machine is going to be -- they are **18** 

### going to sell more drinks when it is hot **19** 

### during the day rather than when it is not **20** 

### being used at night. So it seems like you **21** 

### might be having a little more -- I do not **22** 

### know. It seems like your average might be

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### adjusting up above 75 rather than down below. **2** 

### So, I do not know, something to kind of think **3** 

### about as well. **4** 

### MR. YOUNG: All right. **5** 

### FACILITATOR BROOKMAN: Yes, Jim. **6** 

### MR. COLLINS: Jim Collins, AMS. **7** 

### Are we trying to get at the actual cost of **8** 

### energy used? And, if so, then I have to say, **9** 

### I mean, under our test procedures -- and, **10** 

### believe me, I do not want to open that up **11** 

### again, but that is not representative of a **12** 

### machine in service at all. And if a machine **13** 

### is doing what it is supposed to do, it is **14** 

### selling products, so the doors are being **15** 

### opened, people are getting products in and **16** 

### out. Their route man is coming back to reload **17** 

### it. There is a lot more energy consumption in **18** 

### actual use than there is under the test **19** 

### procedures that we follow. **20** 

### MR. YOUNG: Okay. **21** 

### FACILITATOR BROOKMAN: Do you have **22** 

### any --

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### MR. COLLINS: I would ask if you **2** 

### had considered that. No, I do not have **3** 

### anything on that. **4** 

### FACILITATOR BROOKMAN: Okay. Do **5** 

### you have a comment? **6** 

### MS. WIDDER: I think I have a **7** 

### followup. **8** 

### FACILITATOR BROOKMAN: Sarah, **9** 

### please. **10** 

### MS. WIDDER: So I think that is **11** 

### certainly a good point, and it is difficult to **12** 

### think of, as we were talking about usage **13** 

### profiles previously, you know, the usage **14** 

### profiles of beverage vending machines can vary **15** 

### widely in their application. **16** 

### And so in this analysis, we are **17** 

### really trying to get an average, **18** 

### representative picture of the population of **19** 

### beverage vending machines, recognizing that we **20** 

### are not going to get it perfectly, and then we **21** 

### are going to -- we are going to look at **22** 

### incrementally decreasing the energy use of

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### those equipment through standards and what is **2** 

### the benefit of that. That is the point here. **3** 

### So to the extent that we have data **4** 

### to better characterize the baseline energy **5** 

### consumption, I think that is what we would be **6** 

### looking for, if this is not an appropriate **7** 

### average representation of the population of **8** 

### beverage vending machines installed in the **9** 

### nation. But those things that you were **10** 

### mentioning, like opening the door, closing the **11** 

### door, to refill it, that is not anticipated to **12** 

### change as a function of standards. **13** 

### So that incremental energy use **14** 

### associated with refilling a machine is not -- **15** 

### it would fall out of the analysis, if that **16** 

### makes sense. It would be the same if we **17** 

### increase efficiency, and so if we do not look **18** 

### at -- if we do not account for that, it will **19** 

### not affect the outcome of this analysis. **20** 

### I feel like I did not explain that **21** 

### very well. Was that clear? **22** 

### FACILITATOR BROOKMAN: I think we

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### got it. Move on. **2** 

### MR. SUAMI: I have a question. I **3** 

### think that this morning you talked about 25 **4** 

### percent or perhaps lower usage of Class B. I **5** 

### just want to know, what was the source of that **6** 

### information? If that information is more **7** 

### accurate than the 16, why not use the same -- **8** 

### MS. WIDDER: If I said 25 percent, **9** 

### I misspoke. The data in the energy **10** 

### conservation standard and the test procedure **11** 

### -- well, the test procedure does not really **12** 

### care about outdoor use. I mean, it is just 75 **13** 

### percent ambient. So if I gave that -- made **14** 

### that statement, I apologize. The 16 percent **15** 

### number is the best number that DOE has, and **16** 

### the only number. So I do not have another **17** 

### source of data. **18** 

### MR. SUAMI: Yes. I remember maybe **19** 

### a 2009 study or discussion. They were talking **20** 

### about 25 percent. Probably that 25 percent **21** 

### came from -- **22** 

### MS. WIDDER: So in 2009, I would

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### have to look back at the source of data, but **2** 

### my recollection from 2009 was that the 25 **3** 

### percent number was not based on as rigorous a **4** 

### sample as even this is. **5** 

### MR. SUAMI: Okay. **6** 

### MS. WIDDER: So to the extent that **7** 

### there is better data than DOE has and is **8** 

### referencing here, I do not believe that the **9** 

### 2009 will used better data, but we will **10** 

### certainly look back and ensure that that is **11** 

### the case. **12** 

### MR. SUAMI: Okay. **13** 

### MR. YOUNG: All right. So here is **14** 

### the annual energy use. On average, for -- **15** 

### average volume for Class A, going from 1,525 **16** 

### kilowatt hours per year, down to about **17** 

### 800-and-some or 900, and then for Class B **18** 

### going from about 1,700 kilowatt hours per year **19** 

### down to about 841 kilowatt hours. **20** 

### And then, also for combination A **21** 

### and combination B, the estimated annual energy **22** 

### consumption on average for representative

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### volumes, from 2,200 down to 644 for **2** 

### combination A and from about 1,700 down to **3** 

### about 700 for combination B. **4** 

### And these are also averages based **5** 

### upon a distribution of values, and I will get **6** 

### back to the distribution point at the analysis **7** 

### portion. **8** 

### Are there any questions, further **9** 

### questions, on the energy use analysis before **10** 

### we move to the next section of analysis? **11** 

### Okay. The next portion of **12** 

### analysis is called the life-cycle cost and **13** 

### payback period analysis. This is the point **14** 

### where we bring together the prices coming from **15** 

### the markups analysis and the energy use coming **16** 

### from the energy use analysis. The purpose of **17** 

### this analysis is to provide an estimate of the **18** 

### economic impacts of the standard from the **19** 

### customer's point of view, from the end user's **20** 

### point of view. **21** 

### The life-cycle cost is the total **22** 

### cost of a machine from the time it is

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### purchased to the time the person uses -- or **2** 

### the firm uses it until they retire it. **3** 

### And the payback period is the time **4** 

### it takes a firm to recoup any additional costs **5** 

### of a more efficient product through reductions **6** 

### in annual operating costs. **7** 

### The overall method we use, it **8** 

### takes several steps. One of them is we use **9** 

### the customer samples developed during the **10** 

### energy use analysis, and then for each EL **11** 

### determine the total installed cost, then **12** 

### determine any of the operating costs for both **13** 

### the first year and the lifetime of the **14** 

### product, and then calculate the payback period **15** 

### by dividing the increase in installed cost by **16** 

### the decrement in operating cost, determine the **17** 

### LCC by adding the whole life-cycle cost to the **18** 

### installed cost, and determine the life-cycle **19** 

### cost savings by subtracting the life-cycle **20** 

### cost of a particular efficiency level from the **21** 

### life-cycle cost of a product the sample **22** 

### customer would have bought without that

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### standard. **2** 

### So for the customer sample, we **3** 

### took a sample of 10,000 customers -- Monte **4** 

### Carlo sampled 10,000 customers. It started in **5** 

### the energy use analysis. And we allocated a **6** 

### geographic location to each of them. We used **7** 

### projections -- we assumed that BVMs would be **8** 

### distributed proportional to population, and so **9** 

### we used population projections for 2020. **10** 

### And then we did -- allocated a **11** 

### building use for where that BVM would be **12** 

### located, and that was using state vending **13** 

### industry reports indicating the typical uses **14** 

### for vending machines. **15** 

### And then, calculated the total **16** 

### installed cost, and that is the sum of the **17** 

### equipment price as well as any installation **18** 

### costs. The equipment price comes from the **19** 

### markup analysis, and then in addition to the **20** 

### markups analysis we applied a price learning **21** 

### factor to the prices to derive what we would **22** 

### expect or what DOE would expect the equipment

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### price to be in 2019, because equipment prices **2** 

### are provided in 2013. **3** 

### And so we used a .9 factor on the **4** 

### equipment prices. This is based upon an **5** 

### exponential bid we did on a PPI index for **6** 

### merchandise and machines. And then, we added **7** 

### installation costs, and those came from a **8** 

### report on BVM installation, as well as Bureau **9** 

### of Labor Statistics stats. **10** 

### So this leads to the first request **11** 

### for comment in this section, Issue 4.15. **12** 

### Should DOE apply an exponential price decline **13** 

### trend based on PPI data for automatic **14** 

### merchandising machines to the future equipment **15** 

### prices for beverage vending machines? **16** 

### FACILITATOR BROOKMAN: Anyone? No **17** 

### comment here. No? Okay. Go ahead. **18** 

### MR. YOUNG: So the next part was **19** 

### starting to calculate the operating cost **20** 

### versus annual -- calculating the annual energy **21** 

### cost. So the annual energy consumption came **22** 

### from the energy use analysis. Then, DOE

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### estimated energy cost using EIA data, using **2** 

### state level electricity prices as well as AEO **3** 

### price projections. So that was estimated out **4** 

### for the full lifetime- the longest lifetime of **5** 

### the product. **6** 

### Then, the second component of **7** 

### operating cost was calculating maintenance and **8** 

### repair costs. DOE estimated two different **9** 

### sets of repair costs, depending upon whether **10** 

### the product had LED lighting or not. Then it **11** 

### also estimated maintenance costs that were the **12** 

### same for all efficiency levels and included a **13** 

### refurbishment cost, based upon -- turned it **14** 

### into an annualized cost for refurbishment that **15** 

### was across all efficiency levels, but is based **16** 

### upon two refurbishment events, one at 4.5 **17** 

### years and the other one at approximately nine **18** 

### years. **19** 

### And so this leads to three **20** 

### different requests for comment. The first one **21** 

### is, what are the average costs for **22** 

### refurbishment as distinct from maintenance and

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### repair costs that beverage vending machines **2** 

### incur over their lifetime? **3** 

### Do we have any -- **4** 

### FACILITATOR BROOKMAN: I think **5** 

### we're going to have to -- no comment on that **6** 

### one. **7** 

### MR. YOUNG: Okay. And then, are **8** 

### the average annual costs for repair and **9** 

### maintenance that DOE estimated reasonable? **10** 

### And also, is there any appreciable fraction of **11** 

### repair maintenance that happens in the shop as **12** 

### opposed to in the field that would affect the **13** 

### estimated cost of repair and maintenance? **14** 

### FACILITATOR BROOKMAN: Okay. **15** 

### MR. YOUNG: And then, Item 4.13, **16** 

### is the DOE's assumption reasonable that 100 **17** 

### percent of new shipments of Class A machines **18** 

### in 2019 will have LED lighting? **19** 

### FACILITATOR BROOKMAN: We ought to **20** 

### be able to get a response on that one. What **21** 

### do you think? **22** 

### MR. HIEB: Yes. We already are.

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### FACILITATOR BROOKMAN: Okay. **2** 

### Thank you for that confirmation. **3** 

### MR. YOUNG: All right. So move on **4** 

### to the next thing. **5** 

### FACILITATOR BROOKMAN: And that **6** 

### was Larry speaking, by the way. Thank you, **7** 

### Larry. **8** 

### MR. YOUNG: The next point as far **9** 

### as the LCC analysis is determining a lifetime **10** 

### for the product. So DOE used available **11** 

### information to estimate a lifetime survival **12** 

### function for the product. The average **13** 

### lifetime was 13.4 years, going from a minimum **14** 

### of eight years to a maximum of 30 years. **15** 

### So there is -- as you can see on **16** 

### the screen, that's the cumulative distribution **17** 

### of survival for the products. As you can see, **18** 

### most of the products have retired by the time **19** 

### of 20 years, but there is a long tail that **20** 

### goes up to 30 years. **21** 

### So that means -- so our next **22** 

### request for comment, Issue 4.10, is this -- is

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### the estimated distribution function for **2** 

### lifetime reasonable for BVMs? And then, **3** 

### should DOE assume that all BVMs at all **4** 

### efficiency levels have the same lifetime? Or **5** 

### is there any reason to believe that at **6** 

### different efficiency levels lifetimes will **7** 

### change, either get longer or shorter? **8** 

### FACILITATOR BROOKMAN: Louis? **9** 

### MR. STARR: So I have a question **10** 

### about your Slide 140 there. **11** 

### MR. YOUNG: Yes. **12** 

### MR. STARR: So if you're **13** 

### refurbishing them, how does that -- if you **14** 

### have a machine and refurbish that, how does **15** 

### that show up? Is that in the longer percent **16** 

### surviving, or is that -- how do you -- **17** 

### MR. YOUNG: Yes. In this case, so **18** 

### what DOE estimated was DOE estimated that with **19** 

### each refurbishment, they stayed in the same **20** 

### efficiency level. They didn't change that **21** 

### efficiency at all, and that the actual -- in **22** 

### particular, it seemed that refurbishments

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### would happen at 4.5 and nine years, and that **2** 

### that wouldn't affect the overall lifetime of **3** 

### the product. **4** 

### FACILITATOR BROOKMAN: So the **5** 

### refurbishment doesn't cause it to reset for **6** 

### zero. **7** 

### MR. YOUNG: Exactly. **8** 

### MR. STARR: So does that mean by **9** 

### the third refurbishment you really can't do **10** 

### anything? I mean, is that kind of the **11** 

### assumption, more or less? **12** 

### MR. YOUNG: Yes. From data that **13** 

### -- from what reports we could find, it seemed **14** 

### like we got -- took what was stated as the **15** 

### typical, you know, full lifetime of a product **16** 

### before it gets retired, and it was stated that **17** 

### they typically have two refurbishments in that **18** 

### time. And so we just use a full lifetime, and **19** 

### it seemed there would be two refurbishments. **20** 

### FACILITATOR BROOKMAN: I see. So, **21** 

### in 140, the straight line from 100 percent all **22** 

### the way to 10 years out, that includes at

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### least one refurbishment. **2** 

### MR. YOUNG: Yes. Actually, that **3** 

### -- so that actually has -- so in this, the **4** 

### shortest lifetime is eight years, and so one **5** 

### refurbishment would happen at 4.5 years. And **6** 

### so for -- some machines wouldn't hit that **7** 

### second refurbishment, but almost all machines **8** 

### would. **9** 

### FACILITATOR BROOKMAN: Okay. **10** 

### MR. YOUNG: So the next component **11** 

### was discount rates. And so discount rates are **12** 

### used in the LCC analysis to convert the **13** 

### streams of operating costs over the lifetime **14** 

### of the product back to the installed cost year **15** 

### or the year of installation -- **16** 

### FACILITATOR BROOKMAN: Hang on one **17** 

### second. **18** 

### MR. YOUNG: Yes. **19** 

### FACILITATOR BROOKMAN: I'd like to **20** 

### back up to 141. **21** 

### MR. YOUNG: Sure. Yes. **22** 

### FACILITATOR BROOKMAN: This seems

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### like an important question. Maybe the -- **2** 

### maybe you're not in a position to answer it **3** 

### now, but the second question there at the **4** 

### bottom of that comment box, if you could **5** 

### address that, I think it would be useful. **6** 

### Should DOE continue to assume that machines of **7** 

### all efficiency levels have the same lifetime? **8** 

### Do some of these new technology offerings, **9** 

### including LED lighting, does that mean that **10** 

### they are going to last longer? Or do they **11** 

### have the same lifetime? **12** 

### I guess you're not ready to **13** 

### comment on that. Okay. Yes, Scott? **14** 

### MR. MITCHELL: It doesn't quite **15** 

### answer the question. Scott Mitchell, Southern **16** 

### California Edison. But assuming that we get **17** 

### to the point where other refrigerants enter **18** 

### the mix here, that might have an impact on **19** 

### this. **20** 

### FACILITATOR BROOKMAN: In what way **21** 

### might you speculate? **22** 

### MR. MITCHELL: That there might be

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### increased maintenance costs based on different **2** 

### pressures than what was available to -- or **3** 

### maybe decreased maintenance costs. **4** 

### FACILITATOR BROOKMAN: Okay. 134 **5** 

### is a pretty tried-and-true kind of an **6** 

### operating system? **7** 

### MR. MITCHELL: Yes. **8** 

### FACILITATOR BROOKMAN: Okay. All **9** 

### right. Thank you. You may proceed. **10** 

### MR. YOUNG: Thank you -- DOE used **11** 

### the weighted average cost of capital to **12** 

### estimate the discount rates for firms. This **13** 

### is including the financial cost of debt **14** 

### incurred to purchase beverage vending machines **15** 

### as well as the cost of any equity that was **16** 

### used to purchase. **17** 

### And in this case, DOE estimated -- **18** 

### used the estimate that the types of firms **19** 

### under whose premises this machine was located **20** 

### would be the ones whose discount rate would be **21** 

### used. And so in this case there are a number **22** 

### of machines, we realized, that are purchased

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### by, say, a bottler, and they're placed on -- **2** 

### at someone's business, say, and that person's **3** 

### business actually pays for the electricity **4** 

### prices. But they didn't actually buy the **5** 

### unit. **6** 

### But in order to -- so this **7** 

### analysis made the assumption that any **8** 

### additional cost of that unit by this party **9** 

### would be passed on to this party who -- where **10** 

### the BVM is located, through either some type **11** 

### of leasing arrangement or some other kind of **12** 

### financial arrangement which happened. And so, **13** 

### therefore, we're using the same discount rate **14** 

### for electricity prices and for other things. **15** 

### And so that leads us into the next **16** 

### request for comment, Issue 4.17. What are the **17** 

### typical financial arrangements between BVM **18** 

### owners and the party that pays for energy **19** 

### cost? Is it reasonable for DOE to make this **20** 

### assumption? **21** 

### FACILITATOR BROOKMAN: That's an **22** 

### interesting question. Finish making the

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### statement. Is it a reasonable assumption that **2** 

### the increased costs - **3** 

### MR. YOUNG: Yes. The increased **4** 

### cost of the more efficient BVM equipment can **5** 

### be passed on to the party that pays the energy **6** 

### cost. **7** 

### FACILITATOR BROOKMAN: How do **8** 

### these leasing or provisional interest **9** 

### typically work? Is that plausible? Louis? **10** 

### MR. STARR: I had a question. **11** 

### FACILITATOR BROOKMAN: Let's try **12** 

### that one first, though. Can we get a response **13** 

### on that? **14** 

### MR. HIEB: Larry Hieb from **15** 

### SandenVendo. If I had to give an opinion, it **16** 

### would be that they are not passed, or these **17** 

### are marketing equipment B- they are trying to **18** 

### promote their product, trying to get it out to **19** 

### the consumer. And that price point is set by **20** 

### the market, so I would say it's not passed on **21** 

### to the actual user of the equipment. **22** 

### FACILITATOR BROOKMAN: If the

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### 1 

### beverage -- if the BVM is provided to the **2** 

### market, they are going to have a cost **3** 

### structure that doesn't depend as much on **4** 

### variability and variation among those **5** 

### marketplaces. So the potential for **6** 

### passthrough of savings is not going to be **7** 

### there. Louis? **8** 

### MR. STARR: So my understanding is **9** 

### one of the large bottlers actually has the **10** 

### price of electricity in their product. So, **11** 

### therefore, it is no longer a split incentive **12** 

### as much, but maybe you're -- I don't know who **13** 

### -- I think I heard that the last time I was **14** 

### here in June of whatever. So some have a way **15** 

### of capturing the cost, but not everybody wants **16** 

### it -- **17** 

### FACILITATOR BROOKMAN: Yes. It's **18** 

### an interesting question. I don't know how **19** 

### these business arrangements typically work. **20** 

### Okay. Final comments on this **21** 

### request? Okay. **22** 

### MR. YOUNG: DOE always welcomes any

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### 1 

### written comments on these things, too. **2** 

### The next thing that is required is **3** 

### to assess the energy efficiency in the base **4** 

### case. So this is the distribution of **5** 

### efficiencies that are in the market in the **6** 

### absence of any type of standard. So, and this **7** 

### is -- DOE estimated this based upon the **8** 

### models, likely B- energy use analysis based on **9** 

### the models that are available on the **10** 

### marketplace currently, in the CCMS database **11** 

### and the ENERGY STAR database. And a similar **12** 

### sort of thing, estimated 92 percent of BVMs in **13** 

### 2019 would be ENERGY STAR, and that the **14** 

### distribution of models that we see on the **15** 

### market currently would be similar to the **16** 

### distribution we see in 2019, in terms of how **17** 

### they fit into that efficiency level. **18** 

### So this leads to the next request **19** 

### for comment, Issue 4.12. Should DOE continue **20** 

### to use the CCMS and ENERGY STAR databases to **21** 

### estimate efficiencies of Class A and B **22** 

### equipment shipments weighted by assumed ENERGY

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### STAR compliant to 93 percent for each? And **2** 

### then, initial -- something I didn't mention in **3** 

### the previous slide is that for combination **4** 

### equipment, DOE estimated that all products on **5** 

### the market would give a baseline efficiency **6** 

### level. And so is that a reasonable assumption **7** 

### to make? **8** 

### FACILITATOR BROOKMAN: Any **9** 

### comments here? Sometimes we have heard **10** 

### previously the other products,that gee, we **11** 

### have already squeezed a lot of efficiency out, **12** 

### and there is not much head room there. **13** 

### MR. HIEB: Yes. Larry Hieb for **14** 

### SandenVendo. I would say that may be the case **15** 

### with the existing products, but there are **16** 

### developments that we have in a way where we **17** 

### are struggling to meet basic DOE levels with **18** 

### certain refrigerants and things that we are **19** 

### being requested to move to. **20** 

### And, therefore, I would expect **21** 

### that it would not be continuing at the 93 **22** 

### percent level. If anything, that trend may

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### 1 start to reverse. **2 FACILITATOR BROOKMAN: Got you. 3 Thank you. Okay. Additional thoughts on**  **4 this? Okay. So that's probably enough at 5 this point. Additional comments here? Okay.**  **6 MR. YOUNG: So these are example 7 results that come out of the LCC analysis. I**  **8 only have one set of tables here, but all the 9 rest of the tables are in the TSD chapter and**  **10 they can be looked at, as well as the 11 executive summary.**  **12 And so the values that -- you get 13 a set of columns going from installed costs**  **14 through to life-cycle cost and into the 15 average life-cycle savings, and each of these**  **16 is an average, or almost all of these are 17 averages, but the important thing to note is**  **18 that they are based upon a distribution. So 19 if we take a look at LCC savings, say for EL**  **20 5, it's an average of $200, and the 21 distribution of those actual LCC savings for**  **22 all the sample customers is shown below.**

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### So the mean is at $200, the red **2** 

### line, but it's based upon a distribution where **3** 

### some customers save a whole lot and others **4** 

### save less. And there is even some, in this **5** 

### case one percent of customers, who actually **6** 

### have no -- have negative savings. So they **7** 

### lose over the lifetime of the product. So **8** 

### that's the overall nature of the results that **9** 

### come out of this analysis. **10** 

### Any questions on that? **11** 

### FACILITATOR BROOKMAN: Are you **12** 

### familiar with these distribution curves, like **13** 

### this -- you following this? **14** 

### MR. YOUNG: Okay. So that's the **15** 

### end of the LCC and PBP analyses. We'll move **16** 

### on to shipments analysis, unless anyone has **17** 

### any followup comments for this. **18** 

### FACILITATOR BROOKMAN: How many **19** 

### more slides do we have? **20** 

### MR. YOUNG: We have approximately **21** 

### -- so we're at 147. I think we might have -- **22** 

### MS. WIDDER: Twenty.

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### MR. YOUNG: Yes, something like **2** 

### that. **3** 

### FACILITATOR BROOKMAN: Do you want **4** 

### to take a really quick break? Just 10 **5** 

### minutes? **6** 

### MR. YOUNG: Sure. **7** 

### FACILITATOR BROOKMAN: Just get up **8** 

### and stretch and make a quick dash to the **9** 

### restroom. Yes? It's 2:53, almost 2:55. **10** 

### We'll resume at five minutes after three. **11** 

### We're close to the end here, but let's finish **12** 

### strong. Five minutes after we'll resume. **13** 

### Make sure to wear your badges out there in the **14** 

### hallway. **15** 

### (Whereupon, the above-entitled **16** 

### matter went off the record at 2:54 p.m. and **17** 

### resumed at 3:09 p.m.) **18** 

### FACILITATOR BROOKMAN: Okay. **19** 

### Let's start. When we left off, Scott was on **20** 

### shipments analysis. Scott, proceed, please. **21** 

### MR. YOUNG: All right. So now **22** 

### we're doing shipments analysis. The overall

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### 1 

### idea of the shipments analysis is to estimate **2** 

### how many shipments of these units happen in **3** 

### 2019 and for the next 30 years after that **4** 

### point, identify how that changes with possible **5** 

### efficiency, with the possible standards, and **6** 

### also how that is distributed among different **7** 

### efficiency levels and on different product **8** 

### classes. **9** 

### The overall method that we used is **10** 

### so -- DOE relied on ENERGY STAR reports in **11** 

### terms of what market penetration the ENERGY **12** 

### STAR product has, so they put out a report **13** 

### indicating how many ENERGY STAR products are **14** 

### sold approximately and what they estimate the **15** 

### penetration of those ENERGY STAR products are **16** 

### in the market. **17** 

### And in this case, we are only **18** 

### dealing with replacement shipments in this **19** 

### case. We are looking at the cost. It looked **20** 

### like the overall stock is likely going down, **21** 

### and so assumed that all shipments are largely **22** 

### just for replacement.

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### 1 

### And so there are three main **2** 

### inputs. One of them is the replacement rate. **3** 

### It comes out of the lifetime of the products. **4** 

### The historical shipments, which is estimated **5** 

### based upon the ENERGY STAR market penetration **6** 

### reports. And then, estimates of shipments by **7** 

### equipment class. **8** 

### So, in this case, DOE estimated **9** 

### the combination machines are two percent of **10** 

### the total shipments market, one percent each **11** 

### for combo A and combo B, and then Class A and **12** 

### Class B are each 49 percent of the market. **13** 

### And DOE also assumed that those **14** 

### market shares are assumed to be the same or -- **15** 

### in 2019 through 2048. **16** 

### This is the request for comment, **17** 

### Item 4.8. Are DOE's assumptions of fixed **18** 

### market share shipment for equipment classes **19** 

### reasonable? So 49 percent Class A, 49 percent **20** 

### Class B, one percent combo A, and one percent **21** 

### combo B. Are those numbers reasonable? And **22** 

### also, reasonable to have those the same or --

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### for 2019 through -- **2** 

### FACILITATOR BROOKMAN: What do you **3** 

### think? Do we know this at this point? We **4** 

### don't know or you can't comment or -- **5** 

### MR. YOUNG: No, I don't. I don't **6** 

### know. **7** 

### FACILITATOR BROOKMAN: Okay. **8** 

### MR. YOUNG: I don't know. **9** 

### FACILITATOR BROOKMAN: You don't **10** 

### know. Our industry members present don't **11** 

### know. Okay. **12** 

### MR. YOUNG: And so the first **13** 

### estimate is the base case shipments **14** 

### projection. So this is the estimated **15** 

### shipments in the absence of any new standard. **16** 

### And so DOE estimated that there would be a **17** 

### constant shipment rate of 100,000 units per **18** 

### year shipped from 2013 through 2019 to 2048. **19** 

### This was based upon feedback that the market **20** 

### had -- the shipment -- the stock had been **21** 

### declining, and then also based upon what was **22** 

### estimated by ENERGY STAR reports in terms of

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### 1 

### the number of shipments of new products. **2** 

### And then we estimated this -- used **3** 

### the base case distribution of models that were **4** 

### used in the LCC analysis, and assumed that **5** 

### that is the same for 2019 through 2048. **6** 

### So there's three requests for **7** 

### comment here. Item 4.6, will refurbishment **8** 

### result in improvements in annual energy use in **9** 

### 2019 or later? And, if so, what is the nature **10** 

### of this? Is that -- should refurbishments be **11** 

### expected to decrease the annual energy use? **12** 

### Okay. Item 4.7, should DOE **13** 

### continue to use an assumption of flat BVM **14** 

### shipments of 100,000 units per year starting **15** 

### in 2013? Is it reasonable that refurbishment **16** 

### -- DOE estimates that refurbished units remain **17** 

### in the same geographic location as they were **18** 

### when they were new? **19** 

### FACILITATOR BROOKMAN: And that **20** 

### assumption of 100,000 units, that goes on for **21** 

### 30 years? **22** 

### MR. YOUNG: Yes.

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### FACILITATOR BROOKMAN: Including **2** 

### the constant refurbishment. What do you **3** 

### think, is that a sensible B- Or do you all **4** 

### think this market is going to grow? **5** 

### PARTICIPANT: It sounds quite high **6** 

### to me. **7** 

### FACILITATOR BROOKMAN: It sounds **8** 

### high to you? **9** 

### PARTICIPANT: Yes. **10** 

### FACILITATOR BROOKMAN: Okay. **11** 

### Okay. **12** 

### PARTICIPANT: We're talking about **13** 

### the North American market. **14** 

### FACILITATOR BROOKMAN: I think so, **15** 

### yes. **16** 

### MR. YOUNG: Yes. This is for **17** 

### everything that is manufactured for sale in **18** 

### the U.S. **19** 

### FACILITATOR BROOKMAN: Yes. Okay. **20** 

### Thank you, Larry. **21** 

### MR. YOUNG: That includes things **22** 

### that are also import -- manufactured overseas

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### 1 

### and imported to the U.S. **2** 

### FACILITATOR BROOKMAN: Imported **3** 

### for distribution -- sale and distribution in **4** 

### the U.S. Okay. **5** 

### MR. YOUNG: And then, Item 4.13, **6** 

### is DOE's assumption reasonable of the **7** 

### efficiency level market share distributions **8** 

### will remain constant beyond 2019? So based **9** 

### upon what they are currently in 2013? All **10** 

### right. **11** 

### FACILITATOR BROOKMAN: Louis? **12** 

### MR. STARR: I have a question **13** 

### about -- Item 4.6. Are some of the **14** 

### refurbishments you are thinking about, like **15** 

### switching out units that are going to be -- **16** 

### when are those units -- or is it existing **17** 

### units now that are going to refurbished before **18** 

### '19 or -- 2019? **19** 

### MR. YOUNG: This would be the unit **20** 

### -- we are -- in this case, we were largely **21** 

### looking at units that are sold in 2019 and **22** 

### refurbished at some time after that period of

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### time. **2** 

### MR. STARR: Okay. **3** 

### MR. YOUNG: And so in this case, **4** 

### though, there had been indication that for **5** 

### some units as part of the refurbishment, there **6** 

### may be a change in lighting technology as part **7** 

### of that refurbishment from fluorescent to some **8** 

### type of an LED, and that would affect energy **9** 

### use. **10** 

### But the penetration of LED is so **11** 

### high by 2019 that we felt that there -- it **12** 

### would B- added that extra -- this is an unmet **13** 

### and unneeded complication to assume that there **14** 

### was any change in the overall efficiency of **15** 

### the product after that point. But if anyone **16** 

### has any knowledge on that or thoughts on that. **17** 

### Okay. So the additional thing is **18** 

### projecting the share of shipments that -- by **19** 

### refrigerant type, and so DOE estimated that **20** 

### CO2 refrigerants, although they are a small **21** 

### portion of the market now, they would be **22** 

### ramped up to the point at which they would get

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### 50 percent of the overall market by 2020. And **2** 

### in this case, we are not considering any **3** 

### hydrocarbon refrigerants, as we discussed. **4** 

### And also assuming that this share of **5** 

### refrigerant -- of the refrigerant distribution **6** 

### is the same across all efficiency levels. **7** 

### And so this leads to Item 4.9, **8** 

### should DOE assume that shipments of CO2 **9** 

### refrigerant-based beverage vending machines **10** 

### reach 50 percent of total market share by **11** 

### 2020? I know this applies equally to all **12** 

### equipment classes. **13** 

### FACILITATOR BROOKMAN: Yes, **14** 

### please. Jim. **15** 

### MR. COLLINS: Jim Collins, AMS. **16** 

### Certainly, if EPA gets its way with the new **17** 

### SNAP rule, HFCs will be gone in 2016. **18** 

### MR. YOUNG: Right on. As we talked **19** 

### about earlier, we're dealing with only the **20** 

### things that are currently on the market. **21** 

### FACILITATOR BROOKMAN: Yes. Louis? **22** 

### MR. STARR: So is it part of the

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### 1 

### -- I think from the TSD, the reason you're **2** 

### coming up with 50 percent, isn't that -- is **3** 

### that Coca-Cola or one of those market shares, **4** 

### they are trying to reach a goal, and so that's **5** 

### the basis of that number? **6** 

### MR. YOUNG: Yes. That is the **7** 

### basis of that. Since they had an indication **8** 

### that they would have everything by 2015 all **9** 

### new that would be CO2. So in this case I **10** 

### believe what we estimated was that they would **11** 

### be a little bit behind that. They might get **12** 

### that until 2017. **13** 

### FACILITATOR BROOKMAN: And so **14** 

### thanks for those comments. **15** 

### MR. YOUNG: And so the last part **16** 

### of the shipments analysis is estimating what **17** 

### impact the possible standard would have on **18** 

### shipments, and so this uses the same data as **19** 

### used on the base case shipments. The **20** 

### additional -- addition is looking at the **21** 

### elasticity of demand as a result of the price. **22** 

### So as you increase the price of the BVM, you

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### 1 

### might expect that there might be some drop in **2** 

### shipments for some of those. **3** 

### And so that was what was added. **4** 

### And, as you can see, the table on the bottom **5** 

### -- for a lot of the refrigerant or efficiency **6** 

### levels, there is no added or no change in **7** 

### shipments projected, but above these **8** 

### efficiency levels shown in the table it is **9** 

### considered that there will be an effect on **10** 

### shipments. So a reduction of shipments above **11** 

### those efficiency levels, for that efficiency **12** 

### level and above. **13** 

### So, say, for Class A, we would **14** 

### assume for efficiency, if there were standards **15** 

### on efficiency level 1, 2, or 3, the shipments **16** 

### would be the same as if there were no -- **17** 

### there's no standard. But if there is a **18** 

### standard set at efficiency level 4 or above, **19** 

### then that would reduce the shipments overall. **20** 

### And, yes, that's the end of the **21** 

### shipments. So the shipments analysis, the **22** 

### results are in the TSD chapter to look at, and

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### 1 

### actually bring up -- when you consider the **2** 

### shipments analysis. So any question on the **3** 

### shipments analysis? Okay. **4** 

### So now we are on to the last major **5** 

### section, which is the national impact **6** 

### analysis. And this looks at the economic **7** 

### impact of standards from the national point of **8** 

### view. And so we are looking at the national **9** 

### net energy savings, and the net present value **10** 

### of a potential standard to customers across **11** 

### the nation. **12** 

### So overall there are several steps **13** 

### in here. One of them is developing an annual **14** 

### series of economic and energy impacts, and so **15** 

### looking at -- for every year for 30 years of **16** 

### shipments, what would be the energy impacts of **17** 

### a potential standard, and what would be the **18** 

### economic impacts of that standard? **19** 

### And then, discounting those, so **20** 

### back to the present value and adding them all **21** 

### up. So we get the net value for energy **22** 

### savings and net value for present value.

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### 1 

### And they're bringing the results **2** 

### from the LCC analysis, plus the results from **3** 

### the shipments model, to get those two values **4** 

### of -- and we're looking at across 30 years of **5** 

### shipments, so we're looking at products **6** 

### shipped starting in 2019 through products **7** 

### shipped in 2048, and to the end of the lives **8** 

### of the last products sold in 2048. **9** 

### Here is an overall schematic **10** 

### diagram just of the process for the national **11** 

### energy savings, and so you can see you have **12** 

### started with the shipments model, stopped, and **13** 

### then let's take the base case projection first **14** 

### on the left, and you go for shipments in 2019, **15** 

### shipments in 2020, shipments in '21. **16** 

### For each of those, we look at the **17** 

### change in energy use for -- the base case **18** 

### energy use that would occur if there were no **19** 

### standard put in place. And then we add those **20** 

### up to get a cumulative energy use across those **21** 

### for all 30 years of shipments, and we do the **22** 

### same thing for a given standard -- potential

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### standard level. For 30 years, what would be **2** 

### the total energy use? **3** 

### And then, we subtract those two, **4** 

### and we apply a factor to go from site energy **5** 

### to a full fuel cycle energy value, and from **6** 

### that we get a national energy savings. Does **7** 

### that make sense? **8** 

### And then, here is also a schematic **9** 

### going from there, from the energy to the **10** 

### actual NPV value. So the same thing, you **11** 

### start with the shipments analysis, and we take **12** 

### the -- for both base and standards case, we **13** 

### take an energy cost, a maintenance and repair **14** 

### cost, and the equipment cost together. And **15** 

### from that, we can get a cumulative operating **16** 

### cost savings for customers, and then we take **17** 

### the cumulative total increase in equipment **18** 

### prices for customers. And you can subtract **19** 

### those two and discount them back to get a net **20** 

### present value at the present time of a **21** 

### potential standard. **22** 

### MR. STARR: So the refurbishment

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### 1 

### is in the maintenance and repair cost, right? **2** 

### MR. YOUNG: Yes. **3** 

### MR. STARR: Okay. **4** 

### MR. YOUNG: As part of doing this, **5** 

### we need to calculate sort of shipment-weighted **6** 

### efficiency levels and shipment-weighted levels **7** 

### of cost and energy. And so that -- so that we **8** 

### can adequately compare different numbers or **9** 

### different changes in shipments. **10** 

### And then, we use the market share **11** 

### efficiency data, so we use the base case **12** 

### efficiency distribution we talked about in **13** 

### both the energy use and the LCC analysis to **14** 

### look at what the typical set of efficiency **15** 

### levels are on the market. And then we assumed **16** 

### that if any of those levels are removed, then **17** 

### all of the market share that are -- that is no **18** 

### longer available due to a standard gets rolled **19** 

### up into the next closest level. **20** 

### So if we say that we have, say, **21** 

### take an example, five percent of the market at **22** 

### EL 0, and that there is a standard place at

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### 1 

### efficiency level 1, then that means that EL 0 **2** 

### is no longer available on the market. And so **3** 

### we assume that all customers who would have **4** 

### bought EL 0 before now buy EL 1. Does that **5** 

### make sense? So that's what we call our roll**6** 

### up scenario. **7** 

### Now, we get to our standard -- the **8** 

### efficiency level 2, then all the people who **9** 

### would have bought efficient level 0 or 1 now **10** 

### buy efficiency level 2. Yes? **11** 

### MR. STARR: So that slide that **12** 

### seemed to be -- I think it was page 4, I don't **13** 

### remember. The one that had everybody debating **14** 

### whether the cost of the machines and the **15** 

### average energy use, it seemed like it sort of **16** 

### flattened out, so that if you went from EL 1 **17** 

### you might not -- you might just key on up to **18** 

### EL 4, instead of just to EL 2. Do you think **19** 

### that that would really -- how might that **20** 

### impact that? I don't know. I assume you're **21** 

### not the one that developed that or are you? **22** 

### MR. YOUNG: No. No. We didn't --

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### 1 

### we don't -- so the engineering analysis **2** 

### relative to the cost efficiency curves, and **3** 

### then we take the cost-efficiency curves and **4** 

### use that to estimate what the impact would be **5** 

### for -- economically for our customers. **6** 

### MR. STARR: Do you feel like they **7** 

### -- someone did -- in other words, if it only **8** 

### cost a dollar to jump four efficiency levels, **9** 

### I would -- if I was a company, I would **10** 

### probably pay that extra dollar to go up an **11** 

### extra couple levels. Do you think as far as **12** 

### what you just explained, that in light of that **13** 

### you might want to adjust that, or is it -- **14** 

### what's your thoughts about that? **15** 

### MR. YOUNG: Let me think -- is **16** 

### what you're saying is that you think that it **17** 

### may not be accurate to say that everyone who **18** 

### would normally be at zero would just go to **19** 

### one, that they might actually -- some of them **20** 

### might go to two or three possibly. **21** 

### So if that were the case, then we **22** 

### would see a -- we would potentially see a

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### 1 

### larger impact, because some people would go to **2** 

### more energy savings. In this case, what we've **3** 

### taken here is a very conservative approach, **4** 

### assuming that people just go to the next level **5** 

### and that's all that you -- we don't -- we're **6** 

### not taking any credit for people optionally **7** 

### choosing to go to some higher level. We're **8** 

### only saying that they are going to go to the **9** 

### minimum -- to make the minimum change that **10** 

### they need to to -- **11** 

### MR. STARR: So to minimize cost, **12** 

### they just go to the closest level to save a **13** 

### dollar. Okay. **14** 

### MR. YOUNG: It's based upon the **15** 

### base case distribution. They have some **16** 

### indication that they chose to lower costs. **17** 

### So these are all of the inputs. **18** 

### Going to national impact analysis, I won't **19** 

### discuss all of them, but basically a full list **20** 

### of all of the costs -- repair and maintenance **21** 

### costs, annual energy use, the base case **22** 

### efficiencies, the standard case forecasted

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### efficiencies, the energy prices, the full fuel **2** 

### cycle factors, discount rates, and present **3** 

### year. **4** 

### So overall this is -- these are **5** 

### just a table of the national energy savings **6** 

### for each of the products analyzed across all **7** 

### the efficiency levels. And so you can see, as **8** 

### -- we were talking about as you go to a higher **9** 

### and higher efficiency level, you go to lower **10** 

### energy use, and so it makes sense in this case **11** 

### that the more and more energy savings -- **12** 

### energy savings, understanding, just increase **13** 

### as you go to higher and higher efficiency **14** 

### levels. This doesn't take cost into account **15** 

### at all. **16** 

### And then, as long as no one has **17** 

### any questions on net energy use, I'll move on **18** 

### to the -- this is an example of the net **19** 

### present value results. And so this is -- this **20** 

### B- basically B- diagram shows a schematic of **21** 

### what is actually measured in the NPV analysis. **22** 

### So there is kind of two main components here.

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### One of them is the blue, and that's the **2** 

### operating cost savings. And so any savings **3** 

### are positive, go up -- up in terms of dollars **4** 

### from the zero axis. **5** 

### And you can see over the course of **6** 

### years, from 2019 through to 20 -- it looks **7** 

### like 2060 or so, you can definitely see that **8** 

### there are considerable operating cost savings, **9** 

### and they ramp up, and then they ramp down as **10** 

### the product that was sold in this analysis **11** 

### dies. **12** 

### And then, you can see below the X**13** 

### axis, you see the yellow bars and those are **14** 

### the increases in installed costs. So the **15** 

### extra amount that customers have to pay in **16** 

### order to get this more efficient -- these more **17** 

### efficient appliances. **18** 

### And so what we do is across each **19** 

### of those years we subtract the yellow from the **20** 

### blue, and that gives you the red line. That's **21** 

### the net value in each of those years, and then **22** 

### those are discounted back to the present year.

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### And that gives you the sum of the net present **2** 

### value. Does that make sense to everyone? **3** 

### So I don't have all of the **4** 

### analyses -- all the results in here, but the **5** 

### results are in that book of supporting **6** 

### documents. **7** 

### So that's the end of the national **8** 

### impact analysis. Does anyone have any **9** 

### questions on the national impact analysis? **10** 

### Okay. **11** 

### So now we'll move on the next **12** 

### steps. So the next steps -- the next step is **13** 

### the NOPR stage, and in that stage the first **14** 

### thing that's done is revise all of the things **15** 

### that were done in the preliminary analysis. **16** 

### So that's on the far left side, revisions of **17** 

### the engineering analysis, life-cycle cost, **18** 

### payback period, national impact analysis. **19** 

### And then, there are a number of **20** 

### additional analyses that are done, and I'll go **21** 

### through each of these very shortly. One of **22** 

### them is a subgroup analysis done on the

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### life-cycle cost, looking at potential **2** 

### subgroups in the customer population who might **3** 

### be adverse -- or might be disproportionately **4** 

### affected. And there is a manufacturer impact **5** 

### analysis, which you guys -- you already talked **6** 

### about. **7** 

### Then, there is an emissions **8** 

### analysis and monetization of emission **9** 

### reduction benefits, utility impact analysis, **10** 

### employment impact analysis, and regulatory **11** 

### impact analysis. Does anyone have any **12** 

### questions on these sets of analyses that will **13** 

### be done at the NOPR stage? Okay. Great. **14** 

### Okay. So that is I think all of **15** 

### the -- **16** 

### FACILITATOR BROOKMAN: Yes. Before **17** 

### we turn it back to Ron to talk about this **18** 

### final slide, as we promised you at the outset, **19** 

### anybody that wishes to make final comments, **20** 

### anything that you think hasn't been said or **21** 

### summarized sufficiently, now is the **22** 

### opportunity for anybody that wishes to make

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### closing remarks. **2** 

### Okay. Yes, Scott? **3** 

### MR. MITCHELL: Scott Mitchell, **4** 

### Southern California Edison. Just wanted to -- **5** 

### I don't think I stated it earlier, but the **6** 

### ASHRAE Committee, SPC 32.1, has a website **7** 

### where we have been keeping all of the **8** 

### information that we have produced thus far. **9** 

### So there's a written record of all of the **10** 

### issues that we have been talking about, and **11** 

### it's publicly available on the ASHRAE website. **12** 

### I don't have the exact website **13** 

### here with me, but you can find it searching **14** 

### through ASHRAE.org and just search 32.1. I **15** 

### think it comes up pretty quickly. **16** 

### FACILITATOR BROOKMAN: 32.1? **17** 

### MR. MITCHELL: Yes. 32.1. And if **18** 

### anybody is interested in joining in that **19** 

### process, you can contact me and I can get all **20** 

### of the information out to them. **21** 

### FACILITATOR BROOKMAN: Okay. **22** 

### Good. Thank you. Ron?

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### MR. MAJETTE: Okay. Just in **2** 

### conclusion now, I just want to make sure **3** 

### everybody knew we do, one, appreciate your **4** 

### written comments. I noticed that we had a **5** 

### couple of verbal comments today, but it B- I **6** 

### have a feeling that you guys are putting your **7** 

### thoughts together and we are going to get a **8** 

### writing campaign coming in. **9** 

### Just wanted to make sure you knew **10** 

### that -- refer to Docket Number EERE-2013-BT**11** 

### STD0022. The presentation today, the test **12** 

### procedure side and the standards side, both of **13** 

### those are listed as one file, and they are in **14** 

### both documents. So it doesn't matter which **15** 

### one you go into, you will be able to see this **16** 

### presentation today. **17** 

### Also, when you are emailing, I **18** 

### know from time to time you may get the urge to **19** 

### directly email either General Counsel or **20** 

### myself, but please try to use the email **21** 

### address provided in the presentation. That **22** 

### way, we can keep an accurate account of all of

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### the comments that come in. And we have **2** 

### listed, if you wanted to mail or courier any **3** 

### of your comments, you would give those to Ms. **4** 

### Brenda Edwards. We have the two addresses **5** 

### there for you to do that. **6** 

### Don't forget, comment period **7** 

### closes October 7th. **8** 

### MS. BUTLER: For the standards. **9** 

### MR. MAJETTE: For the standards, **10** 

### yes. Any other questions or -- **11** 

### MR. COLLINS: I'd just note here, **12** 

### again, there is a disparity between this **13** 

### presentation here and the Federal Register. **14** 

### That email address is different. How do I **15** 

### reconcile that? **16** 

### MR. MAJETTE: I'm sorry. I'm not **17** 

### looking at the standards. What do you have in **18** 

### the standards, the email address? **19** 

### MR. COLLINS: This is 0045, and in **20** 

### the presentation it's 0022. **21** 

### MS. BUTLER: That's probably in **22** 

### the test procedure.

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### MS. WIDDER: Yes. And, actually, **2** 

### I'll make that comment also. If it's possible **3** 

### -- and I recognize it might be a little bit **4** 

### more work -- to keep comments on the test **5** 

### procedure separate and emailed to the test **6** 

### procedure docket, which is listed in the first **7** 

### -- the blue-colored slide material that we **8** 

### had, and then the comments on the standard **9** 

### separately to this 0022 email that you **10** 

### referenced, Jim. **11** 

### We both are -- they are separate **12** 

### dockets, and they are separate rulemakings, **13** 

### even though they are happening in parallel. **14** 

### So it just helps us track them better. **15** 

### MR. COLLINS: And the 0022 is due **16** 

### earlier. **17** 

### MS. WIDDER: It is due earlier. **18** 

### So do that first. **19** 

### MR. MAJETTE: Okay. If we don't **20** 

### have any other questions, I want to thank **21** 

### everybody for coming out and your indulgence **22** 

### for the entire day. We really appreciate it.

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### Thank you. **2** 

### FACILITATOR BROOKMAN: Safe **3** 

### travels. **4** 

### (Whereupon, the above-entitled **5** 

### matter went off the record at 3:42 p.m.) **6 7**  **8 9**  **10 11**  **12 13**  **14 15**  **16 17**  **18 19**  **20 21**  **22**202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

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This is to certify that the foregoing transcript

In the matter of:

Before:

Date:

Place:

was duly recorded and accurately transcribed under my direction; further, that said transcript is a true and accurate record of the proceedings.

----------------------- Court Reporter 146

Refrigerated Beverage Vending Energy Conservation Standards

US DOE

09-16-14

Washington, DC