1

U.S. DEPARTMENT OF ENERGY

PUBLIC MEETING ON ENERGY CONSERVATION STANDARDS

FOR RESIDENTIAL DISHWASHERS, DEHUMIDIFIERS, AND

COOKING PRODUCTS, AND COMMERCIAL CLOTHES WASHERS

Holiday Inn Capitol

550 C Street, SW

Washington, D.C. 20024

9:00 a.m.

Thursday, December 13, 2007

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I N D E X

AGENDA: PAGE:

Welcome 3

Opening Remarks,

Agenda Review

James Raba

Introductions and 4

Rulemaking Overview 15

Stephen Witkowski

Comments from Participants 19

Engineering Analysis 26

Judith Reich

Preliminary Manufacturer Impact Analysis 92

Constantin von Wentzel

Life-Cycle Cost Analysis 113

Gregory Rosenquist

National Impact Analysis 164

Gregory Rosenquist

NOPR Analyses and Next Steps 195

Constantin von Wentzel

Gregory Rosenquist

Microwave Oven Analysis 213

Constantin von Wentzel

Final Discussions 235

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

2 (9:00 a.m.)

3 WELCOME

4 MR. RABA: Good morning. This meeting is on

5 methodology for the Advanced Notice of Proposed

6 Rulemaking Analysis and explains plans for future

7 analysis in support of its Notice of Proposed

8 Rulemaking later on.

9 That's the next step in the rulemaking

10 process, but equally important is your participation

11 and input from each one of you is important to gather

12 that up in both your oral and written comments. You'll

13 have opportunity today to speak and submit written

14 comments after the meeting.

15 Now, what we need to hear from you is

16 feedback and information about what we're presenting

17 today, any data you can provide to support the

18 rulemaking process and the views you have and comments

19 on our methodologies and assumptions that are going to

20 be put forward today and the data sources. That would

21 be most helpful to move the process forward so we can

22 gather the information needed for later on down the

23 road as the proposed rule is then available and the

24 final rule in the future. So, there's ample time to do

25 those things. So, you're important and participation

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1 is quite valuable.

2 And really moreover, it's not a time to solve

3 problems. We'd like to do that, sure, but that will

4 come, but really like to listen, to gather information,

5 to hear everybody's views and encourage participation.

6 So not to worry. The rulemaking process takes time.

7 We want to get it right. We want to make it a win-win

8 situation for everybody, so we want everybody to be

9 heard and to have ample opportunity.

10 Now, my name is Jim Raba. I'll be your

11 facilitator for today. I will be your neutral servant.

12 I'll not evaluate or contribute any ideas of my own,

13 have none anyway, but I'll try to focus our common

14 energy on our common task, that is, to encourage

15 participation and gather information.

16 OPENING REMARKS , INTRODUCTIONS AND

17 AGENDA REVIEW

18 MR. RABA: Now, with our welcome, I'd also

19 introduce yourselves. I see a lot of new faces here

20 today. So, let's get acquainted. We'll go around the

21 room and introduce ourselves. We'll start here to my

22 right with Steve Witkowski, the project manager. Next

23 to Steve is?

24 MR. LEWIS: Ron Lewis, DOE.

25 MR. RABA: One thing, too. I would ask you,

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1 please, to make sure your microphone is on and get

2 close to the mike and speak clearly your name and the

3 company or the organization with which you are

4 affiliated, so we can -- for the record, our court

5 reporter will make a transcript of this record and

6 needs to hear that for the tape.

7 Also, if you're in the back of the room,

8 there are microphones on either side in the back. You

9 may come up, come forward, state your name and your

10 affiliation.

11 So again, please get started. Let's start on

12 this side of the room.

13 MR. DeLAURA: Good morning, everybody. My

14 name is Lance DeLaura. I'm with Southern California

15 Gas Company and also San Diego Gas and Electric

16 Company. I'm the National Codes and Standards Manager.

17 MR. RABA: Welcome.

18 MR. HOLT: I'm John Holt. I'm Senior Manager

19 of Generation and NRECA here locally, and I handle our

20 appliance efficiencies.

21 MR. CALABRESE: Dave Calabrese with the

22 Association of Home Appliance Manufacturers.

23 MR. HOYT: J.B. Hoyt, Whirlpool Corporation.

24 MR. BALLO: Tim Ballo, Earth Justice.

25 MR. BRUNDAGE: Don Brundage, Southern

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1 Company.

2 MS. BRADY: Marty Bank, representing GE

3 Consumer Industrial.

4 MR. EDWARDS: Mike Edwards, BSH Home

5 Appliances.

6 MR. MANTHEI: Phil Manthei, Alliance Laundry

7 Systems.

8 MR. deLASKI: Andrew deLaski, Appliance

9 Standards Awareness Project.

10 MR. ECKMAN: Tom Eckman, Northwest Power and

11 Conservation Council.

12 MR. CABOT: Paul Cabot with the American Gas

13 Association here in Washington, D.C. I'm the

14 Administrator for the National Fuel Gas Code.

15 MR. STAS: Eric Stas, DOE.

16 MS. PINTO: Francine Pinto, DOE.

17 MR. WITKOWSKI: Steve Witkowski, DOE.

18 MS. McGORY: Laura McGory, Lawrence Berkeley

19 National Laboratory.

20 MR. STODDARD: Steve Stoddard, Navigant

21 Consulting.

22 MR. BATTAGLIA: James Battaglia, Navigant

23 Consulting.

24 MR. SWANK: Doug Swank, Whirlpool Appliance.

25 MR. TOFNEY: Dick Tofney, Whirlpool

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1 Appliance.

2 MS. LANE: Cynthia Lane, American Waterworks

3 Association.

4 MR. BURNES: Matt Burnes, Alliance Laundry

5 Systems.

6 MR. BROUGHTON: John Broughton, Virginia

7 Division of Energy.

8 MR. McNEARY: Phil McNeary, BNR

9 International.

10 MR. SCAGGS: Jacob Scaggs, DNR International.

11 MR. RABA: Gee, you're all good sports.

12 MS. REICH: Judith Reich, Navigant

13 Consulting.

14 MR. von WENTZEL: Constantin von Wentzel,

15 Navigant Consulting.

16 MR. RIVEST: Mike Rivest, Navigant

17 Consulting.

18 MR. ROSENQUIST: Greg Rosenquist, Lawrence

19 Berkeley National Laboratory.

20 MR. McMAHON: Jim McMahon, Lawrence Berkeley

21 National Lab.

22 MR. RABA: Well done. Anybody I missed?

23 (No response.)

24 MR. RABA: Thank you. As I said, that's

25 important to know who you are. The court reporter will

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1 prepare a transcript and this will be available to you

2 in about two weeks' time. So, if you would like a copy

3 of the transcript at the close of the meeting or

4 something, make arrangements with the court reporter to

5 get a copy sent to you. Okay? That's good.

6 I'm going to do a brief agenda review. We're

7 going to talk about some ground rules and housekeeping

8 matters and we'll go straight into the presentations.

9 Now, I request you hold any general

10 statements until we get through some of the comment

11 periods here, too, but for the record, any comments

12 after we go through the agenda, there will be ample

13 opportunity for that, I'll show you on the agenda, for

14 that time.

15 Also, during the presentations, ask that you

16 would hold the questions until we have the

17 presentations given and there will be ample opportunity

18 with the presentation to ask your questions.

19 You'll see on your slides, there's some

20 special language there in blue italicized. After the

21 presentations, there will be some questions and room

22 for comment, too. So, our presenters will then invite

23 comments after they've given their presentation.

24 As I say, you still have copies of the agenda

25 and other materials as you entered the room, and as I

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1 understand, also, following our public meeting today,

2 the hard copies of the presentations that you have will

3 be available online on the DOE website. So, if you

4 don't like the paper, you can always download it later

5 on from the DOE website.

6 Now having said that, take a look at our

7 agenda today. We're in the Opening Remarks,

8 Introductions and Agenda Review area. After we have

9 our opening remarks, Steve Witkowski will give our

10 overview of the rulemaking process and then we'll

11 invite comments, general statements from you, the

12 participants.

13 These are kind of like overarching kind of

14 comments and statements to identify your key issues,

15 information that you would like to have presented of

16 general interest, and anything, any comments

17 overarching that you would have about the

18 methodologies, the assumptions we're using today, but

19 we'd like for you to keep it to about two to three

20 minutes, so you keep the presentations moving along.

21 There's a lot to cover today and we want to get it all

22 in for the benefit of your time.

23 So again, there will be ample opportunity

24 throughout the public meeting with each presentation to

25 ask questions, offer comments, information, and also

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1 those are in your handouts.

2 After that, later this morning, we'll have

3 the Engineering Analysis. Judith Reich will present

4 that and some time late in the morning, we'll see if we

5 can take a 10-or-15-minute break. We'll kind of work

6 that in. We'll try to stick to the schedule as much as

7 possible, ask for your cooperation, but, you know, if

8 we get on a topic and discussion flows, we'll keep it

9 going for the time.

10 So, we'll look for a break in the morning and

11 back to the Engineering Analysis in the late morning.

12 Judith will continue there, and Preliminary

13 Manufacturer Impact Analysis, Constantin von Wentzel

14 will present that.

15 So, right after that, somewhere in there,

16 around 12 noon, we'll look to break for lunch. I would

17 add that there is a restaurant. As you probably came

18 in the corridor down there of the hotel, you go out the

19 door, right/left, out that way, there's a restaurant.

20 There's a small coffee shop. There's also a Starbucks

21 wannabe down the far end of the building, also. Do

22 that.

23 Then come back about 1 o'clock. We'll do the

24 Life Cycle Cost Analysis, Gregory Rosenquist will do

25 that. National Impact Analysis, Greg again, and then

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1 when the presentations are finally done, the questions,

2 comments for each one, we'll go back. We'll take a

3 look at some of the things that we have looked at

4 before.

5 Now, if we have something that may want to

6 save for later on, it's going to hold that thought, we

7 want to keep -- we're going to keep that on a parking

8 lot over here of ideas and thoughts we may want to come

9 back to later on. So, any of those thoughts you want

10 to have, let us know and we'll put it up there. We

11 want to keep the discussion going and relevant to the

12 topics at hand.

13 So, in the afternoon, we'll look to do the

14 Notice of Proposed Rulemaking Analysis and the Next

15 Steps after today's public meeting. Microwave Oven

16 Analysis towards the end, next to last, and then Final

17 Discussions.

18 Any questions so far about the order of

19 agenda and how we'll proceed with that? Questions or

20 comments?

21 (No response.)

22 MR. RABA: Okay. Great. Thank you. We're

23 going to look here at some ground rules. We're going

24 to call them norms. Over the years, we've found that

25 people kind of adopt and get familiar with these kinds

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1 of things, kind of make things flow along much more

2 smoothly.

3 We'd like you to speak, as I say, clearly

4 into the microphone, state your name for the record so

5 the court reporter can take it down, and keep the focus

6 here in the presentations. So, we ask that you please

7 turn off your cell phones or if you would rather, put

8 them on the vibrate or stun or something else, and also

9 sidebar conversations, maybe if you need to -- thank

10 you. Take them outside. It's fine. Get up, walk out

11 and back, but again if there's a sidebar conversation,

12 I'd like to hold that to a minimum, if we could.

13 Listen as an ally. One of my favorites is

14 listen as an ally. Work on this together to solve, get

15 a win-win situation. So, as you present information,

16 listen to each presentation, but listen as an ally, and

17 we'll focus on the issues, not personalities, and it's

18 okay to disagree with things. We prefer that you

19 agree, but, you know, we're here to hear views and

20 gather information, and I'll be queuing persons to

21 speak. This way, we can continue to flow. Everybody

22 gets a chance to be heard. So, I'll queue folks to

23 speak on that and so as not to be rigid and interrupt.

24 If we have any valuable give and take

25 discussion going on, I'll let it continue, but again

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1 say your name into the microphone so the court reporter

2 can hear that.

3 And moreover, I recognize your time is

4 valuable and we want to keep things moving. So, I'll

5 try to keep the pace because there's a lot to cover in

6 today's agenda. As I said, hold your questions till

7 there's ample opportunity to ask the questions. There

8 are cues on your slides for those times. The

9 presenters will also invite questions and comments,

10 too.

11 You know, really, you're here to participate.

12 We really want you to participate fully in this, get

13 the most out of it you can, listen and provide

14 information that we need to continue the rulemaking on

15 these products, and the ample opportunity to submit

16 comments later on in written form.

17 One more ground rule I did not put up here is

18 that if I mess up as your facilitator, let me know.

19 Okay? So, I want to be sure that the meeting is well

20 done for you, your benefit. So, let me know and we'll

21 take care of it. We'll fix the problem.

22 So, any questions so far?

23 (No response.)

24 MR. RABA: Okay. Some housekeeping items.

25 Restrooms, out the door, to the right, left, down the

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1 hall, and you saw where the security station was for

2 the FEMA folks. If you turn left there and go down the

3 corridor, short way down, there's a mens room and a

4 ladies room.

5 Now, I guarantee they're not going to stop

6 you for ID or hit you with the metal detectors to get

7 to the restrooms, but let me know that. Okay? Just

8 kidding. We know where the restrooms are.

9 Other emergency exits. There are four there,

10 but all pretty much go in the same direction, out, and

11 you'll see the outside of the building right there

12 pretty much just in front of you. So, out that way.

13 We said we'd take a one-hour lunch break at a

14 convenient time, and two more things I've been asked to

15 tell you is (1) a copy of the Technical Support

16 Document is available for review on the back table over

17 there in the corner. Look but don't take it with you.

18 That can also be downloaded from the DOE website if

19 you need that later on.

20 Also, before you leave today, please see

21 Brenda or she'll be handing out evaluation forms. We

22 want to know how for your sake and for our sake the

23 meeting went today. We can always find improvement in

24 the future. Okay?

25 So, anything else? Okay. Well, Steve

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1 Witkowski is the project manager for today's rulemaking

2 and for residential dishwashers, dehumidifiers, cooking

3 products, and commercial clothes washers, and he will

4 give an opening review of the rulemaking.

5 Steve?

6 RULEMAKING OVERVIEW

7 MR. WITKOWSKI: Is this working now? Thank

8 you.

9 I want to welcome you all on behalf of the

10 Department of Energy and Building Technologies. I will

11 be very brief to keep within the time frame. Jim

12 already mentioned the general purpose of the public

13 meeting, but we have some bullets here to present

14 methodologies and characterize the results for analysis

15 to date, to discuss specific issues that are related to

16 each of the analyses, to seek input from attendees on

17 methodologies, assumptions, and data sources, and to

18 describe the upcoming analyses and next steps, and in

19 all these processes, we are looking forward to your

20 input.

21 In case you haven't seen this before, the

22 Energy Policy Conservation Act, EPCA, directs DOE to

23 consider seven factors when setting energy conservation

24 standards. Those seven factors are economic impact on

25 consumers and the corresponding analysis is a Life

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1 Cycle Cost Analysis and the Manufacture Impact

2 Analysis. Two is the Lifetime Operating Cost Savings

3 and the corresponding analysis is Life Cycle Cost

4 Analysis.

5 Number 3 is the total projected energy

6 savings and we do a National Impact Analysis for that

7 factor. Number 4 is the impact on utility or

8 performance and this is where we provide and do a

9 Screening Analysis and an Engineering Analysis.

10 5, the impact on any lessening of competition

11 and this requires a Manufacturer Impact Analysis. 6 is

12 the need for national energy conservation and that

13 requires a National Impact Analysis, an NIA, and 7 is

14 the all-encompassing other factors the Secretary

15 considers relevant which may include Environmental

16 Assessment, Utility Impact Analysis, and Employment

17 Impact Analysis.

18 I thank you all for listening to that. I

19 know most of you have heard it several times before.

20 Okay. The steps in the standards rulemaking.

21 We are now at the ANOPR stage, the Advanced Notice of

22 Proposed Rulemaking. This follows the Framework

23 Document and that public meeting. Next will be the

24 NOPR, the Notice of Proposed Rulemaking, then we

25 proceed to the final rule and an effective date, and

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1 correspondingly, we have the analyses, the market

2 Technology Assessment, the Screening Analysis, the

3 Engineering Analysis, mark-ups to determine equipment

4 price and energy use and water use characterization,

5 Life Cycle Cost and Payback Period Analysis, Shipment

6 Analysis, and National Impact Analysis, and again all

7 of these are on your presentation sheets.

8 And, you know, for the ANOPR for this

9 particular part of the rulemaking process, we're

10 looking at Market and Technology Assessment, Screening

11 Analysis, and Engineering Analysis, and then we move on

12 again to what I had mentioned before and this is -- I

13 apologize. There's a little bit of duplication here,

14 but we go to the mark-ups to determine equipment price

15 and the other areas that are in red. I don't want to

16 read everything again. Then, finally, we get to the

17 Shipment Analysis and National Impact Analysis.

18 When we get to the NOPR, the process looks

19 like this and again you can follow the arrows. There's

20 to revise the revision of the ANOPR Analysis. There's

21 the trials standard levels, Manufacture Impact

22 Analysis, Utility Impact Analysis, Employment Impact

23 Analysis, Environment Assessment and Regulatory Impact

24 Analysis.

25 And we put together a list of issues for

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1 public comment. These aren't necessarily the only

2 ones, but they're ones that, you know, we thought would

3 probably arise, and these include the microwave oven

4 standby power, the equipment product classes,

5 commercial clothes washer, the horizontal axis designs,

6 compact dishwashers, microwave oven design options,

7 technologies unable to be analyzed and exempted from

8 product classes, dishwasher efficiency and its impact

9 on cleaning performance, dehumidifier use, commercial

10 clothes washer per cycle energy consumption, commercial

11 clothes washer consumer prices, repair and maintenance

12 costs, efficiency distribution in the base case,

13 commercial clothes washer shipments forecast, base case

14 and standards case forecasted efficiencies,

15 dehumidifier cost and efficiency relationships, and

16 trial standard levels.

17 And as Jim has already mentioned, you know,

18 for comments for participants, you are invited to

19 provide summary comments or statements. Participants

20 are invited to raise additional issues for discussion

21 today, and the ANOPR comment period is open until

22 January 29th of 2008, and you have more information on

23 that in your handout materials and in the Federal

24 Register Notice.

25 And at this point, I turn it back to Jim and

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1 the discussion, and again I thank you very much for

2 attending.

3 COMMENTS FROM PARTICIPANTS

4 MR. RABA: Thank you, Steve. Is there anyone

5 who would like to make a summary comment? You can

6 either use the table mikes or step up back there.

7 State your name for the record, please.

8 MR. DeLAURA: This is Lance DeLaura with

9 Southern California Gas Company.

10 Just a very brief comment. I think there --

11 I'm actually glad on Page 6 to see under the dishwasher

12 efficiency to see its impact on cleaning performance.

13 There's a lesson to be learned from the previous

14 activity with Energy Star.

15 A number of folks in the room probably

16 remember that there was a standard of efficiency for

17 dishwashers that had a difficulty with the testing, the

18 performance testing, and as I recall, it was the

19 performance testing with clean dishes, and later when

20 it was discovered, it created a disruption in the

21 marketplace and as a public utility that provides

22 rebates to consumers, we want to make sure we keep

23 everyone's credibility good and not have the issue of

24 having to go back and this would be for commercial or

25 anything else we'd be talking about.

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1 So, I guess my comment is, and I'll close

2 just by suggesting that we very carefully consider,

3 especially since we have a lot of time here, to make

4 sure that we look at all of those factors.

5 MR. RABA: Good comments. Thank you. Yes,

6 please.

7 MR. CALABRESE: David Calabrese with AHAM.

8 We're going to make a number of comments here

9 today on all the products, of course, and then all of

10 the products being discussed here are represented by

11 our manufacturers.

12 In particular, we're going to have comments

13 on two of the product categories, dishwashers and

14 dehumidifiers, with our friends in the advocate

15 community. As everyone knows, there is an agreement,

16 there is a pending energy bill which includes standards

17 which would essentially, if the law were to pass,

18 obviate the need for further rulemaking, but we will

19 discuss that as well as in some of the other products,

20 cooking products and commercial clothes washers,

21 microwave ovens, there's a number of very critical

22 issues there related to product classes, related to the

23 analysis that we've already -- that DOE has presented

24 that we will be commenting on.

25 MR. RABA: Thank you, David. Anyone else,

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1 please? Yes, over here.

2 MR. CABOT: Paul Cabot with the American Gas

3 Association.

4 We're going to limit our comments to gas

5 cooking appliances at this meeting. We will be

6 submitting more comments in detail on a number of

7 subjects, but to heart is the potential elimination of

8 pilot ignition systems for ranges. That's a great

9 concern for the Association as well as we have concern

10 with some of the economic bases for the justification

11 that the Department of Energy has put forward.

12 We believe the utility of a pilot ignition

13 system is of value to consumers. This rule, if it goes

14 forward as presented here in the ANOPR, would eliminate

15 those and would eliminate approximately 18.2 percent of

16 the gas cooking ranges in the United States and that

17 level of shipments with standing pilots has been fairly

18 consistent, although the department is forecasting a

19 drop-off of those shipments, but over these years, the

20 price difference between a pilot ignition system and an

21 electronic ignition system is not that great.

22 Apparently consumers do find the utility in having

23 standard pilot ignition systems for a number of

24 reasons. We will outline those.

25 On the economic basis, we have concerns with

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1 the switch to or the need to provide electrical outlets

2 if consumers are forced to install electronic ignition

3 ranges. We believe the department has underestimated

4 the cost of installing those electrical outlets as well

5 as the types of outlets, that the department needs to

6 consider that consumers would have to apply and comply

7 with the National Electric Code which is very specific

8 and requires a lot of work to install electrical

9 outlets near ranges, and again we have other concerns

10 and we'll comment as the presentations go forward.

11 Thank you.

12 MR. RABA: Thank you. Anyone else, please?

13 Yes, over here.

14 MR. BALLO: Hi. This is Tim Ballo with Earth

15 Justice.

16 Our chief comment is that DOE's analysis in

17 the ANOPR does not discuss the economic value of C02

18 emissions reductions possible through this rule.

19 There's a recent case that came out in the 9th Circuit

20 that I urge the department to read. It's the Center

21 for Biological Diversity v. The National Highway

22 Traffic Safety Administration in which the 9th Circuit

23 found that failure to monetize the C02 emissions

24 reductions is arbitrary and capricious.

25 It may be true that there is some uncertainty

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1 but that does not absolve DOE from finding some

2 economic value to place on those. Basically not

3 considering them in the analysis is tantamount to

4 avowing the C02 emissions reductions is zero.

5 Further on the emissions of other pollutants,

6 SOX, NOX, mercury, even if DOE's assertion in the ANOPR

7 is correct that there will be no actual physical

8 emissions reductions of SOX and mercury because there

9 are national emissions trading programs, DOE simply

10 asserts that the impact of the standards on the

11 allowance prices under those trading programs is likely

12 to be small and uncertain.

13 We would definitely like to see a little bit

14 more analysis on this point to explain if the

15 department is not going to include monetary valuations

16 of those effects on allowance prices a little bit more

17 than just an assertion that they're uncertain.

18 Finally, as far as NOX emissions reductions,

19 those may be covered by the Clean Air Interstate Rule.

20 However, that rule does not apply in all states and we

21 urge the department to evaluate the environmental

22 benefit of NOX emissions reductions in non-Clean Air

23 states.

24 Just really quickly, finally, we also

25 encourage the department to evaluate standby power

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1 losses for all products subject to this rulemaking.

2 Thank you.

3 MR. RABA: Thank you. Other opening remarks,

4 please? Summary statements? Yes?

5 MR. deLASKI: Andrew deLaski, Appliance

6 Standards Awareness Project.

7 A couple of points. One is I, like Dave,

8 want to acknowledge the agreement between AHAM and some

9 of the advocacy organizations and other stakeholders

10 governing some products that is incorporated in pending

11 federal legislation but also will influence and be part

12 of what we'll recommend to the department for the

13 products of dishwashers and dehumidifiers.

14 I want to also comment on a couple cross15 cutting issues that are important to this rulemaking

16 and also for other rulemakings. I want to follow up on

17 Tim Ballo's comment about carbon dioxide emissions and

18 other pollutant emissions.

19 The department needs to monetize the value of

20 emission reductions for all pollutants that are

21 characterized in the rulemakings. This applies -- we

22 made this comment in prior rulemakings. We'll make it

23 in this rulemaking and it will continue to be a

24 concern, that the department historically has measured

25 the physical quantities of emission reductions but has

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1 failed to put a monetized value on those and just this

2 morning, as I drove to the airport at 5:30, there's a

3 report on the radio about there's a new exchange

4 opening in New York today for carbon dioxide.

5 You can -- folks are -- there's a tremendous

6 amount of work going into right now how do you

7 characterize the monetary value over a long period of

8 time? Yes, there's uncertainty as to what that value

9 is, but it's certainly not zero and thus far, the

10 implicit value of the department has been zero because

11 it hasn't been quantified.

12 I also want to comment on the issue of price

13 impacts of energy savings. This is an issue that came

14 up in some detail in the furnace rulemaking and the

15 department in the final rule for furnaces issued last

16 month recognized that it had failed to characterize the

17 benefits to consumers, of all consumers of natural gas,

18 that when you use less of a commodity, that tends to

19 put downward pressure on the commodity price.

20 So, when we're saving electricity and we're

21 saving natural gas, we have to consider what's that

22 doing to the overall price of that product, of that

23 commodity, and this is an issue that affects every

24 single rulemaking the department considers and the

25 department needs to develop a methodology for

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1 characterizing those price impacts really across the

2 board for all rulemakings, this one included.

3 We have a lot of detailed comments on some of

4 the engineering issues and some of the other aspects of

5 the analysis, product classes and other specific

6 technical issues that we'll wait to talk about during

7 that part of the presentation today.

8 Thanks.

9 MR. RABA: Thank you. Further opening

10 remarks?

11 (No response.)

12 MR. RABA: Going once, twice. Okay. Very

13 good. Thank you. That gives us a framework of what

14 we're going to look at for the day and sets the tone.

15 Our first presentation is the Engineering

16 Analysis. Judith Reich will do that.

17 ENGINEERING ANALYSIS

18 MS. REICH: Okay. Thanks, Jim.

19 Good morning, everybody. Judith Reich from

20 Navigant Consulting, and I'm going to start out by,

21 notwithstanding the title of this slide, talking about

22 several of the upfront analyses that will lead up to

23 and include the Engineering Analysis.

24 Namely, they're the first three sections that

25 were shown in Steve's red circle, the Market and

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1 Technology Assessment, the Screening Analysis, and the

2 Engineering Analysis, and these are the leading stages

3 of the ANOPR rulemaking process, and obviously there's

4 a tremendous amount of information that DOE has

5 developed during this ANOPR and so for the purposes of

6 today's presentation, I'm going to focus primarily on

7 the major decisions and methodologies that DOE has

8 used.

9 So, for the great amount of supporting detail

10 and background information, I'm going to refer you to

11 the Technical Support Document in the ANOPR Notice

12 itself, both of which can be found on the DOE website,

13 and also, as I go through this presentation, as has

14 been mentioned several times, there are going to be

15 opportunities for stakeholders to comment. They will

16 be set out by the statements in questions in blue

17 italics, and I encourage everybody who has inputs to

18 please provide them as they come up.

19 For those of you who may not be familiar

20 already with the rulemaking process, let me first go

21 through what the purpose of these three stages are.

22 First, for the Market and Technology Assessment, this

23 forms the foundation for all the subsequent analyses

24 because it's here that DOE defines how to categorize

25 the products in order to proceed through the subsequent

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1 analyses, and there's also a very large information2 gathering stage at this point where the competitive

3 landscape is defined and historical trends are looked

4 at leading up to it.

5 Also, to get a more detailed picture of the

6 current situation, the various efficiencies for

7 products covered under this rulemaking are looked at,

8 and finally, in the Market and Technology Assessment, a

9 really comprehensive effort is made to identify the

10 various technologies that are available, to improve

11 energy efficiency for every one of these products.

12 In the Screening Analysis, we take that whole

13 universe of possible technologies and narrow them down

14 according to specific criteria to those technologies

15 which DOE can consider further for means to improve

16 efficiency over baseline product, and once they go

17 through the Screening Analysis, these technologies are

18 then designated as design options.

19 When they're carried forward into the

20 Engineering Analysis, the purpose there is to first

21 define what a baseline product looks like, what its

22 characteristics are, and then how each one of these

23 design options can contribute to improving efficiency

24 and to do that, various efficiency levels are defined

25 over that baseline level and then DOE analyzes what the

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1 incremental manufacturing costs would be that would be

2 associated with making that improvement in efficiency.

3 So, the result of the Engineering Analysis

4 are cost efficiency relationships that get carried

5 through to subsequent analysis that looks at what the

6 impacts are on consumers, on manufacturers, and

7 ultimately what the national impacts are.

8 These are the subset of issues that were

9 identified in the ANOPR as ones for which DOE is

10 seeking comment. This subset relates specifically to

11 the three analyses that I'm going to be talking about.

12 Just to let you know, they're identified according to

13 the numbers that were designated within the ANOPR

14 Notice, but as you'll see as I go through my talk, they

15 aren't going to necessarily come up in chronological

16 order, but rest assured that I'm going to hit on each

17 one of these.

18 So, let me jump into the discussion of the

19 Market and Technology Assessment. Again, there's a

20 great wealth of information that DOE has determined for

21 the market landscape and for the historical trends and

22 again that's contained within the Technical Support

23 Document.

24 So, I'm going to focus first on one of the

25 key outputs of the Market and Technology Assessment

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1 which are the definition of product classes and product

2 classes are basically the way that DOE categorizes the

3 products so that each product class has its own cost

4 efficiency relationship and the product classes are

5 defined according to unique capacity or consumer

6 utility or other features that impact energy

7 efficiency.

8 So, for dishwashers, DOE looked at the

9 existing federal standards that were based on

10 specifications in the ANSI Standard and has maintained

11 the two product classes because it feels that the

12 capacity or the number of dishware settings that can be

13 accommodated in a dishwasher uniquely impact consumer

14 utility and have unique efficiency characteristics that

15 allow for opportunities for improvement.

16 So, the two product classes that were

17 proposed were the compact product class which is less

18 than eight place settings, plus six serving pieces, and

19 the standard product class, which would be eight or

20 more place settings, plus six serving pieces.

21 So, at this point, I will invite comment on

22 whether these product classes offer adequate

23 flexibility to maintain consumer utility and wash

24 performance for different load sizes.

25 MR. RABA: I have a commenter over here.

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1 MR. CALABRESE: Dave Calabrese with AHAM.

2 I mean, these are the product classes that

3 have been in the law and the regulation for some time

4 and they are an accurate way of measuring or as far as

5 consumer utility, they are an accurate way of

6 determining these two category of products. So, we

7 would support continuing in those two categories.

8 MR. RABA: Any others at this time?

9 (No response.)

10 MS. REICH: For dehumidifiers, EPAC 2005 put

11 forth six product classes, differentiated by capacity

12 which is expressed in terms of the amount of moisture

13 that can be removed over a 24-hour period from the

14 ambient air, specifically in pints per day.

15 DOE has maintained those same six product

16 classes which range from 25 pints per day or less up to

17 a maximum of 75 pints per day or greater.

18 For cooking products, the primary means of

19 differentiation is the energy source, that is, whether

20 it's electric power or gas input, and further can be

21 subdivided according to cooking method and unique

22 utility provided and this differentiation results in

23 eight product classes.

24 For gas cooktops, there's a single product

25 class for all burners on residential scale. For

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1 electric cooktops, there's further subdivision

2 according to the consumer utility of cleanability. So

3 that results in smooth elements being differentiated

4 from open coil-type elements.

5 For gas ovens, DOE considers that there's a

6 unique utility associated with self-cleaning feature.

7 So, for each gas and electric ovens categories, they

8 are further subdivided into standard ovens and those

9 with a self-cleaning cycle.

10 And finally, for microwave ovens, the

11 microwave ovens that use microwave energy for their

12 primary cooking source are considered and those can

13 include with and without radiant elements for surface

14 browning.

15 So, DOE invites comment on these product

16 classes, specifically on whether sealed burners warrant

17 a separate product class for gas cooktops.

18 MR. RABA: Comments? Yes?

19 MR. CALABRESE: Dave Calabrese with AHAM.

20 I'll comment at least on the microwave oven

21 issue. I think that there is a need with the microwave

22 oven category to break up into subcategories to

23 identify the various types of microwave ovens and the

24 features that many of them have. You have -- you know,

25 these days are different from when the standard was

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1 first put into effect many years ago. You have many

2 different types of these products.

3 Energy use can vary and so at the minimum, we

4 believe that microwave oven -- there should be separate

5 categories on that.

6 I don't have at this time any further

7 comments on the other categories of gas and electric

8 ovens and cooktops.

9 MR. RABA: And you'll provide written

10 comments later on?

11 MR. CALABRESE: Yes, we will.

12 MR. RABA: Great. Thank you very much. Any

13 others, please?

14 (No response.)

15 MR. RABA: Okay. Proceed.

16 MS. REICH: Okay. For commercial clothes

17 washers, DOE recognizes that there is a critical

18 decision that needs to be made on the number of product

19 classes and that the decision on the number of product

20 classes could have material impacts on many

21 stakeholders.

22 For the purposes of the ANOPR, DOE first

23 noted that EPAC 2005 placed all commercial clothes

24 washers into a single product class with one energy

25 efficiency standard and one water factor standard.

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1 DOE further noted that it is not prevented by

2 statutory provision from creating additional product

3 classes if it was deemed appropriate for such

4 differentiation.

5 In addition, DOE did consider that there

6 would be -- did consider the likely possibility of a

7 Department of Justice review of the potential impacts

8 in the event that a single product class was defined.

9 In consideration of all of these factors at

10 this time for the purposes of the ANOPR, DOE has

11 decided to keep a single product class for the purposes

12 of the ANOPR, in accordance with what Congress had

13 determined, but we are certainly inviting additional

14 comment on this topic, particularly on the

15 specification of the single product class and how to

16 consider impacts on the availability of products with

17 certain performance characteristics and features in

18 considering trial standard levels.

19 MR. BRUNDAGE: Don Brundage with Southern

20 Company.

21 Just for clarification, the commercial

22 clothes washer would not include the very large

23 industrial-scale tunnel washer-type facilities, would

24 it?

25 MS. REICH: No, it would not.

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1 MR. BRUNDAGE: Okay.

2 MR. RABA: Others, please? David?

3 MR. CALABRESE: Dave Calabrese with AHAM.

4 This is a very critical issue insofar as how

5 we determine and move forward on these product classes.

6 There must be two product classes for commercial

7 clothes washers.

8 As you note that while the law may state that

9 there is one standard for one class, DOE certainly has

10 the authority to create several classes and in fact, on

11 the residential clothes washer standard, there are at

12 least three and one of which is a front-loading clothes

13 washer, and so what we would recommend -- and I

14 actually have some materials here I can pass out which

15 demonstrate clearly the divide between your front

16 loader and top loader, traditional top loader

17 commercial clothes washer.

18 And in DOE's own analysis, it demonstrates --

19 I don't know if we'll get into that at a later point,

20 but looking at the Life Cycle Cost Analysis, there is a

21 clear break when you move from certain MEFs and water

22 factors to higher ones as the cost to change the

23 platform is significant and so we believe it critical

24 that as DOE continues its analysis, it continue it in a

25 manner where you have these two product classes and if

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1 DOE decides to determine a standard, that it do so in a

2 top load category as well as a front load category.

3 I can pass out some of this data to the

4 department at some point, but it describes very clearly

5 the difference between these two categories of products

6 and the shipments.

7 MR. RABA: Thank you. Yes, please?

8 MR. MANTHEI: Phil Manthei, Appliance Laundry

9 Systems.

10 Of course, we make commercial clothes washers

11 and we're one of the leading manufacturers of those.

12 We also plead with DOE to create two product classes.

13 We make both product classes or what we consider both

14 product classes, the vertical axis traditional agitator

15 style commercial clothes washer and the front-loading

16 clothes washer, and as the charts that Dave was going

17 to pass out indicate, there are definitely two

18 operating efficiencies and levels of clothes washers

19 and they do not overlap. They have unique

20 characteristics and that should be appreciated by DOE.

21 One of the things that I should bring out

22 here is a top-loading clothes washer provides more

23 mechanical action to the clothes and it's proper to

24 provide that mechanical soil removal in the time and

25 convenience that consumers are used to in the

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1 commercial coin op and multihousing scenarios, markets.

2 We deployed, for instance, in our residential

3 front load washer a clothes washer that the consumer

4 union and the Consumer Reports here a year ago, about a

5 year and a half ago, reported and we deployed it with

6 the same kind of tumble agitation wash time as we had

7 in our commercial product basically, and we got badly

8 marked because most of the residential clothes washers

9 have a very long tumble agitation time because it takes

10 more time to take the mechanical soils out of the

11 clothes.

12 So, therefore, here you have in a vertical

13 axis traditional agitator machine a product that can do

14 that in a shorter amount of time and with a front15 loading commercial horizontal axis product, you need a

16 little longer time to do that. So, they have unique

17 characteristics here and the department needs to

18 appreciate those.

19 The top loader also, you can open the

20 product. It's not locked. You can add an item in the

21 middle of the cycle. You can stop it, whatever you

22 need to do. With a front-loading clothes washer, it's

23 locked. You have to drain the product first before you

24 can open and add a garment, interrupt the cycle.

25 There's different characteristics to these

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1 products and the department needs to appreciate them.

2 Thank you.

3 MR. RABA: Thank you. Other comments? Move

4 on? Yes, over here, Andrew.

5 MR. deLASKI: This is not working again now.

6 Oh, is it working? So, we agree, too, that this is a

7 critical issue for the rulemaking. We kind of agree

8 for different reason, though, which is that looking at

9 some of the preliminary -- looking at the analysis in

10 the ANOPR, if the department were to, based on the

11 analysis where it set a standard that essentially

12 eliminated top-load clothes washers, the net present

13 value savings to the purchasers would be in the

14 neighborhood of $5 million, whereas if you constrain

15 yourself to a standard that says you have to have top

16 loaders in the marketplace, the potential savings is in

17 the order of $200 million.

18 If you put it in terms of energy savings, it

19 is, of course, commensurate. There is significant

20 energy savings on the table, if one considers the

21 standard that is based upon front load technology or

22 horizontal axis technology, however it's loaded.

23 To eliminate the option, to say you only can

24 consider a standard that perpetuates clothes washers

25 that have a vertical axis really does cut down the

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1 potential for energy savings in this rulemaking, not

2 just for commercial clothes washers but for the overall

3 rulemaking.

4 So, I strongly urge -- I think the department

5 made the right decision in the ANOPR and applaud that

6 decision.

7 I also want to emphasize that Phil Manthei in

8 his comments just described some different

9 characteristics of vertical axis washers versus

10 horizontal axis washers.

11 If the department in a rulemaking cannot

12 change the characteristics that are available in the

13 marketplace, it handcuffs the department's ability to

14 set efficiency standards. The department has routinely

15 over the past 20 years set standards, Congress and the

16 department both have set standards that changed the mix

17 of characteristics available in the marketplace.

18 I believe it was the 1993 clothes washer

19 standard that essentially eliminated the availability

20 of warm water rinse. Now many consumers like having

21 the warm water rinse, I understand. I live in Boston.

22 I used to live in Michigan. The clothes come out

23 really cold, you know. It's nice having warm water

24 rinse and not to have to put those cold clothes into

25 the basket and into the dryer. Some consumers like

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1 that feature, like that characteristic, but the DOE set

2 a standard that eliminated that option in the

3 marketplace.

4 Air conditioners, another one. People like -

5 - some people like having air conditioners that fit on

6 the -- central air conditioners that fit on their

7 existing concrete pad outside their house. 2006 air

8 conditioner standard results in air conditioners that

9 are physically larger than air conditioners used to be.

10 So, there's a change in the characteristics of the

11 product as a result of the efficiency standards.

12 That's something that happens routinely and the

13 department, I think, makes the right conclusion in the

14 ANOPR here that how one loads the clothes washer should

15 not be determinative of what can be considered for

16 efficiency standards.

17 I think the department made another really

18 important conclusion in the ANOPR which is that if you

19 break these two products into separate product classes,

20 you have the potential for the perverse incentive to

21 encourage less efficiency. The horizontal axis

22 technology's inherently more efficient. Require it to

23 be even more efficient risks that you actually would

24 drive the market towards the less-efficient technology.

25 So, how you balance standards for these

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1 competing product classes, I think, could create

2 tremendous disincentives to efficiency that the

3 department has to be aware of as it advances this

4 rulemaking.

5 Thanks.

6 MR. RABA: That was Andrew deLaski. Other

7 comments, please?

8 (No response.)

9 MR. RABA: Not hearing.

10 MS. REICH: So, the second half of the Market

11 and Technology Assessment is the broad survey of

12 identifying technology options for each of these

13 products and casts a very broad net and in some cases,

14 the most appropriate place to start is the previous

15 rulemaking where we look at the Technical Support

16 Documents because, for example, for cooking products,

17 there may not have been very many technological changes

18 from the last rulemaking. So, a lot of that

19 information is still applicable.

20 But then DOE also conducts a comprehensive

21 literature review where we draw from a really wide

22 range of sources, including things like reports or

23 technical papers and trade journals, and we supplement

24 that with the review of manufacturer literature or

25 product specifications because in many cases, DOE can

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1 identify across a particular product platform using

2 these specifications what the effects of implementing

3 particular technologies will have on the energy

4 efficiency.

5 And finally, a very valuable tool that DOE

6 also uses is to carry out conversations directly with

7 the manufacturers who can provide not only details of

8 the technology but often the context for when those

9 technologies are applicable.

10 So now that we have the whole universe of

11 technologies, DOE then has to narrow them down into

12 what are the final ones that can be considered for the

13 purposes of the Engineering Analysis, and there are

14 particular criteria that DOE follows that were

15 initially laid out in EPCA and further specified in the

16 1998 process rule and they boil down to four criteria.

17 The first is basically technological

18 feasibility. Has that particular technology been

19 demonstrated in a working prototype or in products that

20 are already on the market?

21 The second criteria is whether a particular

22 technology will be practicable to manufacture and

23 install and service on a scale that would be

24 appropriate for the industry at the time of the

25 effective date of the rulemaking.

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1 Thirdly, the specific technology in question

2 cannot impact consumer utility or can't result in the

3 unavailability of certain products that would have

4 features like capacity, performance, size or volume

5 that are currently available on the market.

6 Finally, of course, you can't adversely

7 impact the health or safety.

8 So, those resulting technologies now

9 designated as design options are carried into the

10 Engineering Analysis and the purpose of the Engineering

11 Analysis is to provide the relationship between the

12 manufacture costs that would be associated for

13 improving energy efficiency and, of course, in general,

14 as efficiency goes up, so does manufacturing costs and

15 it results in a relationship like the one shown here

16 where the starting point of that curve would be a

17 baseline product and DOE defines a baseline product as

18 one which has typical characteristics or minimum

19 characteristics and generally this would be a product

20 that meets, just meets the current federal standard.

21 Then the additional efficiency levels above

22 that baseline point, the incremental manufacturing

23 costs are defined all the way up to the maximum

24 technologically feasible level and the final result is

25 this cost efficiency curve.

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1 The curve is then used as an input to

2 subsequent analyses, particularly the Life Cycle Cost

3 Analysis and Payback Period Analysis. It also factors

4 into the Manufacture Impact Analysis and finally the

5 national impacts where the national energy savings and

6 net present value are defined.

7 It's DOE's intent to analyze each of the

8 product classes that were previously defined, but in

9 some cases, there are certain product classes for which

10 data was unavailable and therefore limited the number

11 that could be analyzed in the Engineering Analysis.

12 For example, for dishwashers, industry13 supplied data was available for standard size

14 dishwashers in the form of cost data. However, such

15 data for reasons of not wanting to divulge proprietary

16 information, this data was not available for compact

17 dishwashers and therefore DOE's seeking inputs on means

18 to extend the analysis to that class.

19 For dehumidifiers, DOE looked at three

20 product classes which were a subset of those original

21 six and again that was based on data that was supplied

22 via AHAM and DOE was able to extend the results

23 numerically downstream of the Engineering Analysis.

24 So, as you'll see, it gets carried through as six

25 product classes by the time you get to the National

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1 Impact Analysis.

2 For cooking products and commercial clothes

3 washers, all product classes were able to be analyzed.

4 There were, however, additional technologies

5 and product classes that were completely excluded from

6 this analysis for several reasons, possibly because

7 there was a lack of consumer usage data or energy

8 efficiency data, in some cases indicating that the test

9 procedure was inapplicable to that particular product

10 class.

11 There were also technologies for which the

12 information that was available to DOE suggested that

13 the energy savings would be negligible and before I

14 request inputs on these particular excluded

15 technologies and product classes, let me go to the next

16 slide because I list out in more detail which those

17 were.

18 For dishwashers, there were none, but for

19 dehumidifiers, there was a series of technologies that

20 were eliminated on the basis of the fact that they

21 would require non-steady state ambient conditions

22 during testing and such a condition is not currently

23 provided in the test procedure.

24 In addition, the test procedure currently

25 does not allow for a measurement of standby power which

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1 would be the case for low standby loss controls.

2 For cooking products, there were a range of

3 reasons why these technologies were excluded. For

4 conventional products, the most common reason was that

5 the data was unavailable due to limitations of the test

6 procedure and for microwave ovens, in some cases,

7 there's simply a uniformity of technologies available

8 on the market today and so therefore DOE was unable to

9 evaluate some of these.

10 For commercial clothes washers, there was a

11 lack of data indicating efficiency improvement

12 associated with the improved drum design and again the

13 lack of a standby power measurement limited the

14 evaluation of low standby loss controls.

15 So heading back, DOE invites comment on

16 extending the analyses to these excluded technologies

17 and in particular seeks input on energy efficiency data

18 and potential limitations of the existing test

19 procedures.

20 MR. RABA: Are there any comments at this

21 time? Questions, comments? Yes, go ahead.

22 MR. DeLAURA: This is Lance DeLaura, Southern

23 California Gas Company.

24 It's a question more than a comment. How do

25 we find the cost-effective analysis method that's used?

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1 Is it in the manual that's on the back table there

2 that's available on the Web?

3 The reason I'm asking, when you're talking

4 about payback, is it a simple payback? There were some

5 comments made earlier about considering standby losses,

6 potentially water issues, other types, natural resource

7 conservation.

8 Does the analysis consider that, and the

9 reason I ask is it may have an impact on making things

10 look better for things if in the past it didn't include

11 those additional topics?

12 MS. REICH: Okay. I'm going to defer that

13 question to some of the later presentations that go

14 through the payback periods.

15 MR. DeLAURA: Okay. Fair enough.

16 MS. REICH: And yes, it is detailed in the

17 TSD.

18 MR. DeLAURA: Thank you.

19 MR. RABA: Right. As Steve was saying, the

20 TSD is also on the Web.

21 Thank you. Comments?

22 (No response.)

23 MR. RABA: Many good thoughts out there.

24 MS. REICH: There are two separate approaches

25 that can be used for conducting the Engineering

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1 Analysis and a choice is made on a product by product

2 basis, which one to go forth with.

3 First is the efficiency level approach and in

4 this case, the incremental manufacturing costs

5 associated with each change in efficiency level are

6 analyzed individually and this approach is often taken

7 when there are a wide range of efficiencies of products

8 currently available on the market.

9 Where there isn't a wide range or if the

10 efficiency data is simply unavailable, another

11 possibility is to take the design option approach in

12 which particular technologies are analyzed individually

13 and then layered sequentially to wind up with

14 efficiency levels at which manufacturing costs can also

15 be layered.

16 For dishwashers, dehumidifiers, and

17 commercial clothes washers, the efficiency level

18 approach is taken and for cooking products with the

19 concurrence of stakeholders, the design option approach

20 was the method selected.

21 So, in addition to the industry-supplied

22 data, DOE supplements it and validates that data with

23 several other sources, including a review of past

24 rulemaking analyses and a reverse engineering process

25 where we go ahead and tear down products and conduct

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1 some additional testing.

2 Finally, an additional source of information

3 are manufacturer interviews. I just want to point out

4 that for cooking products, the approach, again with the

5 concurrence of stakeholders that was taken, was to

6 utilize the same design option approach that was taken

7 for the 1996 TSD under the assumption that with the

8 possible exception of microwave ovens, that there had

9 not been significant changes in technologies since that

10 time frame.

11 So, the same analysis was used as a starting

12 point from the 1996 TSD and the particular individual

13 design options were revisited and those that were still

14 applicable were carried forth into this Engineering

15 Analysis to provide the incremental efficiencies with

16 manufacturing costs associated with those design

17 options updated.

18 In a little bit more detail, here is the

19 efficiency level approach and in this case, AHAM

20 supplies industry average data on a shipment-weighted

21 basis at each efficiency level. It only provides those

22 for efficiency levels where there are at least three

23 manufacturers which have products represented there in

24 order to maintain confidentiality.

25 The cost data is provided in several

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1 components, the first being the full production cost

2 and that would include the direct material and labor

3 associated on a per product basis along with overhead

4 and depreciation.

5 In addition to that, the dataset includes

6 one-time conversion costs which can include the sales

7 and marketing R&D costs, as well as costs associated

8 with the development of additional facilities, such as

9 building costs and tooling and equipment costs, and in

10 sum total, those represent the manufacturing costs data

11 at that particular efficiency level.

12 Again, there are several supplemental

13 activities that DOE carries out for this data, to first

14 discuss with manufacturers these costs so that they can

15 understand more completely what the variability in

16 those costs may be, and also to supplement the data

17 with its own reverse engineering activities which can

18 allow additional information to be developed.

19 In performing the reverse engineering, first

20 of all, significant care is taken in determining which

21 units are going to be subjected to tear-down because we

22 try to select units that have a range of efficiencies

23 across a given platform as well as trying to select

24 several platforms from various manufacturers to get a

25 really complete picture of the industry.

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1 The units that are selected are then

2 subjected to a tear-down process where they are taken

3 apart and the individual components examined and

4 measured to determine, first of all, what the raw

5 material costs may be associated with them, what the

6 likely fabrication steps are, and what sort of purchase

7 components may be included.

8 So, putting those together, along with the

9 expected assembly processes, all of that information is

10 compiled in a detailed bill of materials which

11 represents the overall greenfield cost for producing

12 that particular product on a relevant scale.

13 In contrast, the design option approach

14 starts with the definition of a baseline product and

15 here again, the starting point is usually a product

16 that just meets federal standards or it may be one for

17 which it has typical minimum features and then the

18 individual design options are examined. The cost

19 associated with each one of them and the efficiency

20 increment associated with each one is defined.

21 They are layered on top of the baseline in

22 order of the ones that have the shortest payback period

23 to the longest and from those, the cumulative

24 incremental costs and efficiencies can be calculated in

25 order to develop the cost efficiency curve.

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1 I just want to point out that the net result

2 is that there are efficiency levels associated with

3 each manufacturing cost increment, whether we take the

4 efficiency level or design option approach, but the

5 method by which those levels are reached differs.

6 The efficiency levels that DOE proposed for

7 dishwashers are presented here. There are current

8 standards that exist for both compact and standard

9 classes where the metric is an energy factor defined in

10 terms of cycles per kilowatt hour and that forms the

11 baseline.

12 There is also a current Energy Star level for

13 both product classes and that forms Efficiency Level 3.

14 For the interim levels, it was noted that for Energy

15 Star prior to January 2007 and for the CEE tiers, that

16 there are only definitions for standard size

17 dishwashers. So, in order to come up with efficiency

18 levels for the compact class, DOE scaled the values

19 from the standard sized product class according to the

20 ratio of energy factors for the current federal

21 standard.

22 For the purposes of the ANOPR, in some cases,

23 DOE also defined the maximum technologically-feasible

24 efficiency level on the basis of a review of products

25 that are currently on the market and subsequently

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1 designated that as maximum available to specifically

2 make clear where that data was coming from.

3 So, a review of databases of energy factor

4 for dishwashers produced values for both compact and

5 standard classes, and finally, since there was a fairly

6 large gap between the maximum CEE tier and between the

7 maximum available and for both cases, for both product

8 classes, there were products available that did have

9 intermediate values, DOE defined two gap fill levels.

10 When ARAM provided its industrywide data for

11 dishwashers, it did so for efficiency levels up to and

12 including an energy factor of .72. It did not provide

13 data at higher efficiency levels due to the need to

14 protect proprietary information.

15 So, therefore, DOE validated the data that

16 was provided and evaluated efficiency levels above that

17 .72 by means of a series of tests and reverse

18 engineering of several different dishwasher platforms

19 and because the data that resulted from that additional

20 analysis showed reasonable agreement with the AHAM

21 data, then DOE had confidence in extending that cost

22 efficiency curve up to the maximum available level for

23 standard size dishwashers.

24 However, for compact product class, as I

25 mentioned before, DOE was unable to obtain cost

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1 information and relied on scaling the efficiency levels

2 from the standard size dishwashers to values for

3 compact product class.

4 So, in order to address this inability to

5 evaluate compact dishwashers at this time, DOE invites

6 comment on extending the analyses to compact

7 dishwashers.

8 MR. RABA: Comments on compact dishwashers?

9 State your name.

10 MR. deLASKI: Andrew deLaski of Appliance

11 Standards Awareness Project.

12 Jim, I'm not sure this is the right time or

13 when would be the appropriate moment, but I have a few

14 comments on the presentation that just went before

15 this, and I'm not sure when's appropriate, not

16 specifically on compact dishwashers, though.

17 MR. RABA: Let's do compact dishwashers first

18 and before the break, can we do that, because we're

19 going to get to it pretty soon?

20 MR. deLASKI: Sure. These are cost-cutting

21 issues that I want to bring up.

22 MR. RABA: Be sure I recognize you before.

23 Okay? Thank you.

24 MR. CALABRESE: Dave Calabrese, AHAM.

25 We'll provide some more views on this issue

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1 with the compact dishwashers in our written comments.

2 I have nothing at this point.

3 MR. RABA: Thank you. Compact comments?

4 (No response.)

5 MR. RABA: Judith?

6 MS. REICH: Okay. So, an additional issue

7 for which DOE is seeking comment is the potential

8 definition of an annual energy consumption metric that

9 incorporates standby power, and we first want to know

10 that the current dishwasher test procedure includes

11 measurement of standby power, but that this is not

12 currently rolled into the energy factor metric that is

13 the subject of the current standard.

14 AHAM did not supply standby power data, but I

15 did want to point out that in the life cycle cost

16 analyses, the values that were used do incorporate --

17 provide for a measurement of standby power, so that it

18 allows a comparison of the potential effects of standby

19 power levels.

20 The DOE recommends that if standby power is

21 to be included in the standard, that it not be

22 prescribed separately, that it be incorporated into an

23 overall annual energy consumption metric because this

24 would allow manufacturers to have the ability to make

25 the appropriate design trade-offs between features and

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1 various design options.

2 DOE invites comment on this specification of

3 an annual energy usage as the metric for dishwasher

4 standards instead of a prescriptive standard.

5 MR. CALABRESE: Dave Calabrese with AHAM.

6 We agree with that approach. In fact, that

7 is the approach that was taken in our agreement with

8 the advocates groups. In fact, I'll just state for the

9 record here that our agreement includes a standby

10 element, but it is rolled up into the overall energy

11 use of a dishwasher. So, our agreement, which is part

12 of the legislative package which, by the way, I just

13 heard has failed to get cloture in the Senate, so we'll

14 how that moves, but at this point, it's 355 kilowatt

15 hours per year which is again a measurement of the

16 total energy use of a dishwasher that would include

17 standby power.

18 As an equivalent, it's about a .62 EF, but

19 again this would include standby power. So, we do

20 support that approach and in fact, for all products,

21 where appropriate, we would support that as a very

22 appropriate way to bring in standby power, if the

23 department deemed it to be necessary, to do it in a way

24 that provides the manufacturer the means to incorporate

25 that.

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1 A separate -- a prescriptive one watt, two

2 watt, three watt standard is not an appropriate way to

3 design products and it really is quite a limitation on

4 the way for manufacturers. So, we really support this

5 approach.

6 MR. RABA: Thank you, David. Other comments

7 on standby power?

8 (No response.)

9 MR. RABA: Some nods. Okay. Proceed.

10 MS. REICH: For dehumidifiers, a subset of

11 the original six product classes were considered for

12 analysis and in the Engineering Analysis, on the basis

13 of the data that was supplied from industry, and in

14 particular, there were two product classes for which

15 data was unavailable due to limitations of the number

16 of products in that -- available in that product class

17 and those would be the 45 to 54 pints per day and the

18 75 pint per day or greater classes.

19 For the two smallest product classes, the

20 data that was supplied by industry was consolidated

21 into a single one for zero to 35 pints per day and so

22 that results in the three product classes you see on

23 the right being the ones that were analyzed in the

24 Engineering Analysis.

25 Do you also want to comment that those

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1 results were extended numerically downstream and so

2 when I talk about the consolidation, that is strictly

3 for the purpose of defining the three cost efficiency

4 curves?

5 The metric that's used for dehumidifiers is

6 energy factor which is defined in liters of water per

7 kilowatt hour and for each of the three product

8 classes, the representative product classes, there are

9 currently standards in place that were effective in

10 2007 that form the baseline and I also want to note

11 that the values that are listed for the zero to 35

12 pints per day all represent those for the 25 to 35 pint

13 per day class in the standards.

14 There also exists a default standard for 2012

15 in the event that new standards are not created and

16 that's defined from EPAC 2005 and so that formed one of

17 the intermediate efficiency levels and again a survey

18 of available products and efficiencies resulted in the

19 maximum available level for each of the product

20 classes.

21 In between the intermediate levels between

22 the current standard, the default standard and the max

23 available were again based on available products.

24 MR. BRUNDAGE: Quick question. Don Brundage,

25 Southern Company.

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1 You're defining these product classes just

2 for further analysis and not as a final three product

3 classes for dehumidifiers, is that correct?

4 MS. REICH: That's correct. That the --

5 downstream of this, we will be considering again all

6 six product classes and this was done for --

7 specifically to start out with initial cost efficiency

8 curves that could then be extrapolated and interpolated

9 for other product classes later on, but this

10 consolidation was done on the basis of how the data,

11 the cost data was provided to DOE.

12 MR. BRUNDAGE: Thank you.

13 MS. REICH: So, having these three -- the

14 cost data for these three product classes, DOE again

15 performed some reverse engineering to validate the data

16 and to extend it, as necessary, where data was not

17 available, and the DOE analysis resulted in costs in

18 efficiency increments that agreed reasonably with the

19 industry-supplied data. So, on the basis of that, the

20 three cost efficiency curves were then created that

21 would be carried on downstream.

22 As I referred to before, a fundamentally

23 different approach was taken for cooking products and

24 here, the basis for the analysis, the starting point

25 was the 1996 TSD in which specific design options were

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1 evaluated individually and as were the costs associated

2 with them.

3 With the concurrence of stakeholders based on

4 comments that were received during the initial stages

5 of the rulemaking, it was believed that the incremental

6 efficiencies for each of the design options was still

7 similar and it was simply the manufacturing costs for

8 those design options that were still viable that needed

9 to be updated and to do so, they were scaled according

10 to the ratio of the producer price index from the time

11 that the analysis was conducted for the 1996 TSD to

12 2006 dollars, and you can see that a separate ratio was

13 assumed for both electric cooking products and gas

14 cooking products where the electric would also include

15 microwave ovens.

16 MR. deLASKI: Let me interrupt for a second,

17 if I may. This is one of my prior comments I wanted to

18 make, Jim. Actually, it's relevant right here.

19 MR. RABA: Good.

20 MR. deLASKI: In our comments to the

21 Framework Document, which I have here, we asked that

22 the department start over on microwave ovens. You

23 write here on this slide that with the concurrence of

24 stakeholders, that you're going with the design options

25 from 1996.

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1 So, at least these other stakeholders on

2 these joint comments, which I think is a significant

3 set of stakeholders, did not concur with this

4 particular approach, starting over with simply we used

5 the 1996 documentation. I think that's with the

6 concurrence of the manufacturer stakeholders would be a

7 more accurate representation in that slide.

8 MS. REICH: Okay.

9 MR. RABA: For the record, that's Andrew

10 deLaski.

11 MS. REICH: Yes, I want to clarify that this

12 was the starting point for microwave ovens and

13 recognizing that there could be potential differences

14 for that specific product as is going to be presented

15 later, DOE did conduct some specific microwave oven

16 additional testing and analysis to either confirm or,

17 you know, evaluate the current landscape for that

18 product. So, there will be some additional efficiency

19 testing that was carried out whose results you're going

20 to see towards the end of the presentation.

21 MR. deLASKI: And that was looking at

22 additional design -- looking at design options, are

23 there design options or is the cost structure right for

24 these existing design options?

25 MS. REICH: Primarily looking at the design

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1 options to see which design options could potentially

2 impact energy efficiency and if there were new ones

3 that hadn't been accounted for in the '96 analysis.

4 Cost information for microwave ovens is very

5 hard to come by. So, efficiency was really the focus

6 of the testing.

7 MR. deLASKI: Okay.

8 MR. RABA: You looked puzzled.

9 MR. deLASKI: Well, I mean, if cost

10 information is hard to come by, then that speaks that

11 there may be the need to shift to an approach of doing

12 some tear-downs on some products. I mean, you may need

13 to go back, and we've suggested in our Framework

14 Document comments start over on microwave ovens and not

15 start back with the 1996 analysis which is outdated,

16 frankly, and that, you know, we recommended in our

17 framework comments to do -- start over, do tear-downs.

18 If you can't get cost data from

19 manufacturers, then that may be appropriate for this

20 technology which the department predicts will sell at a

21 rate of 20 million units per year. So, it's a big --

22 it's potentially a very big and important technology

23 for the rulemaking.

24 MS. REICH: Well, I think some of your

25 questions may be addressed in the upcoming

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1 presentation.

2 MR. deLASKI: Okay. Thanks.

3 MR. RABA: Thank you.

4 MS. REICH: Well, the approach that I've just

5 described resulted in the following efficiency levels

6 for cooktops. Specifically for gas cooktops, the

7 baseline product was assumed to have standing gas pilot

8 with the first efficiency level corresponding to the

9 replacement of a gas pilot with electronic ignition.

10 For both electric coil and smooth cooktops,

11 there was only a single efficiency level defined above

12 the baseline.

13 These are the efficiency levels that were

14 defined for ovens, both conventional ovens and

15 microwave ovens. In here, the metric actually for all

16 cooking products is energy factor which is the ratio of

17 the useful cooking energy output to the energy

18 consumption, and this is a non-dimensional value.

19 So, there are a couple things that I want to

20 point out here. First of all, the efficiency levels

21 were derived from design options that were layered and

22 may be slightly different from the 1996 TSD because of

23 certain design options no longer being considered

24 viable.

25 Secondly, wanted to point out that for

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1 microwave ovens, there was this additional analysis

2 that will be described a little bit later.

3 The need to revisit microwave oven efficiency

4 led to ARAM providing additional industry-supplied data

5 -- pardon me -- AHAM-supplied data for microwave ovens

6 that comprised 21 units that were selected across a

7 range of manufacturers and this was intended to look at

8 some of the conclusions that were arrived at from the

9 1996 TSD; namely, that there is no correspondence

10 between efficiency and either measured output power or

11 cavity volume, and the data also demonstrated a similar

12 range of values from those that were in the 1996 TSD

13 and so that led to the assumption, at least at this

14 time, that the updated cost efficiency analysis was

15 valid as an approach to use for the ANOPR.

16 Certainly we'd like to invite comment on that

17 particular assumption, whether the design options and

18 efficiency levels are still appropriate, so we invite

19 comment on the microwave oven design options that

20 impact annual energy consumption, including those that

21 are not currently measured by the test procedure.

22 MR. RABA: Floor's open. Yes, please.

23 MR. DeLAURA: This is Lance DeLaura with

24 Southern California Gas Company.

25 I didn't see an opportunity to comment on the

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1 dehumidifiers or some of the previous pages. Is that

2 the appropriate time to ask a question now for that?

3 MS. REICH: We can go back to that. Sure.

4 MR. DeLAURA: It's more of a question of

5 ignorance. It's on Slide 31. Ignorance on my part. I

6 see that there are two different methods of measuring

7 volume. One is liters, the other is pints per day, and

8 I understand that there are two different issues going

9 on there, but I'm wondering why there's two different

10 units of measure.

11 MS. REICH: Okay. One is to categorize them

12 into product classes and that is the pints per day of

13 moisture removed.

14 MR. DeLAURA: Right.

15 MS. REICH: When we get --

16 MR. DeLAURA: That's actually not my

17 question. My question is why is one in pints and the

18 other is in liters? It's just terminology.

19 MS. REICH: That's actually how the metrics

20 are defined. There are two different standards that

21 are used, one for capacity, which I believe that one is

22 an ANSI standard and the energy factor is from a

23 Canadian standard.

24 MR. DeLAURA: Thank you.

25 MR. RABA: Other comments or questions?

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1 MR. ROSENSTOCK: Back to the microwave ovens

2 page.

3 MR. RABA: Your name for the record?

4 MR. ROSENSTOCK: Steve Rosenstock, Edison

5 Electric Institute. Sorry about that.

6 Back to Page 37, Slide 37, and I think I

7 mentioned this in some of my earlier comments. I guess

8 my question was the increase in the number, I'll say,

9 of combination units, microwave/thermal units out

10 there, and I didn't know -- again, I don't know what

11 their market share is, but I didn't know if DOE -- how

12 DOE was thinking about handling, I'll just say,

13 combination-type units for their analysis.

14 MS. REICH: Okay. In discussing combination

15 units, it's important to differentiate. People use the

16 term to mean various things. It can be a microwave

17 oven that has a radiant element associated with it. It

18 can also be a microwave oven that includes a convection

19 system.

20 The former, the one with the radiant

21 elements, are included in this rulemaking and not

22 differentiated from ones that are strictly microwave

23 ovens because it's assumed that the radiant portion is

24 a secondary cooking function and therefore it does not

25 fundamentally affect the energy efficiency performance.

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1 For the kind that incorporate convection

2 systems, it's unclear how or whether those would be

3 appropriately measured by the existing test procedures

4 since the convection part of it, it's not clear if that

5 contributes to the primary cooking function, and

6 therefore that was one of the product classes that DOE

7 was unable to analyze and was excluded from in the

8 analysis.

9 MR. ROSENSTOCK: Thank you.

10 MR. ECKMAN: Tom Eckman, Northwest Power and

11 Conservation Council.

12 In comparing the graph on Page 36 with the

13 efficiency levels for microwaves, it appears that there

14 are several, I count five dots, on the efficiency graph

15 that are above the 60 percentile range and 60 is where

16 you topped out and if my memory serves me right, if

17 we've got empirical evidence that shows the maximum

18 technical efficiency level is beyond that level, we

19 ought to be analyzing it up to something like 62

20 percent for the max tech level since there are products

21 on the market that at least achieve that level of

22 efficiency.

23 MR. RABA: Okay. We recognize that. Andrew

24 deLaski.

25 MR. deLASKI: Are you going to handle standby

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1 separately --

2 MS. REICH: Yes.

3 MR. deLASKI: -- or is that part of this

4 discussion?

5 MS. REICH: Yep. No. I'll be getting to

6 that --

7 MR. deLASKI: Okay. Thank you.

8 MS. REICH: -- shortly.

9

10

11

MR. RABA: Other comments at this time?

(No response.)

MR. RABA: Why don't you move on?

12 MS. REICH: Okay. In fact, here it is, the

13 discussion of standby power.

14 DOE recognizes that there is interest in

15 specifying a standby power metric for microwave ovens,

16 in particular because standby power represents a

17 significant portion of the annual energy consumption

18 for microwave ovens.

19 So, within the AHAM data submittal was

20 information on standby power consumption for the sample

21 of microwave ovens that it tested, and as you can see,

22 there's a wide range of standby power levels associated

23 with this particular sample of ovens, and in

24 particular, it was noted that they could be

25 differentiated on the basis of whether the unit

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1 contained a cooking sensor or not and those with

2 cooking sensors tended to consume higher standby power

3 than those that don't.

4 So, this is specifically an issue where DOE's

5 seeking comment. In particular, because of the fact

6 that it's a significant portion of annual energy

7 consumption, because there's a wide range of standby

8 power levels of units currently on the market, these

9 would suggest that there's an opportunity to reduce

10 standby power.

11 It should be noted, though, that in order to

12 include that in efficiency standard, that it would

13 require modification to the existing microwave oven

14 test procedure. There is an International Electrode

15 Technical Commission's standard that DOE has identified

16 that could be applicable, could be included by

17 reference, and to look into this particular topic, DOE

18 conducted some additional testing on its own to look at

19 standby power, verify that there is in fact this wide

20 range of values on the market, and to determine what

21 possibilities there are to reduce it by trying to

22 associate specific design features with values of

23 standby power, and it was noted from this analysis that

24 the standby power levels are largely driven by the type

25 of display that the oven incorporates and whether there

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1 is or is not a cooking sensor.

2 So, we invite comment on included standby

3 power in a microwave oven efficiency standard and, more

4 specifically, input on analyzing standby power

5 characteristics and stakeholder feedback on a test

6 procedure change.

7 MR. CALABRESE: Dave Calabrese with AHAM.

8 I'll just start off. I think that DOE has

9 the right idea when you're looking at some of these

10 functions that may have standby power use, and these

11 are, and as you referenced, the IEC's procedure

12 identifies clearly what they phrase and I'll paraphrase

13 as something in the order of consumer utilities,

14 something that has a consumer utility to it.

15 So, this is not just dead standby power.

16 These are functions, like sensors, like clocks, maybe

17 some other functions for microwave ovens we may want to

18 consider, but these are useful functions that the

19 microwave oven performs, and so if DOE is to proceed

20 and to examine this, we don't see from an industry

21 standpoint a need for a standby power standard.

22 However, if they're going to proceed, it is

23 critical that you look at these functions and identify

24 them properly and then, accordingly, if you're changing

25 the test procedures, that would be appropriate place to

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1 incorporate that. We certainly want to work with you

2 as you make those changes and identify some of those

3 consumer utilities.

4 MR. RABA: Thank you.

5 MR. ROSENSTOCK: Steve Rosenstock, Edison

6 Electric Institute.

7 One other thing in terms of some of this. We

8 had suggested earlier that we analyze standby power but

9 be it part of a total energy efficiency standard. One

10 thing about this, too, is, for example, the cooking

11 sensor, what is it doing? Well, if you thought that

12 you used to need 10 minutes to cook something in the

13 microwave oven and the cooking sensor knows that it's

14 cooked within eight minutes, you've saved two minutes

15 of microwave energy.

16 So, if you're analyzing it, I think one thing

17 to do is possibly -- if there is a way to do it in the

18 test procedure, is think out of the box because the

19 sensor might be providing the function of actually

20 reducing cooking time, therefore saving annual energy.

21 So, we prefer kind of an annualized approach

22 because that will actually lead to more annual energy

23 savings.

24 Thank you.

25 MR. RABA: Okay. Any others, please?

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1 MR. deLASKI: We support --

2 MR. RABA: State your name again.

3 MR. deLASKI: Andrew deLaski, Appliance

4 Standards Awareness Project.

5 We strongly support the department addressing

6 standby power of microwave ovens. I think the

7 department should address it. I certainly support --

8 think a test procedure to incorporate it makes a lot of

9 sense, but I don't think that should be a hurdle, a

10 barrier to the department addressing the standby power;

11 that is, if you can't come up with a standard that

12 addresses the overall energy consumption of the

13 product, then you should come up with a standard that

14 addresses the standby consumption.

15 It's preferable to address the overall energy

16 consumption, but we can't let an energy consumption for

17 a unit that sells on the order of 20 million units a

18 year and has standby energy consumption that ranges

19 from 1.5 to 5.8 watts in a very small sample -- in

20 other words, I expect the range actually is quite a bit

21 broader than 1.5 to 5.8 watts.

22 This is a significant energy use that needs

23 to be addressed and let's not let the test procedure

24 become a barrier to addressing this particular energy

25 use and what looks like could be a significant energy

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1 waste because, you know, it's not clear what the

2 additional functionality is that you're getting between

3 5.8 and 1.5 watts.

4 MR. RABA: If you have any additional -- this

5 goes for anybody, too. Any additional data or

6 information that you can send the department as written

7 comments later on, we'd most appreciate it.

8 MR. deLASKI: One thing I would suggest, Jim,

9 is that I know there's been work on this in Australia.

10 We'll look at the data. We'll look and see if we can

11 look at some of this Australia work but also would

12 suggest the department look at what the Australian

13 Greenhouse Gas Office has done on microwave ovens.

14 There have been some reports out of there that may be

15 instructive.

16 MR. RABA: Thank you. We invite that on all

17 products across the board from everybody, but thank you

18 very much, Andrew.

19 MR. HOYT: J.B. Hoyt, Whirlpool Corporation.

20 We will provide in our written comments some

21 additional detail that addresses the point Mr. deLaski

22 just made as much as that energy use is consumer

23 functionality as opposed to classical standby, and

24 hopefully we'll be able to shed some light on that that

25 will provide a little further guidance to the

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1 department.

2 MR. RABA: Fair and balanced. Any other

3 comments, please, on standby?

4 (No response.)

5 MR. RABA: Okay. Good. Move on?

6 MS. REICH: Yeah. For commercial clothes

7 washers, there are both current federal standards,

8 there are Energy Star levels, and there are CEE, three

9 tiers of CEE efficiency levels.

10 Here, the metric is defined as two standards,

11 one for modified energy factor in cubic feet per

12 kilowatt hour, and in water factor, which is gallons

13 per cubic foot.

14 Again, available product information was used

15 to define the maximum efficiency level of 2.2 to 5.1

16 where a gap fill was also included in order to span

17 that range between CEE Tier 3-A and max available and

18 was based on the availability of products at that gap

19 fill level.

20 It's particularly challenging to develop a

21 cost efficiency relationship for commercial clothes

22 washers because, for reasons of confidentiality, AHAM

23 was only able to provide cost data at two of the

24 efficiency levels, one being a 1.42 MEF, 9.5 water

25 factor, and the other being a 2.0 MEF and 5.5 water

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1 factor.

2 So, the approach that DOE used to supplement

3 this data was to first consider the possibility that

4 information derived from the residential clothes washer

5 rulemaking could potentially be applicable to

6 commercial clothes washers. So, a very careful review

7 was made of that previous rulemaking and it was

8 determined that there were key issues that

9 differentiated both the cost and the energy parameters

10 for the -- between the residential and commercial

11 clothes washers that would preclude the use of that

12 information.

13 So, alternatively, DOE turned to manufacture

14 interviews and from these, some important pieces of

15 information were determined. One was that there would

16 be a platform change necessitated between the two

17 efficiency levels for which cost data was provided and

18 that would require a change from a vertical axis top19 loading machine to a horizontal axis one.

20 Associated with this platform changeover

21 would be a step change in manufacturing cost. For

22 points that would be at or above that step change, we'd

23 be looking at a horizontal axis platform but that to

24 change efficiencies once that changeover had occurred

25 would primarily be a function of reprogramming the

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1 controller and so there would be not significant costs,

2 manufacturing costs associated with making those

3 changes. So, it resulted in a cost efficiency curve

4 that was flat after that break point.

5 The available information that DOE has at

6 this point suggests that that changeover occurs at an

7 efficiency level of 1.6 MEF and 8.5 water factor. So

8 that at that point or above, we're talking about a

9 horizontal axis machine.

10 Further, based on those manufacturing

11 information, DOE believes that incremental costs remain

12 flat from the 1.6 MEF level and above up to the max

13 level and that those costs would be comparable to what

14 the AHAM cost data submittals suggested which was about

15 $316.

16 This is an area where we certainly welcome

17 comments and input, in particular, on the validity of a

18 constant incremental manufacturing cost at the

19 efficiency levels greater or equal to 1.6 MEF, to lower

20 cost alternatives, to horizontal axis designs for

21 efficiency levels greater than 1.42 MEF and 2.0 MEF,

22 potential adjustments to the energy and water

23 consumption at the 2.0 MEF, 5.5 water factor efficiency

24 level, that would allow for manufacture cost

25 differentiation both above and below that point, and

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1 methods to weigh the impacts of a potential market

2 shift required by a changeover from vertical to

3 horizontal axis technologies.

4 MR. RABA: It's a lot. Let's start with the

5 first one, the validity of the cost and incremental

6 manufacturing cost at efficiency levels of 1.6 MEF and

7 5.5 WF and higher. MEF is mean energy factor, is that

8 it?

9 MS. REICH: Modified energy factor.

10 MR. RABA: Modified energy factor. Okay. A

11 lot to think about. Written comments to follow, but

12 any oral comments at this time on this first bullet?

13 Any thoughts? Please.

14 MR. MANTHEI: Phil Manthei from Alliance

15 Laundry Systems.

16 Our company makes, you know, the two clothes

17 washers at the two extremes, the vertical axis and the

18 horizontal axis. We're a fairly small company. We do

19 not have the kind of resources, capital, that it would

20 take to design something in between.

21 First of all, we already have a horizontal

22 axis that operates near the max tech design. We

23 certainly aren't going to go backwards to add water or

24 to reduce energy. That would make no sense. So, the

25 only option are these non-traditional top-loading

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1 vertical axis machines that have been deployed and have

2 been removed from the home market and we're certainly

3 not going to go there.

4 We've reviewed those. They're very

5 complicated, lots of parts. Reliability would be a

6 nightmare. Our industry depends on a highly-reliable

7 rugged product. That's how we've become a market share

8 leader. We can't go in this area in between. There is

9 only two designs, vertical axis traditional agitator

10 design and our existing front loader design.

11 That's it.

12 MR. RABA: Thank you. Other comments on that

13 first bullet?

14 (No response.)

15 MR. RABA: Second bullet. A lower cost

16 alternative to horizontal axis designs for efficiency

17 of those greater than 1.42 MEF and 9.5 WF and 2.0 MEF

18 and 5.5 WF.

19 (No response.)

20 MR. RABA: Third bullet. The potential

21 adjustments to the energy and water consumption of the

22 2.2 MEF and 5.5 WF efficiency level to allow for

23 manufacture cost differentiation above and below this

24 level.

25 Comments?

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1 MR. deLASKI: This is Andrew deLaski,

2 Appliance Standards Awareness Project.

3 I'm not sure what you're getting at with this

4 question.

5 MS. REICH: Well, this was the assumption

6 that we have a flat cost efficiency relationship from

7 the 1.6 level and up and whether in fact that is an

8 appropriate assumption or whether there should be

9 differentiation in cost at different levels because we

10 extended the cost value at the 2.0 MEF level both above

11 and below it at the same cost.

12 MR. deLASKI: Okay. I don't have any

13 comments.

14 MR. HOYT: J.B. Hoyt, Whirlpool Corporation.

15 The flat assumption just is fundamentally

16 illogical. If that were true, we'd all make machines

17 that were way off the curve to the right some place.

18 So, I don't see how you can do that. Obviously any

19 time you're doing something that changes the

20 performance characteristics of the machine, there's

21 some sort of cost impact, positive or negative.

22 MS. REICH: Okay.

23 MR. HOYT: Whether or not we're able to

24 provide information on that, again given the small size

25 of the number of manufacturers here, is a challenge.

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1 We'll certainly work with AHAM to try and do that, but

2 a flat assumption just doesn't make any sense.

3 MR. RABA: Data information would be very

4 appreciated. Thank you. Good.

5 MR. deLASKI: This is Andrew deLaski.

6 I just want to disagree with J.B. on that

7 point, that, you know, it may be unusual. Because

8 something's unusual doesn't make it untrue. You know,

9 you have step changes in technology. Step changes in

10 technology happen. We just heard Phil Manthei describe

11 it.

12 It would be costly for manufacturers to come

13 back and figure out how to design and to take features

14 out, to put in a cheaper -- put in a control panel that

15 says -- has fewer options, for example, you know. So

16 that's -- it's a cost increment to be less efficient,

17 given the current size of the marketplace that sells

18 about 200,000 units per year. You know, so this is not

19 residential clothes washers where you have tremendous

20 amounts of differentiation in the marketplace to appeal

21 to a marketplace that sells on the order of eight

22 million units per year where you're trying to get

23 differentiation.

24 So, I think in this marketplace, it's not

25 illogical. You have a step change function going from

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1 one platform to the other. It makes perfectly good

2 sense to me.

3 MR. HOYT: J.B. Hoyt from Whirlpool.

4 At the risk of respectfully disagreeing with

5 a guy that went to the same university I did, Mr.

6 deLaski, it appeared, Andrew, from your comments that

7 your comments were theoretical and mine are fact-based,

8 based on our actual cost experiences. I just can't

9 share those directly for competitive reasons.

10 So, there may be other companies who can do

11 what you're suggesting, but we don't know how to do

12 that at Whirlpool. There is a cost trade-off here.

13 MR. RABA: Okay. Others, please?

14 MR. CALABRESE: Dave Calabrese.

15 This just goes back to the point we made

16 earlier about the need for the two product classes and

17 what we're seeing here are the difficulties that DOE is

18 having as a result of these two very different

19 products, and while a comment was made earlier that

20 perhaps everyone could switch to a front load clothes

21 washer, the problem is that the preference for

22 consumers and especially in this market, this

23 commercial clothes washer market, is for the

24 traditional top loader.

25 In fact, the large -- 70 percent or so of the

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1 products in the market today are your traditional top

2 loaders and there have been various studies, marketing

3 research, done that show that people prefer that.

4 So, if DOE is to establish a standard that

5 eliminates that product, they are going to eliminate a

6 significant utility to consumers and that's, of course,

7 one of the issues identified by Steve in the beginning,

8 is looking at what's the utility to the consumer.

9 Consumers prefer the top load washer, especially in the

10 commercial market, as a result of laundry rooms and the

11 like. That's what people want.

12 So, I think DOE is going to have to really

13 take a very careful look at this and a decision that

14 will eliminate top load clothes washers in the

15 commercial market and the residential market would have

16 very significant implications for these products.

17 MR. RABA: Thank you. Other comments,

18 please?

19 MR. deLASKI: A couple of comments.

20 MR. RABA: State your name.

21 MR. deLASKI: Andrew deLaski from the

22 Appliance Standards Awareness Project.

23 I want to respond to Dave's point in a

24 second, but I also want to comment on the use of the

25 term "max tech" in this particular part of the

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1 rulemaking.

2 If you go back a slide, if you don't mind,

3 here, you use the term "maximum available" to apply to

4 2.2/5.1 and the document, the ANOPR document, you use

5 the term "max tech" to apply to that.

6 I think the department's under a statutory

7 obligation to consider a maximum technical available,

8 maximum technically feasible technology for each

9 rulemaking or each technology, and those two things are

10 not the same, max tech and max available, I think we

11 all would agree.

12 So, I think for this particular technology,

13 it's important that you look at levels above 2.25.1

14 that are technically feasible, perhaps not available in

15 the marketplace today but technically feasible to get

16 that max tech evaluation done and that's true for each

17 technology, you know, in this rulemaking. You

18 shouldn't just be constrained by what you find in the

19 Energy Star database, for example.

20 On the issue of horizontal axis, you know, I

21 think the fundamental issue here is the clothes

22 washers, the fundamental thing these things do is

23 washing clothes and whether it's access from the top or

24 the front is not affecting whether or not it washes the

25 clothes. In fact, I think most of the market research

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1 shows that the ones that have access from the front

2 that are spin on the side or horizontal axis actually

3 wash better on average as products. So, it's superior

4 performance for the consumer.

5 In contrast to Dave's point about what

6 consumers prefer, I think in this marketplace, the

7 department handles this pretty well in the ANOPR

8 document published in the Federal Register, that the

9 preference isn't so much a consumer preference as it is

10 a preference about price.

11 In this marketplace, particularly in the

12 multifamily housing sector, products are bought by a

13 stakeholder who doesn't pay the water bill or the

14 electric bill. They're looking to buy the cheapest

15 clothes washer they can put their hands on because

16 they're not facing the energy and water bills

17 associated with the use of their product as the

18 landlord and that disconnect, the market barrier to

19 efficiency, is why you see 80 percent of the sales at

20 low efficiency products, is the driver behind that.

21 Certainly some consumers do -- there may be

22 some preference by some consumers for top load

23 machines, but I would submit that it is not the

24 exclusive factor driving the market toward cheap and

25 efficient machines. Low cost, excuse me, low cost and

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1 efficient machines.

2 MR. RABA: Thank you. Go ahead.

3 MR. MANTHEI: This is Phil Manthei, Alliance

4 Laundry Systems.

5 I just want to correct one thing that Andrew

6 said, that multihousing property owners purchase the

7 machines. They do not. They typically lease the

8 machines. They have a lease agreement. Our customer,

9 the route operator, is who owns the machines.

10 However, that is true that they are still

11 looking for the lowest price and, of course, all of us

12 as consumers are looking for a lower price product.

13 There is, I believe, in the Technical Support

14 Documents and other documents shows an installed cost

15 difference between the vertical axis and the horizontal

16 axis product of about $500. So, yes, there is a

17 substantial cost impact.

18 MR. RABA: Okay. More comments, please?

19 Floor's open.

20 (No response.)

21 MR. RABA: The last bullet on that Slide 42,

22 Methods to weigh the impacts of potential market shift

23 from vertical to horizontal axis technologies.

24 Yes, go ahead.

25 MR. CALABRESE: Point of clarification.

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1 MR. RABA: David Calabrese.

2 MR. CALABRESE: David Calabrese. Sorry.

3 To elaborate a little bit on what your

4 question is here, I mean, you say methods to weigh the

5 impact. I mean, what kind of input are you looking for

6 from us?

7 MS. REICH: It's fairly broad. To understand

8 what the impacts on the competitive landscape would be,

9 to shift from vertical axis to horizontal axis

10 machines, any information in that area.

11 MR. CALABRESE: Dave Calabrese again.

12 We'll be providing, of course, more

13 information along the lines we've discussed here and

14 perhaps more in some of these other questions in our

15 written comments.

16 MR. RABA: Anybody else?

17 (No response.)

18 MR. RABA: We've really moved along very well

19 this morning. Looking at the clock right now, before

20 we entertain a break, if this is appropriate, I'd like

21 to compliment Andrew for being patient with me because

22 he had a comment way back about the presentation way

23 back, and if he can remember what that is, I'd be happy

24 to revisit it with him.

25 MR. deLASKI: Thanks, Jim.

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1 MR. RABA: You're welcome.

2 MR. deLASKI: A couple have been addressed,

3 but a couple haven't, and they had to do with the

4 overall approach for collecting data on the Engineering

5 Analysis.

6 One is that in our comments in the Framework

7 Document, we asked the department to be sure to make

8 clear to manufacturers in collecting data that cost

9 estimates should be based on mass production.

10 Do you know if manufacturers submitting data

11 to you for the Engineering Analysis based their cost

12 estimates on mass production?

13 MS. REICH: I believe they did, yes.

14 MR. deLASKI: And we also asked the

15 department make details of manufacturer cost data

16 publicly available. Steve Nadell's not here today, but

17 one of his hobby horses that you've heard in many of

18 these proceedings is that this is a black box.

19 To those of us who aren't manufacturers, when

20 you put up data on the screen shown to be data from

21 manufacturers that's been verified by the department

22 through some sort of analysis, we don't know where that

23 data came from, we don't know -- we're unable to verify

24 whether or not it's -- the validity of that data.

25 So, has the department thought about how you

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1 might make some of the manufacturer-submitted data

2 available in a way that would protect their need for

3 confidentiality but also protect the need of other

4 stakeholders for full disclosure of information used in

5 this rulemaking?

6 MS. REICH: We recognize that it's a very

7 difficult balancing act and DOE works very hard to make

8 it as transparent a process as possible without

9 divulging any proprietary information. That's about

10 all I can comment on it, that we provide as much

11 information as we can because we want to make this

12 process as open to all stakeholders as possible but

13 still be sensitive to areas where such information

14 could be releasing proprietary or confidential matters.

15 MR. deLASKI: We've recommended in the past

16 and continue to recommend that and if the department's

17 not able to make that kind of data public, then we need

18 to go back to a more broad design option approach that

19 looks at the individual design options across the board

20 for all technologies as opposed to the efficiency level

21 approach, one that's more transparent to all

22 stakeholders.

23 MR. RABA: Comment on the slide?

24 MR. RIVEST: Mike Rivest, Navigant

25 Consulting.

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1 I think in this particular rulemaking, we've

2 taken great efforts in doing tear-down for two

3 categories of the products, for both dishwashers and

4 dehumidifiers and as you'll see later for microwave

5 ovens.

6 So, there's actually completely separate and

7 independent cost analysis that was done by the

8 department for those three categories of products, and

9 to the extent manufacturer data that was provided to

10 the department is part of the spread sheets and there's

11 no additional data that the DOE has from manufacturers,

12 it's not available to the public, and if you read the

13 Technical Support Documents, in our interviews with

14 manufacturers, we definitely probed to understand what

15 the cost drivers are and what the technologies are that

16 are being employed in each of those efficiency levels,

17 so that although you don't have per se a design option

18 approach, you do have the design options that are

19 incorporated into the products at the various

20 efficiency levels and the design paths that are being

21 used.

22 So, for instance, in the dishwashers, I

23 believe we tore down eight or nine and we've listed all

24 the product attributes and the technologies that are

25 present within each of those various dishwashers. So,

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1 hopefully we've provided sufficient information to open

2 up that box and, you know, it's an ongoing effort that

3 we have to do that.

4 The efficiency level approach is extremely

5 helpful in that there are two uncertainties. There's

6 the price of a product and there's its efficiency, and

7 by doing efficiency level, at least we have one of

8 those that we can concretely measure and then the cost

9 becomes the only uncertainty.

10 So, then we'll see later today on microwave

11 ovens, although we did the tear downs on 22 of them,

12 what we found is that there's just not a lot of product

13 differentiation on efficiency. So that, you know, the

14 conclusions are, you know, not as satisfactory as they

15 could be.

16 MR. deLASKI: Thanks, Mike.

17 MR. RABA: I see some heads nodding. I think

18 we need to take a break now. Remind you that the TSD

19 in paperbound is over there on the back table.

20 I'd like to pick up these other issues, other

21 slides, after the break. This will give you time to

22 kind of stretch, remove the cobwebs and think about

23 some other issues that you might want to raise at this

24 time.

25 So, let's take, say, till 11:30. 15-minute

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1 break. 15. Come back. My watch says 10 after 11. 25

2 past 11, please.

3 (Recess.)

4 MR. RABA: Before we begin with other issues

5 at this time, we're moving along very well, I'd like to

6 compliment all of you as stakeholders for

7 participating, there have been some folks who arrived

8 through the course of the morning. If you've not had

9 an opportunity to introduce yourself and the company,

10 you're affiliation, organization, you may do so now.

11 There's some mikes on the table or the side mikes over

12 here to introduce yourselves for the record, for the

13 court reporter.

14 MR. ROSENSTOCK: I'm a late arrival. Sorry.

15 Steve Rosenstock, Edison Electric Institute.

16 MR. RABA: Good sport, Steve. Thank you very

-17 much. Steve's a regular. Appreciate that. Thank you.

18 Okay. Well, -- oh, I'm sorry. Hi.

19 MS. AMANN: That's okay. Jennifer Amann,

20 American Council for An Energy Efficient Economy.

21 MR. RABA: Thank you. I did see you back

22 there. You're over here now. Thank you. Thank you.

23 Welcome.

24 MR. POLINSKI: Steve Polinski from Miele

25 Appliance.

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1 MR. RABA: Okay. Thank you. Thank you very

2 much. Others, please?

3 (No response.)

4 MR. RABA: Okay. Other issues. Oh, by the

5 way, remind you again that the TSD is available in the

6 back if you want to flip through and see some of the

7 issues there, more analysis.

8 Let's continue now with other issues. You've

9 had time to think about it. Is there anything else

10 that you'd like to bring up at this time that pertains

11 to the previous presentations from Judith? It's wide

12 open. Free agents.

13 (No response.)

14 MR. RABA: Okay. Let's move on along then.

15 We're on a good pace here.

16 Next presentation will be Constantin von

17 Wentzel about the Preliminary Manufacturer Impact

18 Analysis.

19 PRELIMINARY MANUFACTURER IMPACT ANALYSIS

20 MR. von WENTZEL: Thank you, Jim.

21 As part of the Manufacturer Impact Analysis,

22 we conducted, the DOE conducted telephone interviews

23 with manufacturers of dishwashers, dehumidifiers and

24 commercial clothes washers. We addressed a number of

25 topics, as you can see on the slide, and in concurrence

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1 with stakeholders, we did not interview cooking

2 appliance manufacturers as part of the ANOPR phase.

3 The di s hwas her MIA f ocused on -- we were able

4 to conta ct about 80 percent of the U.S. dishwasher

5 market i n terms of manufacturers and we focused on four

6 topics, as you can see, and the key issues for

7 dishwasher manufacturers that we heard as part of our

8 interview process was the potential elimination of

9 entry-level dishwashers due to high cost of production

10 and manufacturers have stated that the water

11 consumption of hand washing is greater than the water

12 consumption even with entry-level dishwashers.

13 Therefore, water consumption would actually go up.

14 Another impact, potential impact of higher

15 efficiency standards would be the reduction in

16 dishwasher performance and the potential relocation of

17 production facilities overseas if product -- great

18 product redesigns were necessary.

19 At the present time, manufacturers stated

20 that the sub $300 category represents approximately 30

21 percent of unit shipments and producing dishwashers

22 that can wash dishes well at very low price is

23 difficult and as efficiency standards are increased,

24 the possibility of differentiating among products based

25 on efficiency is reduced.

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1 As unit prices go up, price-sensitive

2 customers might repair rather than replace, avoid

3 buying a dishwasher or simply wash dishes by hand or

4 have to resort to prewashing dishes.

5 All manufacturers noted fierce price

6 competition due to their market conditions and in 2005,

7 82 percent of unit shipments met Energy Star which was

8 at that time .5 ADF and in 2007, the Energy Star was

9 raised to .65. The reason that's relevant is because

10 some chains require manufacturers to only ship Energy

11 Star-rated products to them.

12 As I've mentioned before, as efficiency

13 levels rise, the ability of manufacturers to

14 differentiate their products diminishes and the cost of

15 meeting a particular energy efficiency standard depends

16 in part on the inherent platform energy efficiency,

17 which is to say some platforms are inherently more

18 efficient than others, regardless of what design

19 options you add on. Thus, some manufacturers are

20 impacted more than others.

21 Manufacturers use a limited set of platforms

22 as a basis of all their dishwashers. I think we noted

23 between two and four. Most dishwashers sold in the

24 U.S. are still produced domestically. The AHAM25 supplied capital conversion expenditures range from

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1 about $17 million to $98 million, depending on the

2 efficiency level. This is for the entire industry, and

3 major manufacturers noted individual factory conversion

4 costs of $50 to a $100 million.

5 So, at higher efficiency levels,

6 manufacturers may elect to actually relocate their

7 production facilities abroad because if you're going to

8 have to build a new production facility anyway, you

9 might as well take advantage of lower labor costs.

10 Concurrently with that, you might have a

11 reduction of product platforms and product scope and

12 you might also have validation or mergers within the

13 industry.

14 In addition to the efficiency issues, the

15 manufacturers also noted that meeting energy efficiency

16 standards requires significant resources and can

17 detract from product innovation and several

18 manufacturers also expressed concern about a number of

19 municipalities in the United States that are

20 considering the ban of phosphates in detergents.

21 Moving on to dehumidifiers, we had

22 conversations with manufacturers that represented

23 approximately 66 percent of U.S. unit shipments, and

24 you can see that we had five topics of conversation

25 that we focused on primarily.

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1 Like dishwashers, manufacturers have great

2 difficulty passing on cost increases due to fierce

3 competition. They also noted that they're facing a lot

4 of foreign competition and like with dishwashers,

5 there's the issue of having Energy Star-rated products

6 that they can sell to consumers.

7 The dehumidifier product mix depends in part,

8 like dishwashers, on platforms, which is to say you

9 start off with a common platform that offers a scope of

10 capacities and/or efficiencies, depending on what kinds

11 of compressors, heat exchangers, whatnot, you put

12 inside.

13 These platforms are typically cost optimized

14 for high shipping volumes and as a result will not be

15 optimal for capacities that fall outside that range.

16 Manufacturers prefer to differentiate their

17 products by Energy Star, but if the Energy Star --

18 attaining Energy Star would require them to come up

19 with a new product platform, they may elect not to do

20 so. It just depends on the volume that they produce

21 at, so they say, and there continues to be a trend to

22 outsource.

23 We noted in our tear-downs a number of units

24 that were produced presumably in the same facility

25 because the insides were completely the same but the

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1 outside parts, the parts that the consumer would see,

2 were different and labeled differently as well.

3 As I've stated before, manufacturers note a

4 fierce price competition. The retail chains are very,

5 very aggressive and as efficiency requirements go up,

6 manufacturers noted that the sizes of the units would

7 probably have to increase as well to meet the

8 requirement for larger heat exchangers, compressors and

9 whatnot. That in turn requires the unit to become

10 larger which in turn increases prices due to all the

11 materials that are required as well as shipping costs

12 because you can't fit as many units into a container or

13 truck as you would otherwise.

14 The higher unit costs in turn would decrease

15 demand since most dehumidifier purchases are

16 discretionary and the conversion costs to meet higher

17 efficiency standards depend in large part on the

18 inherent platform efficiency and the number of

19 efficiencies that -- excuse me -- platforms that a

20 manufacturer produces.

21 In closing, all manufacturers agreed with the

22 aggregated cost that AHAM provided for conversion.

23 The AHAM-supplied capital conversion

24 expenditures ranged from $300,000 to $18 million,

25 depending on the efficiency level and product class.

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1 Currently, most dehumidifiers are produced abroad,

2 which is to say there's also, as I mentioned before, a

3 large private labeling industry.

4 The remaining U.S. facilities will likely

5 continue to produce domestically, unless an efficiency

6 standard was set that was so high as to require the

7 complete redesign of a facility. At that point, the

8 manufacturer may elect to move that facility abroad.

9 At present time, none of the manufacturers

10 felt that further energy -- excuse me -- industry

11 consolidation would result as a result of energy

12 efficiency standards.

13 Regarding product innovation and cumulative

14 burden, manufacturers noted that innovation typically

15 occurs in the higher-end models where there may be more

16 latitude for price and thus innovation may be less

17 likely to be affected by standards. However, they

18 noted also that the majority of their volume depends on

19 customers that care about price, performance and size.

20 Another cumulative issue for the

21 manufacturers of dehumidifiers is the phase-out of R-22

22 which is the refrigerant of choice. At the present

23 time, some dehumidifier manufacturers have already

24 switched to R-134A, but it's up in the air to see where

25 everybody else is going to go and it depends in large

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1 part on the compressor manufacturers which my

2 understanding is have not shipped a large scope of

3 product that is for alternative refrigerants.

4 Moving on to the commercial clothes washers,

5 -- sorry?

6 MR. RABA: Question. Go ahead, please.

7 MR. HOYT: J.B. Hoyt from Whirlpool.

8 One comment on dehumidifiers. Constantin

9 noted a fierce foreign competition, I believe were your

10 words, and you made the comment that production would

11 likely continue as long as it was cost effective.

12 I can tell you that the last remaining

13 domestic manufacturer of dehumidifiers is no longer in

14 the business. That would be Whirlpool Corporation and

15 we exited that business this past summer. So, there is

16 no longer a domestic production of that product.

17 MR. von WENTZEL: Well, that was -- thank you

18 very much for your comment. That was the information

19 we had at the time of interview.

20 MR. HOYT: And, indeed, it was true at the

21 time, but I was just wanting to provide that update to

22 lend a little further credence to some of the comments

23 you've made.

24 MR. von WENTZEL: Thank you.

25 MR. RABA: The update is appreciated. Thank

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1 you very much. It's important.

2 Did you have your hand up? Okay. Great.

3 Thank you both, gentlemen. Thank you. Tag team.

4 Others? Anything else?

5 (No response.)

6 MR. RABA: Good.

7 MR. von WENTZEL: Okay. Moving on to

8 commercial clothes washers, you can see that pretty

9 much every focus topic that could be a focus topic was

10 a focus topic, but we also interviewed 100 percent,

11 pretty much 100 percent of the manufacturers of U.S.

12 unit shipments, and there are a number of key issues,

13 such as the risk of eliminating the low-cost vertical

14 axis clothes washer from the market.

15 Manufacturers also noted that there could be

16 a reduction in unit shipments due to a move away from

17 central laundry facilities to in-home -- in-unit

18 residence laundries and more repair rather than

19 replacing of existing units.

20 The manufacturers have also noted that some

21 energy saving design options that have been tried out

22 or have been fielded in the residential field were not

23 applicable to, in their opinion, use in commercial

24 clothes washing facilities due to the use patterns.

25 Manufacturers also noted the possible

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1 relocation of production facilities outside the

2 country, depending on the market conditions and the

3 potential for industry consolidation and/or the

4 elimination of the low-volume manufacturer. I'll get

5 into these a little bit more later.

6 As several participants here have noted, the

7 current market for commercial clothes washers is split

8 between vertical axis and horizontal axis units,

9 approximately 70/30. What we've heard, 80/20,

10 depending on who you talk to.

11 Vertical axis, the clothes washers could be

12 eliminated on the basis of a standard that is set too

13 high because they may not be able to achieve the

14 cleaning performance or work at all.

15 Manufacturers also noted that there were

16 three main groups of buyers for commercial clothes

17 washers, which is to say route operators, multifamily

18 building operators, and laundromats.

19 Multiple manufacturers noted that higher

20 efficiency standards are likely to drive up unit costs

21 and hence the price demand. Higher costs could then

22 accelerate the trend away from central laundry

23 facilities to more in-unit laundry systems. You might

24 have more repairs rather than replacements and the sale

25 of dryers are usually concurrent with the sale of

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1 clothes washers, therefore you could reduce the demand

2 for dryers as well.

3 Manufacturers also noted that the commercial

4 clothes washer business is approximately 45 times

5 smaller than the residential market in this country and

6 therefore there's very little volume, unit volume

7 spread, development costs and other conversion costs

8 across compared to the residential market.

9 There are currently only three significant

10 competitors in the commercial clothes washer market.

11 Therefore, there is limited consolidation opportunity.

12 However, a standard that would eliminate the vertical

13 axis clothes washer platform could result in one

14 significant manufacturer ceasing clothes washer

15 production all together due to scale issues.

16 In the future, high-volume foreign

17 competitors may elect to extend their residential lines

18 to also compete in the higher margin commercial clothes

19 washer market which is always a possibility.

20 As I noted before, there is a low-volume

21 manufacturer that operates primarily in the commercial

22 clothes washing business. Therefore, that manufacturer

23 will be affected disproportionately compared to the

24 other manufacturers in the clothes washing business

25 because the other clothes washer manufacturers can

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1 depend on residential sales to not only help them with

2 research and development but also to spread scale and

3 this manufacturer does not have the scale of these

4 larger manufacturers. It also derives approximately 87

5 percent of its income from commercial sales whereas

6 these other manufacturers derive approximately 2

7 percent of their clothes washer sales from the

8 commercial business.

9 At the present time, this low-volume

10 manufacturer has sales that are approximately two11 thirds of its total shipment volume that are vertical

12 agitator clothes washers and the remainder are

13 horizontal axis units. They employ approximately 1,500

14 employees in the United States. The facilities at this

15 manufacturer were built decades ago and have thus

16 benefited from a lot of accumulated depreciation and

17 manufacturing expertise for vertical axis agitator

18 clothes washers.

19 If the vertical axis clothes washer is

20 eliminated as a product platform in commercial clothes

21 washing, pretty much this entire investment would have

22 to be written off and they would have to make

23 significant investments to shift to horizontal axis

24 clothes washers.

25 As you can see in the slide, currently their

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1 unit shipments are less than 20 percent for horizontal

2 units and that would require a very significant

3 investment on the part of that manufacturer which the

4 manufacturer may or may not be able to sustain.

5 The low-volume manufacturer noted that its

6 parent company or owners would be pretty unlikely --

7 would be unlikely to make these kinds of investments

8 and therefore force the low-volume manufacturer to

9 cease clothes washer and dry manufacturing all

10 together.

11 The efficiency issues for the commercial

12 clothes washers depend in part on the buyer of these

13 clothes washers and so there's three distinct groups

14 that I mentioned before: the route operators, the

15 multifamily homes, and the laundromats.

16 Manufacturers noted that route operators

17 typically pay a fixed lease regardless of what kinds of

18 clothes washers they put in. Therefore, the benefits

19 of the higher energy efficiency go to the building

20 owner, not to the route operator, and as a result, they

21 would expect the route operators to recuperate the

22 higher costs of maintaining, repairing and buying

23 commercial clothes washers from the end user.

24 Manufacturers also noted that multifamily

25 homes typically have fixed budgets. Therefore, any

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1 increase in unit price for commercial clothes washers

2 would depress demand, and laundromats are the only end

3 buyers who actually benefit directly from the lower

4 life cycle costs of horizontal axis clothes washers or

5 who would benefit from them.

6 Depending on the energy efficiency standard

7 chosen and depending on the end user, the cleaning

8 performance may also suffer, according to several

9 manufacturers.

10 MR. RABA: I have a question over here,

11 please. Excuse me, Constantin.

12 MR. deLASKI: Just one question I was hoping

13 you could elaborate on.

14 Do you have a feel for what the relative

15 market share is amongst the three market channels you

16 described there, route operators, multifamily homes,

17 that purchase their own machines, and laundromats?

18 MR. von WENTZEL: Greg, I think you would

19 have that information.

20 MR. ROSENQUIST: Yeah. Based upon data from

21 the Consortium for Energy Efficiency, about 15 percent

22 of the market is in laundromats and the remaining 85

23 percent is in multifamily buildings. So, they didn't

24 actually determine how much was route operators.

25 MR. RABA: I'm having trouble with the audio

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1 here. The questioner was Andrew deLaski and the

2 responder was Greg Rosenquist from Lawrence Berkeley

3 National Lab. Thank you, both.

4 MR. von WENTZEL: At the present time, the

5 commercial clothes washers -- the majority of

6 commercial clothes washers that are produced do not

7 contain the kinds of controls that would even allow

8 coin op route operators or laundromat owners to give

9 incentives to consumers to use lower wash settings,

10 lower temperature wash settings or lower capacity

11 settings. That is something that can only really be

12 done with high-end electronic controls which add cost.

13 So, in terms of product innovation, the

14 multiple manufacturers noted that because of the

15 incentive structure for consumers and how they use

16 commercial clothes washers, that commercial clothes

17 washers are habitually overloaded and therefore

18 commercial clothes washers must be built to a higher

19 standard than residential clothes washers in terms of

20 durability and reliability.

21 Unconventional designs that have operated

22 satisfactorily or may operate satisfactorily in

23 residential market have therefore been met with poor

24 commercial clothes washer market acceptance because

25 they did not operate as well, for example, with the

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1 spray rinse in terms of sand removal.

2 Due to the low unit shipments, we're only

3 talking about approximately 200,000 units per year,

4 manufacturers feel that the market is not large enough

5 to support significant research and development into

6 new controls and other design options because they do

7 not have the scale to spread these kinds of costs

8 across the way that you would in the residential market

9 and therefore these lower volume manufacturers in this

10 sense are disadvantaged.

11 Lastly, there are intellectual property

12 rights and proprietary designs that restrict

13 manufacturers from exploring as many designs out there

14 as they could and particularly at higher efficiency

15 levels.

16 At the present time, during our interview

17 process, I should say, 100 percent of the -- nearly 100

18 percent of the vertical axis commercial clothes washers

19 were being produced domestically. Therefore, any

20 standard that would eliminate vertical axis clothes

21 washers would primarily affect domestic production

22 facilities.

23 The remaining U.S. manufacturing facilities

24 continue to manufacture domestically only as long as

25 not major platform changes are required by new energy

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1 efficiency standards. So, as long as you can meet

2 higher energy efficiency standards with easy design

3 option changes and whatnot, manufacturers felt that

4 they would continue to produce here.

5 However, I keep repeating myself here, but

6 one manufacturer stated that it might exit the clothes

7 washer business all together if its vertical axis

8 clothes washer line in the commercial market was

9 eliminated.

10 All manufacturers agreed that there would be

11 significant stranded assets if vertical axis clothes

12 washers were eliminated. Relocating abroad or

13 outsourcing is less expensive in their mind than

14 converting domestic facilities to horizontal axis use

15 because it basically would require a brand-new

16 facility. Several horizontal axis commercial clothes

17 washers are already being produced abroad.

18 There are also some cumulative burdens for

19 commercial clothes washers. Besides the federal

20 standards, commercial clothes washers have had to meet

21 several differing energy standards set by states.

22 Several commercial clothes washers export to Canada

23 which has its own set of standards, and the low-volume

24 manufacturer would be affected disproportionately

25 relative to its competitors due to its focus on the

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1 commercial clothes washer business.

2 MR. RABA: At this time, are there any

3 comments on the previous presentations in this area?

4 We went through several, went through fast and very

5 well, I might add, but any comments to go back and

6 recap or regroup on some and issues to raise at this

7 time?

8 MR. deLASKI: Could you go back to a prior

9 slide, please?

10 Andrew deLaski, Appliance Standards Awareness

11 Project.

12 Just in the same spirit of bringing this up

13 to date with the federal implementation of a federal

14 standard for commercial clothes washers, I think

15 effective January 1st of this year, the state standards

16 are fully preempted.

17 MR. von WENTZEL: Okay.

18 MR. deLASKI: So, your first bullet in terms

19 of complying with state requirements is no longer a

20 factor. There's only one national standard preempting

21 all states.

22 MR. von WENTZEL: Okay. Thank you.

23 MR. RABA: Thank you for bringing us up to

24 date. Lance?

25 MR. DeLAURA: This is Lance DeLaura with

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1 Southern California Gas Company and SDG&E.

2 I'm putting myself sort of in an analytical

3 mode here and wanting to be completely empathetic to

4 the manufacturers. I mean domestic jobs are very

5 important to the country and we certainly appreciate

6 that.

7 I think what would be useful for DOE to

8 examine -- this is not the first time standards have

9 changed. Granted, it's been awhile, but the standards

10 have changed, and my sense is that the arguments would

11 have been there previously. Any time the standard

12 changes, it causes a change of some sort in the

13 manufacturing process.

14 My best recommendation, thinking

15 analytically, would be to look at the prior

16 proceedings, examine the comments that were made and

17 see what the actual outcomes were.

18 MR. RABA: Very thoughtful. Thank you.

19 MR. POLINSKI: Steve Polinski from Miele

20 Appliance.

21 In support of the key issues, I'll move away

22 from central laundry facilities to residential laundry

23 facilities. We're not manufacturers of commercial

24 clothes washers at this time. We do, however, see an

25 increase in apartment dwellers seeking out smaller

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1 Eurostyle laundry.

2 One of the major concerns now is with a

3 virus, the MRSA virus, and it's come into play where

4 more people are concerned for laundry sanitization and

5 would like to take it on, you know, individually in

6 their own home rather than share laundry facilities.

7 MR. RABA: Very interesting. Thank you.

8 MR. MANTHEI: Phil Manthei, Alliance Laundry

9 Systems.

10 Yes, obviously we are the low-volume

11 manufacturer referred to in all these slides. I think

12 I wanted to comment on one of the things you brought up

13 about looking at past rulemakings.

14 In the clothes washer area, the past

15 rulemakings, of course, have been on residential.

16 Those rulemakings still allowed for vertical axis

17 clothes washers to be available. This is a different

18 scenario now. We are at the point where the vertical

19 axis can no longer be transitioned to a higher

20 efficiency one.

21 Thank you.

22 MR. RABA: Thank you. Other comments? Go

23 ahead, please.

24 MR. MANTHEI: Phil Manthei again, Alliance

25 Laundry Systems.

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1 We do want to come back and talk about this

2 trend of multifamily housing, installing the

3 residential style clothes washers in place of the

4 central laundry commercial clothes washers.

5 It comes into play in the shipments forecast

6 which I think probably will be coming up in this

7 afternoon's presentation. So, we do want to see some

8 modification of the shipments forecast.

9 Thank you.

10 MR. RABA: Okay. Other thoughts?

11 (No response.)

12 MR. RABA: Let's move on. I think we had a

13 late break. We're on a roll right now. Can we just

14 keep moving along and get started, if there are no

15 objections, to the first presentation on Life Cycle

16 Cost Analysis and maybe we can give you some benefit

17 back at the end of the day to end early, but, indeed,

18 we did take a late break and if there's no objections,

19 perhaps we can move on, do you think, and also are

20 there any comments that would be directed to the

21 Department of Energy General Counsel that they would

22 need to acknowledge at this time and think about later

23 on?

24 Any thoughts directly to our General Counsel?

25 Is everybody okay with moving on? Go a little faster,

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1 too? You okay with that? I see a fair and balanced

2 yes and no.

3 MR. CALABRESE: It would seem, though, this

4 would be a good place to break, although if you are

5 trying to move forward, I mean, I appreciate that, but

6 I don't know how much Greg is going to plan on

7 discussing here.

8 MR. ROSENQUIST: The Life Cycle Cost Analysis

9 consists of three components. So, I can probably get

10 through one, maybe two of those components before

11 lunch. We'll have to see what time we're at.

12 MR. RABA: If you're growling, we can still

13 break for lunch.

14 MR. ROSENQUIST: I think I can get through

15 the first component at least by 12:30.

16 MR. RABA: Yeah. Please. We're not going to

17 starve you here.

18 Thank you very much.

19 LIFE CYCLE COST ANALYSIS

20 MR. ROSENQUIST: Okay. My name is Greg

21 Rosenquist from Lawrence Berkeley National Laboratory,

22 and I'll be talking about the Life Cycle Cost Analysis.

23 Returning to the ANOPR Analysis Flow Diagram,

24 the LCC Analysis presentation I'll be giving, folks, is

25 actually on three components: the mark-ups for

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1 equipment price determination, the energy use and water

2 use characterization, and the actual Life Cycle Cost

3 and Payback Analysis itself.

4 This slide presents the purpose of each one

5 of those three components of the LCC Analysis.

6 Starting with the energy use and water use

7 characterization, its purpose is to develop energy and

8 water consumption savings for the various efficiency

9 levels that we're looking at for the products. We

10 combine that with energy and water prices in order to

11 get energy and water cost savings due to the various

12 efficiency levels.

13 The purpose of the mark-ups for equipment

14 price determination is to determine, first of all, the

15 distribution channels for how the equipment is

16 distributed from the manufacturer to the consumer and

17 then from that, we determine mark-ups for each party in

18 that distribution channel in order to convert the

19 manufacturing cost in the Engineering Analysis to

20 consumer retail prices for the LCC and Payback

21 Analysis.

22 And finally, we have the LCC and Payback

23 Analysis. There, we developed a net LCC impact in the

24 payback periods of the various efficiency levels that

25 we'll be looking at.

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1 These are the six ANOPR issues that were

2 identified for comment, for which DOE is seeking public

3 comment on. I'm not going to list them now here for

4 you. I'm just going to be bringing them up later in

5 the presentation.

6 So, the first analysis component of the LCC

7 Analysis is the energy use and water use

8 characterization, and what I'll be doing now is

9 presenting some of the findings from that analysis for

10 each of the four products, starting with dishwashers.

11 Its annual energy and water use is determined

12 by taking the per cycle energy and water consumption

13 and multiplying it by the number of cycles per year.

14 We get the per cycle energy consumption by taking the

15 inverse of the energy factor.

16 We then break that down into its components,

17 energy for water heating, energy for the machine and

18 energy for dish drying, and then we determine also the

19 per cycle water use and based upon an AHAM cost, AHAM

20 data submittal, we found that the per cycle water use

21 is directly proportional to the per cycle energy use.

22 For the average number of cycles per year, we

23 determined that to be 215 and we relied there on a

24 comprehensive analysis conducted by Arthur D. Little

25 back in 2001. We looked at the variability of those

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1 cycles, based upon data from the 2001 Residential

2 Energy Consumption Survey.

3 So, based upon all this information, we

4 developed a baseline annual energy use and water use

5 for dishwashers. The baseline corresponds to a .46

6 energy factor, and we determined an annual energy

7 consumption of 485 kilowatt hours per year. Again

8 that's based upon the use of solely an electric water

9 heater and those numbers would change if a gas or oil

10 water heater is used to heat the water.

11 Of that annual energy consumption, on the

12 order of 60 percent is for water heating and the

13 remainder, which is for machine drying and standby, is

14 40 percent. The water use consumption is 1,800 gallons

15 per year.

16 MR. RABA: Greg, we have a question over

17 there, please.

18 MR. ECKMAN: Yeah. Tom Eckman, Northwest

19 Power and Conservation Council.

20 Greg, the average cycles per year which is

21 the test number that was A.D. Little-derived, 215

22 cycles per year, I believe in reading the analysis, the

23 RECS data uses or comes up with about a 180 cycles per

24 year as the mean. So, if you're using the RECS data

25 for variability, you don't have means in the

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1 distributions that match the A.D. Little data.

2 So, it seems to me that we should be using

3 the A.D. Little data distributions rather than the RECS

4 data to represent the variability rather than --

5 because it has the same mean as the test cycle.

6 MR. ROSENQUIST: Yeah. What we did there --

7 thank you for pointing that out. We normalized the

8 mean value of the 180 cycles per year from RECS with

9 the 215. So, effectively then we changed the mean

10 value from the REC sample to be 215 and then judged the

11 variability relative to that value.

12 MR. ECKMAN: So, you're not using the A.D.

13 Little, but you're using the RECS data with an

14 adjustment?

15 MR. ROSENQUIST: We're using the A.D. Little

16 data to establish the average number of use cycles and

17 then using the RECS data to establish the variability

18 based upon normalizing the mean value from RECS to the

19 215.

20 MR. ECKMAN: Were the distributions roughly

21 equivalent once you normalized?

22 MR. ROSENQUIST: I didn't look at that

23 specifically.

24 MR. ECKMAN: Because the means can be

25 different but also for different reasons, they can be

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1 different --

2 MR. ROSENQUIST: Right.

3 MR. ECKMAN: -- with respect to skewness.

4 So, I'd like to be able to see the -- compare the two.

5 MR. RABA: Parenthetically, RECS, R-E-C-S,

6 Residential Energy Consumption Survey, and ADL, Arthur

7 D. Little, in paren.

8 MR. ROSENQUIST: Okay. Now we're moving to

9 our first issue as pertains to the Energy Use Analysis

10 and this has to do with dishwasher efficiency and its

11 impact on cleaning performance.

12 This has already been mentioned before by

13 Constantin in regards to the Preliminary Manufacturing

14 Impact Analysis, but there's concern here that if you

15 increase dishwasher efficiency too much, you reduce its

16 water use to the point where you're sacrificing

17 cleaning performance. So, it's possible then that if

18 you do that, the consumers will respond by changing

19 their behavior and cleaning their dishes more by hand

20 or doing more prewashing.

21 So, what the department is looking for here

22 is feedback on whether these more efficient dishwasher

23 designs will actually do this, lead to a consumer

24 behavior that leads to additional prewashing or more

25 hand washing, and if so, what sort of increase in these

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1 prewashing and hand washing would be expected?

2 MR. RABA: Feedback? Comments?

3 MR. ECKMAN: This is just more conversational

4 than advice, I guess, but certainly there's a range of

5 dishwasher cleaning capability, at least functionality,

6 if you look at something like Consumers Union Reports.

7 They have a variety of testing that they do to decide

8 whether these things clean as well as they ought.

9 I could probably look at the models that are

10 tested there and see whether they have a range of

11 energy factors and whether that has any relevance with

12 respect to cleaning capability. I mean, it's a

13 publicly available source, by and large. So,

14 independent of the manufacturers and independent of

15 DOE. So, whether that's a relevant source or not, it

16 is out there.

17 MR. RABA: That was Tom Eckman. Comments?

18 (No response.)

19 MR. RABA: Go.

20 MR. ROSENQUIST: Now let's move on to

21 dehumidifiers, and we determined the annual energy

22 consumption there by taking the capacity in pints per

23 day, dividing it by its energy factor in liters per

24 kilowatt hour and multiplying it by the hours of

25 operation.

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1 The two other numbers here, the .473 and the

2 24, are used to make sure that we get the annual energy

3 use into kilowatt hours per year.

4 For the operational use, we used several

5 estimates. Unfortunately, none of them were based upon

6 actual metered studies. That's why we looked at such a

7 wide range of estimates. We received three estimates

8 from AHAM, low, middle and high values. We received --

9 we got one estimate from a 1998 report from Arthur D.

10 Little, another one from the Energy Star website, and

11 finally one from an LBNL estimate that was performed

12 for Energy Star.

13 You can see that the operational use is quite

1'4 varied. It goes from a low value of 875 hours all the

15 way up to over 4,000 hours and what the table presents

16 here is the annual energy consumption that's been

17 calculated for each one of the product classes baseline

18 unit, and although the capacity and energy factor

19 definitely have an impact on annual energy consumption,

20 it's the estimate of operational hours that has much

21 more of an impact. It increases the estimate of annual

22 energy consumption by a factor of five, going from the

23 low value to the highest value.

24 This leads us to our next issue, which is

25 dehumidifier use. For the purposes of the analysis, we

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1 took into account all these estimates, but we put more

2 focus or put more emphasis on the middle estimate

3 provided by AHAM, basically because they relied on

4 their numbers based upon the experience of

5 manufacturers, people who actually produce these

6 products.

7 So, this average estimate of 1,095 hours was

8 chosen as the most representative value and DOE is

9 looking for feedback on whether this is a good

10 representative value for dehumidifier usage.

11 MR. RABA: Okay. Move on, please.

12 MR. ROSENQUIST: Next, we move on to cooking

13 products, and the two figures you see here are

14 historical estimates of electric range and gas range

15 energy consumption since the late or mid 1970s, and

16 there's a general trend downward in the annual energy

17 consumption due to these products.

18 We looked at two recent data points, one from

19 the 2004 California Residential Appliance Saturation

20 Survey and a metered study from the Florida Solar

21 Energy Center, and those show that there is a continued

22 drop in energy consumption for these products.

23 If you look at the electric range figure, you

24 see those last two data points are from the California

25 RASS and the FSEC data. It's around 275 kilowatt hours

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1 per year now for electric ranges and for gas ranges,

2 the California RASS provided us with a value of 40

3 therms per year.

4 Because we see this drop in annual energy

5 consumption since the mid 1970s, we chose to use only

6 the most recent data as the basis for our annual energy

7 use estimates for cooking products, for conventional

8 cooking products.

9 One last note. We used the Residential

10 Energy Consumption Survey again to establish the

11 variability of the annual energy consumption.

12 Here, I'm presenting another chart for

13 historical annual energy consumption estimates of

14 microwave ovens, and unlike the case of conventional

15 cooking products, here the energy consumption has been

16 relatively steady since the late 1980s, especially if

17 you disregard that one top point from 1989. That was

18 from a conditional demand analysis estimate.

19 The last data point over there in 2003 is

20 from the 2004 California RASS and that estimates about

21 a 130 kilowatt hours per year for microwave ovens, and

22 again since this was the most recent data point, we

23 went forward with this estimate as the basis for

24 establishing annual energy consumption of microwave

25 ovens, and again we used the 2001 RECS data to

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1 establish the variability of that annual energy use.

2 This slide summarizes the annual energy

3 consumption for all of the cooking product product

4 classes. Just looking at a quick scan here, we

5 disaggregated where we could the annual energy

6 consumption into cooking energy use, clock energy use,

7 energy use for self-cleaning and self-cleaning ovens,

8 and ignition energy for gas cooking products.

9 With the exception of gas cooktops and gas

10 standard ovens, the biggest component is for cooking

11 while for gas cooktops and gas standard ovens, the

12 biggest component is for standing pilots.

13 I'll be presenting later in the presentation

14 what percentage of the market is still sold with

15 standing pilots.

16 Now our last product, commercial clothes

17 washers, we determined the annual energy and water use

18 here by taking the per cycle energy and water

19 consumption and multiplying it by the cycles per year.

20 Per cycle energy use was determined by taking the

21 inverse of the modified energy factor and multiplying

22 it by the clothes container volume. For water use, we

23 took the water factor and multiplied that by the

24 clothes container volume.

25 Once we had those things for the energy, we

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1 disaggregated them into the energy for water heating,

2 for clothes drying, and the machine. I'll point that

3 out for clothes drying. Again that's taken into

4 consideration because clothes washers are evaluated

5 with a modified energy factor.

6 Because we didn't receive any data from AHAM

7 to tell us how these components should be broken down,

8 we used data from an old 2000 Residential Clothes

9 Washer Technical Support Document and that was applied

10 to commercial clothes washers to come up with the per

11 cycle drying energy use and the machine, per cycle

12 machine energy use.

13 The number of cycles per day were established

14 for the two predominant product applications,

15 multifamily housing and laundromats, and we did a

16 pretty comprehensive literature survey to try to

17 establish the number of cycles per day for each product

18 application. For multifamily, we had on average 3.4

19 cycles per day while for laundromats, six cycles per

20 day.

21 Taking all this information, we developed

22 annual energy and water use data for the baseline

23 clothes washer which was at a level of 1.26 MEF with a

24 9.5 water factor and for the multifamily application,

25 it ended up being almost 2,800 kilowatt hours per year.

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1 Again that's based upon the use of an electric water

2 heater. The water use is 33,000 gallons per year. For

3 laundromats, it's almost 5,000 kilowatt hours per year

4 in energy consumption and 58,000 gallons per year in

5 water consumption.

6 Of the energy consumption, the majority,

7 almost 60 percent, is due to energy for clothes drying.

8 About 35 percent is for water heating and the

9 remainder is for the machine.

10 MR. ECKMAN: Greg, I looked at -- P&L has

11 done some submetered data for Southern Cal and for

12 maybe PG&E, and it didn't look like the machine energy

13 use was consistent with the residential data. So, I

14 would look at those studies to -- as the MEF improves,

15 the machine energy use actually does go down more than

16 those numbers you're using there, down below one watt.

17 MR. RABA: And that was Tom Eckman.

18 MR. ROSENQUIST: That leads right into the

19 next issue, which is our use of the 2000 TSD for

20 Residential Clothes Washers to establish the per cycle

21 energy consumption for clothes washers, in particular

22 the per cycle drying energy consumption and the per

23 cycle machine energy.

24 So, DOE is requesting feedback on this

25 particular issue because they want to make sure that we

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1 get these per cycle quantities correct, especially the

2 drying component, since it accounts for almost 60

3 percent of the overall clothes washer energy

4 consumption.

5 MR. ECKMAN: Tom Eckman again.

6 There are two studies. There's one out of

7 Toronto as well looking at commercial clothes -- that

8 looked at commercial clothes drying in laundromat

9 applications and coin-operated applications with

10 respect to whether the clothes dryer run times are

11 actually shorter as a consequence of having remaining

12 moisture content reduced, and they didn't find that to

13 be the case because they were coin-op time-operated

14 machines and so the dryers ran for whatever the money

15 was worth, and so they said, you know, without

16 moisture-sensing to shortcircuit the cycles, you didn't

17 see a reduction in the dryer energy consumption.

18 So, I would look at that and think about that

19 in terms of how it plays into this analysis.

20 MR. RABA: Other comments? Yes?

21 MR. HOYT: J.B. Hoyt, Whirlpool.

22 Just a point of clarification. You talk

23 about drying energy, you're not talking about in the

24 washer itself?

25 MR. ROSENQUIST: Right. No, it's in the

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1 dryer.

2 MR. HOYT: Okay. So, what you're doing is

3 talking laundry system energy consumption then?

4 MR. ROSENQUIST: That's correct.

5 MR. HOYT: Thank you.

6 MR. ROSENQUIST: That is correct.

7 MR. RABA: Good point. Other comments,

8 please?

9 MR. MANTHEI: Phil Manthei, Alliance Laundry

10 Systems.

11 I also want to underscore that, yes, as we're

12 looking at these individual line items for trial level

13 or standard efficiency level, that that energy includes

14 that dryer energy which that focused product is not

15 using.

16 We like the idea of giving credit for the

17 fact that when you compare two different tiers, that

18 we're getting credit for how -- as we go higher in

19 efficiency level, typically the moisture extraction in

20 the clothes load is going -- getting greater. We're

21 extracting more moisture, therefore saving energy in

22 the dryer.

23 So, yes, we need it when we compare different

24 levels, but when we look at one particular focused

25 level of commercial clothes washer, the washer itself

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1 is not using that energy. Always need to keep that

2 focus.

3

4

5

MR. RABA: Okay. Further comments?

(No response.)

MR. RABA: Move on, please. Next.

6 MR. ROSENQUIST: So that brings us to the

7 conclusion of the energy use and water use

8 characterization, and so now I can start going into the

9 mark-ups for equipment price determination, if people

10 want to keep on plowing ahead before lunch.

11 MR. RABA: Do you want to tough it out or do

12 you want to take a break now? I think we're ready for

13 a break. What do you say? Lunch. Okay. So, let's

14 take one hour. You've earned it.

15 Thank you very much.

16 (Whereupon, at 12:25 p.m., the meeting was

17 recessed for lunch, to reconvene this same day at 1:30

18 p.m.)

19

20

21

22

23

24

25

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1

2 AFTERNOON SESSION

3 (1:30 p.m.)

4 Life Cycle Cost Analysis (Continued)

5 MR. ROSENQUIST: Okay. Thanks, Jim. Looks

6 like some people still need to be coming in, but I'll

7 start.

8 Where I'm picking up now is at the mark-ups

9 to determine equipment prices, and this is the second

10 of the third components that comprise the LCC Analysis.

11 The purpose of this analysis is to take those

12 manufacturing costs from the Engineering Analysis and

13 mark them up into consumer retail prices for the Life

14 Cycle Cost Analysis.

15 One of the main purposes is to characterize

16 how that equipment is being distributed from

17 manufacturers to consumers; that is, how to

18 characterize the distribution channels for each of the

19 products.

20 Once we establish the parties that are

21 involved in the distribution of the products, we

22 develop mark-ups for each one of them by looking at

23 their direct costs, their expenses, and their profits.

24 Inputs to the analysis for manufacture mark25 ups come from 10-k reports that are filed to the

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1 Securities and Exchange Commission by publicly-traded

2 appliance manufacturers. The mark-ups for retailers

3 and distributors are developed from data from the U.S.

4 Census Bureau. We develop what are called firm balance

5 sheets and there's one set that are developed for

6 retailers and another set that's developed for

7 distributors of equipment, including those that

8 distribute commercial clothes washers.

9 The output of this analysis are baseline and

10 incremental mark-ups and I'll be describing what those

11 are in a couple more slides.

12 This slide discusses the distribution

13 channels that were developed for residential products

14 and commercial clothes washers. For residential

15 products, we relied on data from the AHAM Fact Book

16 which stated that over 93 percent of sales go through

17 appliance retailers. So, since such an overwhelming

18 majority of products are being distributed in this

19 manner, we relied solely on this particular

20 distribution channel to develop the mark-ups and in

21 turn the consumer retail prices for dishwashers,

22 dehumidifiers, and cooking products.

23 For commercial clothes washers, we relied on

24 data from the Consortium for Energy Efficiency. They

25 produced a report in 1998 that looked at the family

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1 size residential style commercial clothes washer market

2 and they essentially established two types of

3 distribution channels, one for laundromats and the

4 other one for multifamily housing.

5 For laundromats, they essentially purchased

6 most of their equipment through distributors while for

7 multifamily housing, they get their equipment either

8 through leases or through purchase from route

9 operators.

10 Constantin mentioned some details about how

11 the route operators lease equipment to multifamily

12 housing owners back in the Preliminary Manufacturing

13 Impact Analysis.

14 What we did for our analysis for commercial

15 clothes washers is that we relied solely on this

16 distribution channel that had product go through the

17 distributor into the laundromat owners and we assumed

18 that the resulting equipment prices from that

19 distribution channel are representative of the prices

20 that you would get through this other distribution

21 channel that involved route operators.

22 And that leads us to our next issue that DOE

23 is seeking public comment on and that's our method for

24 determining consumer retail prices for commercial

25 clothes washers, and again I'll just repeat, you know,

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1 we characterized these two general distribution

2 channels for determining prices, but we relied only on

3 the distribution channel that involved distributors

4 selling to laundromats.

5 So, DOE is requesting feedback on this

6 approach. Specifically, whether or not the prices you

7 get from that distribution channel involving

8 distributors is representative of the prices you would

9 get through the route operators.

10 MR. RABA: Floor's open.

11 MR. MANTHEI: It's Phil Manthei from Alliance

12 Laundry Systems.

13 We'll comment on that with our formal

14 comments after the meeting. Personally, I don't have

15 anything in front of me right now, but I would imagine

16 that they're basically the same. It's probably

17 acceptable.

18 MR. RABA: Okay. Good. Others? Other

19 thoughts?

20 (No response.)

21 MR. RABA: I think it will require some

22 thought on a lot of folks' part. So, we'll look for

23 your comments around the table, but, okay, let's move

24 on.

25 MR. ROSENQUIST: This next slide speaks to

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1 the development of the baseline and incremental mark2 ups.

3 The baseline mark-ups are used to convert

4 baseline manufacturing costs into baseline consumer

5 prices while the incremental mark-ups are used to

6 convert the incremental change in the manufacturing

7 cost into an incremental change in the consumer price.

8 So, I want to emphasize that the incremental mark-ups

9 are applied only on that portion that is an incremental

10 change.

11 Both sets of mark-ups relate the consumer

12 price --

13 MR. RABA: We have a question here, Greg.

14 MR. ROSENQUIST: Yes?

15 MR. RABA: J.B. Hoyt, Whirlpool.

16 MR. HOYT: Greg, could you expand on why you

17 do that? Because what that suggests to me is that

18 you're expecting manufacturers to take a lower margin

19 on that incremental cost, incremental piece of the cost

20 than on the baseline.

21 MR. ROSENQUIST: Well, I should clarify that

22 these types of mark-ups are only developed for the

23 retailers, the home appliance retailers, as well as the

24 distributors for commercial clothes washers because we

25 had the level of data that would allow us to look more

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1 closely at their costs and expenses to try to get after

2 what their mark-up might be after Staggers takes

3 effect.

4 For manufacturers, we didn't have that level

5 of data. So, for the manufacturer mark-ups, we assumed

6 that equivalent mark-ups were the baseline and

7 incremental, that they're basically the same.

8 MR. RABA: Was that helpful?

9 MR. HOYT: Yes, that clarifies it. Thank you

10 very much.

11 MR. RABA: You're welcome. Other questions

12 while we're pausing?

13 (No response.)

14 MR. RABA: Okay. Go ahead, please.

15 MR. ROSENQUIST: So, as I was saying, the

16 mark-ups relate to how the customer -- the consumer

17 price relates to the cost of goods sold for the parties

18 that dispute this piece of equipment and again I'm

19 talking about only the retailers for residential

20 products and the distributors for commercial clothes

21 washers.

22 For the baseline mark-up, it relates again to

23 the situation where there's no change in product

24 efficiency; that is, no new efficiency standard, and

25 what these baseline mark-ups cover are the distributor

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1 and retailer's cost basically of doing business. It

2 covers all of their expenses and costs, plus their

3 profit. That includes direct labor costs, like

4 salaries for personnel, administrative payroll,

5 utilities, rent, those type of things. It also covers

6 non-direct labor costs, like insurance, depreciation,

7 advertising.

8 Now, the incremental mark-ups, they relate

9 only again that what happens under this situation when

10 you have a change in efficiency otherwise caused by a

11 change in the standard, and it covers only those costs

12 that do change when you have this change in product

13 efficiency.

14 So, unlike in the case of baseline mark-ups

15 where you're covering all of the distributor or

16 retailer's costs and expenses and profit, the only

17 thing we're covering in incremental mark-ups are the

18 non-direct labor costs and profit and the assumption

19 there is that the direct labor costs won't change when

20 you have a change in equipment efficiency. So, meaning

21 that salaries to personnel won't change, the rent,

22 utilities won't change, administrative payroll won't

23 change.

24 So, under the incremental mark-up

25 assumptions, we always come up with the value that's

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1 lower than the value for the baseline mark-up, and this

2 table summarizes the mark-ups that we developed for our

3 analysis. For the manufacturer mark-ups, we developed

4 the same value for all products, 1.26. For the

5 retailer mark-ups, we had values of 1.45 and 1.15 for

6 the baseline and incremental values, and for commercial

7 clothes washers, we had values of 1.43 and 1.18 for the

8 baseline and incremental values.

9 When you throw in sales taxes, you get an

10 overall mark-up which is used again to convert that

11 baseline manufacturing cost and the incremental change

12 to that manufacturing cost into consumer retail prices,

13 and the baseline value varies between 1.95 and 1.93 and

14 incrementals vary from 1.55 to 1.59.

15 That ends this part of the analysis. I don't

16 have a specific slide here for anything else regarding

17 mark-ups, but I'm certainly willing to entertain any

18 questions you might have about this analysis.

19 (No response.)

20 MR. ROSENQUIST: Okay. Let's move on. Let's

21 now talk about the Life Cycle Cost and Payback Period

22 Analysis and again its purpose is to develop the net

23 LCC impacts as well as the payback period to consumers

24 of raising the efficiency of these products that we're

25 analyzing.

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1 This slide goes over the method that's used

2 to do the LCC Analysis. The first thing, of course, is

3 to define what the LCC is and it's the consumer price

4 plus the sum of the operating costs, the lifetime

5 operating costs, discounted to a particular base year,

6 and so again we do this analysis from the perspective

7 always of the consumer, and we implement this analysis

8 in a spreadsheet tool using Microsoft Excel and we

9 combine it with an add-in called Crystal Ball.

10 This allows us to do what we call a Monte

11 Carlo simulation analysis where we characterize all of

12 the inputs to the analysis with probability

13 distributions to capture the variability and

14 uncertainty of those inputs.

15 For residential products, we have household

16 samples which we're sampling from for the purpose of

17 trying to characterize the variability in the energy

18 use and energy prices that pertain to these products.

19 So, the result of our analysis is a distribution of

20 results.

21 We actually do 10,000 iterations and so we

22 have a very wide distribution of results which we can

23 pick off a mean value and a median value from, and we

24 also can determine from the distribution what percent

25 of consumers are benefiting and being burdened by the

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1 standard.

2 The results for the LCC are savings

3 calculated from a standard level relative to a baseline

4 level and we also calculate the simple payback which is

5 just the change in the total installed cost divided by

6 the change in the first year's operating expenses.

7 This flow chart is just a simple

8 representation of what we do in the LCC. We calculate

9 the first cost by calculating the consumer price plus

10 the installation cost. We have the lifetime operating

11 expenses which are converted to the present value and

12 we combine those two which gives us the LCC results.

13 This flow chart goes into much more detail

14 about all the inputs that are involved in calculating

15 the life cycle cost and the payback period and I

16 believe a lot of you have seen this type of flow chart

17 before. So, I'll go over it relatively quickly.

18 Starting with the inputs in the upper left19 hand corner, these are the baseline and standard level

20 manufacturing costs that we get from the Engineering

21 Analysis. We combine those with the mark-ups in the

22 sales taxes to get the consumer retail price. We add

23 the installation cost to get the total installed cost

24 of the product.

25 For the operating expenses, we start with the

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1 energy and water consumption data that we get from the

2 Energy Use and Water Use Characterization Analysis,

3 combine that with energy and water prices to get the

4 annual energy and water expense. We add repair costs,

5 maintenance costs to get annual operating expenses, and

6 then we add in lifetime discount rate and energy and

7 water price trends to get lifetime operating expenses.

8 Those are added to the total installed cost to get the

9 life cycle cost and again the change in the total

10 installed cost divided by the change in the first

11 year's annual operating expenses gives you the payback

12 period.

13 Now I'm going to be going into detail, a

14 little bit of detail about all these inputs that are

15 fed into the Life Cycle Cost Analysis.

16 Yes?

17 MR. DeLAURA: This goes to my earlier

18 question. This is Lance DeLaura with Southern

19 California Gas Company.

20 You actually answered virtually all of it.

21 It's perfect, and it makes perfect sense to me. The

22 only question I have is on the lifetime. How do you

23 determine the lifetime for the equipment?

24 MR. ROSENQUIST: I have a slide that will go

25 into that in a little bit more detail.

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1 MR. DeLAURA: Okay. All right. Thank you.

2 MR. ROSENQUIST: Okay. So, with regard to

3 total installed costs, again those are determined by

4 taking the consumer retail prices and adding the

5 installation cost. Again we get those manufacturing

6 costs and multiply them by mark-ups in order to get the

7 consumer retail price. Manufacturing costs come from

8 the Engineering Analysis. Mark-ups and sales taxes

9 come from the mark-ups to determine equipment price

10 analysis.

11 The installation costs is the cost that

12 represents the labor, materials that are required to

13 install the piece of equipment and for this analysis,

14 we used data from the RS Means Cost Databook. It's a

15 book that represents the installation costs of various

16 pieces of equipment and it's used exclusively in North

17 America.

18 I want to point out that for dehumidifiers

19 and microwave ovens, we assume that they would incur no

20 installation costs, and also I wanted to mention that

21 these installation costs were assumed not to vary with

22 product efficiency, with one exception, for gas

23 cooktops and gas standard ovens.

24 We recognize that in some situations, if DOE

25 requires these appliances not to use standing pilots,

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1 that some kitchens will have to install electrical

2 outlets in order to accommodate that appliance that now

3 needs electricity to operate and again we accounted for

4 that in this analysis.

5 This is an example of one total cost versus

6 efficiency curve. The example up here is for standard

7 size dishwashers. It shows the total installed cost as

8 a function of the dishwasher's energy factor. The

9 installation costs were about $250 and again those did

10 not vary with energy factor.

11 Just quickly looking at the curve, up and

12 through .65 energy factor, the curve is relatively flat

13 and then after that, it increases quite steeply,

14 indicating that the cost of the efficiency is quite

15 high after energy factor of .65.

16 Next are the energy and water prices. For

17 the electricity prices, we developed average

18 electricity prices for this analysis, based upon data

19 from the Energy Information Administration, Form 861

20 data, which provides revenue and sales for various

21 utilities in the country, almost all the utilities in

22 the country. So, dividing the revenues by the sales

23 gives us an average electricity price for each utility

24 in that sample.

25 The data also provides us with customer --

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1 the number of customers that each utility serves. So,

2 we can come up with a customer-weighted average

3 electricity price for 13 regions and we focused on the

4 nine Census divisions in the four large states, those

5 states being New York, California, Texas and Florida.

6 By doing this, we captured the regional variability of

7 electricity prices into our Life Cycle Cost Analysis.

8 For natural gas prices, we based this on

9 EIA's natural gas monthly data which provides average

10 gas prices by state and using population data, we

11 developed a weighted average natural gas price for each

12 one of these 13 regions. So again, just like

13 electricity prices, we captured the variability in gas

14 prices into our LCC Analysis.

15 Next, we come to oil prices and we needed to

16 do this because for dishwashers, some water that's

17 being heated in households are from oil water heaters.

18 We used EIA's Petroleum Navigator to do this. It

19 provides data again at the state level. Not all states

20 have data provided for them. So, we had to limit it to

21 about 10 regions in which we developed average oil

22 prices for.

23 For water prices, we got data here from the

24 Ref Telus Consultants, American Waterworks Association,

25 Water and Wastewater Survey. The version of the survey

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1 that we used in our analysis had about 300 water

2 utilities and about 200 wastewater utilities, and from

3 that analysis, even though it's a nationally

4 representative survey, there's not enough utilities in

5 each region to develop an average water price and an

6 average wastewater price for each of the 13 regions.

7 So, we just stopped at developing regional prices at

8 the four Census regions.

9 In this slide, -- oh.

10 MR. deLASKI: Just to clarify on your last

11 slide, if I can, so you listed water as the fourth

12 bullet, but I heard you talk about wastewater, too.

13 So, are you -- water and wastewater are rolled up

14 together into a single number?

15 MR. ROSENQUIST: Actually, we disaggregate

16 the two and so we account for both. Yeah. This slide

17 should say water and wastewater prices, not just water.

18 MR. deLASKI: Because in my understanding in

19 many parts of the country, wastewater is probably more

20 expensive than water itself.

21 MR. ROSENQUIST: Yeah. I moved to the next

22 slide. If you go straight down, water --

23 MR. deLASKI: Just on that last slide, if I

24 may, one other comment on the oil prices. I don't know

25 what share oil has for water heating. I think it's

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1 pretty small. I also suspect it's concentrated

2 geographically. So, doing 10 regions might be kind of

3 overkill.

4 MR. ROSENQUIST: Yeah. There's about one or

5 two water heaters in California that use oil.

6 MR. deLASKI: Right.

7 MR. ROSENQUIST: Well, most of them are in

8 the Northeast.

9 MR. deLASKI: Yeah.

10 MR. RABA: That was Andrew deLaski.

11 MR. ROSENQUIST: Comment?

12 MR. CABOT: Paul Cabot, American Gas

13 Association.

14 I just need clarification. On the natural

15 gas prices, you use the EIA's data. Is that averaged

16 for a year or is that just particular months?

17 MR. ROSENQUIST: They give us monthly data

18 and we just took a straight average to come up with an

19 annual price for each state.

20 MR. CABOT: So, you took one month?

21 MR. ROSENQUIST: Yeah. They gave us prices

22 for each of the 12 months of the year.

23 MR. CABOT: They did, and you took the 12

24 months and came up with an average?

25 MR. ROSENQUIST: A straight average.

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1

2

3

4

5

6

MR. CABOT: Straight average for the year?

MR. ROSENQUIST: That's correct.

MR. RABA: Other questions, please?

(No response.)

MR. RABA: Okay.

MR. ROSENQUIST: And I don't want to linger

7 on this slide a long time. I just wanted to show that

8 we did develop all these energy and water prices at the

9 level of the regions that I mentioned before in the

10 previous slide, and if you look at the numbers here,

11 you can see how the prices vary from region to region.

12 We developed weighted average prices for

13 electricity, gas and oil and again you can see them on

14 the slide for each of the four products, and again for

15 water, we did this because we had to evaluate water and

16 wastewater prices for dishwashers and commercial

17 clothes washers because both those appliances do use

18 water.

19 Next, we had to forecast what happens to

20 these energy prices into the future and these two

21 figures show what these price forecasts are for

22 electricity and natural gas, and these forecasts are

23 straight out of the Annual Energy Outlook which is

24 another Energy Information Administration publication.

25 We incorporated three cases into our

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1 spreadsheet tool, the reference case, the high-growth

2 case, and the low-growth case. The forecast stops at

3 the year 2030, so we had to extrapolate this out to the

4 end of our analysis period for purposes of the National

5 Impact Analysis. So, we used the -- for electricity

6 pricing, we used the average growth rate from 2020 to

7 2030 to estimate what would happen out to 2042 and for

8 gas and oil prices, we looked at the average rate from

9 2015 to 2030 to forecast those prices out to 2042.

10 Again we had to also forecast what would

11 happen to water and wastewater prices and here, we used

12 Consumer Price Index for water prices to forecast those

13 prices into the future, and we used the average rate

14 and the CPI from 1970 to 2005 in order to do this.

15 This slide goes over almost all the remaining

16 inputs into the LCC and Payback Period Analysis which

17 include discount rates, equipment lifetime, and repair

18 and maintenance costs. For discount rates, again as a

19 reminder, these are used to bring the future operating

20 costs to a present value, and we base these rates on

21 the finance cost of purchasing these appliances, and we

22 do a weighted average calculation that's based upon

23 consumers and how consumers pay for these appliances

24 with either debt, either debt-based purchases, for

25 example, using a credit card or a home equity loan, or

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1 the opportunity costs associated with equity that has

2 to be pulled out in order to purchase the appliance.

3 So, for example, maybe pulling money out from a savings

4 account or stocks and bonds.

5 For our residential discount rate, we

6 developed an average real mortgage rate for purchases

7 to new housing and that turned out to be .2 percent

8 real. For replacements and also for purchases that go

9 to existing households that don't already have the

10 appliance, we did a weighted average calculation, again

11 taking into account the equity and debt financing that

12 goes on, and we got a 5.6 percent real interest rate

13 associated with replacements and households that don't

14 already have the appliance.

15 And our primary source for data for all this

16 was the Federal Reserve Board's Survey of Consumer

17 Finance, and we looked at surveys over years spanning

18 1989 to 2004 in order to capture all the economic

19 cycles that occur during the course of a long period of

20 time. So, we don't sample from one particular year.

21 We want to look at all the years in order to have a

22 representative discount rate value.

23 For commercial discount rates, we calculate

24 that using a weighted average cost of capital

25 technique. So, we determine what the weighted average

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1 cost of capital is to firms that actually purchase

2 commercial clothes washers and in that case, the

3 average discount rate happened to be 5.7 percent real.

4 For product lifetimes, we based that on

5 various sources, but we relied more heavily on the

6 Appliance Magazine and past DOE Technical Support

7 Documents. We see lifetime values here. Each of them

8 had a range of values with an average value.

9 I do want to point out for commercial clothes

10 washers, that we had two sets of lifetimes for the two

11 different product applications that we looked at, one

12 for multifamily housing and the other one for

13 laundromats. We found that laundromats used their

14 clothes washers more frequently, so that had a lower

15 lifetime than for multifamily housing.

16 Finally, we come to the repair and

17 maintenance costs and the repair costs are the costs to

18 repair or replace a component that fails in a piece of

19 equipment and the maintenance costs are those to

20 maintain the operation of the equipment over its life.

21 For this analysis, we assumed no changes in

22 these repair and maintenance costs as you increase

23 product efficiency which leads us to our next issue,

24 which is how DOE developed the repair and maintenance

25 costs for the ANOPR, and specifically because we could

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1 not collect any data or was not provided with any data

2 to determine how these repair and maintenance costs

3 might change with product efficiency, again we went

4 ahead and went forward with an assumption that they did

5 not change with efficiency. So, DOE is requesting

6 feedback on whether or not this assumption is

7 reasonable.

8 MR. CABOT: Yeah. Just before we go on with

9 the repair and maintenance cost, specifically on the

10 cost of installing an electrical outlet, the indication

11 that it currently has a standing pilot range and is

12 forced to switch over to a range with electric

13 ignition.

14 As I understand the TSD Document, we're using

15 the 1996 TSD as the basis for gas appliances and that's

16 $90 per outlet?

17 MR. ROSENQUIST: Actually, we updated that

18 with more recent data from the RS Means. The data that

19 we did take from the '96 TSD was the estimate of how

20 many households would have to install an electrical

21 outlet --

22 MR. CABOT: Just that. Okay.

23 MR. ROSENQUIST: -- and that was, we

24 estimated, to be 20 percent of households.

25 MR. CABOT: Right. So, do you know the

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1 figure for installation? I couldn't figure that out.

2 I didn't see it on the spreadsheets or anything.

3 MR. ROSENQUIST: You know, for a household

4 that needs an electrical outlet, I think it's on the

5 order of a $100.

6 MR. CABOT: So, not too much different from

7 1996.

8 MR. ROSENQUIST: Not too much different from

9 1996.

10 MR. CABOT: Okay. And we have comments on

11 it, that being way too low, but --

12 MR. ROSENQUIST: Okay.

13 MR. CABOT: -- we'll write them up.

14 MR. ROSENQUIST: Okay.

15 MR. RABA: And your name for the record

16 again?

17

18

19

MR. CABOT: Oh, I'm sorry. Paul Cabot, AGA.

MR. RABA: Thank you, Paul. Other comments?

MR. ECKMAN: Just a question.

20 MR. RABA: Tom Eckman.

21 MR. ECKMAN: Back on the other inputs again,

22 is the 3.2 percent average real mortgage rate, is that

23 net of tax effects or is that just net of inflation?

24 MR. ROSENQUIST: For both inflation and tax

25 effects.

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1 MR. deLASKI: Andrew deLaski with Alliance

2 Standards Awareness Project.

3 Just following up on AGA's comment of a

4 moment ago about -- I heard you say -- your assumption

5 about the percent of households that would need -- that

6 lack an outlet near the stove is what? What was the

7 assumption?

8 MR. ROSENQUIST: 20 percent.

9 MR. deLASKI: Which dates from?

10 MR. ROSENQUIST: Again from the analysis we

11 did back in 1996.

12 MR. deLASKI: Okay. And is there any intent

13 to update that analysis to know -- do you believe that

14 number to still be the same 10 years later, 11 years

15 later, or is there any reason to suspect it might be

16 different?

17 MR. ROSENQUIST: We have to do some

18 additional research to determine whether that number

19 was appropriate still. So, I don't have a feel for

20 whether or not that is still appropriate today.

21 MR. RABA: So, we'll note that for the

22 record, and during the NOPR process, we'll pick up on

23 that .

24 Paul Cabot?

25 MR. CABOT: Yeah. Paul Cabot, AGA.

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1 Just to clarify, the 20 percent is actually

2 what DOE is assuming that would require out of all

3 homes that would have to switch over to electric. So,

4 in other words, if you had 10 homes that required an

5 electrical outlet, DOE's only assuming that 20 percent

6 of those, two out actually have to put an extra outlet

7 in and the rest of those kitchens rely upon existing

8 outlets in the room.

9 Our contention is that if you have to follow

10 the National Electric Code, which is all the cities and

11 states require, that your percentage of homes requiring

12 an additional outlet be actually installed is much

13 greater than 20 percent of overall homes. So, we

14 understand that the basis for 20 percent is a

15 guesstimate, that there is no data behind it, and we

16 contend that those figures should be much higher.

17 MR. DeLAURA: This is -- could I ask a

18 question, too, or make a statement? Lance DeLaura with

19 Southern California Gas Company.

20 I would also suggest that it's a regional

21 issue. In California, there's a very high percentage

22 of natural gas cooking and where you have natural gas

23 cooking, typically you wouldn't see an outlet. In

24 areas, let's say the Northwest or other parts of the

25 country where they have hydro and there is electric,

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1 you would see it.

2 So, I would suggest taking a finer cut as

3 well as support Paul's comment.

4 MR. HOYT: J.B. Hoyt, Whirlpool Corporation.

5 The discussion of product lifetimes. Do I

6 recall that the ANOPR document says you used a uniform

7 distribution over the time period shown here?

8 MR. ROSENQUIST: That's correct.

9 MR. HOYT: I find that highly unusual. I've

10 never seen any kind of product failure rate that's a

11 uniform distribution and most are Poson or Rival-based.

12 What was the rationale for uniform?

13 MR. ROSENQUIST: Simply because we didn't

14 have enough detailed data to tell us what type of

15 distribution it should be. So, our default assumption

16 was to use a uniform distribution.

17 MR. HOYT: Well, but generic product failure

18 rates would suggest something else is my only point.

19 MR. RABA: As an aside, too, again more data

20 is more helpful. So, with the distributions, maybe in

21 some question of interest, we may look at that again,

22 provided we get more data, for the next agency

23 analysis. So, good comment.

24 Next, please.

25 MR. CALABRESE: Dave Calabrese with AHAM.

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1 On the repair issue, specifically maintenance

2 costs in regards to commercial clothes washers, we

3 believe there is a difference, first of all, as you

4 move up in efficiency level, there would be more repair

5 costs. We are gathering some more data on that and

6 we'll be aggregating that and so perhaps we'll be able

7 to provide that to you as we provide our written

8 comments.

9 MR. RABA: Okay. Comment, please.

10 MR. MANTHEI: Phil Manthei with Alliance

11 Laundry Systems.

12 Yes, we'll be supporting the collection of

13 data on repair through AHAM.

14 It's obvious because of the types of controls

15 that are used in the front load horizontal axis,

16 you've got a converter control. It's much more

17 expensive, more expensive motor, variable speed motor,

18 et. cetera, to run the front load clothes washer. So,

19 the costs are higher, and we'll do our best to support

20 the information.

21 MR. CABOT: I also want to echo these

22 comments, Paul Cabot, American Gas Association,

23 especially when you're talking about going from a

24 standard pilot range to one that includes electronic

25 controls.

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1 You're talking a big difference in repair

2 costs in the future. So, we need to have those

3 considered.

4 MR. RABA: Okay. Great.

5 MR. ROSENQUIST: Okay. Thank you for that

6 feedback. I appreciate it.

7 Next, we move on to the very last input into

8 the Life Cycle Cost Analysis, and this is the equipment

9 assignment in the base case.

10 Typically way in the past, DOE usually

11 analyzed all standard levels relative to only the

12 baseline level, but, you know, not all consumers

13 purchase products at the baseline level. They actually

14 purchase products over a wide range of efficiency.

15 So, the base case efficiency distributions,

16 which I like to call, are -- what they do is they

17 define the percentage of the market that is actually

18 being purchased by consumers at these various

19 efficiency levels.

20 So, we incorporate that into the analysis to

21 make sure that we don't overstate the benefits from a

22 particular standard level; that is, if a consumer's

23 already purchasing equipment at the standard level that

24 we're looking at, we want to make sure that we capture

25 that into the analysis and make sure that we identify

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1 that they won't be impacted by an increase in the

2 standard.

3 What this slide shows you are the base case

4 efficiency distributions that we used for dishwashers

5 and dehumidifiers. AHAM had submitted data to DOE that

6 provided this information. So, you can see for

7 dishwashers, very little portion of the market is at

8 the baseline level of .46. On the order of 80 percent

9 of the market is actually between energy factors of .58

10 and .62.

11 For dehumidifiers, somewhat similar in the

12 fact that you do have product sales, much more than

13 dishwashers, at the baseline level, but you also do

14 have a large percentage of equipment being sold above

15 the baseline level.

16 For cooking products, we only had enough data

17 to allow us to get after what the distributions might

18 be like for gas cooktops and gas standard ovens. AHAM

19 was not able to provide any information when it came to

20 cooking products, but because of the issue of standing

21 pilots and how many products are still being shipped

22 with standing pilots, we wanted to try to capture this

23 into our analysis.

24 For gas cooktops, it turns out that around 7

25 percent of the market is still being purchased with the

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1 standing pilot while for gas standard ovens on the

2 order of 18 percent is still being purchased with

3 standing pilots.

4 What we do in the rest of the analysis, in

5 particular for the National Impact Analysis, is that we

6 forecast what happens to the share of the market with

7 standing pilots based upon the historical trend and

8 basically what that means is that by the year 2035, on

9 the order of 5 percent of the market, we estimate, will

10 be shipped with standing pilots.

11 For commercial clothes washers, AHAM provided

12 only a shipment-weighted efficiency value. So, we had

13 to deduce a distribution from that and we assumed that

14 we had a bimodal distribution; that is, product was

15 either being purchased at the baseline level or at the

16 level of 2.0 MEF with a water factor of 5.5, and with

17 that assumption, we get around 80 percent of the market

18 at the baseline level and 20 percent at the higher

19 efficiency level.

20 MR. RABA: Comments over here?

21 MR. CABOT: Paul Cabot, American Gas

22 Association.

23 Just a clarification. When looking through

24 the TSD, and this is on shipments of ranges with

25 standing pilots, I noticed that in Table 8297, it says

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1 18 percent, but if you go to Table 939, which is again

2 historical shipments projected out for 2004, it says 29

3 percent. So, I'm not quite sure the difference between

4 those two tables.

5 I think DOE needs to go back and see if it's

6 in error in using two different datasets to come up

7 with these percentages, but we just want to make sure

8 that that's clarified.

9 MR. RABA: Thank you, Paul.

10 MR. ROSENQUIST: So, this is the next issue

11 for public comment that DOE is seeking input on, and

12 it's this development of these efficiency

13 distributions, and as I've said before, the reason why

14 we're doing it is to make sure we don't overstate the

15 benefits for moving to a higher standard level and want

16 to capture those consumers that are already purchasing

17 products at more efficient levels than the baseline.

18 For dishwashers and dehumidifiers, we're

19 pretty confident about those base case efficiency

20 distributions because those did come from AHAM and they

21 are fairly detailed, but we are less certain about our

22 distributions for gas cooking products and for

23 commercial clothes washers.

24 So, DOE is looking for feedback on these base

25 case efficiency distributions, in particular on the

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1 cooking products and on the commercial clothes washers.

2 I don't know if anyone wants to provide any

3 input on this right now or --

4 MR. RABA: Going once, going twice. Written

5 comments are always welcome.

6 MR. ROSENQUIST: This is the last slide from

7 the LCC Analysis presentation, and it shows an example

8 of the results that are generated with the LCC and

9 Payback Analysis.

10 I'm using the example here of dishwashers.

11 The figure on the left shows the average life cycle

12 cost and the average payback as a function of the

13 energy factor, and you can see that the minimum life

14 cycle cost is at an energy factor of .65 with a

15 corresponding payback value of around six years.

16 The figure on the right shows what percent of

17 consumers are benefiting, being burdened or not

18 impacted at all from an increase in the standard. So

19 again looking at a .65 energy factor, that green bar

20 which represents about 55 percent of consumers will be

21 benefiting from the standard, 10 percent, that yellow

22 bar, represents those not impacted at all because

23 they're either purchasing dishwashers at that energy

24 factor or higher, and finally, the red bar indicates

25 those percentage of the consumers being burdened by the

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1 standard which in this case is around 35 percent.

2 So that's the Life Cycle Cost and Payback

3 Period Analysis presentation, and the department seeks

4 any additional input on the analysis at this time.

5 MR. deLASKI: Andrew deLaski, Alliance

6 Standards Awareness Project.

7 Greg, I want to take you back to an issue

8 from before lunch, if I could, back on Slide 79. Here,

9 for cooking products, you characterized the energy

10 consumption for what's called CLOCK here, and there's

11 been a lot of attention to the issue of standby power

12 electrical consumption for various products, and I'm

13 curious whether this is literally just the clock or

14 whether it also incorporates other functions, other

15 standby energy uses.

16 MR. ROSENQUIST: Well, the data was taken

17 from the '96 analysis, the Technical Support Document,

18 and there, it was just the clock power. So, the answer

19 is, is that, I believe it represents only the clock

20 power and not any other standby power consumption.

21 MR. deLASKI: Okay. So, I think that in

22 order for the department to accurately characterize the

23 energy use for the cooking products, there's probably

24 additional standby energy consumption going on, in

25 addition to a clock, in a product being sold today

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1 versus one being sold, you know, a dozen years ago.

2 MR. RABA: Does anybody have examples, for

3 example?

4 MR. deLASKI: I think it's something that

5 needs to be investigated. I don't have particular

6 examples myself.

7 MR. RABA: It would be good for further

8 feedback to us. Thank you. Good point.

9 Ron Lewis?

10 MR. LEWIS: Ron Lewis, DOE.

11 I'm just thinking in the time period since

12 1996, not only are there more functions and bells and

13 whistles on things that may contribute to it, but

14 clocks have probably gotten a lot more efficient than

15 what were being used back in 1996 as well. So that

16 that whole net of the detail of how that's derived

17 probably would be important to know rather than just

18 assuming that the clocks are still consuming the same

19 energy they did in 1996. So, there may be details

20 available on that.

21 MR. deLASKI: Right. It's a question that

22 can be answered, right? I mean, people --

23 MR. LEWIS: Well, there was a question

24 before, I guess Paul from AGA had mentioned something

25 about components, somebody else had mentioned

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components in the maintenance and costs and things.

2 There are a lot of things where we really

3 could use some help, if somebody would give us. If

4 there's a difference in builds and materials today, if

5 there's a difference in the basic operation, if there

6 are assumptions that go back to the '96 TSD and we're

7 doing analysis that's considering new technologies or

8 new ways of doing things, the smarter we can get as far

9 as those components that are there that may impact

10 initial costs and may impact operating costs, they may

11 impact maintenance costs.

12 We're assuming a lot of stuff. There may not

13 be visible data on a lot of items. Everybody easily

14 throws out what you need to do more work on that, but

15 we need to find data and it's not always available on

16 some of these things.

17 So, as people are asking for finer

18 granularity, it would be helpful that people, you know,

19 in this room and others think about ways they could

20 accurately portray so that we give an accurate

21 depiction and do accurate analysis.

22 MR. deLASKI: Thanks, Ron, for that

23 clarification.

24 I think on the issue of standby energy use

25 for all of these products, but the microwaves has

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1 already been discussed in some length, and I guess it's

2 on the agenda for this afternoon as well, that some

3 simple metering on how much energy use is a cooking

4 product using when it's not cooking is not a

5 tremendously indepth task to undertake for the

6 department.

7 And since we often -- you can't assume -- we

8 often see standby energy use of appliances that's just

9 way higher than you would expect and until we go and do

10 some metering, till someone does that metering, you

11 know, you don't know the answer. The manufacturers may

12 have some data but they may not at this point. Standby

13 energy use of cooking products may not have gotten much

14 focus until now.

15 So, I think putting that question back to the

16 manufacturers makes a lot of sense, but if we don't get

17 an answer, I think it's something that it's worth the

18 department doing some tests and doing some metering to

19 determine is there -- what is the standby energy, just

20 like we did on microwaves, but for the rest of these

21 cooking products as well. What is the sort of range

22 that you see of standby energy consumption on the

23 electric side?

24 MR. RABA: Good exchange. That was good.

25 Good discussion.

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1 Any others, please?

2 (No response.)

3 MR. RABA: Proceed. Okay. At this point,

4 we're finished with Life Cycle Cost Analysis.

5 Overall, are there any questions for the

6 Department of Energy General Counsel? Anything at all?

7 General Counsel has to leave at this time. So, I

8 wanted to invite any last questions. We'll stay here,

9 but he has to go.

10 (No response.)

11 MR. RABA: None hearing. Hearing none.

12 Thank you very much for being with us this morning and

13 this afternoon.

14 NATIONAL IMPACT ANALYSIS

15 MR. ROSENQUIST: Okay. With that, I'll

16 proceed with talking about the National Impact

17 Analysis.

18 Again returning to the ANOPR Analysis Flow

19 Diagram, this presentation will focus on two components

20 of the National Impact Analysis: the Shipments

21 Analysis and the actual National Impact Analysis. The

22 Life Cycle Cost and Payback Period Analysis as well as

23 the Shipments Analysis provide inputs that are used to

24 do the National Impacts.

25 The purpose of the Shipments Analysis is to

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1 estimate appliance shipments over time and also

2 estimate the impact of standards on those shipments.

3 The purpose of the National Impact Analysis is to

4 estimate the national energy savings that could result

5 from various standard levels that we're looking at for

6 these products and it's also to estimate the national

7 economic impacts quantified as the net present value

8 for these various standard levels that we're

9 considering.

10 This slide is a simple flow diagram of the

11 process used to calculate the national impacts. Again

12 we take results from the Life Cycle Cost Analysis and

13 these are results that are on a per unit basis. So,

14 we're taking per unit total installed costs, per unit

15 annual energy and water consumption and per unit annual

16 energy and water expenses.

17 The shipments model, not only does it

18 generate annual shipments but it's also a stock

19 accounting model. It keeps track of the appliance

20 stock over time for each year over this analysis

21 period. So, in simple terms, what happens is that to

22 calculate out national energy, national water

23 consumption, national costs, is we take the per unit

24 values from the LCC Analysis and multiply them by the

25 stock of an appliance for any given year in order to

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1 get those values.

2 The national energy savings is calculated

3 over the time period of 2012 to 2042 which is a 30-year

4 time period. 2012 is the assumed effective date of the

5 standards.

6 The national economic impacts are determined

7 with a net present value which is the difference in the

8 national operating cost savings and the national

9 installed equipment costs. Again this is calculated

10 over the time period of 2012 to 2042 and it's valued in

11 billions of dollars.

12 There were three issues identified in the

13 ANOPR for which DOE was seeking public comment. I'll

14 be talking about each one of these issues later on in

15 this presentation.

16 This complicated-looking flow chart is a

17 representation of the shipments model that was used to

18 estimate shipments for each of the four products.

19 There are three basic market segments that were

20 assumed. One was for replacements, two was for new

21 construction, and then a third was used in order to

22 calibrate our shipments model to historical data.

23 The light yellow-covered boxes represent the

24 inputs and calculations that are done in order to come

25 up with the replacement shipments and the new

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1 construction shipments. For replacements, we again are

2 tracking the appliance stock and its vintage and using

3 appliance lifetime, we can figure out when these

4 appliances fail and thus need replaced. For new

5 construction shipments, we're using new construction

6 building starts and multiplying that by the saturation

7 of these products in those new buildings.

8 I do want to note that for dehumidifiers, we

9 are making the assumption that these purchases are made

10 after the home is purchased. So, this particular

11 market segment doesn't apply to them.

12 So, this is the basis of the shipments that

13 we forecast and also that we estimate over historical

14 time period and so with that historical backcast, we

15 compare that to actual historical shipment values, and,

16 of course, there's going to be some differences there.

17 So, to minimize the difference, we establish a third

18 market segment, like I was mentioning before, which is

19 represented by these greenish boxes.

20 For dishwashers and dehumidifiers, we assumed

21 that existing households that did not already have the

22 appliance comprised this third market and so we

23 established a historical rate of adoption for this

24 market to establish the shipments for this particular

25 market segment.

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1 For cooking products, our shipments model

2 overestimated shipments. So here, we estimated an

3 early retirement rate. So, we came up with early

4 replacement shipments for cooking products, and then

5 finally, for commercial clothes washers, we found that

6 again because of a significant drop in product

7 shipments starting in 1998, our model estimated more

8 replacement shipments than there actually existed.

9 So here, we assumed that there was some portion of

10 these replacement shipments that were never replaced;

11 that is, they were permanently retired.

12 So, after developing these third market

13 segment shipments, we combined that with the shipments

14 from new construction and from the replacements to get

15 total of shipments for each product and then we used

16 market share data for the product classes for

17 dehumidifiers and cooking products to get the shipments

18 for each one of those product classes, again for

19 dehumidifiers and cooking products.

20 Does anyone have any questions about this

21 flow diagram or this shipments model?

22 (No response.)

23 MR. ROSENQUIST: Okay. Seeing none, I'll

24 move on to the next slide which summarizes the inputs

25 to our shipments model, and again starting with the

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1 inputs that are necessary to determine replacements,

2 again we used the appliance lifetime that we get from

3 the LCC Analysis and along with the stocker counting

4 that we're doing in our shipments model, we're able to

5 determine the number of replacement shipments.

6 For new construction shipments for

7 dishwashers and cooking products, we're using

8 forecasted housing starts from the Annual Energy

9 Outlook, and we're getting product saturations for new

10 housing from the Residential Energy Consumption Survey.

11 For commercial clothes washers, again we're taking

12 forecasted new construction from the Annual Energy

13 Outlook and new building saturations are based upon

14 that 1998 Consortium for Energy Efficiency Report that

15 I mentioned earlier for the commercial family size

16 residential style commercial clothes washers.

17 Historical shipments come from a variety of

18 sources for the residential products. We received some

19 data from AHAM through their submittal to the

20 department as well as we used some data from the AHAM

21 Fact Book as well as the Appliance Magazine.

22 For commercial clothes washers, again we

23 received data from AHAM through their data submittal.

24 We also used data from Appliance Magazine as well as

25 data from the U.S. Bureau of Economic Analysis which

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1 has a Quantity Index data, and I'll be talking about

2 that in the next slide. Then finally to get shipments

3 to each one of the product classes for dehumidifiers

4 and cooking products, we used data that was submitted

5 by AHAM.

6 This shows the base case shipments forecast

7 for commercial clothes washers, and I'm showing it

8 because of the unique situation we had with the

9 historical shipments, and the historical shipments in

10 this figure are represented by the green triangles.

11 So, from 1988 to 1998, we used data from the Appliance

12 Magazine. From 2002 to 2005, we received data from

13 AHAM. So, we had this gap in the two sets of shipments

14 data, and the gap in those two sets of data showed a

15 significant drop in product shipments from 1998 to

16 2002.

17 So, since we had this gap, we felt like we

18 needed to verify it. So that's when we turned to the

19 U.S. data, this Quantity Index data, to verify whether

20 this drop actually does exist and it's real. This drop

21 did actually occur.

22 So, as a result, as I mentioned two slides

23 ago, we overestimated the replacement shipments for

24 commercial clothes washers. So, we had to assume that

25 a certain percentage of replacements were never

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1 replaced; that is, that they were permanently retired,

2 and we maintained that over the time period through

3 2013 and then we allowed replacements to resume again

4 at their normal pace and so that's why with the red

5 line here, the bottom red line, it continues to go up

6 because we're just continuing to replace commercial

7 clothes washers that are failing.

8 We're also tieing shipments to new

9 construction and multifamily housing starts are also

10 forecasted to rise over this time period. So that's

11 another element for why those shipments are going up.

12 So, in total, that top blue line represents the amount

13 of shipments that we're forecasting for commercial

14 clothes washers, which leads us to our next issue,

15 which is the shipments forecast, and Phil, do you want

16 to jump in right now?

17 MR. MANTHEI: Yes, I do. Phil Manthei,

18 Alliance Laundry Systems.

19 I believe the new construction is where the

20 error is in that significant numbers of the new

21 construction -- I suggest DOE contact Multihousing

22 Laundry Association, contact some of the larger route

23 operators, Coin Mac is one of our large customers, and

24 get the numbers.

25 What's happening is with the new construction

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1 to attract people to these new multihousing

2 construction, they are placing residential clothes

3 washers in units instead of -- and they are not

4 designing in central common area commercial laundry

5 rooms and so I think this is where the disparity lies.

6 You know, the trend is down, down, down in

7 terms of our shipments in the industry and to see it

8 all of a sudden magically -- it's going to go up, I

9 don't see it.

10 MR. ROSENQUIST: Yeah. Thanks for that

11 comment, Phil. That's why this issue is out for public

12 comment by the department, just because again we're not

13 sure whether there will be a rebound, you know, whether

14 they're rebound from the drop that occurred since 1998.

15 MR. LEWIS: Ron Lewis, DOE.

16 Phil, do you have some specific people that

17 you could refer us to to get that? You gave us some

18 associations, but are there individuals that you could

19 -- we could engage in dialogue here?

20 MR. MANTHEI: Yes, there is. Dave Field.

21 He's the Executive Director of Multihousing Laundry

22 Association. Steve, I can't think of his last name,

23 I'm sorry, right now.

24 MR. LEWIS: Yeah. If you could get them to

25 us.

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1 MR. MANTHEI: He's with Coin Mac. I'll get

2 it to you.

3 MR. LEWIS: That would be very helpful.

4 MR. MANTHEI: Yes.

5 MR. LEWIS: Thank you.

6 MR. HOYT: J.B. Hoyt, Whirlpool Corporation.

7 I couldn't begin to compete with that. I was

8 trying to stay fact-based in these things, but I can't

9 help but provide one piece of anecdotal evidence.

10 25 years ago, I had the responsibility for

11 forecasting the appliance industry for Whirlpool, and

12 we had very similar models to what you've developed

13 here, and I applaud the comprehensive nature of the

14 model, but in the area of commercial laundry products,

15 we had forecasts that increased steadily over the

16 forecast horizon based on very similar assumptions to

17 what you've made and as you cited, the evidence from

18 the early '80s on suggests a number of offsets. Your

19 volatility has been pretty flat, and I see nothing that

20 suggests that's going to be different going forward.

21 Again it's anecdotal. I apologize for that,

22 but my own experience, having been burned on that very

23 same kind of modeling, would cause me to ask questions

24 of this outcome.

25 MR. BRUNDAGE: Don Brundage, Southern

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1 Company.

2 I would not pretend to be an expert in the

3 subject matter, but it seems like there's going to be a

4 pretty strong correlation between amount of people in

5 multifamily housing and these commercial clothes washer

6 shipments and with an awful lot of new housing single

7 family starts over the last dozen years, that may be

8 part of your decline.

9 To have this happen, I think you'd have to

10 have an awful lot of people moving back to apartments.

11 Thank you.

12 MR. RABA: Thank you. Others, please?

13 MR. ECKMAN: Greg, I agree with Don on that.

14 I think if you're looking at multifamily, you may want

15 to look at five units and larger only as opposed to

16 fourplex and duplex because those are clearly going

17 into residential-installed laundry units and it's only

18 in the larger complexes that we ever see a multifamily

19 laundry facility where there's a central facility.

20 Otherwise it's pretty much going with the residential

21 unit in the dwelling.

22 MR. RABA: Thank you, Tom Eckman.

23 MR. ROSENQUIST: Okay. I'll move on. So,

24 all the information I'm presenting so far is to

25 establish the shipments forecasts under the base case;

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1 that is, the case without standards.

2 So now we have to estimate the shipments that

3 occurred due to a standard; that is, the standards case

4 shipments, and we do that by taking into account the

5 purchase price effects as well as the operating cost

6 savings effects due to the standard.

7 I want to emphasize we use all the same data

8 to estimate standards case shipments forecasts with the

9 exception of including the effects of the standards on

10 purchase price and operating cost changes.

11 To do this, we incorporate into the shipments

12 model what we call the relative price elasticity and

13 this is a combination of the purchase price plus the

14 present value of operating cost savings divided by

15 household income.

16 As it turns out, historically, if you look in

17 the economic literature, when consumers face a purchase

18 decision, they typically use very high implicit

19 discount rates. So, the operating costs portion of the

20 relative price elasticity is small, especially when

21 compared to the purchase price effect. So, the

22 purchase price effect is a dominant effect in this

23 equation.

24 Again, though, it's somewhat mitigated by

25 household income, meaning that if households become

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1 more wealthy, they tend not to be as concerned about

2 any increase in purchase price.

3 So, we performed a regression analysis on

4 multiple variables, including historical shipments,

5 historical retail prices for appliances, historical

6 appliance efficiencies and income data, and we ended up

7 with a relative price elasticity of minus .34.

8 Now, what does this mean? What it means is

9 that if you have a 10 percent increase in the relative

10 price elasticity, you get a 3.4 percent drop in the

11 annual shipments, and since the relative price is, for

12 the most part, dominated by purchase price effects,

13 it's pretty much a correlation to purchase price.

14 We also found that consumers become less

15 sensitive to purchase price increases over time. So,

16 we incorporated that into our model as well and looking

17 at various economic literature, we found that this

18 relative price elasticity or at least we forecast it to

19 be dropping 65 percent over a 10-year time period.

20 So what this next slide does is show you very

21 concretely what this effect is on the base case

22 shipments forecasts and I have figures here for

23 dishwashers, dehumidifiers, microwave ovens and

24 commercial clothes washers.

25 We did not assume that there would be any

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1 change in the standards case shipments for cooking

2 products because cooking products are fully saturated

3 into the market and that when a failure occurs and

4 needs to be replaced, we just assume that the consumer

5 will replace in kind.

6 Let me focus in on one of these figures and

7 that's dishwashers. The very top blue line is our base

8 case shipments forecast. That is the case without

9 standards. The next four lines correspond to our

10 standards case shipments for the four highest candidate

11 standard levels for dishwashers; that is, for energy

12 factors of .68, .72, .80 and 1.11, and you can see the

13 1.11 candidate standard level, which is the bottom line

14 there, has the most severe impact and that's primarily

15 because the purchase price associated with that

16 dishwasher is very high. We see the same sort of

17 effect for dehumidifiers, for microwave ovens, and for

18 commercial clothes washers.

19 MR. BRUNDAGE: Don Brundage, Southern

20 Company.

21 Can you go back to microwaves? I'm not sure

22 why on a long-term forecast you've got that 10-year

23 cyclic effect on microwave ovens.

24 MR. ROSENQUIST: That's due to the product

25 lifetime. So, you get this sort of -- because it's

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1 relatively short, its actually more like nine years

2 but we have a distribution that goes down to seven.

3 Things come and go. Things are tied to new

4 construction shipments as well and it has a little bit

5 of volatility in it as well.

6 Okay. If no one has any questions about --

7 any more about the shipments forecast for the standards

8 case, then I'll move on to the other inputs.

9 MR. deLASKI: This is Andrew deLaski. Just

10 for a second.

11 Did you control -- in the 1998 -- looking at

12 the 1998 to 2005 data, is that controlled for new

13 multifamily housing starts? To what extent is it

14 driven perhaps by the fact that there are just

15 different levels of multifamily housing starts in those

16 given years?

17 MR. ROSENQUIST: Unfortunately, I can't

18 answer that question. I don't -- I just don't remember

19 what those starts looked like historically for those

20 years. I can say this, that that drop that you see

21 from 1998 down to 2002 is very significant and

22 especially considering, if I can recall correctly, that

23 the multihousing forecast or starts didn't change all

24 that appreciably.

25 MR. deLASKI: I agree, and getting the

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1 shipments, getting your best estimate of shipments here

2 is really important. I certainly would encourage you

3 to go back and look at the multifamily housing starts

4 and see if it helps to explain it. Part of it, maybe

5 not all of it but that part of the explanation, I

6 think, you know, getting a good handle on the shipments

7 forecast is going to be crucial.

8 MR. RABA: DOE is so encouraged. Thank you.

9 Don Brundage?

10 MR. BRUNDAGE: Don Brundage, Southern

11 Company.

12 I think we need to step back a little and

13 think about what really happens with multifamily

14 housing. 10 years ago or 15 years ago, the norm in

15 multifamily housing was not to have washing machines

16 and dryers in the units. I think if you'll look at

17 recent construction, there's a much higher percentage

18 in the units that have washer-dryer connections and

19 have washers and dryers in the units.

20 So, I think there's some fundamental changes

21 going on and maybe a survey of -- try to find some

22 survey data on washer-dryers in multifamily

23 installations. I suspect it ought to be flat going out

24 in the future and not that constant escalation, but I

25 think if you dig deeper into multifamily and seeing how

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1 -- what percentage of them have washers and dryers

2 within individual units, I think we'll find part of the

3 answer.

4 Thank you.

5 MR. RABA: Good insight, and I encourage any

6 data on that to be forthcoming.

7 MR. DeLAURA: Lance DeLaura with Southern

8 California Gas Company.

9 Just to add on to that, I mentioned several

10 times today that I think there's a value to looking at

11 things regionally. California's a good example where

12 we've seen dramatic increases in multifamily

13 construction.

14 At one point in time, 10-15 years ago, the

15 ratio was about 70/30, 70 percent single family, 30

16 percent multifamily. Right now, we're seeing

17 multifamily at about 55 percent.

18 MR. RABA: Big difference. Thank you.

19 MR. deLASKI: Just a follow-on to Lance's

20 comment, I think there may be some real regional things

21 going on here in this market, and I can imagine. I

22 don't have any data, Lance, to supply and I wish I did,

23 but that if you're going to be talking to, and the

24 suggestion here was to talk to a particular route

25 operator and you need to be able to get a company to

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1 tell you what's happening nationally, not just what's

2 happening in a given marketplace because it could very

3 well vary.

4 You can imagine that you may have a

5 marketplace in which it becomes the standard to have

6 in-unit laundry and it may not be that in a different

7 market. So, you need to have a national picture.

8 MR. RABA: That was Andrew deLaski. Ron

9 Lewis, Department of Energy?

10 MR. LEWIS: Lance, could some of that change11 over be not just construction-type but conversions of

12 things that were maybe multitenant apartment buildings

13 that have gone condo or gone to single ownership or

14 shared ownership of buildings as opposed to large

15 singly-owned buildings?

16 MR. DeLAURA: It's a factor, but the majority

17 of it is new construction, and just to add on, the

18 majority of the reason that we see these laundry units

19 going in is a lot of the buildings are being built as

20 apartments for now but as the market evolves, they

21 convert and they get sold as condos and so they want

22 that individual laundry facility.

23 MR. RABA: Thank you, Lance. Interesting

24 topic. Any others, please, to comment?

25 (No response.)

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1 MR. RABA: Complex. Greg?

2 MR. ROSENQUIST: Okay. Now I'll summarize

3 all the other inputs that are used to calculate

4 national impacts.

5 Total installed costs, repair and maintenance

6 costs, annual energy use, those -- all these come from

7 the Life Cycle Cost Analysis, and they are again, as I

8 mentioned earlier, per unit values that are input into

9 the National Impact Analysis.

10 The next input are the base case and

11 standards case forecast efficiencies, and these are

12 important because the per unit values coming from the

13 LCC Analysis are a function of efficiency.

14 The base case efficiencies for the time

15 period of 2005 up to when the standard becomes

16 effective in 2012 were determined from those base case

17 efficiency distributions that I presented earlier in

18 the LCC Analysis.

19 The standards case efficiencies in the year

20 2012 when the standard becomes effective are based upon

21 using what I call a roll-up scenario and I'll get into

22 more detail about that in the next slide.

23 Forecast efficiencies were done by assuming a

24 frozen efficiency trend, meaning that future

25 efficiencies were assumed to stay constant at the level

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1 that they were in 2012 for both the base case and the

2 standards case.

3 For energy and water prices, we took those

4 average prices straight from the LCC Analysis. Future

5 energy prices were forecasted with the annual energy

6 outlook and future water prices were forecasted with

7 that Water Consumer Price Index variable.

8 Electricity site-to-source conversion factors

9 are used to convert the site energy savings, that is at

10 the building, into source energy savings at the power

11 plant or at the distribution point for where natural

12 gas is provided.

13 We get these conversion factors based upon

14 marginal heat rates that are developed with the

15 National Energy Modeling System that's used to generate

16 the annual energy outlook, and again these factors vary

17 annually and for electricity, they account for

18 generation, distribution and transmission losses. For

19 natural gas, they factor in distribution losses.

20 Discount rates are based upon guidelines

21 given to us by the Office of Management and Budget. We

22 use 7 percent and 3 percent real discount rates, and

23 the present year in which we discount savings to is the

24 year 2007.

25 MR. RABA: I had a hand. Don Brundage? I'm

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1 sorry. Tim Eckman? I'm sorry. Tom Eckman?

2 MR. ECKMAN: We're all from the utilities.

3 MR. RABA: All together, all brothers. You

4 all look alike.

5 MR. ECKMAN: On the annual energy use,

6 extrapolating that to the national impacts, given the

7 sizable amount of water savings in the commercial

8 laundry equipment and some water savings in the higher9 efficiency dishwashers, there's a fairly significant

10 amount of electricity tied up in water treatment and

11 wastewater treatment, and is that accounted for

12 anywhere in this analysis?

13 MR. ROSENQUIST: No, that is not. We're

14 strictly accounting for only the energy that's used to

15 provide electricity, natural gas, oil.

16 MR. ECKMAN: Because it says, you know, for

17 -- particularly for the West and I suspect lesser so

18 for the East, but it's a significant amount of embedded

19 energy in those gallons of water. California's done a

20 lot of work on that. We're starting to look at it and

21 it's not an insignificant number. It might be in some

22 cases larger than the actual onsite energy savings.

23 So, I wouldn't diminish it.

24 MR. ROSENQUIST: Yeah. We've looked into

25 that, actually, and there's a huge --

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1 MR. ECKMAN: Huge range.

2 MR. ROSENQUIST: -- variation. Also, when it

3 comes to estimating national energy savings, you know,

4 we rely on NEMS to do that forecasting for us and

5 there's no comparable tool for water yet, at least none

6 that we have been able to identify. It probably has to

7 do with the fact that there's so many more

8 municipalities around the country and things like that.

9 So again, NEMS factors in all these things

10 with regards to the economy and the effects on energy

11 and personally, I think that you need something like

12 that to be able to really capture what the embedded

13 energy is in the water on a national basis. Perhaps

14 you can do it on a specific regional basis, if you had

15 the data, but --

16 MR. ECKMAN: But at a minimum, I suspect that

17 EPA or others have some information on what it costs to

18 do wastewater treatment, forget the embedded transport

19 costs, but aeration energy, pumping energy, to provide

20 the treatment of the effluent, and we're talking 30,000

21 to 60,000 gallons a year out of this equipment. It's

22 not an insignificant number of kilowatt hours.

23 MR. DeLAURA: Could I add on to that? This

24 is Lance DeLaura.

25 Even though the data is as it is today, since

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1 this process is going to be spanning a considerable

2 period of time, my recommendation would be that DOE

3 stay open to new data that becomes available. I really

4 think in the next few years, you will actually have

5 some water data.

6 There's a lot of work that was suggested

7 that's going on in California right now, and I think it

8 will translate to other states. You will have that

9 ability. A number of regulatory authorities in the

10 energy efficiency business are starting to look at this

11 and very soon the water, both potable water and

12 wastewater, will be part of the calculations that we do

13 in energy efficiency in terms of cost effectiveness.

14 Again not yet today but in the fairly near future, I

15 think we'll have it.

16 MR. RABA: I hear a lot of good comments, at

17 least for us to consider, look at and relook at in this

18 particular area. It's not going to be insignificant

19 and narrow in the future and it's worthy of some real

20 research.

21 So, in the NOPR stage, I'm sure we'll be

22 taking a very close look at this and thank you for

23 raising that.

24 MR. ROSENQUIST: This slide gets into more

25 details on exactly how we determined our base case and

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1 standards case forecast efficiency. I'm using the

2 example here of dishwashers.

3 If you look at the table more closely, look

4 at the column underneath the words "Base Case." That's

5 the same efficiency distribution that we established in

6 the Life Cycle Cost Analysis and that's used to

7 basically determine what the shipment weighted energy

8 factor is for dishwashers under the base case. It

9 turns out to be .596 energy factor.

10 Again for the base case, we assumed that it

11 stayed frozen from 2005 until the effective date of the

12 standard which is in 2012. Then we used the roll-up

13 scenario and to demonstrate what that does, let's focus

14 on Standards Case 2, two columns over from the Base

15 Case. That corresponds to an energy factor of .62 EF,

16 and what you see there is all the products below .62 EF

17 are rolled up, all that percentage of the market, that

18 is, is rolled up to equal .62 energy factor, and all

19 the efficiency levels or all the distributions of

20 energies above .62 EF are untouched.

21 So, there you see under this roll-up scenario

22 case for candidate Standards Level 2 89 percent of the

23 market is assumed to exist at that energy factor of .62

24 and that results in a weighted average energy --

25 shipment weighted energy factor of .625.

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1 Again this is what happens in the year that

2 standards are assumed to become effective, that is, in

3 2012. To forecast efficiencies, like I said before, we

4 assumed frozen efficiency scenarios; that is, we kept

5 the efficiency of the base case and the standards case

6 in 2012 the same over our forecast period and although

7 we recognize that efficiencies will certainly grow over

8 this forecast period, what we were more concerned about

9 is making sure we got that efficiency gap or difference

10 between the base case and standards case correct in our

11 analysis and we believe that maintaining that

12 efficiency gap with frozen efficiencies is a reasonable

13 estimate of what the impact of standards would be.

14 MR. RABA: Comment?

15 MR. ROSENSTOCK: Steve Rosenstock, Edison

16 Electric Institute.

17 Just out of curiosity, just looking at this

18 table, I'm looking at the Levels 3 and 4, they have

19 like a 10+ percent share of the market, and I was

20 wondering if you had data that shows over the last five

21 or six years, maybe through the Energy Star Program or

22 incentive programs, has that been static over the last

23 few years? I'm just kind of curious if you've looked

24 at the data because if there's -- I'm just kind of

25 curious. Has there been any change in, I'll say,

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1 Levels -- especially, I'll say, probably 2, 3 and 4

2 over the last several years?

3 MR. ROSENQUIST: I haven't looked at it in

4 detail, but I've been told from other colleagues of

5 mine that certainly, yeah, the market share for more

6 efficient equipment historically has increased due to

7 the Energy Star Program.

8 As far as forecasting that into the future,

9 it's difficult to do that under the base case and under

10 the standards case scenario, but we'd certainly welcome

11 input as to possibly how to do that.

12 MR. RABA: Yes?

13 MR. HOYT: J.B. Hoyt, Whirlpool.

14 I was going to go along the same lines, and

15 this suggests the Energy Star Program ceases to be

16 effective, and with one of Mr. Lewis's other hats on, I

17 suspect he would be uncomfortable with that outcome,

18 and I agree with you, Greg, it would be difficult to

19 forecast, but one assumption could be that the Energy

20 Star Program is no more or less effective in voluntary

21 market transformation tomorrow than it is today because

22 it would seem that the market transformation programs

23 will continue to have some impact.

24 MR. RABA: Okay. Other comments, please?

25 Ron Lewis, DOE?

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1 MR. LEWIS: One of the factors that's hard to

2 quantify, but I've heard it mentioned already this

3 morning, the earlier articles by Consumer Reports on

4 cleanliness and actual function versus just efficacy or

5 efficiency and how we correlate that.

6 If we just keep looking at increasing

7 efficiency, is there any way to take a look at any

8 existing ceilings or practicality with technology right

9 now that hinder the functionality or where we've had

10 some criticism of efficiency sometimes comes at the

11 expense of other things, of taking a look at that and

12 better understanding that as we go forward rather than

13 just looking at things as a power algorithm.

14 How do we look at, you know, the energy to

15 accomplish what needs to be accomplished?

16 MR. HOYT: J.B. Hoyt from Whirlpool.

17 You make a great argument, that the

18 traditional Energy Star approach of just raising the

19 bar, if you will, at some point ceases to become

20 effective from a consumer functionality standpoint, and

21 I don't disagree with that at all. In fact, I've made

22 that point publicly previously.

23 I think the future gains in programs like

24 Energy Star are going to come from complex interaction

25 across products, not with a single product. I wouldn't

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1 want to be in Greg's shoes trying to figure out how to

2 model that, very honestly. So, assuming that there is

3 some continued impact and market transformation is a

4 shortcut, very honestly, to that, because I don't know

5 how you model that, but I agree it's a valid concern.

6 MR. RABA: Andrew deLaski?

7 MR. deLASKI: Andrew deLaski, Appliance

8 Standards Awareness Project.

9 I just want to follow on to J.B.'s comment

10 and agree that you know, I think an assumption,

11 particularly at the lower standard levels, that Energy

12 Star ceases to be effective is just, you know, a non13 starter. It doesn't make any sense. So, we need to be

14 able to come up with some way to -- you know, perhaps,

15 Ron, at the higher efficiency levels, you know,

16 assuming that you're going to have a whole range of

17 efficiencies above, say, Level 7 when it's max tech,

18 you know, it's not going to happen, but certainly at

19 the lower efficiency levels, there is a shift rather

20 than just a roll-up. There is some sort of shift going

21 on as manufacturers and retailers seek to offer -- have

22 a range of product offerings that include Energy Star

23 and other, you know, value-added efficiency gains that

24 they can market.

25 So, I think you need to take that into

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1 account at the lower efficiency levels.

2 MR. RABA: I see nods of agreement. Go

3 ahead, Greg.

4 MR. ROSENQUIST: I think what we've been

5 doing now is this next issue up here for public comment

6 that DOE's looking for input on and it's about this

7 whole issue of how, you know, forecasted efficiencies

8 were developed and using the roll-up scenario, for

9 example, and using frozen efficiency trends.

10 So, I don't know if anyone has any additional

11 input on this particular issue or not, but if not, we

12 can move on.

13 MR. RABA: Okay.

14 MR. ROSENQUIST: This next slide presents the

15 unique situation that we had with dehumidifiers, and as

16 Judy Reich presented in the Engineering Analysis, AHAM

17 was only able to provide costs for only three of the

18 six product classes that we had for dehumidifiers, and

19 I don't want you to get lost in all these numbers that

20 I have here, but the point I want to get across here is

21 that we used the exact same total installed costs for

22 the other three product classes which we did not have

23 any cost data on.

24 So, AHAM provided cost data for the zero to

25 35 pint per day product class category and we went

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1 ahead and assumed that those costs were applicable to

2 both the less-than 25 pint per day class and the 25 to

3 35 pint per day class.

4 For the middle two product classes, AHAM

5 provided data on the 35 to 45 pint per day class and

6 again we simply assumed the same costs apply to the 45

7 to 54 pint per day class, and then finally AHAM

8 provided cost data on the 54 to 75 pint per day class

9 and again we just simply assumed that those costs were

10 completely applicable to the greater than 75 pint per

11 day class, and I do want to emphasize that we made no

12 adjustments here based upon product efficiency or

13 product capacity.

14 That's basically the next issue up here for

15 public comment that DOE is looking for input on, is

16 basically how these installed costs were developed for

17 the three product classes in which AHAM did not provide

18 any cost data on, whether or not we can just simply

19 assume that they applied to the other classes which we

20 had no cost data on and whether we can do that without

21 taking into account any extrapolations or

22 interpolations based upon product capacity or product

23 efficiency.

24 MR. RABA: Silence. No, speak up.

25 Questions, comments?

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1 (No response.)

2 MR. RABA: Let's move on.

3 MR. ROSENQUIST: This is the last slide of

4 the National Impact Analysis, and this shows just an

5 example of the type of results that are calculated or

6 generated in order to determine the net present value

7 and here's a specific example of Standard Level 3 for

8 dishwashers, and what I'm presenting in this figure

9 here are the annual national operating cost savings,

10 the annual equipment cost increases, and then the red

11 line represents the net savings between those two

12 values, and again I want to repeat that these values

13 are non-discounted. So, they're basically greater than

14 what they should be because they don't have the

15 discount rate applied to them yet.

16 So again, this type of time series is

17 generated for purposes of generating the NPV and I also

18 want to point out that for all products that come into

19 the marketplace before the end of our forecast period

20 ends which is 2042, we account for the operating cost

21 savings for those products. That's why you see the

22 tail in this figure and it decreases as all those

23 products eventually retire and die off in the market.

24 So that brings to conclusion the National

25 Impact Analysis.

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1 Any other issues that folks want to bring up

2 at this time, please do.

3 MR. RABA: Lot of information. Lot more

4 needed, too. Very complex. I'm sure there will be

5 comments, but think about it. If you have some future

6 comments, when you study the slides more carefully,

7 send them in. Written comments, please. We invite

8 them.

9 Yeah. I think this would be a good time for

10 a break. Give yourselves credit because we're moving

11 right along very well and for the most part right on

12 time. So, go ahead and take a 15-minute break, please.

13 Be back at 10 past 3.

14 (Recess.)

15 MR. ROSENQUIST: Okay. We're getting into

16 the home stretch here.

17 Next thing we'll be discussing are the

18 analyses that are used to -- the analyses that are

19 conducted for the Notice of Proposed Rulemaking and

20 also whatever other steps are necessary to complete the

21 rulemaking.

22 NOPR ANALYSES AND NEXT STEPS

23 MR. ROSENQUIST: This is a flow diagram that

24 you may remember from earlier this morning. It shows

25 the various steps that are necessary for doing all the

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1 analyses that comprise the Notice of Proposed

2 Rulemaking.

3 The first step are to revise the ANOPR

4 Analyses, and the revision of the ANOPR Analyses apply

5 to the Engineering Analysis, to the Life Cycle Cost and

6 Payback Period Analysis, and the National Impact

7 Analysis, and these analyses are revised based upon the

8 comments that you've been giving today in this public

9 meeting as well as any written comments that are

10 submitted in response to the ANOPR.

11 To do any updates to the analysis, we'll be

12 trying to use the most recent data that is available,

13 and for the Life Cycle Cost and Payback Period

14 Analyses, we will also do a Life Cycle Cost Subgroup

15 Analysis and that's what this slide does. It discusses

16 this LCC Subgroup Analysis and its purpose is to look

17 at the economic impacts to any subset of consumers that

18 may be more disproportionately impacted by a particular

19 standard than the general user population.

20 The method is pretty simple. It's just

21 extending and applying this LCC Analysis that we've

22 already developed to the specific subgroups that we

23 want to look at, and the list here that you see is for

24 the subgroups that we plan on analyzing for the Notice

25 of Proposed Rulemaking.

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1 For the residential products which are

2 dishwashers, dehumidifiers and cooking products, we

3 plan to look at low-income consumers as well as

4 seniors. Specifically for dishwashers, we plan to look

5 at consumers who are without city water and sewer; that

6 is, those who are using wells and septic systems.

7 For cooking products, we're specifically

8 going to look at consumers who do not have electricity

9 and this is done for the gas cooking products. Again

10 we want to try to determine whether there's any

11 households out there that may be using gas cooking

12 products but don't have electricity available to them

13 and thus would be impacted by a standard that would

14 require the elimination of standing pilots.

15 Finally, for commercial clothes washers,

16 we'll look for small businesses and any multifamily

17 buildings that also may not have any water and sewer,

18 city water and sewer.

19 MR. RABA: Steve Rosenstock.

20 MR. ROSENQUIST: I'm being stopped in my

21 tracks right here.

22 MR. RABA: Yes, stopping you cold. What is

23 this? Who's first?

24 MR. BRUNDAGE: Don Brundage, Southern

25 Company.

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1 To clarify, are you talking about no outlet

2 at the appliance or no electricity in the household?

3 MR. ROSENQUIST: No electricity in the

4 household.

5 MR. BRUNDAGE: I'm not sure you have any of

6 those.

7 MR. CABOT: Paul Cabot, American Gas

8 Association.

9 Actually, yes, there are quite a bit of homes

10 that don't have electricity. Amish do not allow the

11 use of electricity and in fact, the House of

12 Representatives did pass -- they passed their version

13 of the Energy Bill that included an exception for

14 prescriptive standards for boilers that were going to

15 eliminate pilots for boilers and they specifically put

16 in an exception that would not require the use of

17 electricity, in other words, allow standing pilots,

18 specifically for Amish and other religious groups that

19 don't rely upon the use of electricity.

20 MR. ROSENSTOCK: Do the Amish allow the use

21 of natural gas?

22 MR. CABOT: They have gas products, whether

23 it's LP or natural gas, yes. Natural gas was around

24 when they set their rules. So, some pipeline quality

25 gas was around.

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1 MR. ROSENSTOCK: Okay. I think in terms of

2 subsets, though, in terms of homes, I know there's a

3 lot of Amish people in Ohio and Pennsylvania, but since

4 you're doing a national analysis, I have a funny

5 feeling that that subset is going to be significantly

6 less than 1 percent.

7 So, I don't know, you know, in terms of some

8 of your modeling in your analysis how -- you know, I'm

9 not sure you're going to be able to -- I think it's

10 going to be very difficult for you in terms of that

11 subset because the number is so small.

12 MR. ROSENQUIST: Yeah. What we may only do

13 for this particular subgroup is just identify the

14 percent of the housing population that falls into this

15 category rather than actually do an LCC analysis for

16 that subgroup.

17 MR. ROSENSTOCK: I'm thinking if you rely on

18 EIA data and their dataset is, let's say, 7,000, they

19 might still miss some.

20 MR. ROSENQUIST: Yeah. Well, we'll have to

21 go elsewhere.

22 MR. RABA: That was Steve Rosenstock.

23 MR. ROSENSTOCK: I'm sorry. Steve

24 Rosenstock, Edison Electric Institute.

25 MR. ROSENQUIST: Yeah. We'll have to go

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1 outside of the EIA data to try to capture what that

2 number is.

3 MR. RABA: Okay. Great. Proceed. Thank

4 you, gentlemen.

5 MR. ROSENQUIST: It's nice to see smiling

6 faces when I bring up a particular issue that I think

7 might be contentious.

8 Okay. So, moving on, the next step is the

9 establishment of what are called trial standard levels,

10 and these trial standard levels are developed for the

11 purpose of establishing the national impacts, the

12 manufacturing impacts, the employment impacts, the

13 utility impacts, the environmental impacts, for the set

14 of products that we're looking at.

15 So, these trial standard levels are comprised

16 of the various candidate standard levels that exist for

17 the number of product classes that may exist for a

18 particular product. So, for example, in the case of

19 dehumidifiers, which is composed of six product

20 classes, a particular trial standard level might be a

21 Candidate Standard Level 2 for one product class and

22 Candidate Standard Level 4 from another product class.

23 They don't have to be uniform in their number. They

24 just have to be uniform in the type of characteristic

25 that they have. So, this goes into the method in which

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1 the trial standard levels are developed.

2 Again what the department does is it looks at

3 all the candidate standard levels for all the product

4 classes and tries to pick a set of candidate standard

5 levels for a particular trial standard level that has

6 the same characteristic. For example, those standard

7 levels that are max tech. Another example are the

8 standard levels with the lowest life cycle cost.

9 Another one is payback period that -- those standard

10 levels with payback periods of less than three years or

11 any worthy technologies that the department wants to

12 take into consideration.

13 So, the next issue that DOE is looking for

14 public comment on is whether or not there are any

15 unique criteria that it should consider when it

16 develops the trial standard levels for these four sets

17 of products.

18 MR. RABA: Feedback on criteria?

19 MR. CALABRESE: Dave Calabrese, AHAM.

20 I don't have anything specific. However, I

21 think that in a number of the analyses in the cooking

22 products and the others, you can see some payback

23 periods which some of them are somewhat even comical in

24 the length that they have in the hundreds of thousands

25 of years and so obviously I think the department should

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1 be taking those into consideration when determining

2 which would be appropriate trial standard levels as

3 well as looking at national economic energy savings as

4 well. There's some with very small amounts and so it's

5 more of a generic comment that I think the department

6 is already considering, but in light of some of the

7 more egregious examples, I just want to make sure that

8 those are taken into account.

9 MR. RABA: And duly noted. Thank you.

10 MR. ECKMAN: I think we noted earlier a

11 couple areas where the maximum available that's listed

12 isn't necessarily the maximum technically feasible at

13 the moment. So, those ought to be modified to include

14 at the top end at least what is really max tech as

15 opposed to just available.

16 The second area, at least on commercial

17 laundry, some step that basically looks at where the

18 top end of the vertical axis leaves us ought to be at

19 least one of the stages, so the best available or best

20 technically feasible vertical axis that meets other

21 criteria ought to be, given that that seems to be a

22 fairly cornerstone problem in that rulemaking.

23 MR. RABA: That was Tom Eckman. Greg?

24 Constantin von Wentzel?

25 MR. von WENTZEL: So, I'm here to talk a

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1 little bit about the MIA phase in the NOPR. The MIA

2 Analysis has some fairly similar purposes as in the

3 ANOPR phase. Specifically to assess the impacts of

4 standards on residential dishwashers, dehumidifiers and

5 cooking products and commercial clothes washers

6 manufacturers, to estimate the impacts on subgroups

7 that might be more severely impacted than the industry

8 as a whole, to examine the impact of cumulative

9 regulatory burdens on the industry.

10 There are multiple methods by which we do

11 this, but probably the best known to the group here is

12 the GRIM, which is the Government Regulatory Impact

13 Model which basically evaluates the impact on the

14 industry as a function of the efficiency levels chosen

15 in terms of the net present value, and after developing

16 the GRIM, DOE plans on interviewing manufacturers to

17 refine the inputs and confirm its analysis and assess

18 any qualitative issues.

19 The output is an industry net present value

20 impact. Also, net present value impacts the subgroups

21 and any other impacts that come up as we conduct our

22 interviews.

23 So, you can see that the MIA has three

24 phases, and the MIA is an ongoing process. We had our

25 preliminary MIA as a part of this ANOPR and after we

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1 develop our strawman GRIM, we will be in Phase 2. We

2 will be coming back to manufacturers for a final set of

3 interviews.

4 So, in the first phase, we collect financial

5 and market information, industry reports. We analyze

6 annual reports on their websites. We look through

7 trade journals, SEC 10-k forms, and anything else that

8 we can find. We develop the strawman GRIM which

9 basically takes account of the prices that

10 manufacturers can sell their products at, their

11 shipments, and the manufacturing costs and the

12 financial information that's available, and that all

13 flows into a net present value for the industry as a

14 function of the cash flows that it can produce, minus

15 obviously the investments required to meet various

16 efficiency levels.

17 We also develop an interview guide to

18 understand all the critical issues that manufacturers

19 face which include the engineering issues, the shipment

20 projections that we make, the cost structures and other

21 financial parameters that each industry enjoys,

22 conversion costs, cumulative burdens and other

23 regulatory impacts, employment impacts, export and

24 import issues, consolidation, replace versus repair,

25 the impact of the standard effective date, and any

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1 other topic that's important to manufacturers.

2 So, in the third phase, we go through another

3 set of manufacturer interviews and, you know, these are

4 tasks. Basically, one of the other very important

5 issues that we've brought up here obviously is the low

6 volume manufacturer or any other kind of subgroup that

7 needs separate analysis. That basically leads to a

8 more focused version of the industrywide analysis. In

9 that, we basically tailor our GRIM to that specific

10 subgroup and focus on issues of importance to that

11 subgroup, including employment, capacity, utilization,

12 and cumulative burden, and subsequently, we review our

13 draft findings with that subgroup or that subgroup

14 members.

15 So now we go into the Utility Impact

16 Analysis. Greg, that would be you.

17 MR. RABA: Any questions about the GRIM

18 Modeling System, how it's used?

19 (No response.)

20 MR. RABA: If you think of a better way to, I

21 guess, entitle that, make it GRIN, maybe you could

22 think of a better word than GRIM, but GRIN is better,

23 smile, but go ahead, Greg. Thank you.

24 MR. ROSENQUIST: Okay. The next analysis

25 I'll be talking about here is the Utility Impact

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1 Analysis.

2 The purpose of this is to investigate and to

3 determine the effects on both electric and gas

4 utilities from reduced energy sales, they're estimated

5 in the National Impact Analysis, for electric

6 utilities. We also take into account the effect on

7 peak demand.

8 The method relies on using the Energy

9 Information Administration's National Energy Modeling

10 System and we tailor this specifically for use for the

11 Building Technologies Program to look at appliance

12 standards and their effect on the energy economy.

13 We use inputs -- the inputs that we use in

14 the analysis are from the National Impact Analysis,

15 specifically the National Energy Savings Results, and

16 the output that we generate are the change in energy

17 sales and prices by region. There are basically 13

18 regions captured in the NEMS model.

19 For electric utilities, we also capture the

20 change that occurs due to the standards and the mix of

21 electricity generation as well as the change that

22 occurs to the capacity construction; that is, how the

23 installed generation capacity changes due to the

24 appliance standards.

25 That's it for the Utility Impact Analysis.

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1 If there's any questions, I'll be happy to try to

2 answer them.

3 (No response.)

4 MR. ROSENQUIST: Okay. Next, we'll move on

5 to the Employment Impact Analysis.

6 Here, the purpose is to determine the effect

7 of standards on national employment throughout the

8 economy. The method is to use a tool called MSET,

9 which is a spreadsheet tool that is developed by

10 Pacific Northwest National Laboratories, that focuses

11 on almost 200 sectors in the most relevant sectors to

12 the industrial, commercial and residential building

13 energy use sectors.

14 Again what we're inputting into this analysis

15 come from the National Impact Analysis. That's the

16 National Energy Savings and the National Economic

17 Impacts, and again these are used to estimate what the

18 effect is on the sectors that might be impacted again

19 by appliance standards. For example, one particular

20 sector that is always affected is the utility sector.

21 I do want to emphasize that direct employment

22 impacts for the manufacturers that are being regulated

23 under appliance standards are calculated in the

24 Manufacturer Impact Analysis and again the output that

25 we're talking about here is the change in employment

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1 for the various sectors that are impacted as a result

2 of changes caused by the standards and the economy and

3 their effect throughout the sectors of the economy.

4 So again, I'd like to entertain any

5 questions, if people have any issues they want to bring

6 up at this time.

7 (No response.)

8 MR. ROSENQUIST: If not, then I'll move on to

9 the next analysis that's done for the NOPR and that's

10 the Environmental Assessment.

11 Here, we're looking at the effect of

12 standards on the environmental impacts and specifically

13 the airborne emissions from power plants and any

14 emissions coming from fossil fueled-appliances that are

15 used in commercial and residential buildings.

16 The tool that we use for this is the same one

17 we use in the Utility Impact Analysis, which is NEMS.

18 Again what NEMS provides us are forecasts of the

19 emissions that come from power plants in terms of C02,

20 S02, NOX and mercury. Inputs to this analysis again

21 come from the National Impact Analysis and what we're

22 inputting are the National Energy Savings.

23 Now, the NEMS is being used to determine what

24 the effects are on power plant emissions, but we have

25 to do a different analysis outside of NEMS to capture

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1 what the effects are from fossil fuel-fired appliances

2 in residential and commercial buildings and there, we

3 do a literature search to determine what emission

4 factors are associated with these type of appliances.

5 Finally, we're going to determine what the

6 impacts are to wastewater discharges due to the water7 consuming appliances in this rulemaking which are

8 dishwashers and commercial clothes washers, and again

9 we're doing something similar to what we're doing for

10 inbuilding emissions, what I call inbuilding emissions,

11 and that's do a literature search and determine the

12 appropriate discharge factors for determining what the

13 wastewater discharge effects are.

14 The output from our analysis is estimate of

15 national emission reductions at the power plant for

16 S02, NOX, mercury and C02. I do want to mention that

17 there is -- there are caps on S02 emissions due to the

18 Clean Air Act and there's recently legislation passed

19 that significantly reduces the amount of NOX emissions

20 as well as mercury emissions. So, S02, NOX, mercury

21 are effectively capped now, although there is allowed a

22 bit of NOX and mercury emissions because the

23 legislation didn't cover all regions of the country.

24 So, the main effect at the power plant level

25 from appliance standards will be to reduce airborne

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1 emissions of CO2.

2 Now, because this legislation, the Clean Air

3 Act, isn't applied to emissions coming from buildings,

4 we will be capturing those in our analysis. So, we'll

5 be tracking the SO2 and NOX generated by fossil fuel

6 appliances and emitted to the atmosphere, and again

7 we'll be doing that with these discharge factors, and

8 again just to repeat, we'll be calculating the

9 wastewater discharge reductions due to more efficient

10 dishwashers and clothes washers.

11 So that's the Environmental Assessment in a

12 nutshell. If anyone has any issues or questions they

13 want to bring up, certainly like to entertain them at

14 this time.

15 MR. RABA: Comment over there?

16 MR. BALLO: I'm Tim Ballo from Earth Justice.

17 I just want to reiterate a point I made

18 earlier, that as you pointed out, the NOX Clean Air

19 interstate rule does not apply, other than in the

20 Eastern United States. I think it only applies to 22

21 states. So, if there are going to be NOX reductions

22 through more efficient standards here, I think those do

23 need to be looked at a little more.

24 Thanks.

25 MR. RABA: Thank you. Yes? Don?

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1 MR. BRUNDAGE: Don Brundage, Southern

2 Company.

3 If you do get into looking at SOX, NOX,

4 mercury, et. cetera, it's critical to look at this, at

5 marginal emissions, which is where changes in appliance

6 efficiency standards would occur. With much of the

7 country having natural gas generation at the margin,

8 there's some of these emissions, the incremental effect

9 from appliance standards would be pretty minimal.

10 Thank you.

11 MR. RABA: Thank you. Any other comments,

12 please?

13 (No response.)

14 MR. RABA: Written comments are always

15 welcome. Proceed, Greg. Thank you very much.

16 MR. ROSENQUIST: And finally, we come to the

17 last analysis that's conducted for the NOPR and that's

18 the Regulatory Impact Analysis.

19 What this does is it investigates the impact

20 from non-regulatory alternatives to the mandatory

21 standards. So, after DOE determines a proposed

22 standard, what this analysis does is look at non23 regulatory alternatives to that standard to see what

24 sort of energy savings and what sort of economic

25 impacts result from these various alternatives.

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1 The types of alternatives that are going to

2 be considered or that we plan on considering are no new

3 regulatory action, that is, no new standards, early

4 replacement programs, prescriptive standards, consumer

5 and manufacturer tax credits, consumer rebates,

6 voluntary efficiency targets, like Energy Star, and

7 bulk government procurement activities.

8 The method that we're going to use is to just

9 modify the spreadsheet tool that was developed for the

10 National Impact Analysis. We call this in short NES

11 Spreadsheet, to stand for National Energy Savings.

12 What we're doing here is -- plan on doing at

13 least is adjusting the base case efficiency trends and

14 determine what sort of effect these regulatory

15 alternatives have on that base case efficiency trend,

16 and thus then we're using this NES spreadsheet tool to

17 calculate the energy savings and the economic impacts

18 in exactly the same way we do for standards and we're

19 calculating the NPV in exactly the same way, accounting

20 for operating cost savings that that regulatory

21 alternative might have and also any effect it could

22 have on increasing equipment costs.

23 As I just said, the output are the National

24 Energy Savings and the Net Present Value from these

25 non-regulatory alternatives.

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1 Does anyone have any questions about this

2 particular analysis?

3 (No response.)

4 MR. ROSENQUIST: Okay.

5 MR. RABA: Continue, Greg.

6 MR. ROSENQUIST: Thank you. I'll turn it

7 over to Constantin.

8 MICROWAVE OVEN ANALYSIS

9 MR. von WENTZEL: All right. In response to

10 stakeholder inquiries, the DOE conducted a

11 supplementary analysis for Microwave Ovens which we

12 just completed which is why it's at the end of the

13 report here.

14 Our purpose was to validate the approach of

15 updating the 1996 TSD Analysis. AHAM supplied some data

16 to DOE which was based on 21 microwave ovens which

17 included data on efficiency tests, standby power and

18 output power, and their analysis did not show a

19 relationship between efficiency and output power or

20 cavity size, and our supplementary analysis was

21 designed to verify the potential impacts on efficiency

22 of specific design options that made it through the

23 screening analysis and to validate cost efficiency

24 results in that 1996 analysis.

25 We also were asked to take a look at the

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1 microwave oven test procedure for potential updating

2 because the test, DOE test standard currently

3 references an IEC test procedure which IEC now

4 considers to be obsolete and the testing that DOE has

5 conducted suggests that there are significant

6 differences between the two test procedures and that

7 significantly impact the efficiency measurements.

8 Lastly, DOE was asked to investigate standby

9 power for a possible standard and the question was

10 whether there was an opportunity to reduce standby

11 power consumption, what kinds of design options could

12 be identified to do that and whether an IEC test

13 procedure could be incorporated or modified to measure

14 that standby power.

15 So, the first part is the cost efficiency

16 validation. AHAM submitted, as I said, efficiency data

17 for 21 microwave ovens. The dataset included rated

18 output power, cavity volume, cooking sensor, and then

19 measured output power, and the range of efficiencies in

20 that dataset were similar to the range of efficiencies

21 in the 1996 TSD.

22 DOE purchased 32 off-the-shelf units with a

23 wide range of output powers, cavity volumes and cooking

24 sensors, various kinds of displays, control interfaces,

25 and two kinds of magnetron control. Specifically,

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1 you've got the standard microwave oven transformer

2 power supply system which is basically a very large

3 transformer and a capacitor and a high-voltage diode

4 and a different system which has been marketed recently

5 which uses an inverter power supply to vary the

6 frequency in the voltage being sent to the magnetron.

7 I'll get into that a little bit further.

8 After testing these units for standby and

9 cooking efficiency, DOE tore down 22 of them completely

10 and examined the remaining 10 without tearing them down

11 completely to examine the characteristics for the

12 magnetron, the power supply, the kinds of motors that

13 were used for the fan or the turn table, and any

14 differences in wave guide design, which is what the

15 magnetron shoots through into the cavity.

16 Here are the efficiency test results, along

17 with the rate of power, and what you can basically see

18 is that the efficiencies are pretty much all over the

19 map, but at the same time, the range is very narrow and

20 it doesn't really matter whether you're at 700 watts of

21 rated output power or 1,200, the range is basically

22 from 55 to just under 62 percent.

23 The inverter drive units have a slightly

24 lower efficiency in this graph and we're not exactly

25 sure why. According to the AHAM data submittal, the

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1 inverter drives are actually supposed to be more

2 efficient than the MOT, standard MOT units, but we

3 can't individually test each component and therefore we

4 can't disaggregate where the power is going. So, this

5 is just an observation that inverter drives may in fact

6 be more efficient. It's just not reflected here.

7 We also looked at the measured output power

8 and you can see a very, very slight trend upwards as a

9 function of output power but that's really explained

10 primarily by the fact that the microwave oven consumes

11 a steady state of power regardless of its output which

12 is to say to drive the lights, the fan, the turn table,

13 et. cetera, and so because the efficiency range is so

14 narrow, it actually shows up as a trend here that, you

15 know, at a higher output power, that it's slightly more

16 efficient, but as you can see, for each output power

17 level, there's such a wide range, that again it's

18 almost noise.

19 During the tear-down, we did not observe a

20 number of design options, which is to say none of the

21 microwave ovens had any insulation in them. It was

22 just bare epoxy-coated steel. None of the microwaves

23 had dual magnetrons. None of them had ceramic mode

24 steer covers. None of them had reflective surfaces,

25 which is to say stainless steel interiors.

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1 A couple of design options that were observed

2 had little to no impact on cooking efficiency testing,

3 which is to say cooking sensors, for instance, have no

4 impact on the efficiency test because they're not used.

5 The fan efficiency. This needs a slight

6 correction, actually. It should be 7.5 -- actually 9.3

7 kilowatt hours over the life of an 800 watt microwave8 rated -- 800 watt-rated microwave oven, not 5.6 here.

9 That's, you know, a slight benefit there.

10 The low standby loss of electronic controls

11 obviously have no impact on the cooking efficiency test

12 either because the controls consume less than five

13 watts, as we will see in a moment, and we weren't able

14 to observe any special coatings or the like on the wave

15 guides, although six of them were oriented horizontally

16 versus vertically, but there was no clear indication of

17 whether that had any impact on efficiency whatsoever.

18 Yes?

19 MR. ROSENSTOCK: Steve Rosenstock, Edison

20 Electric Institute.

21 In that bullet on improved fan efficiency,

22 you're assuming a 13-year life of the microwave oven?

23 I'm not sure what the estimated life is. You said 5.6

24 kilowatt hours over the life. So -- 9.3. Excuse me.

25 MR. von WENTZEL: That was my mistake. That

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1 should have been -- for whatever reason, I plugged in

2 5.4 years, but I'm assuming a nine-year life, 9.3.

3 MR. ROSENSTOCK: Nine years. So, it's about

4 one kilowatt hour a year, basically?

5 MR. von WENTZEL: Yes.

6 MR. ROSENSTOCK: Thank you.

7

8

9

MR. von WENTZEL: Any other questions?

(No response.)

MR. von WENTZEL: No? Okay. So, there is

10 some efficiency potential that was noted in the 1996

11 TSD, such as improving the efficiency of the magnetron,

12 the magnetron power supply, and potentially the power

13 supply, but that power supply efficiency improvement

14 really only pertains to standby power as opposed to

15 cooking efficiency, which is what these first two

16 bullet points refer to.

17 The 45.4 kilowatt hour number, by the way,

18 has to be updated as well. I apologize. I made the

19 same mistake there. That should be 75 kilowatt hours

20 over a nine-year life for a microwave oven.

21 So, in our analysis for all the magnetrons

22 that we were able to get specification sheets for, we

23 noted a rated efficiency of 71 to 72 percent. We were

24 made aware of or we became aware of one proprietary

25 design released by one manufacturer that's allegedly 75

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1 percent efficient. To the best of our knowledge, it is

2 not yet on the market and it's obviously only one

3 supplier.

4 The magnetron power supply. As I've noted,

5 you've got the standard magnetron power supply which

6 has some potential improvement left in terms of the

7 metals being used in the microwave oven transformer and

8 then you have the newer technology based on inverters

9 that use insulated gate bipolar transistors to

10 basically produce any frequency in voltage you want at

11 the output. According to the AHAM data submittal, such

12 power supplies are slightly more efficient than

13 standard magnetron oven transformer-based power

14 supplies.

15 Lastly, DOE noted in its tear-downs that

16 there was potential for better power supply designs,

17 more efficient power supply designs based on the work

18 that we've done elsewhere, and such improvement

19 opportunities could include using Triacs instead of

20 electromechanical relays, for example, but the question

21 is whether these kinds of technologies and new power

22 supplies would operate reliably in a microwave oven

23 environment.

24 And lastly, as much impact as we would have

25 in terms of the power supply efficiency, the displays

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1 and cooking sensors frequently consume far more power.

2 So, the impact would be negligible or would be masked,

3 I should say, rather, by that.

4 So, here we have the 1996 analysis and we

5 looked at the four different efficiency levels that

6 were proposed based on the design options that meter

7 passed the Screening Analysis and noted that, for

8 instance, that the more efficient power supply based on

9 our own internal estimates, that those costs for the

10 more efficient power supply were very similar to the

11 costs estimated in 1996, once you adjusted them for

12 higher material prices in today's dollars.

13 We also looked at the fan motor efficiency

14 improvement opportunity which is .23 percent and better

15 magnetrons, although since this one design is limited

16 to one manufacturer at the present time, it would be

17 considered proprietary, and last but not least, we

18 looked at the opportunity to use reflective surfaces,

19 which is to say stainless steel cavities, which is a

20 very expensive option but could improve microwave oven

21 efficiency by .5 percent, and this will be looked at a

22 little bit further, but we did not note a single

23 microwave oven, residential microwave oven on the

24 market that contains stainless steel cavities.

25 We were also tasked to look at the cooking

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1 test procedure, as I noted before, and as I noted, the

2 IEC 705-1988, has been superseded by IEC 705-2006. In

3 some ways, these are very similar test procedures,

4 which is to say that you heat up a vial of -- a glass

5 container containing a kilogram of water from 10

6 degrees Celsius below room temperature to room

7 temperature.

8 There are some differences between the two,

9 which is to say that the 705-1988 does not include

10 filament heating power requirements, which is to say

11 you have to note when the power goes above 90 percent.

12 It has very tight ambient temperature requirements for

13 the room that the appliance is being tested in, and it

14 also has tighter final temperature requirements for the

15 test sample.

16 The current IEC test procedure, which is to

17 say this is the one that you can obtain from IEC, does

18 include the filament heat-up time, but critically, it

19 requires the tester to round the output power to the

20 nearest 50 watts when the test is conducted and to the

21 nearest whole number and what we noted in our testing

22 of 12 microwave ovens where we compared the effects of

23 these two test procedures is that it tripled to

24 quadrupled the range of measurements using one test

25 procedure versus the other.

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1 So, it made it much harder to actually nail

2 down what the proper efficiency number would be for a

3 microwave oven. You can see the range here and you can

4 also see in the table to the left how, if one were to

5 just use the raw data for IEC 607-05, how much lower

6 the range would be and how much more comparable it

7 would be to 705-1988, although it is still higher.

8 We also noted that the test procedure is a

9 little vague in terms of handling the test vessel. We

10 elected to isolate the test vessel whenever we were

11 handling it so that -- and measuring it so that we

12 wouldn't influence the test results. We used four

13 thermocouples instead of one as per test procedure, and

14 we made a number of other improvements, we feel, to the

15 testing methodology while staying within, well within

16 the parameters of the test methodology, and you can see

17 the results here which we will get to in just a little

18 moment in the Conclusion section.

19 Moving to standby power, -- yes?

20 MR. LEWIS: Ron Lewis, DOE.

21 Do you have any insights into why IEC took

22 the stand that they did, that seems to introduce more

23 uncertainty and cause more vagueness? Is there any

24 narrative that says why they made that -- they adopted

25 that?

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1 MR. von WENTZEL: I'm afraid I can't -- I

2 don't know why they adopted this new test procedure,

3 other than that it simplifies the test requirements

4 somewhat for whoever is testing the appliance, which is

5 to say your ambient conditions can be more variable

6 which means your lab perhaps doesn't need to be as

7 expensive in terms of its climate control and what have

8 you, but I can't tell you why the IEC updated it or

9 what their motivations were. I'm sorry.

10 So, I don't want to create some confusion

11 here. The DOE and AHAM standby power measurements are

12 very similar, which is to say that the average standby

13 power ranged from about one watt to 5.75 watts.

14 However, these next bullet points refer only to

15 observations made by DOE during its tear-downs because

16 the AHAM dataset did not contain this kind of data.

17 What we noted in all of the microwave ovens

18 that we tore down or opened up is that they had very

19 similar control boards, which is to say an unregulated

20 power supply followed by a regulated power supply. We

21 also noted that the display type seemed to be the

22 primary driver for higher standby power consumption,

23 which is to say that vacuum fluorescence displays had

24 the highest power consumption on average, particularly

25 when used in conjunction with the cooking sensor,

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1 followed by large sophisticated liquid crystal displays

2 that had backlighting and cooking sensors, and the

3 microwave ovens that had the lowest standby power were

4 ones that used light-emitting diodes or non-backlit

5 LCDs and did not feature a cooking sensor either.

6 The data that we've collected suggests that

7 cooking sensors impose a significant constant standby

8 power load of one to 2.5 watts, but it's very difficult

9 to separate these results because again we can't

10 disaggregate the power consumption of all the

11 individual components within a microwave oven.

12 And lastly, we feel that there is a potential

13 for controllers, microwave oven controllers and their

14 power supplies to be potentially more efficient because

15 even microwave ovens without any kind of backlighting

16 behind their LCDs consumed more than one watt, always

17 consumed more than one watt when in standby mode.

18 Here is a graph that shows you a standby

19 power testing as a function of the display size and the

20 display technology. You can see, for instance, over

21 here at two inches, square inches of display size, we

22 have an LED-based display that consumes on the order of

23 1.5 watts. On the other hand, if you want a cooking

24 sensor, then the lowest measurement that we made for

25 that was an LCD that had backlighting and a cooking

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1 sensor at approximately 2.1 watts and this all,

2 incidentally, was a unit that contained an inverter

3 power supply.

4 The highest power consumption in the DOE

5 dataset was for a VFD-based microwave oven, which is to

6 say a vacuum fluorescent display, offers very high

7 contrast, very high brightness, that also contained a

8 cooking sensor, and you can see it was approximately

9 1.6 square inches in size and it consumed just under 5.

10 watts continuously.

11 MR. ROSENSTOCK: Question. Steve Rosenstock,

12 Edison Electric Institute.

13 With these displays, was there any way to

14 measure the brightness of the displays as a function of

15 the technology used? I know whether it's lumen output

16 or what, but some sort of -- is there a way to do it?

17 Is there any way to sort of kind of measure the

18 brightness?

19 MR. von WENTZEL: I suppose there's a way to

20 do it. We didn't have the means to. So, it's hard to

21 say. I guess really from our context, the primary

22 distinguishing characteristic would be a display that

23 you can read at night, which is to say either a backlit

24 display or a display that has active elements in it

25 versus a display like an LCD without backlighting that

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1 you need some ambient light to read. But it's a very

2 good question.

3 Any other questions?

4 MR. CALABRESE: Dave Calabrese.

5 Maybe you answered this, but do you know

6 which one of these or are any of them more likely touch

7 screens as well as displays, that one type of them is

8 actually a touch screen to do various functions on the

9 microwave?

10 MR. von WENTZEL: None of our microwave ovens

11 had touch screens.

12 MR. CALABRESE: Okay.

13 MR. von WENTZEL: They're all foil-based

14 keypads. So, the display -- all it did was display.

15 MR. CALABRESE: One other question. Dave

16 Calabrese.

17 You said it was difficult to disaggregate the

18 standby use of some of the cooking sensors and maybe

19 these as well. Can you explain that a bit further?

20 MR. von WENTZEL: Sure. Some of the cooking

21 sensors were cooking sensors that you can purchase on

22 the open market and in that case, you can look up the

23 manufacturer, get specification sheets, which in turn

24 will give you a good number on the standby power

25 requirement of the cooking sensor and then you can back

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1 out how much that would actually use once you go

2 through the power supply for the cooking sensor.

3 On the other hand, we also noted a whole

4 range of different kinds of cooking sensors that were

5 entirely proprietary in nature. No stampings, no

6 nothing. They were obviously made by the OEM for that

7 OEM and to disaggregate how much power was going into

8 those would have required us to operate the microwave

9 oven with a cover off which we were not willing to do

10 because of safety precautions.

11 Any other questions?

12 (No response.)

13 MR. von WENTZEL: All right. We also

14 compared our standby data results to the standby data

15 results that AHAM submitted and as you can tell,

16 they're very similar.

17 Now, AHAM did not note in its data submittal

18 what kinds of displays were being used, but we did have

19 the rated output power. So that's what we used as an X

20 axis here and you can see that the results are very,

21 very similar.

22 During our tests, we obviously noted the

23 range of standby power as a function of the display

24 type and we noted that LED displays in particular

25 exhibit a very wide range of standby power which is

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1 really dependent on what time is being displayed on

2 that display.

3 So, times that have a lot of active elements

4 going will require more power than times that do not.

5 So, 1:11 in the morning consumes a lot less power than,

6 let's say, 10:58 and for that reason, we feel that --

7 for that reason, DOE's trying to get comment on whether

8 this standby test procedure should require -- power

9 test procedures should require a 12-hour testing

10 period, such that one can minimize the impact of the

11 changing time on the display.

12 MR. ROSENSTOCK: Sir, question, sorry, on

13 that. The values shown on the previous slide -- I'm

14 sorry. This is Steve Rosenstock, Edison Electric

15 Institute.

16 On Slide -- so, the values shown, are those

17 now -- with these LED displays, are these average

18 values over 24-hour period or what are the -- so, what

19 are the -- I'll say the diamonds represent?

20 MR. von WENTZEL: That's a very good point,

21 and I apologize. The diamond represents the average.

22 Okay? The bar represents the range, and obviously

23 you've got a couple of display sizes that were very

24 similar where you've got overlapping ranges, and I

25 apologize. This was as good as we could resolve the

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1 dataset for you guys.

2 You can see that it's a fairly wide range. I

3 believe it's up to 25 percent.

4 MR. ROSENSTOCK: And this was over 24 hours

5 or 12 hours, this -- the range that you're showing?

6 Steve Rosenstock, Edison Electric Institute.

7 MR. von WENTZEL: Our tests consisted of a

8 number of different approaches. We -- the IEC test

9 procedures all require a five-minute test, unless you

10 observe more than 5 percent power variation. We

11 supplemented that with an 18-set data point where we

12 basically went through all the different permutations

13 of times that you could show on a display in terms of

14 the active elements and, lastly, we also conducted 12-

15 hour test to validate that approach.

16 MR. RABA: Good question; Steve. Thank you.

17 MR. ROSENSTOCK: Thank you.

18 MR. von WENTZEL: Any other questions?

19 (No response.)

20 MR. von WENTZEL: Okay. So, in the DOE

21 dataset, as you can see, we noted that the display type

22 and the features that a microwave oven offers have an

23 impact on the standby power consumption as they are

24 built today, and specifically, within the LCD family of

25 displays, some microwave ovens had no backlighting and

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1 no cooking sensor, some had just backlighting and some

2 had backlighting and a cooking sensor and each time,

3 there was an increase in the average standby power

4 which is what that dot means, and each time the range

5 was also at a higher offset to the previous level.

6 Lastly, you might note second from the right

7 a bar graph that shows an LCD with a sensor,

8 backlighting, and that also has an inverter-based power

9 supply. This is one manufacturer and it's not

10 representative of the industry as a whole and that's

11 why we kept it separate.

12 So, as I noted before, LCDs and VFDs have

13 nearly constant power draws, regardless of the time

14 displayed, and that's true for backlit LCDs as well as

15 LCDs that do not have backlighting.

16 I believe two of our microwave ovens had VFDs

17 where the VFD could be turned off, presumably because

18 people didn't want their kitchen to be lit up at night,

19 and we noted that the standby power only decreased

20 minimally, which suggests that the display's being kept

21 warm and ready for use, regardless of whether it's on

22 or off.

23 We also noted that the standby power's very

24 sensitive to voltage fluctuations. Voltage

25 fluctuations as little as 1 percent could have a 5

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1 percent impact in some cases, and we also noted that

2 the cooking sensors in all units are constantly on.

3 As a result, there are potentially some

4 improvement opportunities, such as cooking sensors that

5 could be turned off when they're not in use. The one

6 cooking sensor manufacturer that we spoke to noted that

7 their cooking sensor requires two minutes of warm-up

8 time which means that at the present time, this sensor

9 would not be able to be turned on and off unless the

10 consumer had that choice to do so.

11 We also note that the test procedure credits

12 displays that could be turned off or dimmed using a

13 variety of approaches and obviously you could also work

14 on the power supply if you've already gone through

15 reducing the power consumption of the display and the

16 cooking sensor. As the next step, you could work on

17 the power supply and the controller of the microwave

18 oven itself. Instead of using electromechanical

19 relays, you could consider using Triacs, for instance,

20 which we find widespread use in commercial microwave

21 ovens, and one could also consider switching to

22 switching-based power supplies instead of the current

23 unregulated plus regulated approach.

24 Coming to the conclusions, our analysis

25 suggests that the approach of using the 1996 -- of

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1 updating the 1996 cost efficiency curves is valid,

2 based on our internal cost estimates as well as the

3 data submittal.

4 There's still a lack of correlation between

5 the efficiency in either cavity size or output power,

6 and for design options that impact efficiency, the

7 efficiency and cost increments are still valid once you

8 update the 1996 prices to present day prices.

9 We also feel that the current IEC test method

10 is perhaps not as good of a test method as the test

11 method that DOE references in its efficiency test. We

12 also have some improvement suggestions that could be

13 considered, such as increasing the water sample weight

14 to two kilograms, which is to keep pace with the higher

15 output of today's microwave ovens as well as some

16 limitations of the user interface, and to insulate the

17 test vessel whenever it's being handled outside the

18 microwave oven so that you don't influence the test

19 results.

20 Lastly, DOE seeks comment on using IEC 62301,

21 which is the general standby power IEC test procedure,

22 ideally in conjunction with some qualifications, such

23 as removing the start time ambiguity by requiring the

24 microwave oven clock to be set to 12 a.m. and the test

25 to be run for 12 hours, such that some better

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1 consistency can be achieved.

2 Any questions?

3 (No response.)

4 MR. von WENTZEL: So, there are a number of

5 specific issues for which we seek comment that are

6 outlined here on Page 168. Whether DOE should continue

7 to use a -- to reference a "obsolete" IEC test

8 procedure for its test procedure, the suggested

9 amendments to the DOE test procedure to improve

10 efficiency measurements, any data or studies of cooking

11 sensors and their effect on energy efficiency and

12 annual energy consumption, the consumer utility of an

13 inverter-based magnetron power supply and efficiency

14 data regarding standard magnetron -- excuse me --

15 magnetron oven transformers versus inverter power

16 supplies, any comparative studies regarding unit-to17 unit cooking efficiencies, i.e., cooking efficiency

18 tests that note the efficiency variability among large

19 samples of microwave ovens due to random component

20 effects, any data or studies regarding the cooking

21 efficiency of magnetrons when run at different output

22 levels, and then with regard to standby power, cost

23 data for different display types and components

24 affecting standby power, the potential amendments to

25 the DOE test procedure to incorporate microwave oven

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1 standby power metric as outlined previously, the

2 consumer utility of the various display technologies

3 we've discussed.

4 Is there inherent consumer utility difference

5 between, let's say, a vacuum fluorescent-based display

6 or an LED or an LCD with backlighting? Then any kind

7 of data that any stakeholders may have on cooking

8 sensors that do not require a constant power supply.

9 MR. RABA: Floor's open. These are good to

10 think over for your written comments to come.

11 Any further questions, comments? It's time.

12 Steve Rosenstock?

13 MR. ROSENSTOCK: Steve Rosenstock, EEI.

14 Just to follow up on what you said about the

15 cooking sensors, are there cooking sensors that exist

16 that don't have multi-minute warm-up time to their

17 function, especially in the microwave oven, when

18 cooking times are typically less than two minutes in

19 many applications?

20 MR. von WENTZEL: That's a very question, and

21 we're not aware of any, but that's why we're asking for

22 comment from stakeholders who may be aware of some and

23 again that's only for the cooking sensors for which we

24 were able to get data sheets. The proprietary

25 solutions we don't know.

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1 MR. RABA: The floor's quiet, Constantin, we

2 think.

3 MR. von WENTZEL: I think we get to go home.

4 MR. RABA: Thank you very much. Thank you

5 very much for all your participation, comments received

6 and well heard. We'll take them into consideration

7 certainly across the board. Many thanks to our

8 presenters, Constantin, Judith and Greg, and also to

9 one of our unsung heroines, Brenda Edwards, who

10 provided support and materials for the public meeting

11 today, tag cards, paperwork, and just the ambiance,

12 things like that, to make this a successful meeting for

13 you folks, and a round of applause to yourselves for

14 great participation. Good comments, good input. Thank

15 you very much.

16 (Applause.)

17 MR. RABA: Thank you.

18 FINAL DISCUSSIONS

19 MR. RABA: Any closing remarks I would invite

20 from anybody at the table. Andrew? Anybody from DOE?

21 MR. deLASKI: Not a closing remark, Jim, but

22 just in terms of schedule from here. You know, the

23 schedule, the material to show comments is due on

24 January 29th, and then where to from there? What's the

25 department's sense of the timing for the issuance of

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1 the NOPR?

2 MR. RABA: What does our project manager say

3 about that?

4 MR. LEWIS: I don't have the exact schedule

5 in front of me, but I believe --

6 MR. RABA: Speak into the mike, please.

7 MR. LEWIS: I'll answer that from the

8 template that's in the report to Congress where we've

9 got estimates of the time to go between the various

10 phases. That's our general guidance of trying to go

11 from an ANOPR to a final rule. So, if you take the

12 final date that's scheduled in that schedule for this

13 and back out, one of them I think is on Page 54, that I

14 think shows the three-year -- the number of analyses,

15 the steps, the major milestones, the Framework

16 Document, the ANOPR, NOPR, final rule. I forget -- is

17 that -- Mike Rivest, do you remember, was that seven

18 and a half months?

19 MR. ROSENSTOCK: When was that report put

20 out?

21 MR. CALABRESE: That's the original

22 congressional report.

23 MR. RABA: The report is also reflected in

24 the DOE website. You may go there for the long-term

25 schedule. Along the way, there are steps, as you asked

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1 for that. We don't have it available right now and we

2 can get that to you.

3 MR. ROSENSTOCK: What I'm hearing you say,

4 Ron, in part, and correct me if I'm wrong, is that you

5 expect to stick to the schedule that went to the

6 Congress in 2006.

7 MR. LEWIS: We are doing everything possible

8 to meet the final delivery dates and those milestones

9 along the way become pretty critical because of the

10 analysis and the steps along the way. So, we're trying

11 to stick to that and we're trying to manage to it.

12 As you're aware, there are a whole lot of

13 packages going through at once and we go through a lot

14 of steps. We launched the project. We're doing the

15 technical part. We're doing the foundational work. It

16 goes through a lot of hands before it ever sees the

17 light of day and so we are trying to get all of our

18 work done and get the input analyzed, looked at the

19 implications, consequences, all the rest, and then hand

20 it off to all the other people that have to concur on

21 it.

22 So, the basic guidance we're operating to is

23 that schedule that's in the report to Congress which is

24 on our website and there actually is on the website,

25 without going through the whole report, which is a

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1 hundred and some odd pages, there was a separate

2 schedule, but I think that the showing of the analysis

3 like we just went over here of what analyses have to be

4 done and how long it will take will be sufficient.

5 MR . RABA : Than k s.

6 MR. LEWIS: Okay. So that's approximate and

7 we're not dealing with brain surgery here, with that

8 precision. We're trying to operate to that and there

9 are a lot of surprises and things that come in late,

10 data, somebody brings something up that we weren't

11 including before. So, we're still trying to deliver to

12 that, but we have to accommodate all the stuff that

13 comes in along the way. So, we're doing our best to

14 hit that final date above all.

15 MR. RABA: Last chance for comments.

16 (No response.)

17 MR. RABA: Well, thank you all for being here

18 today. As I say, good discussion, good input. Look

19 for your data and information in the future. Get home

20 safely.

21 (Whereupon, at 4:19 p.m., the meeting was

22 concluded.)

23

24

25

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1 REPORTER' S CERTIFICATE

2

3 This is to certify that the attached proceedings

4 before:

5 UNITED STATES DEPARTMENT OF ENERGY

6 In the Matter of:

7 PUBLIC MEETING ON ENERGY CONSERVATION STANDARDS

8 FOR RESIDENTIAL DISHWASHERS , DEHUMIDIFIERS, AND

9 COOKING PRODUCTS , AND COMMERCIAL CLOTHES WASHERS

10

11 Were held as herein appears and that this is the

12 original transcript thereof for the file of the

13 Department, Commission, Board, Administrative Law Judge

14 or the Agency.

15 Further, I am neither counsel for or related to

16 any party to the above proceedings.

17

18

19 yeIIdY ^7f''eeiiQi

20 Official Reporter

21 Dated: January 17, 2008

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