1

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### U.S. Department of Energy 1

2

3

4


### Public Meeting on 5


### Energy Conservation Standards for 6


### Single

- Package Vertical Air Conditioners and 7


### Single

- Package Vertical Heat Pumps 8

9

10

11



### 9:01 a.m. to 12:03 p.m. 12


### Friday, February 6, 2015 13

14



### U.S. Department of Energy 15



### Room 8E

- 089 16


### 1000 Independence Avenue, S.W. 17


### Washington, D.C. 20585 18

19

20

21

222

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### Moderator: 1


### DOUG BROOKMAN, Public Solutions 2

3



### DOE Staff : 4



### J OHN CYMBALSKY , Program Manager, 5


### Appliance Standards 6



### RONALD MAJETTE , Project Lead 7



### ERIC STAS , Office of General Counsel 8



### ASHLEY A RMSTRONG , Program Manager 9

10

11



### Attendees: 12


### WES ROAN, Bard Manufacturing Company 13



### DICK LORD, Carrier Corporation 14



### NICK MISLAK , Air Conditioning, Heating, 15


### and Refrigeration Institute 16



### VINCE MUCCIOLA, National Comfort Products 17



### Y OOLANDA WILLIAMS , GE A ppliances 18



### LOUIS STARR, NE E A 19



### MARSHALL HUNT , Pacific Gas and Electric Company 20



### BILL STEEL, Bard Manufacturing Company 21



### FRANK XU, National Coil Company 223

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### Attendees : (continued) 1



### AMY SHEPHERD , Air Conditioning, Heating, 2



### and Refr igeration Institute 3



### R ANDY PALM, Allied Air 4


### DAVE WINNINGHAM, Allied Air 5



### STEVE ROSENSTOCK , Edison Electric Institute 6



### JOANNA MAUER, Appliance Standards Awareness 7


### Project 8


### EDWARD WUESTHOFF, Friedrich Air Conditioning 9


### SABBY SABHARWAL, Friedrich Air Conditioning 10

11



### Consul tants: 12



### ED CUBERO, Lawrence Berkeley National 13


### Laboratory 14



### GREG ROSENQUIST, Lawrence Berkeley National 15


### Laboratory 16



### CHRIS LAU, Navigant 17



### ALISON WILLIAMS, Lawrence Berkeley National 18


### Laboratory 19


### SAM McCLIVE, Navigant 20



### ABINESH SELVACANABADY, P acific Northwest 21


### National Laboratory 224

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### Consultants: (continued) 1


### SCOTT MORRIS, Pacific Northwest National 2


### Laboratory 3


### COLLIN WEBER, Navigant 4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

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### C O N T E N T S 1



### PAGE 2



### Overview 6 3



### Market and Techno logy Assessment; 4


### Screening Analysis 42 5


### Engineering Analysis 59 6


### Energy Use Analysis; Markups Analysis 113 7



### Life

- Cycle Cost and Payback Period Analysis 129 8


### Manufacturer Impa ct Analysis 161 9


### NOPR Analyses 179 10


### Proposed Standards 182 11

12

13

14

15

16

17

18

19

20

21

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


### MR. BROOKMAN: Let's begin. Good 2


### morning, everyone. Apologies for our late start. 3


### Apologies to the Web as well, our Web 4


### participants. We had some difficulty getting all 5


### the people here this morning to start. 6


### Glad to see you here this morning. This 7


### is the Energy Conservation Standards Notice of 8


### Proposed Rulemaking for Single

- Package Vertical 9


### Units. Today i s February 6, 2015, here in the 10


### Department of Energy, the Forrestal Building. My 11


### name is Doug Brookman, Public Solutions, 12


### Baltimore. Nice to see you here this morning. 13


### Again, apologies for small delay in the start. 14


### We are going to have welcoming remark s 15


### this morning from John Cymbalsky. 16


### MR. CYMBALSKY: Thanks, Doug. 17


### Hi. I'm John Cymbalsky. I'm the Program 18


### Manager for Appliance Standards here at DOE. I 19


### just want to welcome everybody to today's public 20


### meeting. I hope we have a really good dialogue 21



### o n the material we are going to present today, 227

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### and then please follow up, as usual, with written 1


### comments during the comment period that's been 2


### established for this product, and I look forward 3


### to a good meeting today. Thank you. 4


### MR. BROOKMAN: Thank you. We always 5


### start with introductions. I will start to my 6


### immediate left. You will get used to turning 7


### these microphones on and off. Your name and 8


### organizational affiliation, please. 9



### MR. ROAN: I am Wes Roan, Bard 10


### Manufacturing Company. 11



### MR. LORD: Dick Lord with Carrier 12


### Corporation. 13


### MR. MISLAK: Nick Mislak, Air 14


### Conditioning, Heating, and Refrigeration 15



### Institute. 16


### MR. MUCCIOLA: Vince Mucciola, National 17



### Comfort Products. 18



### MS. [Yoolanda] WILLIAMS: Yoolanda 19


### Williams, GE Appliances. 20



### MR. STARR: Louis Sta rr, NEEA. 21


### MR. HUNT: Marshall Hunt, Pacific Gas and 228

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### Electric Company in the California IOUs. 1


### MR. STEEL: Bill Steel, Bard 2


### Manufacturing Company. 3


### MR. XU: Frank Xu, National Coil Company. 4


### MS. SHEPHERD: Amy Shepherd, Air 5


### Conditioning, Heating, and Refri geration 6



### Institute. 7


### MR. PALM: Randy Palm, Allied Air. 8


### MR. WINNINGHAM: Dave Winningham, Allied 9



### Air. 10


### MR. ROSENSTOCK: Steve Rosenstock, Edison 11



### Electric Institute. 12


### MS. MAUER: Joanna Mauer, Appliance 13


### Standards Awareness Project. 14



### MR. STAS: Eric Stas, D OE General 15



### Counsel's Office. 16


### MR. MAJETTE: Ronald Majette, U.S. 17


### Department of Energy, Project Lead. 18



### MR. BROOKMAN: Let's see if that 19


### microphone works over there. 20


### MR. McCLIVE: Sam McClive, Navigant. 21


### MR. SELVACANABADY: Abinesh Selvacanabady 229

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### with PNNL. 1



### MR. BROOKMAN: Please stand and introduce 2


### yourself. 3


### MR. MORRIS: Scott Morris, Pacific 4


### Northwest National Laboratory. 5


### MR. BROOKMAN: I think standing will be 6



### sufficient. 7


### MR. CUBERO: Ed Cubero, Lawrence Berkeley 8


### Laboratory. 9



### MR. ROSENQUIST: Greg Rosen quist, 10


### Lawrence Berkeley National Laboratory. 11


### MR. LAU: Chris Lau, Navigant. 12


### MR. BROOKMAN: Again, welcome. Thanks to 13


### all of you for being here this morning. 14


### All of you received a packet of 15


### information as you came in today. The agenda is 16


### listed on p age 3. Immediately following this 17


### agenda review, there is an opportunity for 18


### anybody that wishes to, to make brief summary 19


### comments, opening remarks, here at the outset. 20


### Following on from there, we are going to 21


### dive into the content provided in this pack et. 2210

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### The purpose of the public meeting, 1


### opening statements, comment, submission, 2


### instructions, regulatory authority, rulemaking 3


### overview, and then moving on from there to some 4


### substantive content, market and technology 5


### assessment, screening analysis, then engineering 6


### analysis. We'll take a break midmorning at 7



### around about 10:15 or 10:30 or so. 8


### Following on from that, energy use 9


### analysis, markups analysis, life

- cycle cost, and 10


### payback period analysis, and then shipments, 11


### national impact analysis, and then manufacturing 12


### impact analysis, NOPR analyses, plural, 13


### description of the proposed standards, and we 14


### intend to be entertaining closing remarks. 15


### Anything that hasn't been covered 16


### sufficiently, around about noon today

-- that's 17


### the plan for finishing the me eting, around about 18


### noon. In fact, there is another meeting that is 19


### going to follow on after lunch here in this 20


### meeting room, so we can't go way over, although 21



### we coul d pinch that meeting if we need to. 2211

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### So that's the general plan. Questions or 1



### comments on the agenda? 2


### [No audible response.] 3



### MR. BROOKMAN: None. I would ask for 4


### your consideration, if you would, please speak 5


### one at a time while you are here today. Please 6


### say your name for the record each time you speak. 7


### There will be a complete transcr ipt of this 8


### meeting made available to all. If you could be 9


### concise, share the air time, keep your focus 10


### here. Please turn your cell phones on silent 11


### mode, if you haven't done so already. Limit 12



### sidebar conversations. 13


### Webinar participants, we welcome you

. 14


### The Department of Energy is trying hard to make 15


### sure that these meetings are totally accessible 16


### via the Web. If you have your telephone on mute 17


### and raise your hand via the software to be 18


### recognized to speak, then we ought to be able to 19


### hear you in the room. 20


### I would encourage you, as John Cymbalsky 21


### just did, all participants, including those via 2212

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### the Web, please make certain to submit your 1


### written comments after this meeting, and then I 2


### am going to turn it over to Ron Majette. 3


### Ron, I haven't done the pu rpose of the 4


### public meeting. 5


### MR. MAJETTE: Good morning, folks. My 6


### name is Ron Majette from the U.S. Department of 7



### Energy. 8


### Again, we are sorry for that brief delay, 9


### but we'll just blame it on Mother Nature. We'll 10


### just call it what it is. It was cold o ut there. 11


### We are going to go briefly over these 12


### introductory slides, and then we'll just go right 13


### in, because I know we're a little bit behind. 14


### Purpose of this public meeting is to 15


### present the procedural and analytical approaches 16


### to evaluate potential en ergy savings, energy 17


### conservation standards for single

- package 18


### vertical air conditioners and single

- package 19


### vertical heat pumps, collectively referred to as 20



### SPVUs. 21


### Again, we will continue to keep saying 2213

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### this all throughout the day. We invite comment 1



### on t his particular subject matter, written as 2


### well as being able to provide testimony for 3


### today. 4


### We should actually just go over to Slide 5


### 9, and I will just go right into the regulatory 6


### authority. 7


### The Energy Policy and Conservation Act of 8



### 1975, which is EPCA , as amended by the Energy 9


### Independence and Security Act of 2007, which is 10


### EISA 2007, prescribes energy conservation 11


### standards and definitions for single

- package 12


### vertical air conditioners and single

- package 13


### vertical heat pumps, and that's the citation. 14



### In this one

- time SP V U review, EISA 2007 15



### amended EPCA to require that DOE review the most 16


### recent published ASHRAE Standard 90.1 with 17


### respect to SPVACs and SP V HPs under that 18


### particular c ite. 19


### The ASHRAE trigger, in which the 20


### Department is required to take acti on, EPCA also 21


### directs DOE to consider amending the existing 2214

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### federal energy conservation standard for each 1


### type of equipment listed, including SPVUs, each 2


### time ASHRAE Standard 90.1 is amended with respect 3


### to such equipment. 4


### And here, we're taking our 6

- yea r 5



### lookback. Pursuant to the EISA 2007 and the 6


### American Energy Manufacturing Technical 7


### Corrections Act, amendments to EPCA under 42 USC 8



### 6313(a)(6)(C), DOE must also review its 9


### already

- established energy conservation standards 10


### for each class of ASHRAE equip ment every 6 years, 11


### so it's important we take note of that particular 12


### lookback. This rule simultaneously satisfies all 13


### three reviews and requirements. 14


### Briefly, we will go into the rulemaking 15


### history itself. In 2007, EISA 2007 establishes 16



### standard for SP VUs identical to those in the 17



### then

- current version of ASHRAE Standard 90.1, 18


### which is referencing 90.1

- 2004. EISA 2007 19



### directs DOE to conduct a one

- time review of the 20



### SPVU standards. 21


### In 2011, DOE commenced the statutorily 2215

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### required review with a notice of dat a 1


### availability published on May 5, 2011. 2


### Considering levels above those in ASHRAE, which 3


### were still equivalent to the federal standard, as 4



### contained in ASHRAE 90.1

- 2010. 5


### Now, in 2013, prior to DOE issuing a 6


### NOPR, ASHRAE published Standard 90.1

- 2013, o n 7


### October 9, 2013, triggering DOE's obligation to 8



### consider and revise ASHRAE levels for SPVUs 9


### unless clear and convincing evidence justified 10


### high levels. 11


### And here we are at 2014. DOE published 12


### an analysis of energy savings potential on April 13



### 11, 2014, an d DOE published a NOPR on December 14



### 30, 2014. 15


### Now we go to Slide 11. I am not going to 16



### read this out. These are the definitions as 17


### specified by EISA. It is the definitions for the 18


### single

- package vertical air conditioner and 19


### single

- package vertical heat pump, those two 20


### definitions as defined by EISA 2007. 21


### Slide 12 references the energy 2216

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### conservation standards for SPVUs. SPVUs are 1


### divided into six different equipment classes 2


### based on cooling capacity and whether they are 3



### SPVACs or SPVHPs. 4



### Energy conserva tion standards are 5


### distinguished by EER for SPVACs and EER 6


### supplemented by corresponding heating mode 7



### coefficient of performance value for SPHVPs. 8


### Do we have any questions regarding this? 9


### MR. BROOKMAN: We do have a question. 10


### Ron, maybe we should pause here because 11


### some individuals might wish to make an opening 12


### statement as well, although I think the 13


### regulatory overview is useful in this context. 14


### But a question here first, please. 15


### MR. MISLAK: No. I was asking about the 16


### opening statement. 17



### MR. BROOKMA N: Yes. 18


### MR. MISLAK: Are you ready for them now? 19



### MR. BROOKMAN: Yes. I think we are at a 20


### pausing point, yes. Let's go with opening 21



### statements. 2217

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### MR. MAJETTE: This is a good point. 1


### MR. BROOKMAN: So, Nick, yes. 2


### MR. MISLAK: Good morning again. My na me 3


### is Nick Mislak. I am the Engineering Manager of 4


### Regulatory Affairs at the Air Conditioning, 5


### Heating, and Refrigeration Institute. AHRI is a 6


### trade association representing 350 manufacturers 7


### of heating, cooling, water heating, and 8


### commercial refrigerati on equipment. In the U.S. 9



### alon e , AHRI has members employing approximately 10


### 130,000 people and supports some 800,000 dealers, 11


### contractors, and technicians. AHRI represents 12


### over 90 percent of the market affected by this 13


### Notice of Proposed Rulemaking. 14



### We ap preciate the opportunity to comment 15


### on the U.S. Department of Energy's DOE Notice of 16


### Proposed Rulemaking on the energy conservation 17


### standards for single

- package vertical air 18



### conditioners and SPV HP s, and we support DOE's 19


### determination to accept ASHRAE 90.1

- 2013 20


### efficiency levels for most product classes. 21


### However, we have several pressing 2218

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### concerns that need to be addressed before this 1



### becomes a final rule. 2


### AHRI strongly supports the adoption of 3



### ASHRAE 90.1

- 2013 efficiency levels for all 4


### cooling capacities of single

- package vertical 5



### units. 6


### DOE accepted ASHRAE levels f or units 7


### greater than 65,000 Btu' s an hour but proposed 8


### higher efficiency levels for smaller capacity 9


### units. The levels proposed by 90.1 are 10 EER 10



### and 3.0 CO P for units less than 65,000 Btu' s an 11



### hour. 12


### ASHRAE 90.1 is a public process where 13


### stakeholders are encouraged to present their 14


### views and concerns and develop comments in 15


### support or opposition to selected efficiency 16



### levels. 17



### DOE is included in the ASHRAE 90.1 18


### process and is able to commen t o n the proposed 19


### efficiency levels before they are adopted into 20



### the standard. No comments were received from the 21


### DOE in opposition to proposed efficiency levels, 2219

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### yet this NOPR raises minimum efficiency levels 1


### for smaller units to 11 EER and 3.3 COP, which 2


### will eliminate most product lines from the 3


### market, as the cost to redesign, impact on 4


### shipments, and loss of utilities to customers 5


### will be extremely significant. 6


### This is because increasing the physical 7


### size of a unit is not possible, as modifications 8



### to the building construction will be required. 9


### This eliminates equipment retrofit and replacing 10


### existing structures and reduces the potential for 11


### energy savings. 12



### The increase in efficiencies will also 13


### translate directly into more expensive units, 14


### which may cause consumers to favor other products 15


### or repair existing units rather than replacing 16


### them. None of these factors were adequately 17


### considered in DOE's technical analysis. 18


### AHRI is also very concerned about DOE's 19


### actions outside the statutory authority un der 20


### EPCA in this rule. In 2007, Congress determined 21



### that the definition of SPVUs as commercial 2220

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### equipment, and while DOE acknowledges this, it 1


### dismisses that definition as a technicality for 2


### certain space

- constrained units. 3


### DOE can point to nothing within the 4


### congressionally adopted definition in support of 5


### this exclusion. Furthermore, the criteria DOE 6



### used to make this determination is uncle ar

. 7


### As a result of this determination, DOE 8


### does not correctly analyze the SPVU market impact 9


### to consumers and impa ct to competition. 10


### Finally, as a full participant in ASHRAE 11


### process, through which the space

- constrained 12


### application was adopted, DOE should have acted in 13


### good faith by raising any concerns regarding 14


### these products in the 90.1 discussions. Instead, 15



### DOE f ailed to make other participants in the 16


### process aware of its interpretation, undermining 17



### consensus standard

- setting process that is the 18


### better commercial equipment provisions of EPCA. 19


### So, in conclusion, we look forward to 20


### working with Department and other s in 21


### establishing workable and credible energy 2221

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### conservation standards for SPVUs. 1


### Thank you for the opportunity to present 2


### our views, and we will provide more detail ed 3


### comments in writing. 4



### MR. CYMBALSK Y : Okay. Thank you, Nick. 5



### Do we have other comments here at the 6


### outset? We wanted to provide an opportunity for 7


### anybody to raise at this point? 8


### MR. WINNINGHAM: This is Dave Winningham 9



### with Allied Air. Just kind of a minor technical 10


### question. 11


### Normally, in these presentations, the 12


### request for comment ar e included in the issue 13


### boxes throughout the document. For most of the 14


### document, they are not, until we get to the end 15



### of the document. 16


### So I guess I would request that we take a 17


### pause at the end of the normal breaks in here to 18



### discuss those common issues

. 19


### MR. BROOKMAN: So I would suggest, as a 20


### matter of convenience and a matter of creating a 21


### record that is cogent and hangs together, that if 2222

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### you have questions at any point during the 1


### presentation material, that you just ask those 2


### questions then. That's become sort of a mode of 3


### operating here. We want the comments to be 4


### contiguous to the presentation material. 5


### So don't be constrained by the issue 6


### boxes. If you have a question or comment, let's 7


### just insert it right there and then, okay? 8



### MR. WINNINGHAM: Thank you, Doug. 9


### MR. BROOKMAN: Okay, great. 10



### MR. CYMBALSK Y : Additional comments, 11


### questions, here at the outset? 12


### Amy, do you have a question or comment? 13


### MS. SHEPHERD? I do. I had a question 14



### about the DOE's determination about the exclusion 15



### of the space
- constrained units, and so there is a 16


### note here, but I don't know if there is a better 17


### place to discuss it. 18



### MR. CYMBALSK Y : And which slide is that? 19



### MS. SHEPHERD: Slide 11. 20



### MR. CYMBALSK Y : Slide 11. We are right 21



### here now, so let's do. 2223

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### MS. SHEPHE RD: Okay. 1


### So my question, I have a couple of issues 2


### on this particular topic, but right here, for 3


### example, it says that these SPV U s are primarily 4


### advertised for multifamily residential use, and 5


### so my question is, given the definition of 6



### residential build ings in EPCA, which excludes 7


### multifamily housing above

-- three grades above, 8


### what does multifamily residential use mean, or 9



### where does that definition come from? 10


### MS. ARMSTRONG: Everyone is staring at 11


### me, so I guess I will just talk. 12



### MR. CYMBALSK Y : Ash ley Armstrong. Hello, 13


### Ashley. 14



### MS. ARMSTRONG: So I need to look at the 15


### statute for a second just to see where exactly 16


### you are quoting from. 17


### MS. SHEPHERD: Okay. 18


### MS. ARMSTRONG: So give us a second to 19


### get back to that in terms of

-- 20



### MS. SHEPHERD: Oka y. Residential 21


### building is defined in the consumer section, and 2224

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### it excludes buildings three grades and above. 1


### And this is something that was raised in 2


### comments to the NODA in April as well. 3


### MS. ARMSTRONG: So why don't you just go 4


### ahead and tell us you r point of view on this, why 5



### we look at this. 6


### MS. SHEPHERD: Okay. 7



### MR. CYMBALSK Y : Would you get that 8


### microphone closer to you? 9


### MS. SHEPHERD: Sure. I'm usually very 10



### loud. 11



### MR. CYMBALSK Y : No, you're doing well, 12



### but I'm

-- 13



### MS. SHEPHERD: You're the fi rst person 14


### that's ever told me I'm not loud enough. 15



### MR. CYMBALSK Y : No, no. I didn't say 16



### that. 17



### MS. SHEPHERD: Put that in the record. 18



### MR. CYMBALSK Y : I did not say that, but 19


### these microphones are suspect, so please go 20



### ahead. 21


### MS. SHEPHERD: Okay. So f rom our point 2225

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### of view, this is pretty simple because, as DOE 1


### notes in this slide, Congress determined the 2


### definition of SPVUs in these products that have 3



### been excluded meet it. 4


### So we have really been trying to figure 5


### out how DOE made that determination, a nd when we 6



### look at the NODA and when we look at the NOPR, 7



### there are sometimes references to 8



### space
- constrained product. Sometimes there's 9



### references to residential use. Sometimes there's 10


### references to personal use in the sense that it's 11


### just a person usin g it, for example, in a hotel. 12


### So we really have had a hard time determining 13


### exactly how this decision was made. 14


### From our point of view, when you look at 15


### the consumers of these products, it is the people 16


### who purchased the product, and that is 17



### commercial. For multifamily housing and these 18


### hotels, it's the building engineers, people who 19


### are designing the specs, just like all other 20


### commercial equipment. And so we think that was 21


### the basis for the congressional determination to 2226

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### make this part of the SPVU def inition, but there 1


### are places in which DOE refers to things like 2


### multifamily residential. To us, that term 3


### doesn't even make any sense because, in the 4


### statue, residential buildings are defined as 5


### buildings other than those that are more than 6



### three levels above grade

-- multifamily housing. 7



### Excuse me. 8


### So that just adds further un

- clarity for 9



### us. We don't understand what the basis of this 10


### definition is, and I think

-- you know, we don't 11


### agree with it, but it's hard to kind of fully 12



### flesh that out when we can't clearly understand 13



### what the criteria was. 14


### MR. BROOKMAN: Okay. So I think that 15


### description was helpful, and make certain in your 16


### written comments that you include that. 17


### Ashley, are you

-- 18


### MS. ARMSTRONG: I'm ready. 19


### MR. BROOKMAN: Okay. Ashley A rmstrong. 20


### MS. ARMSTRONG: I'm not going to fully 21


### address this issue, but we will take it back and 2227

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### look at it, now that you've made the point. 1


### I think to explain a little bit behind 2


### what the Department did is, when 90.1 came out 3



### and we saw that there was a distinction being 4


### made with space

- constrained products, what DO E 5


### did was we went and looked at the marketing 6



### literature. We went and looked at those 7


### products. We went and reviewed the materials 8


### that manufacturers were putting on their websites 9



### to kind of see what this new space

- constrained 10


### product was. 11


### So after doing that, what we found was 12


### that some products that were previously 13


### classified as central air conditioners and being 14



### certified to DOE as such, we're now all of a 15


### sudden being called "space

- con strained SPVUs." 16


### So perhaps to turn the question around to 17


### the audience, what changed? Why are they now not 18


### central air conditioners, and why are they now 19



### space
- constrained SPVUs? What's different? 20



### MS. SHEPHERD: Well, I think that, as DOE 21



### noted, the market for this has been the same in 2228

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### 10 years. The space

- constrained definition was 1


### part of the ASHRAE process, which started in 2


### 2010. So I think that's why there's a little bit 3



### of un

- clarity as well as to why DO E

-- and like 4



### some of the statements in th e NOPR were that it 5



### was once
-- ASHRAE 90.1

- 2013 was adopted in 6


### October of 2013, that this came up, but DOE was 7


### part of the process where this definition was 8


### developed, and there weren't any concerned raised 9


### at the time or none of these questions. 10



### MS. ARM STRONG: I don't think that 11


### answers my fundamental question of why were they 12


### once classified and certified to the Department 13


### as central air conditioners and now they are 14


### being called space

- constrained SPVUs. I mean, 15


### that's really more of a question about

-- for the 16


### manufacturers and the marketing materials, I 17



### mean, that's what we found when we reviewed. 18


### MS. SHEPHERD: The marketing materials, 19


### do you mean are they being marketed to individual 20


### households or to the multifamily housing and the 21



### hotels? 2229

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### MS. AR MSTRONG: Both. 1


### MS. SHEPHERD: Okay. And so in terms of 2


### the basis for a manufacturer at this point to 3


### make a decision, is that the basis that DOE is 4


### using as the marketing materials? 5



### MS. ARMSTRONG: No. 6


### MS. SHEPHERD: Is that how they decide? 7



### MS. ARM STRONG: I don't think 8


### exclusivity. I don't think that's what we're 9


### doing. 10


### What I'm trying to tell you is we were 11


### trying to learn for what was being done. So what 12


### I really want to know is why are they now not a 13


### central air conditioner. Why are they now , all 14


### of a sudden, a space

- constrained SPVU? 15


### MS. SHEPHERD: When you say all of a 16


### sudden, you're talking about prior to 2007 or 17



### after? 18



### MS. ARMSTRONG: After. 19


### MR. BROOKMAN: Amy, I thought you were 20


### suggesting that the ASHRAE designation turned the 21



### defini tion or something like that. 2230

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### MS. SHEPHERD: No. I mean, go ahead. 1


### MR. BROOKMAN: Dave, please go ahead. 2


### MR. WINNINGHAM: This is Dave Winningham 3



### with Allied Air. 4


### Ashley, I think the fundamental question 5


### was there was not a category. The creation of 6


### this SPVU is, historically speaking, a

-- it was 7


### created originally in 2003, 2004, within the 8


### AHRI. That definition was adopted in 2007 and 9


### then became a part of ASHRAE in 2010. So it's a 10


### relatively recent category. 11


### The creation of the category from our 12


### opinion was created because it did not fit well 13


### within the confines of residential products, and 14


### that was the genesis of why this category was 15



### created. 16


### In addition to multifamily housing, these 17


### are used in the lodging industry, in the medical 18


### industry, a nd office facilities, all

-- 19



### commercial three

- story buildings, all of which we 20


### regard as commercial applications. These are not 21


### sold to individuals. They are designed as part 2231

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### of a building in a commercial application. 1


### MR. BROOKMAN: Yoolanda, did you ha ve a 2



### comment here? 3



### MS. [Yoolanda] WILLIAMS: Similar and 4


### just a follow

- up to that. Again, Yoolanda 5



### Williams. 6


### The note references multifamily 7


### residential use, but again, these products are 8


### used in a wide array of applications, such as 9



### hotels, motels, ass isted living facilities, so we 10



### consider those to also be commercial. These are 11


### some of the same applications that PTACs are used 12


### in, basically same distribution channels, market 13


### channels, et cetera. Those products are 14


### considered commercial products based on where 15


### those products are being used. These SPVUs are 16


### also used as the same applications, which we, 17


### again, consider commercial. So we think that 18


### they should be classified as commercial products 19



### as well. 20



### MS. SHEPHERD: And I think that the 21


### point, too, is that the statute provides the 2232

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### clarity and the definition of what an SPVU is, 1


### and if these products meet that statutory 2


### definition, then that's how they should be 3


### classified. If DOE is going to say that, no, we 4


### can say, based on some other criteria, th at these 5


### are in fact consumer products and pull them out 6


### of the statutory definition, which, as they say, 7


### they meet the definition, but they're advertised 8



### -- DOE concludes that they're advertised 9


### otherwise. There has to be some clarity as to 10



### what that is. 11


### We don't think they have that authority, 12


### but even if they do, there needs to be some 13


### clarity that manufacturers could look at to 14


### decide this is what they mean by that. 15


### In terms of the application and the 16


### advertisements, if they are being advertised to 17



### m ultifamily, if multifamily residential doesn't 18


### exist, then that can't be the basis to pull it 19



### over into the consumer section. 20


### MR. BROOKMAN: Okay. Thank you, Amy. 21



### So this seems like a fundamental issue. 2233

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### Additional thoughts in this same stream of 1



### conten t? 2


### Dave, do you have anything additional? 3


### Nothing additional? 4


### Any other manufacturers that wish to 5


### weigh in on the definition issue? 6


### [No audible response.] 7


### MR. BROOKMAN: Okay. Then let's move on 8



### with the content, Ron. 9



### MR. MAJETTE: Well, we were f inishing up 10



### Slide 12. 11



### [Pause.] 12


### MR. MAJETTE: All right. We are going to 13


### go ahead and move on to Slide 13. Criteria for 14


### selecting Standard Levels. 15


### For each type of equipment, EPCA directs 16


### that if ASHRAE 90.1 is amended, DOE must review 17


### and adopt amende d standards at the new efficiency 18


### level in ASHRAE Standard 90.1, unless clear and 19


### convincing evidence supports a determination that 20


### adoption of a more stringent efficiency level 21


### would produce significant additional savings, 2234

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### energy savings, be technological ly feasible, and 1


### be economically justified. 2


### DOE must either adopt the amended ASHRAE 3


### levels within 18 months after publication of 4


### 90.1, or promulgate more stringent standards not 5


### later than 30 months after publication of ASHRAE 6



### 90.1. 7


### All right. This is the criteria for 8


### selecting the standard levels in Slide 14, and 9



### these are the seven different criteria that we're 10


### basing that on. 11


### Any questions on Slide 14? 12


### MR. WINNINGHAM: This is Dave Winningham 13



### with Allied Air. 14



### MR. MAJETTE: Yes. 15



### MR. WINNINGHAM: I think the 16



### manufacturers

-- or Allied, in particular, 17



### doesn't believe that DOE has established clear 18


### and convincing evidence. They are estimating .23 19


### quads of energy savings, which is a significant 20


### amount, but if DOE were to adopt 90.1 per the 21


### original in tent of the schedule, they would be 2235

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### able to see energy savings prior to this NOPR and 1


### hasn't taken that into account in their analysis. 2


### We would also advocate the adoption of 3



### 90.1

- 2013 per the process that DOE participated 4



### in. 5


### MR. MAJETTE: Okay. Okay, Dave. Thank 6



### you. 7


### MR. BROOKMAN: Any more questions 8


### regarding that? 9


### [No audible response.] 10


### MR. BROOKMAN: I think we will probably 11


### have more dialogue about Slide 12 throughout the 12


### conversation today. 13


### MR. MAJETTE: I'm sorry. We may have 14


### more questions about Slide 11 throughout the 15


### comments today, but are there any more questions 16


### or any further opening remarks anybody would like 17


### to add at this point in time? 18


### [No audible response.] 19


### MR. MAJETTE: Okay. Great. Well, Doug, 20


### I am going to turn it back ove r to you. 21


### MR. BROOKMAN: Okay. thank you. 2236

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### Well, we are going to move on with the 1


### content as listed here in the packet, and I guess 2


### we are going to hear next from Sam McClive. 3


### MR. McCLIVE: Thank you, Doug. 4


### So the first stage of our analysis was 5



### the ma rket and technology assessment, as well as 6


### the screening analysis. 7



### To start off

-- 8


### MR. BROOKMAN: Ashley Armstrong has

-- 9



### MS. ARMSTRONG: Before we start. 10



### MR. BROOKMAN:

-- wishes to make a 11



### comment. 12


### MS. ARMSTRONG: So I just want to clarify 13


### two things

. 14


### One, Dave, to your point about we don't 15


### account for the energy savings do adopting ASHRAE 16


### earlier than we do, it is in the analysis. 17


### Second, there's been a couple comments 18


### made with respect to DOE's participation on the 19


### 90.1 committee, and that DOE is on the 90.1 20


### committee, and that DOE should be raising issues 21


### during that process or voting against if DOE is 2237

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### subsequently going to do something different. 1



### DOE is a member of the 90.1 committee. 2


### We do work with our building code folks here in 3


### Appliance S tandards. 4


### However, outside of the regulatory space, 5


### DOE cannot state its regulatory opinion voting 6


### for or against in the 90.1. We have to do that 7


### in our rulemaking activities. So that's why 8


### you're seeing DOE's rulemaking opinion or 9


### regulatory opinion co me through during the 10


### rulemaking process. 11



### MR. BROOKMAN: Amy. 12


### MS. SHEPHERD: I just have a follow

- up. 13


### So can you not comment at all

-- I'm just really 14


### seeking clarification. Can you not comment at 15


### all during ASHRAE process then, or what are the 16



### limitat ions or parameters around that? 17


### MS. ARMSTRONG: So I think given some of 18


### the questions and comments that we've gotten, 19


### especially as of late, we are still working with 20


### our counsel's office to actually talk about what 21



### we can and can't do. 2238

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### But generally sp eaking, in terms of 1


### Appliance Standards stuff, we participate in 2


### ASHRAE to provide technical feedback, to ask 3


### questions, but we can't actually express a 4


### regulatory opinion outside of the regulatory 5


### context, generally speaking. So that's about as 6



### far as I' m going to say today. 7


### MR. BROOKMAN: Okay. Additional comments 8


### on this subject? 9


### Yes, please. Wes. 10



### MR. ROAN: This is Wes Roan. 11


### I guess one question, Ashley, is the 12


### ASHRAE 90.1, if it would be adopted today by DOE, 13


### we would see savings starting late 2 015. 14


### Everyone would have to get to 10/3. If it's not 15


### adopted, then it's a state

- adopted thing going 16


### forward for new construction or for residential, 17


### for replacement work. So it's going to be a 18



### roll

- out during the next few years. Some states 19


### will adopt. Some states are notoriously not 20


### going to adopt. So you won't see full 21


### participation. 2239

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### Did you take into consideration full 1


### participation in the calculation or partial? 2


### MS. ARMSTRONG: I am going to let Alison 3


### chime in for a second, but just to be clear , when 4


### we're analyzing, to Dave's point about there 5


### would be savings earlier, that differential is 6



### accounted for. 7


### Now, that being said, if we were to adopt 8


### a minimum standard higher than that, you may have 9


### partial adoption for those couple of years, but 10



### w hen that minimum standard comes in, it's a 11


### federal level. Everyone must comply. So that 12


### partial adoption wouldn't be propagated 13


### throughout many years because the difference in 14


### compliance dates, while not insignificant, to 15


### your point, is small. 16



### MR. WINNI NGHAM: This is Dave Winningham 17



### with Allied. 18


### I recognize that they used 90.1

- 2013 as 19


### the base, and it was my impression. I could be 20


### wrong here, but at the date of implementation in 21


### 2019, that's where the energy savings was

-- 2240

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### differential was measured at that point. 1


### And I guess my point is

-- this is 2


### question

-- if that were to be pulled into

-- 3


### kind of per the roll

- out of ASHRAE normally 4


### following

-- 3 years following. 5


### MS. ARMSTRONG: So I think your ask is in 6


### the delta between our compliance date and the 7


### ASHRAE compliance date, did we subtract out the 8


### partial energy savings that might be had for 9


### those handful of years, where there might be 10


### partial adoption by state codes, if that's the 11


### question. 12



### MS. [Alison] WILLIAMS: This is Alison 13


### Williams, LBNL. 14


### We don't explicitly account for that, 15


### like we didn't explicitly estimate what we 16


### thought the adoption rate of ASHRAE would be, but 17


### we do have base case efficiency distributions, 18



### and we do assume some default increase in 19


### efficiency in the base case. So we are taking 20



### into account some market

- driven changes in 21


### efficiency outside of the federal regulations. 2241

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### MR. BROOKMAN: Yes, Dick. 1



### MR. LORD: Dick Lord with Carrier. 2


### This is kind of just a clarification 3


### question. Because these are federally preempted 4


### requi rements, my understanding has always been 5


### the states could only adopt it for new 6


### construction, not replacement, so you'd only get 7


### new construction implementation? 8



### MS. ARMSTRONG: Yeah. I mean, I think 9


### that's why you're seeing

-- we don't do a full 10



### shift in efficiencies. We just do a partial 11



### shift of the market. 12


### If you look at the distribution of 13


### efficiencies, say, in 2015 versus that of 2019, 14


### the compliance year, you will see a slight shift, 15



### but it's not a full shift. 16



### MR. LORD: Gotcha. 17



### MS. ARMSTRONG: So that's how we account 18



### for it. 19


### So, Dave, if you wanted to know that 20


### difference in savings, that's a different number, 21


### but the effect is ultimately accounted for. 2242

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### MR. BROOKMAN: Additional subjects on 1


### this subject before we move on? 2


### [No audible respo nse.] 3


### MR. BROOKMAN: Okay. We're moving on. 4



### Sam. 5


### MR. McCLIVE: Thank you, Doug. 6


### So the beginning of our analysis was the 7


### market and technology assessment. So, to briefly 8


### describe what that is, the goal of the market 9


### assessment was to develop a qualit ative and 10


### quantitative characterization of the SPVU 11


### industry and the market structure based on data 12


### that DOE gathered from manufacturers, other 13


### interested parties, as well as literature review. 14


### And the technology assessment was performed to 15


### develop a prel iminary list of technologies or, as 16


### they will be referred to throughout the remainder 17


### of the presentation, "design options," which 18


### could be potentially used to improve the energy 19


### efficiency of SPVUs. 20


### MS. SHEPHERD: I had a question. So on 21



### the first

-- 2243

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### M R. BROOKMAN: Amy, will you say your 1


### name when you speak? 2


### MS. SHEPHERD: I'm sorry. I am so sorry. 3



### MR. BROOKMAN: No. Please do. Go ahead. 4


### MS. SHEPHERD: Amy Shepherd, AHRI. 5


### So, on Slide 17, in that first bullet, 6



### the manufacturers that all this info rmation was 7


### gathered from, is that just the seven that are 8



### identified in the NOPR, or were there other 9



### manufacturers? 10


### MR. McCLIVE: I do not recall off the top 11


### of my head if it was just those seven that were 12



### identified in the NOPR. I think there were 13



### oth ers. 14



### MR. BROOKMAN: Steve Rosenstock. 15


### MR. ROSENSTOCK: I'm actually about the 16



### next slides. 17


### MR. BROOKMAN: Amy, did you have a 18



### follow

- on? 19


### [No audible response.] 20


### MR. BROOKMAN: That's enough? Okay. 21


### Well, then, Sam, proceed. 2244

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### MR. McCLIVE: Okay. Thank you. 1


### So general overview of the market 2



### assessment. SPVACs and SPVHPs are used primarily 3


### for the cooling and heating of educational 4


### facilities, which include modular classrooms 5


### primarily, but as well as site

- build 6


### installations, modular and portable buil dings, 7


### such as portable office spaces, 8



### telecommunications and electronics enclosures. 9


### And as you can see, approximately 35 of shipments 10


### go to the education sector. About 30 percent go 11


### to the modular and portable buildings sector, and 12


### the remaining 35 per cent, approximately, go to 13



### telecommunications and electronics enclosures 14



### sector. 15



### MR. BROOKMAN: Steve. 16


### MR. ROSENSTOCK: Steve Rosenstock, Edison 17



### Electric Institute. 18


### I know this is kind of getting into the 19


### analysis section, but especially for the 20



### educati onal facilities, what kind of diversity 21


### factor was used for cooling hours for those 2245

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### modular classrooms? 1


### MR. McCLIVE: Could you specify what you 2


### mean by diversity factor? 3



### MR. ROSENSTOCK: What kind of annual

-- 4


### what kind of cooling hours of operation? F or 5


### example, a lot of modular classrooms aren't used 6


### during summer school periods, for example, so 7


### they're typically shut off. So what percentage 8



### of the universe of modular classrooms

-- what 9


### percentage did you assume were actually being 10



### used for the full summer versus just partial 11



### summer? 12


### MS. [Alison] WILLIAMS: Steve, this is 13



### Alison. 14


### That will be in the energies analysis, so 15


### if we can wait till then. Thank you. 16


### MR. ROSENSTOCK: Okay. We'll wait. 17



### MR. McCLIVE: So, to continue on that 18



### first slide abo ut general overview, SPVUs tend to 19


### have very similar cooling and heating capacities 20


### as other products that are used in residential 21


### applications, but they are subject typically to 2246

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### different operational cycles and operating hours 1



### tha n are encountered in the residential field. 2


### As noted earlier, there are products 3



### which meet the EISA 2 00 7 definition of an SPVU 4


### but are advertised in residential applications, 5


### and these products, as noted earlier, are being 6


### classified as residential CACs and are not being 7



### covered under this proposed rule. 8



### The market assessment revealed that it is 9


### composed of seven manufacturers, two of which 10


### have major market share. The other five have 11



### somewhat minor market share, and of these seven, 12


### there are two which are domestic, small 13



### busin esses, and one of those small business 14


### manufacturers is one of the major manufacturers. 15


### MS. SHEPHERD: This is Amy Shepherd with 16



### AHRI. 17



### I have a follow

- up question. So when you 18


### identified the seven manufacturers, I know that, 19


### for example, in the NOPR, th ey talk about 20


### excluding those ones that are based on the space 21



### constrain ed determination. 2247

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### So all the manufacturers there

-- I guess 1


### I am asking how you determined that. Did you 2


### look at the AHRI directory? Was it the website? 3


### Then you carved out the one s you weren't going to 4


### consider through the marketing materials. Is 5



### that how it worked? 6



### MR. McCLIVE: Correct. That's correct. 7


### We looked at both the AHRI directory as 8



### well as manufacturers' websites, and we 9



### determined whether certain manufacturers that 10


### were posting in AHRI exclusively manufactured the 11


### products that were treat ed as residential under 12


### this rulemaking, and if that was all they 13


### manufactured, then we didn't include them in that 14



### list of seven. 15


### MS. SHEPHERD: Okay. Thanks. This is 16


### Amy Shephe rd again. 17


### And then how did you identify the 18


### manufacturers to look at their websites, other 19


### than the ones listed in the AHRI directory? 20



### MR. McCLIVE: We looked at manufacturers 21


### of just commercial cooling equipment as a whole, 2248

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### and we examined all of their websites to see if, 1


### potentially, they manufactured something which 2


### was not in the AHRI directory. We figured that 3


### was a thorough enough examination of the market, 4


### seeing as SPVUs are a somewhat small segment. 5



### MR. BROOKMAN: Yoolanda. 6



### MS. [Yoolanda] WILL IAMS: Yoolanda 7



### Williams. 8


### In your first bullet where you're talking 9


### about SPVUs have similar cooling and heating 10


### capacities, products used in residential 11


### application, can you elaborate on what you're 12


### considering those residential applications? 13



### MR. McCLIV E: Very simply put, we just 14


### look at the cooling capacities for home 15


### residential applications as well as anything 16


### which is used for the purpose of family, family 17


### use, something which is not installed in a 18


### commercial setting. And we consider that to be 19



### res idential. 20


### MS. [Yoolanda] WILLIAMS: Because on your 21


### earlier chart, you had three segments that you 2249

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### referenced. There were other commercial 1


### applications for this product

-- 2



### MR. McCLIVE: Correct. 3



### MS. [Yoolanda] WILLIAMS:

-- that were 4



### not listed on tho se three. 5



### MR. McCLIVE: Correct. 6



### MS. [Yoolanda] WILLIAMS: Are there 7


### hotels, medical facilities, that are not listed, 8


### which are commercial applications? And the 9


### examples that you gave for residential 10


### applications did not include those particular 11



### segment s. 12



### MR. McCLIVE: I can't comment on that. 13


### I'd have to go back and double

- check, but when we 14


### look at this, we're not considering products 15


### which are used in residential by the DOE 16


### definition. We're just looking at what is 17



### considered commercial based on ho w the product is 18



### used. 19


### MS. [Yoolanda] WILLIAMS: How the product 20



### is used and where it is used? 21


### Our opinion is where it's used and how 2250

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### it's used helps determine whether or not it's 1


### commercial, so hotels and motels are commercial 2


### applications, and products that are used in those 3


### particular facilities are commercial products

. 4



### MR. LAU: Hi. This is Chris Lau from 5


### Navigant. Let me interrupt for a moment. 6


### As noted earlier, DOE focused on what we 7


### consider to be commercial SPVU products, and we 8


### proposed the N ODA definition of what we consider 9


### to be residential applications. 10


### And in the notice, we define not only the 11


### marketing differentiation, but some product 12


### characteristics that we used to help 13



### differentiate between commercial and residential. 14



### As a result of that, I think the majority 15


### of the products considered to be commercial were 16


### used in the segments that you saw earlier. So 17



### there was modular offices, schools, and

-- I'm 18


### drawing a blank

-- oh, and education. Thank you. 19


### So that is really the genesis of w hy 20



### those were the focus, because that's where we saw 21


### those products being applied, and our analysis 2251

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### focused on those segments. 1


### And recognizing that, I think there is 2


### some disagreement about what should be considered 3



### SPVU, and so products that were being u sed

-- 4


### products that were being used in multifamily 5


### homes, living facilities, as such, generally did 6



### not fall within the definition that DOE was 7


### focusing on. And I think based on the comments 8


### we've heard today, there will be some discussion 9


### internally abo ut what the definition should be 10


### and whether analysis needs to be updated. 11



### MR. BROOKMAN: Yes. Nick. 12



### MR. MISLAK: Just a follow

- up. This is 13


### Nick Mislak, AHRI. Just a follow

- up comment. 14



### On the LCC, I believe it breaks the 15



### market down into seven differ ent segments and not 16


### three different segments. Can you clarify why 17



### that is? 18


### MR. MORRIS: This is Scott Morris, PNNL. 19


### What seven segments are you talking 20



### about? 21


### MR. MISLAK: The market segments. I'm 2252

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### pretty sure it divides it down. I know you have 1



### 30, 30, 35, or whatever it is up here, but I 2


### believe it breaks it down into other segments in 3


### the LCC as well. I'd have to go back and look, 4


### but I believe I remember seeing more than three 5



### segments. 6


### MR. MORRIS: I'm going to look at my 7



### notes, and I'll talk a bout that in a few minutes. 8



### I know we talk about several different 9


### business types as well as different building 10


### types. I'll get back to you in a few minutes. 11


### MR. BROOKMAN: Okay. Additional comments 12



### here before we move on? 13



### Yes. Wes. 14



### MR. ROAN: This is Wes Roan with Bard 15


### Manufacturing. 16


### Just one quick one. Is Department aware 17



### that there are other SPVU manufacturers that are 18


### not listed in the seven? I mean, there are, and 19


### are they

-- I mean, would that information be 20


### helpful to the Department? 21



### MR. B ROOKMAN: I think that would be 2253

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### helpful. Thank you. 1


### They're domestic? 2



### MR. ROAN: Yes. 3


### MR. BROOKMAN: Okay. 4


### Let's proceed. 5


### MR. McCLIVE: All right. 6


### So the next step of the market assessment 7


### was to develop the equipment class distribution 8



### that would be used throughout the remainder of 9


### the analysis. 10


### We developed a database of products 11


### available on the market by using data, as 12


### previously mentioned, from the AHRI directory of 13


### certified prior performance as well as product 14


### listings available on manufactu rers' websites. 15


### We compiled a table here depicting the 16


### number of models offered within each equipment 17


### class, as defined by cooling capacity, for both 18


### the SPVAC and SPVHP equipment types, and as you 19


### can see, a large majority of products fall into 20



### the less

- than

- 65,000

- Btu

- per
- hour family, both of 21


### them SPVAC and SPVHP, and about a small 2 percent 2254

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### section of the market falls into the 1



### greater

- than

- 65,000 sector for SPVACs. 2


### We were not able to identify any products 3


### on the market greater than 135,000 Btu's per h our 4


### in either equipment type area, and we were also 5


### not able to identify any products above 65,000 6


### and less than 135,000 in the SPVHP equipment

- type 7



### area. 8


### Next, we developed an efficiency 9


### distribution. The most common efficiency 10


### occurring on the market i s 9 EER, which is the 11


### current EPCA minimum efficiency level for 12


### products that are less than 65,000 Btu's per 13


### hour. 19 percent of equipment models have an 14


### efficiency of 9 EER. We also identified the 15


### highest efficiency or max tech unit on the market 16



### to be a 12.3 EER. 17



### The distribution of models across 18


### efficiency levels is somewhat skewed towards the 19


### lower end of the efficiency spectrum. Only about 20


### 11 percent of models are greater than 11 EER in 21


### efficiency. 2255

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### There are no models in the SPVAC 1


### equipment clas s of greater than 65,000 Btu's per 2


### hour, which are greater than 10 EER in 3


### efficiency, and as previously mentioned, there 4


### are no models at all in the SPVHP equipment class 5


### of greater than 65,000 Btu's per hour. 6



### More detailed information on all of this 7



### can be found in Chapter 3 of the NOPR TSD. 8



### MR. BROOKMAN: Yes. Wes. 9


### MR. ROAN: Wes Roan, Bard Manufacturing. 10


### Just one quick item. In those extra 11


### manufacturers that we'll give information on, 12



### there are SPVACs above

-- where you said there 13


### wasn't any, there are some listed in that 14



### category

. 15



### MR. BROOKMAN: Above 12.3 EER? 16


### MR. ROAN: No, above the capacity. 17


### MR. BROOKMAN: Okay. Okay. 18


### MR. ROAN: I'm not aware of anything 19


### currently listed at 12.3, unless it's somebody's 20



### unit that's not in AHRI. 21



### MR. BROOKMA N: Okay. Thank you. 2256

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### MR. WINNINGHAM: This is Dave Winningham 1



### with Allied Air. 2


### I think it's important to point out that 3


### while they're stating that there's 11 percent of 4


### the models are greater than 11 EER, those models 5



### above

-- at or above 11 EER are fro m two 6



### manufacturers. 7


### MR. BROOKMAN: Okay. 8


### MR. McCLIVE: Next step of our analysis 9


### was the technology assessment. The purpose of 10


### the technology assessment is to provide a 11


### preliminary list of design options that could be 12


### used to improve the efficiency of SPVUs. This 13


### list gets examined in greater detail with 14


### inappropriate technologies being removed in 15


### subsequent analyses. 16


### We identified design options based on 17



### literature review, manufacturer brochures, 18


### specification sheets from commercially available 19


### equip ment, as well as comments and input from 20


### stakeholders. And all these design options are 21


### described in Chapter 3 of the TSD. 2257

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### This is a list of all of the technology 1


### options. I am not going to go through and read 2


### this entire list, but I'll leave it up here for a 3


### few seconds here, so you can look at it. 4


### The next step of our analysis

-- 5


### MR. BROOKMAN: Nick has a question or a 6



### comment. 7


### MR. MISLAK: Just kind of a general 8


### question. 9


### Yeah. For all the things that reference 10


### the increasing coil area and the si ze of the 11


### coil, I'm sure DOE recognizes that in doing so, 12



### it also will cause a unit size to increase as 13


### well, but there doesn't seem to be any real 14


### analysis done of what actually happens to the 15


### construction cost and things like that when the 16


### units get bigg er. 17


### Also, keep in mind that a larger unit 18


### will not be able to fit inside of an existing 19


### building. So you're eliminating, replacing a 20



### more efficient unit into a unit that is older 21


### that may need to be replaced. So now you're 2258

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### favoring repairing versus repl acing, and doing 1


### so, you're just decreasing the possible gains for 2


### efficiency and energy savings as you go along. I 3


### don't see that taking into consideration, the 4


### analysis. 5


### MR. McCLIVE: I think that is going to be 6



### discussed in detail later in the LCC ana lysis 7


### when we talk about installation and repair costs 8



### and stuff. 9


### MS. SHEPHERD: This is Amy Shepherd from 10



### AHRI. 11


### And can I just ask, at some point, are we 12


### going to talk about the point that Nick just made 13


### about the designs? Because it seems to me like 14



### f rom the shipment analysis that there's an 15


### assumption that even if additional coils are 16


### added, there is no change in the product size. 17


### At what point is it best to get into that? 18



### MR. LAU: This is Chris Lau from 19


### Navigant. 20


### Right here, Sam presents all the design 21


### options that were considered. In the next slide, 2259

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### he'll show the ones that are actually

-- these 1


### were considered, but some of these were screened 2



### out, and the next slide will show the ones that 3


### are actually used in engineering analysis, if you 4



### want to just advance one slide. 5



### MR. McCLIVE: Sure. 6



### MR. LAU: Thanks. 7


### But to AHRI's comment earlier, DOE 8


### actually screened out design options that require 9


### a change in the size of the case, and so in the 10


### engineering analysis, I think what they found is 11



### that i n some cases
-- sorry, not some

-- not to 12


### use the word "case" again, but they screened out 13



### -- they did not take into consideration, 14


### technologies that would require a change in size 15


### of the unit, recognizing the fact that there 16


### would be installation impacts. 17


### Did I characterize that correctly, Sam? 18



### MR. McCLIVE: No. We did take into 19


### account that to go from 9 EER to 10 EER, we 20


### anticipate there would be a change in size of the 21


### cabinet as well as when you go from 11 to 11.75 2260

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### and then also up to 12.3. Each one of those also 1



### has additional increases in cabinet size. 2


### MR. MISLAK: Right. That's what I was 3


### going to say. I'd have to disagree with that 4


### because, clearly, there is a change in size, and 5


### that is a design option that was a possibility 6


### for getting the h igher efficiency level. 7


### MS. SHEPHERD: This is Amy Shepherd. 8


### Can you explain why there was no change 9


### in size in between those two when you're adding 10



### coils? 11



### MR. McCLIVE: Between 10 and 11? Based 12


### on the units that we examined, we determined that 13



### betwee n 10 and 11, you can achieve that by adding 14


### tube rows to the heat exchanger, which generally 15



### does not necessitate an increase in size of the 16



### cabinet. 17


### There are basically two ways to increase 18


### the size of the heat exchanger. You can add tube 19


### rows, like ver tical rows of tubes to the heat 20


### exchanger, or you can actually increase the face 21


### area of the heat exchanger. 2261

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### It's the latter, increasing the face 1


### area, which we found tends to necessitate an 2



### increase in cabinet size. 3


### MS. SHEPHERD: Okay. This is Amy 4



### She pherd again. 5


### So because there was one technology that 6


### wouldn't increase the size, then you guys assumed 7


### that everyone would choose that technology

-- 8


### MR. McCLIVE: Right. 9



### MS. SHEPHERD:

-- and therefore, there's 10



### no increase in size? 11


### MR. McCLIVE: Right . Manufacturers, they 12


### tend to go for

-- when they are looking to 13


### increase efficiency, they will first use 14


### technology options that necessitate the lowest 15



### cost, and we looked and saw

-- you know, to go 16



### from 10 to 10.5 and 11, manufacturers were 17


### choosing thi s technology option, which did not 18



### necessitate an increase in cabinet size. But 19


### then to get from 11 to 11.75, they do use an 20


### increase in heat exchanger face area, which does 21



### necessitate an increase in cabinet size. And 2262

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### then also, to get to 12.3, it's the same 1



### scenario. 2


### MR. WEBER: Just to clarify

-- this is 3


### Collin Weber with Navigant. 4


### DOE, as a matter of procedure, looks at 5


### individual design options and looks at the way 6


### that they are implemented, but we wanted to make 7


### clear here, this analysis wasn't th eoretical in 8


### nature. We weren't saying what could a 9


### manufacturer do absent what's actually happening 10



### in the real world. 11


### This analysis in actuality was based on 12


### what manufacturers are already doing and on the 13


### universe of equipment that's already being sol d 14


### today. 15


### So for someone who is talking about DOE 16


### pushing manufacturers to do something that they 17



### don't do, that's not the case because it's 18


### already out there being built, and so that

-- DOE 19


### looked at only the existing product universe. 20


### Yes, we quantified what people are 21


### actually doing to do those, to make those design 2263

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### and efficiency jumps, but DOE isn't saying, 1


### speculatively, someone should do this to meet our 2



### standard

. 3



### MR. BROOKMAN: Nick. 4


### MR. MISLAK: Nick Mislak, AHRI, again. 5


### So adding

-- how did yo u come up with 6


### adding the two rows to the coil? Did you look at 7


### every manufacturer and figure out

-- I don't 8



### understand where that even came from, and how did 9


### you quantify that? Did you model every coil 10


### after you were done to determine the efficiency 11



### lev el? 12



### MR. WEBER : Well, no, the manufacturers 13


### build that equipment. It already has it in it, 14


### and we purchase it and tear it down. 15


### MR. MISLAK: So every manufacturer, the 16


### only thing they did was add two rows to the coil? 17


### I mean, I just don't

-- the two ro ws, it's a very 18


### arbitrary number in my mind. 19



### MR. WEBER : That's part of the 20


### engineering analysis, which we'll get to, and we 21


### can have full discussion. It will probably be 2264

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### more appropriate there, but, I mean, our analysis 1



### reflects what we saw in the field through DOE's 2


### methodology that it uses for a lot of 3


### rulemakings, which is purchasing equipment, 4


### conducting teardowns, and also looking at 5


### manufacturer literature and specification. 6



### So DOE felt that on the net, based on 7


### what manufacturers were doing in th eir design 8


### choices, that was the path that they were taking. 9


### You can feel free, speaking collectively for the 10


### industry, to provide written comment, verbal 11


### comment, detailed specifications that could form 12


### the basis for what you'd consider a more ac c urate 13



### m odel. 14



### MR. MISLAK: Sure, sir. 15


### And just to follow up as well, also, you 16


### know, also, when you increase the depth of the 17


### coil, that also has a negative impact on the fan 18


### power as well. So I'm not necessarily sure that 19


### should be a viable design option. 20



### MR. WEBER: So, I mean, again, that would 21


### be rolled into the lumped EER ratings that are 2265

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### being provided by manufacturers in these models 1


### that they already have on the market that we're 2


### purchasing, testing, tearing down. So that would 3



### all be considered in tha t lump

- sum package. 4


### MR. MISLAK: Okay. 5


### MR. BROOKMAN: Okay. 6



### Yes, Sam. 7


### MR. McCLIVE: So, following the 8


### technology assessment, we went into the screening 9


### analysis to determine which design options should 10



### continue to be considered in the downstream 11


### analys es. 12


### We screened out design options if they 13


### were not technologically feasible, were not 14


### practicable to manufacturer install or service, 15


### had adverse impacts on equipment utility or 16



### availab i l ity to customers, or had adverse impacts 17


### on health or safety. 18



### In t his analysis, we also removed from 19


### consideration, technologies that do not affect 20


### the calculated energy consumption, as measured by 21


### the test procedure with the E E R metric. 2266

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### Additionally, technologies that we found 1


### were already common place in baseline SPV U 2


### designs were also not considered further, and we 3


### discuss all of this in detail in Chapter 4 of the 4



### NOPR TSD. 5


### MS. SHEPHERD: This is Amy Shepherd from 6



### AHRI. 7


### I have a question on bullet number 4. I 8


### don't know if we're going to get into this detail 9



### later , but one of the technologies that wasn't 10


### included was the change in motors, and I had a 11


### specific question about that. 12


### In the NOPR, it covers that analysis, and 13


### it talks about excluding

-- or it talks about the 14


### units that were gas heat, and it says 18 out of 15


### 21 were gas heat. In the technical support 16


### document, it says 18 out of 27, and I was just 17


### wondering which of those was correct. 18


### And I'm happy to take that as a follow

- up 19


### if somebody could

-- 20


### MR. McCLIVE: Yeah. We do list improved 21



### fan motor efficie ncy on this slide. So could you 2267

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### clarify what you mean? 1


### MS. SHEPHERD: Okay. So, in the NOPR, 2


### there is an assumption that baseline, everybody 3


### is going to be using the higher efficiency 4


### motors, and the reason that assumption was made 5



### is because even in th e teardowns, although it was 6


### slightl y more than half that used the more 7


### efficient motors, but there were still people 8


### using less efficient motors

-- because you 9



### determined that

-- in the NOPR, you said 18 out 10


### of 21 of those were gas heat units. That is a 11


### small percentage of the market, so we're just 12


### going to assume that, basically, everybody is 13


### using the more efficient motors at 10. 14


### So the question is, why did you assume 15


### that 100 percent, when it wasn't 100 percent? 16


### And then when you look at the technica l support 17


### document, it was actually not 18 out of 21. It 18



### is 18 out of 27. 19


### MR. McCLIVE: Could you put that in a 20



### written comment? 21


### MS. SHEPHERD: Sure. I'll follow up with 2268

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### you later. 1



### MR. McCLIVE: We'll look more into that. 2


### MS. SHEPHERD: Okay. Thanks

. 3


### MR. McCLIVE: Sounds good. Thank you. 4


### So let's continue on. The technologies 5


### that we removed, because they do not affect the 6


### energy consumption per the DOE test procedure 7


### under the EER metric were thermostatic expansion 8


### valves, electronic expansion v alves, thermostatic 9


### cyclic controls, and also multispeed compressors. 10


### And we also eliminated the following 11


### technologies that we found were commonplace in 12


### baseline designs. These are increased fin 13


### density, improved fin design, improved tube 14


### design, and al so hydrophilic coating on fins. 15


### Lastly, we also removed microchannel heat 16


### exchangers from further consideration in the 17


### engineering analysis. Although we are aware that 18


### SPVU manufacturers have been experimenting with 19


### this technology, we were not aware of any 20



### research or data that documented the effect that 21


### this technology has on the energy efficiency of 2269

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### SPVUs. 1


### So the remaining technologies that were 2


### passed onto the engineering analysis were 3


### increased frontal coil area, increased depth of 4


### coil, so adding the two rows as was previously 5


### discussed, dual condenser heat exchangers, 6


### improved fan motor efficiency, as was also noted, 7


### improved fan blades, and improved compressor 8


### efficiency. 9



### MR. BROOKMAN: Louis Starr. 10


### MR. STARR: So I actually have a question 11



### on
-- Louis Starr with NEEA . I have a question 12


### on the last one. You were talking about the 13


### microchannel heat exchangers. 14



### MR. McCLIVE: Sure. 15


### MR. STARR: So it's not used, but it 16


### could be used, right, or it's just that you 17


### didn't see any available in the m arket? 18



### MR. McCLIVE: Correct. 19


### MR. STARR: Okay. 20


### MR. McCLIVE: Yeah. Our analysis was all 21


### based on what do we see in the market, what's 2270

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### been proven in the market, and we went off 1


### strictly that. 2


### If it's been shown to be possible, then 3


### it's something tha t we consider. 4


### MR. STARR: So it's readily available on 5


### other type of equipment, but I take it, it can't 6


### be used in this one. Is that maybe just because 7


### it's not necessary, because you don't have to 8


### reach those levels of efficiency, or is there 9



### some kind of constraints to it? 10


### MR. McCLIVE: We just didn't consider it 11



### because we didn't see it on the market. It's 12


### really hard to make any sort of conclusion, if 13



### its' not there. 14



### MR. WEBER: This is Collin Weber with 15


### Navigant. 16


### I'd just add a little more. Our 17


### understanding is that a large portion of why we 18



### don't see it on the market is because there are 19


### some certain concerns from the manufacturing 20


### community with respect to reliability, 21


### serviceability, and that sort of thing. And that 2271

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### would also fall under our screening factors as 1



### well. 2


### Maybe the manufacturing community can 3


### provide a little more insight as to why it hasn't 4


### been adopted yet. I know in other applications, 5



### there have been concerns. 6


### MR. BROOKMAN: Yes, please. Is it frank? 7



### MR. XU: Yes. Frank Xu, National Coil 8



### Company. 9


### Could you elaborate a little bit more 10


### about the last one, improved compressor 11


### efficiency under E E R metric? 12



### MR. McCLIVE: Sure. 13


### MR. XU: Are you assuming that 14


### manufacturers right now are not using yet the 15


### most efficient compres sor available already on 16



### the market? 17


### MR. McCLIVE: Basically, the answer is 18


### somewhat. There are obviously going to be 19


### differences in the efficiency of compressors that 20


### are available, not in terms of necessarily major 21


### technological differences in the comp ressors, but 2272

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### some compressors are more efficient at full load 1


### with a constant capacity across them than others, 2


### just because of tighter manufacturing tolerances. 3



### So we considered these more efficient 4


### compressors in the engineering analysis because 5


### they ha ve just greater efficiency from tighter 6


### manufacturing tolerances. 7



### MR. BROOKMAN: Steve Rosenstock. 8



### MR. ROSENSTOCK: Steve Rosenstock from 9



### Edison Electric Institute. 10


### In terms of the fan motor efficiency, the 11


### DOE standards for small motors go into effect 12


### this March, the categories that DOE regulates in 13


### small motors, and then larger, the integral 14


### horsepower motors, those standards increase next 15


### year in 2016. 16


### So for your improvements, were those over 17


### and above those levels, or were those basically 18



### to those levels that are going to be basically 19


### the baseline later this year or next year? 20


### MR. McCLIVE: So the higher efficiency 21



### motors that we examine are motors which would be 2273

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### considered in industry to be the ECM or 2.3 ECM 1



### motors. 2



### I know that these correlate w ith the 3


### types of motors that are going to be put into 4



### effect

-- well, not put into effect, but are like 5


### the highest efficiency motors that are used in 6


### HVAC equipment in general. 7


### I'm not aware of what specifically the 8


### motor type is that you're referring to for this 9



### rule. 10



### I'm familiar with the furnace fan 11


### rulemaking, with those motors, but those are not 12


### the types of motors that we're discussing here. 13



### MR. ROSENSTOCK: Steve Rosenstock. 14


### I was referring to the DOE motor

-- 15


### there's a small motors rule that go es into effect 16


### in March, and then there's

-- well, it's 17


### basically between a quarter horsepower and 3 18


### horsepower based on the DOE definition. 19


### And then there is the larger horsepower 20


### motors, anywhere from 1 horsepower to 600 21


### horsepower. Again, it's certain

-- Design A, 2274

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### Design B. I mean, there's all the different 1


### categories that

-- again, I'm not sure exactly 2



### which of those motors are used in these units, 3


### but there might be some coverage. That's what I 4


### was wondering about. 5



### MR. WEBER: This is Collin Webe r from 6


### Navigant. I can speak to that a little bit. 7


### So, again, we're having a lot of 8


### discussion pertaining to the methodology of the 9


### engineering analysis, and we're having

-- 10


### MR. BROOKMAN: Hey, Collin, keep that 11


### close to your face. 12



### MR. WEBER: Oh, sure

. 13


### So maybe there is some missing context. 14


### The engineering analysis, as mentioned, 15


### was done on sort of a packaged or lump

- sum or 16



### black

- box sort of basis, which is matching of 17



### AHRI

- certified ratings of a whole unit, a 18


### performance level, EER, with cost mode ling of 19


### those specific units at the efficiency levels 20



### considered. 21


### So, needless to say, this analysis wasn't 2275

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### based on, say, first principles modeling of 1


### individual components built up in a package. So 2


### things such as individual motor performance are 3



### not is olated and simulated. 4


### Now, if you feel that SPVU manufacturers 5


### and if the manufacturing community agrees that 6


### they will be making substantive changes to the 7


### nature of the motors they are implementing in the 8


### future due to regulations coming on board or tha t 9


### sort of thing and can provide quantitative data 10


### about how, say, AHRI

- certified ratings for these 11


### units might be adjusted upward in lieu of that, 12


### then we would be happy to see that quantitative 13


### data and suggestions for how we could role it 14



### into the final rule analysis. 15



### MR. BROOKMAN: Joanna. 16



### MS. MAUER: Joanna Mauer. 17


### I think Collin may have personally 18


### answered my questions, but oftentimes when there 19


### are technologies that have been proven in the 20


### market but may not have been incorporated in the 21


### specific p roduct or specific combinations in the 2276

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### product, DOE will try to use modeling to look at 1


### the impact of that technology. 2


### Did you consider for microchannel heat 3


### exchangers in particular, the possibility of 4


### trying to model the impact? 5



### MR. McCLIVE: No. No, we did. 6


### And again, as Collin stated earlier, 7


### obviously there are some issues with microchannel 8


### heat exchanger technology that are known in other 9


### product types with regard to liability and 10


### serviceability within the industry. So taking 11



### that into account, we decided it would be best 12


### just not to model it. 13


### You are right. Sometimes we will do that 14


### for stuff that isn't necessarily out there in the 15


### market, but only if it's something that really, 16


### really looks feasible, looks like it's worth

-- 17



### MS. MAUER: This is Joanna again. 18


### I'm not aware of those issues. Can you 19


### expand on what problems you're referring to? 20


### MR. McCLIVE: I'd rather that you just 21


### put that in a written comment. We can discuss it 2277

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### later if you want. 1


### MS. MAUER: Okay. 2



### MR. BROOKMAN: Nick. 3



### M R. MISLAK: Nick Mislak, AHRI. 4


### I just have kind of a process question, 5


### more or less. At a previous rulemaking, for 6


### instance, large equipment rulemaking, there was 7



### an effort there to model some of these heat 8


### exchangers and calculate

-- or work that into 9



### l ike an efficiency level in order to justify an 10


### increase in efficiency. Why was that not done 11



### here? 12


### I mean, it seems like here, they're just 13


### saying, "Yeah, you can do these things," but at 14


### least in the other one, they went through and 15


### attempted to do some modeling to justify an 16


### increase in coil area, per se. So why was that 17


### same process not done here? 18


### MR. McCLIVE: Well, we just wanted to 19


### very strictly look at equipment that was on the 20


### market and base our analysis off of that. 21


### As you know, SPVUs are a somewhat small 2278

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### sector of the market. So to be as accurate as 1


### possible, we wanted to look very specifically at 2


### what the few manufacturers of the equipment were 3


### doing that could be specific to them. 4



### MR. MISLAK: Sure. But, I mean, on the 5


### other rulemaking, they spent the time to model 6


### several different capacities. 7


### Here, you're talking about, if it's a 8


### small segment, as you say, I would think the time 9


### to do the proper modeling would be less. So I 10


### don't see why it wasn't done. 11



### MR. WEBER: This is Collin We ber from 12


### Navigant. 13


### Are you suggesting that if we modeled the 14


### performance of the units, theoretically, we'd see 15


### performance levels different than those 16


### incorporated into the AHRI

- certified directory? 17


### MR. MISLAK: If you're attempting to say 18



### some of these design improvements would cause 19


### efficiency levels, I think you would for sure see 20


### differences in what you're saying they would do, 21


### because we see that anywhere. Any time you model 2279

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### anything, the actual test results are going to be 1



### different than the model. 2



### MR. WEBER: Sure. And so

-- 3


### MR. MISLAK: In the other rulemaking, 4


### there was modeling and then verification testing 5



### done. That was not done here. 6


### MR. WEBER: So are you suggesting we need 7


### to perform verification testing on what's in the 8


### AHRI directory ? 9



### MR. MISLAK: No, no. Not the AHRI 10


### directory. 11


### I'm saying if you are saying these 12


### certain things will change the efficiency level 13


### of a unit or their potential

-- I mean, they did 14


### the same thing in the other rulemaking, but they 15


### went through. They did t he modeling, and they 16


### did the testing to verify it, because they are 17


### proposing efficiency levels or proposing design 18


### modifications to change the efficiency levels. 19



### MR. CYMBALSK Y : I think the clarification 20


### here is these are units we purchased and looked 21



### a t. They are being built today, and they are 2280

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### being certified. 1


### MR. MISLAK: But you are only looking at 2


### a very small number of units that are out there 3


### that meet these efficiency levels as it is, and 4


### you're

-- it's only a small segment of the 5



### market. 6



### MR. CYMBALSK Y : So does that mean the 7


### other ones can't do the same thing? Is that what 8


### you are saying? 9


### MR. MISLAK: Every design is different, 10


### isn't it? I mean, you are looking at two 11



### manufacturers that make units that meet these 12


### efficiency levels and tryin g to say that these 13


### designs

-- these changes in designs hold across 14


### the entire industry. 15



### MR. CYMBALSK Y : So it's AHRI's position 16



### that

-- are these proprietary designs that these 17


### companies have? 18


### MR. MISLAK: I mean, you guys did the 19



### same exact thin g in th e unitary large equipment 20


### rulemaking. I just don't know why it wasn't done 21


### here. I mean, you looked at the different 2281

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### manufacturers and their designs, and then you 1


### went further to try to do these things, to model 2


### them, and then test them to verify it. 3



### I mean, you did the same process there, 4



### but that wasn't done here. 5



### MR. CYMBALSK Y : We'll buy a bunch of 6



### units and test them. That's fine. We can do 7



### that. 8


### MR. BROOKMAN: We got your point. 9


### MR. MISLAK: Yeah. I mean, that's my 10


### point. 11



### MR. BROOKMAN: We g ot it. 12



### MR. CYMBALSK Y : We'll test every one on 13


### the market if you want us to. That's fine. 14



### MR. BROOKMAN: Let's move on. 15


### MR. McCLIVE: So moving on, the next 16


### stage of the analysis was the engineering 17


### analysis. For the engineering analysis, we 18


### incorpora ted information from product teardowns, 19


### manufacturing cost modeling, manufacturer 20


### interviews, product literature, AHRI product 21


### certification data, and product testing to 2282

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### perform our analysis. 1


### For each equipment class, we selected 2


### efficiency levels for the analysis, which 3



### included both the EPCA and the ASHRAE 90.1

- 2013 4


### baseline efficiency levels, efficiency levels 5


### with the highest numbers of models available on 6


### the market, efficiency levels that are only 7



### achievable via substantial, technological 8


### changes, as well as the maximum technologically 9


### feasible or max tech efficiency level. 10


### So for SPVAC equipment, these are the 11


### efficiency levels that we identified. As you can 12


### see, we have the EPCA baseline. We have the 13


### ASHRAE baseline, and then we have some 14



### interme diate efficiency levels, the 10.5, 11, and 15



### 11.75 for less than 65,000 and then the max tech 16


### at 12.3, and as also, we noted earlier in the 17


### SPVAC greater than 65,000 and less than 135,000 18


### class, we don't have anything above 10 because 19


### the highest efficiency on the market that we 20



### found was 10 E E R. 21


### It's the exact same thing for SPVHP, 2283

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### except you will notice that we have a coefficient 1


### of performance, or COP, values attached to each 2


### efficiency level, and on this next slide, I'm 3


### going to go over how we determine those COP 4


### ratings. 5


### MR. BROOKMAN: Let's just pause for a 6



### second. 7



### MR. McCLIVE: Sure. 8



### MR. BROOKMAN: Questions, comments on 9



### these two tables? 10



### Yes, Steve Rosenstock. 11


### MR. ROSENSTOCK: Just a real quick 12


### question. Steve Rosenstock, E E I. 13


### In a previous sli de, you said for units 14



### between 135 and 240, there's no models offered. 15


### So, in a way, I know the actuary baseline is 10, 16


### but no one is making the product in the 17


### marketplace? 18



### MR. McCLIVE: Correct. There are no 19


### products on the marketplace. 20


### Eric Stas may be able to explain this a 21


### little better, but basically, because ASHRAE set 2284

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### the level at 10, we still set the level at 10, 1



### but

-- 2


### MR. ROSENSTOCK: Okay. Thank you. 3



### MR. BROOKMAN: Louis. 4


### MR. STARR: Is there potential that 5


### ASHRAE is expecting maybe some other equipment 6


### classes to move into this one, and that is why 7


### they are setting levels there? Maybe someone can 8


### speak to that. 9


### MR. McCLIVE: I can't really speak to 10



### that. 11


### If you could put that in a written 12


### comment, though, I'd appreciate it. 13



### MR. CYMBAL SK Y : There are some ASHRAE 14



### members here. 15


### Dick, maybe? 16


### MR. LORD: Yeah. I mean, it's a class of 17


### equipment, so you can't put another class of 18


### equipment in this category. Most of the other 19


### equipment goes in the rooftop

- type tables, which 20


### have higher effi ciencies than these anyway, so

-- 21


### MR. BROOKMAN: Okay. Thanks, Dick. 2285

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### Okay. 1



### MR. McCLIVE: S o we'll move on talking 2


### about the relationship between E E R and COP. 3


### So, based on manufacturing feedback, we 4


### gathered that most of the heat pump equipment are 5



### des igned to achieve a certain EER goal, and then 6


### coefficient of performance is

-- equipment is 7


### designed for coefficient of performance, 8


### achievement as a secondary concern. 9


### So when we selected efficiency levels for 10


### the analysis of the heat pump models, we foc used 11


### on selecting and analyzing the E E R levels and 12


### choosing appropriate COP levels at each E E R level 13


### based on equipment currently on the market, and 14



### we believe that the median COP value at each E E R 15


### level is the most representative value of 16


### equipment, perfo rmance at that E E R level, because 17


### the mean COP level would not be able to represent 18


### it appropriately if, say, there was a large 19



### outlier that skewed the COP above most of the 20


### equipment in that EER bin. 21



### To show this pictorially , we took each of 2286

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### the five

-- well, so there are six efficiency 1


### levels, but we had the five here because there 2


### were very few units at the max tech at 12.3. 3


### Literally, only one product family, which had a 4


### 3.9 COP rating, and we looked at the other five, 5


### and we said, "Okay. Here is the COP 6



### distribution. Where is the median COP at?" And 7


### that is going to be the COP value that we used 8


### going forward to associate with that specific EER 9



### level. 10



### S o going forward, just to get into more 11


### specifically what we did to determine product 12



### cost, we st arted off with a teardown analysis 13


### where we physically tore down units that we 14


### determined were representative products of 15


### equipment at each efficiency level, and we 16


### generated b ills of materials, or BOMs, from this 17


### teardown analysis, and we entered them int o a 18



### cost model. 19



### The cost model

- generated manufacturer 20


### product ion cost s , or MPCs, for each unit tor n 21


### down, and these included material, labor, 2287

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### depreciation, and overhead costs. 1



### Manufacturer interviews were also 2


### conducted to further refine the analytical i nputs 3


### and the results generated by the cost model after 4


### we developed our MPCs. 5


### MS. SHEPHERD: This is Amy Shepherd with 6



### AHRI. 7


### Can I ask a question about how the 8


### physical teardowns correlate with the 9


### manufacturer interviews? So how many

-- I know 10



### there are, I think, 14 physical and virtual 11


### teardowns. So how many of those were physical? 12


### MR. McCLIVE: Off the top of my head, I 13



### think it was 11. 14


### MS. SHEPHERD: Eleven were physical 15



### teardowns? 16



### MR. McCLIVE: Yeah. 17



### MS. SHEPHERD: And so then I think there 18



### w ere three manufacturer interviews? 19


### MR. McCLIVE: No, no. We did more than 20



### that. 21



### MS. SHEPHERD: You did more than that? 2288

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### MR. McCLIVE: Yeah. 1



### MS. SHEPHERD: Because I think the NOPR 2


### says that there were three manufacturers 3



### interviewed. 4


### MR. McCLIVE: Rig ht. As you asked 5


### earlier, we did interview other manufacturers too 6


### who manufacture other types of cooling equipment, 7


### but I think what we have in the NOPR there, those 8


### are manufacturers who actually

-- like 9


### manufacturer equipment, which is treated as an 10



### SP VU under this rule. 11


### MS. SHEPHERD: Okay. But the physical 12


### teardowns were all of the equipment that are 13


### treated as under this rule, right? 14



### MR. McCLIVE: Correct. 15



### MS. SHEPHERD: So there were three 16


### interviews of manufacturers for these physical 17



### teardowns . So those manufacturers, the ones that 18


### you did the physical teardowns of, like did they 19



### correlate? 20



### MR. McCLIVE: Correct, yep. 21


### MS. SHEPHERD: So that you weren't doing 2289

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### physical teardowns of other than the ones you 1


### interviewed, the three that you interv iewed? 2



### MR. McCLIVE: That's correct. That's 3



### correct. Yeah. 4


### MS. SHEPHERD: Okay. Thanks. 5



### MR. CYMBALSK Y : I want to get back to the 6


### point Nick raised earlier about the modeling. 7


### So every efficiency option that we 8


### evaluated is actually in an SPVU today , and 9


### therefore, we wouldn't build a model for 10


### something we know to exist, can test, and know 11


### what the rating is. So it's a little different 12


### from the analysis that you will see in other 13


### rulemakings. 14


### Sure, we can go model and do things that 15


### people aren't doing today, if that's what AHRI 16



### wants us to do. We can do that and make more 17


### efficient packages that don't exist on the market 18


### today through modeling, b ut I've seen negative 19


### comments to that effect by AHRI in the past, so I 20


### just want to

-- 21



### MR. MISLAK: What I would say, if I can 2290

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### just make a comment on that

-- I mean, what I'd 1


### say there is the modeling that was done, for 2


### instance, the unitary large, I mean, the things 3


### that you modeled there already existed in other 4


### units also. I mean, you weren't modelin g 5


### fictitious units. You picked design 6


### modifications there and attempted to show the 7


### impact. 8


### For instance, if we just looked 9


### specifically at this rulemaking here, we 10


### obviously know that one of the challenges or one 11


### of the things that have to be done is to increase 12


### the face area of the coils, and that was one of 13


### the things that was modeled across the unitary 14


### large equipment to see the impact on how big the 15



### coils need to be. 16


### And especially for this unit here, we 17


### obviously know that increasing the coil side is 18


### going to change the dimensional constraints of 19


### the unit, so that does have a large impact. 20



### MR. CYMBALSK Y : We have that unit, and we 21


### took it apart, and we measured it, and we did all 2291

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### those things. 1


### MR. WEBER: I was going to say one 2



### difference between the unitary large and what's 3


### going on here is there are a lot of product 4


### classes and capacities in that space, and so the 5


### modeling in that rule, which I'm familiar with, 6


### but I wasn't involved in that, was more for the 7


### purposes of

-- let's just call it ext rapolation, 8


### if you will, or application, you know, something 9


### that's done here, how can it be applied? 10



### Here, due to the homogeneity in the 11


### space, I mean, able to use field proof of concept 12



### and AHRI

- certified ratings was deemed sufficient. 13



### So that's sort o f a major difference in the 14


### analysis and the cover product. 15



### MR. BROOKMAN: Louis. 16



### MR. STARR: This is Louis Starr with 17



### NE E A. 18


### I'd be real up for modeling equipment. 19


### Things like microchannel that's not being 20


### considered because they don't exist in the 21



### mar ket, better compressors, as was mentioned over 2292

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### here. So we'd be all for doing lots of modeling, 1


### getting even higher efficiency levels than 2


### currently showing. 3


### And if you model it in the double row 4


### coil and the efficiency doesn't come out, you can 5


### just go back to which actually exists and use 6


### that number instead of the model, so we'd be up 7


### for that if DOE has the money to spend. 8


### [Laughter.] 9



### MR. CYMBALSK Y : So now that comment makes 10


### more sense to me coming from

-- 11


### MR. BROOKMAN: Okay. Thanks, John. 12



### Yes . Wes. 13



### MR. ROAN: This is Wes from Bard 14


### Manufacturing. 15


### One of the issues we have, though, as a 16


### group of manufacturers, there's a wide range of 17


### product that we're talking about here, and SPVU 18


### is not just one model. There's several different 19



### versions of them. Even in the ones that you're 20


### considering as part of this rule, there's several 21



### different versions. There are some that are on 2293

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### the outside of structures, some on the inside of 1


### structures, and so they each have their 2


### particular design hurdle to go th rough. 3


### The blanket statement of saying add a row 4


### coil, add two rows of coil just doesn't pass the 5


### test for all types of manufacturers, all types of 6



### units. 7


### For instance, you may have to grow the 8



### cabinet to fit two more rows of coil in some 9


### particular mode ls. You may have to jump cabinet 10


### sizes to a larger cabinet. You may have to 11


### redesign the entire backup electric heat for that 12


### particular model because of that extra two rows 13


### of coil. It's not as easy to add two rows of 14


### coil, and for the record, I snappe d my fingers. 15


### [Laughter.] 16


### MR. BROOKMAN: Before too awfully long, 17


### we're going to take a break, just so you'll know, 18


### but we're going to continue with the presentation 19



### material. 20



### Sam. 21


### MR. McCLIVE: So I'll try and get through 2294

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### this somewhat swiftly here. 1


### So moving on from the analysis, we 2



### calculated the cost

- efficiency curves, and 3


### essentially, these cost

- efficiency curves depict 4


### the MPCs that we calculated at each efficiency 5


### level, and we went through four steps to develop 6



### these. 7


### First, we developed an MP C representative 8



### of a standard baseline unit. We then identified 9


### design options which were used to achieve 10


### specific efficiency levels above the baseline, as 11


### we found them through our teardowns. We then 12



### calculated the incremental costs needed to 13



### achieve e ach of the successive efficiency levels 14


### above the baseline, using the data from our 15


### teardowns, as well as component cost data that we 16


### gathered from manufacturer interviews and other 17



### sources. 18


### Then lastly, we generated our cost 19


### efficiency curve depicting th e relationship 20


### between manufacturer production cost and 21


### efficiency level. 2295

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### And this diagram shows the different 1


### efficiency levels and the design options that we 2



### determined could be used to achieve these 3


### efficiency levels, as indicated through our 4



### teardown data. 5


### So, as you can see, additional tube rows, 6



### we've discussed. That was used at the EL1 and 7


### EL2 levels. As also discussed previously, 8


### improved indoor fan motor efficiency, we found 9


### that to be used to go from the EPCA baseline to 10


### the ASHRAE baseline, a nd then also increased HX 11



### face area, which includes an increase in cabinet 12


### size. That was used to go from 9 to 10 and also 13


### to go from 11 to 11.75

. H igher efficiency 14


### compressors, as was mentioned earlier ; w e used 15


### that to make the jump from 11 to 11.75. 16



### A nd then at max tech, we have these three 17


### other design options, which were not found to be 18


### used previously. 19


### So, I mean, basically, it's important to 20



### remember here that all of this is from what we 21


### found in our teardown. It is not necessarily 2296

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### going to be re presentative of every single unit 1


### on the market, but it's just what we believe from 2


### our teardowns is representative on average of 3


### equipment that is found on the market. 4


### MS. SHEPHERD: Can I ask a question about 5



### that? Given the

-- 6



### MR. BROOKMAN: Amy. 7



### MS . SHEPHERD: I'm sorry. 8


### [Laughter.] 9


### MR. BROOKMAN: That's okay. That's okay. 10


### MS. SHEPHERD: This is Amy from AHRI. 11


### Given the way this market is distributed 12


### in terms of a few number of manufacturers making 13


### large number of equipment , and we don't know w ho 14


### you interviewed. 15


### But you interviewed three manufacturers. 16


### Can you really

-- what's the basis for that 17


### determination? That if you interviewed the 18


### manufacturers and you confirmed it with those 19



### three and there is such a concentration of 20



### manufacturers in this market, how can you make 21


### that extrapolation to the rest of the 2297

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### manufacturers? How do you know that that's 1


### representative of the rest of the rest of the 2


### manufacturers in the market, what they're capable 3



### of? 4


### MR. McCLIVE: It's a good question. I 5



### mea n, the basic answer is the manufacturers that 6


### we interviewed, specifically two of those three, 7


### they hold a very dominant market share in the 8



### market, so we felt that based on that, based on 9


### what they told us, their statements would be 10


### fairly representative

. 11


### But, yes, there are going to be some 12


### segments of the market that are not

-- they 13


### aren't representative by what they say. There is 14


### only so much analysis that can really be done, 15


### but we'd be happy to look into revising it in 16


### some way to further represent those other 17



### manufacturers. 18


### MS. SHEPHERD: This is Amy Shepherd. 19


### I just would say, as to the competitive 20


### impact on this market, I don't really think the 21


### data that we have right now is sufficient to 2298

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### conclude that there is not really going to be a 1


### signific ant competitive impact. 2



### MR. BROOKMAN: Eric Stas. 3



### MR. STAS: Eric Stas. 4


### Sam, did you approach other manufacturers 5


### to interview, and did they decline? What 6


### happened? 7


### MR. LAU: I can probably better answer 8


### that question. 9


### I am actually going to go back. There is 10


### some discussion about how many manufacturers 11


### there are. In the notice, we say that there's 12



### seven manufacturers, and that's based on DOE's 13


### definition of the SPVU that we're using today. 14



### There are other folks that make what DOE 15



### considers to be r esidential product, and those 16


### folks were not considered as part of this 17


### analysis. 18



### Of those 7, we reached out

-- I believe 19


### we reached out to every manufacturer and three 20


### accepted, and we went and spoke to everyone who 21


### would have us there, and so, as is the case with 2299

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### all the rulemakings, we speak to as many, as much 1


### of the industry as we can, and, of course, we 2



### validate as much of our content as we can, but in 3


### some cases, we're constrained by the willingness 4


### of cooperation in the industry. 5



### MR. BROOKMAN: Ok ay. 6



### Louis. 7


### MR. STARR: It sounds like maybe AHRI is 8


### willing to get some more people on board to 9


### provide some more information. Would that be an 10


### accurate statement, or do they think three is 11


### enough? What is your thoughts on that? 12



### MR. BROOKMAN: Amy. 13



### M S. SHEPHERD: I think we always 14


### encourage that, but it's up to them. You know, 15


### it's up to every individual manufacturer, their 16



### decision. 17



### MR. BROOKMAN: Joanna. 18



### MS. MAUER: Joanna Mauer. 19


### So, as I understand it, DOE's engineering 20


### analysis has to be based on the lowest cost way 21


### of meeting a given efficiency level. So it's not 22100

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### -- it doesn't have to take into account all the 1


### ways you could possibly get to an efficiency 2



### level. 3


### Obviously, every individual manufacturer 4



### can make their own decision about how th ey meet 5


### an efficiency level, but the analysis has to be 6


### based on the lowest cost way of meeting each 7


### potential level. 8



### MR. McCLIVE: Correct. Correct. Yeah. 9


### MR. BROOKMAN: Okay. Are we ready to 10



### move on? 11



### MR. McCLIVE: Yeah. 12


### MR. BROOKMAN: Okay. 13



### MR. M cCLIVE: So this graph shows the 14


### MPCs that we calculated for SPVAC equipment. In 15


### green, we have equipment that's less than 65,000, 16


### and in yellow, we have the greater than 65,000. 17


### Same thing for SPVHPs. 18



### So after we calculated the MPCs

-- 19



### MR. HUNT: Excu se me. Marshall Hunt, 20



### PG&E. 21



### MR. McCLIVE: Sure. 22101

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### MR. HUNT: Don't you need something on 1


### the vertical that has a capacity factor in it? 2


### Different capacities will cost different amounts 3


### of money. So is this a table for all 24,000? 4



### MR. McCLIVE: Oh, that 's a great 5


### question. 6


### So we selected a representative capacity 7



### for each of the two

-- well, first, I should 8


### note, so, yellow, that's one capacity class, and 9


### the green is a different capacity class. For 10


### each of those capacity classes, we chose one 11


### single c apacity that we believed would be 12


### representative of that capacity class. 13


### MR. BROOKMAN: I see the legend is in the 14


### bottom right. 15


### MR. HUNT: Yeah, I saw that, but then you 16


### went further than that and said within the class, 17


### zero to 65,000, these points repr esent some 18


### representative

-- or from some representative 19


### piece of equipment. 20


### MR. McCLIVE: Right. 21



### MR. HUNT: What was that? 2, 3

-- 22102

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### MR. McCLIVE: 3 tons. 1


### MR. HUNT: 3 tons? Okay. Thank you. 2



### MR. McCLIVE: Yeah. And it was 6 tons 3


### for the greater tha n 65,000. 4


### So the last and final step of the 5


### engineering was to derive MSPs, manufacturer 6


### selling prices, from the MPCs. So, essentially, 7


### the MSP is the price at which the manufacturer 8


### can recover all of their production and 9


### nonproduction costs and still earn a profit. 10


### Shipping costs are typically considered 11


### as a nonproduction cost and are included in the 12


### MSP, and the shipping costs are presented in 13


### greater detail in Chapter 5 of the NOPR TSD. 14


### The MSP is calculated by multiplying the 15


### MPC by a manufacture r markup, and then on top of 16


### that, we add the shipping costs. 17


### So this is a very detailed slide, 18


### obviously. I'm not going to go into all of it, 19



### but this shows the structure of how the MSP is 20



### de rived . On the left, you have your full 21


### manufacturer productio n cost, your MPC, and on 22103

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### the right, you have all of the stuff that's 1


### included in the markup to the MPC as well as your 2


### shipping costs. 3


### Going forward, the manufacturer markup is 4


### normally derived by looking at Securities and 5


### Exchange Commission 10K reports from public 6


### companies, which provide an indicator of industry 7


### profitability. For SPVUs, though, a lot of the 8


### industry is privately held, so it's not really 9


### possible to have this financial information on 10


### hand to perform this sort of analysis. 11



### So what we d id instead was we looked at 12


### the package terminal, air conditioner, and heat 13


### pump, PTAC industry, because it's a comparable 14


### industry to the SPVU industry, and we took the 15


### markup that was used for the final rule for that 16


### back in 2008, and we used that as a s tarting 17


### point for developing the markup here. 18


### After consultation with industry through 19


### interviews, we estimated that the average 20


### manufacturer markup for SPVUs would be 21


### approximately 1.28. 22104

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### MR. BROOKMAN: Yes, please. Bill. 1



### MR. STEEL: Bill Steel of Bard 2


### Manufacturing. 3


### When you were looking at the pricing, was 4


### there any price

-- given any consideration of the 5


### price sensitivity of the different markets that 6


### you mentioned, or you're just assuming that each 7


### market can handle the markup that you're 8


### assuming? 9


### MR. McCLIVE: I'm going to hand that to 10



### Chris Lau. 11



### MR. LAU: This is Chris Lau from 12


### Navigant. 13


### So the 1.2 is the average across all 14


### markets. What you'll see later on is when we do 15


### the LCC, we do consider differences in the 16



### distribution chain. 17


### This is p rimarily used for estimating 18


### manufacturer profitability, but we recognize that 19


### resell through different markets results in 20


### different end user prices. 21



### MR. STEEL: And some markets are much 22105

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### more price sensitive than others. 1


### MR. LAU: Right. Agreed. 2



### For t he MSP, we use a single average 3


### markup across the manufacturers

-- sorry
-- 4


### across all products for a given manufacturer. 5


### MR. WINNINGHAM: This is Dave Winningham 6



### with Allied. 7


### Just a general comment. I find it 8


### somewhat peculiar that you are referencing the 9


### PTAC industry, which they are making a statement 10



### -- or DOE has made a statement that the type of 11


### equipment that they were excluding from this is 12


### probably the most similar to the PTAC industry. 13


### In looking at the LCC, there are in fact 14


### six different typ es of applications that include 15


### health care, general office and retail. Lodging 16


### is included in that, but in the LCC, it says it's 17


### not used. So there appears to be more than the 18


### three types of buildings in your analysis than is 19



### stated in the NOPR. 20



### MR. Mc CLIVE: Again, I am going to pass 21


### that to Chris, unless

-- Chris, do you have 22106

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### anything to add? 1



### MR. LAU: Yeah. This is the manufacturer 2



### mark up , so this is the average markup across all 3


### SPVU products for a manufacturer of the 4


### equipment. 5


### We do recognize t hat there are different 6


### distribution chains and different markups based 7


### on those distribution chains, which result in 8


### different end user prices across different

-- for 9



### different end uses. 10



### MR. WINNINGHAM: This is Dave with 11



### Allied. 12


### My comment wasn't neces sarily to the 13


### markups, but just the references to the PTAC and 14


### the similarities, and also kind of respond to the 15


### prior question, there is more than the three 16


### categories. 17



### MR. BROOKMAN: Yep. 18


### MR. WINNINGHAM: In the analysis. 19


### MR. BROOKMAN: Okay. 20



### MS. SHE PHERD: this is Amy Shepherd. 21


### When you say you recognize that, does 22107

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### that mean it's reflected somewhere, or you're 1


### just recognizing it? 2


### MR. LAU: No, it is. If you look at the 3


### LCC, they are just different distribution chains. 4



### MS. SHEPHERD: And so ther e's a different 5


### markup for that? 6


### MR. LAU: We'll get there, but in DOE's 7



### notice

-- it's a little confusing. There is a 8


### manufacturer markup, and then there are 9


### distribution chain markups, and so those two are 10


### separate analyses. 11



### And for the manufacturer markup, it's 12


### assumed to be 1.28 in the base case, and what 13


### you'll see is the manufacturer impact analysis. 14


### We model a change in the manufacturer markup as 15


### manufacturers make investments to comply with the 16


### standard and as their manufacturer production 17



### cost s go up. It's an assumption of how much 18


### increased cost they pass on. 19


### MR. BROOKMAN: Which we will get to. 20


### MR. LAU: Right. 21


### MR. BROOKMAN: Yes. Okay. 22108

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### So now we're moving on. 1


### MR. McCLIVE: Okay. So, as I showed you 2



### before, we created cost

- efficiency curves. This 3


### time, this represents the MSPs versus the 4


### efficiency, so that's what we have for SPVACs, 5



### and then this is what we have for SPVHPs. 6



### Question? 7


### MR. BROOKMAN: Yes, please. Steve. 8



### MR. ROSENSTOCK: Steve Rosenstock. 9


### Yeah. For the heat pump c hart that you 10


### have on Slide 45, you show the EERs , and I'm just 11


### curious. Are those representative of the

-- for 12



### the COPs, are those across all COPs, for the COPs 13


### that you're putting out as the standard levels? 14


### For example, that 12.3 EER, is that with 15



### a 3 .9 COP, or the 11 EER, is that with a 3.3 COP 16



### or for all COPs? 17



### MR. McCLIVE: Yeah. Yeah, it is. 18


### MR. ROSENSTOCK: Okay. It is what? 19



### MR. McCLIVE: It is the COP that we 20


### determine corresponds with each EER level. 21


### MR. ROSENSTOCK: Okay. So it's 11, and 22109

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### that's 3.3 COP, and that

-- 1



### MR. CYMBALSK Y : That was listed 2


### previously

. 3


### MR. ROSENSTOCK: Okay. Thank you. 4


### MR. McCLIVE: They all correspond. 5



### MR. ROSENSTOCK: It wasn't clear. thank 6



### you. 7


### MR. BROOKMAN: Did you finish presenting 8



### 45? 9



### MR. McCLIVE: Yea h. That's the end of 10


### the engineering analysis. 11


### MR. BROOKMAN: Okay. We have covered a 12


### lot of territory here. Additional comments 13


### before we go to break? 14


### [No audible response.] 15


### MR. BROOKMAN: Okay. Let's go to break. 16



### It's 20 minutes

-- go ahead, Emil y. 17


### ATTENDEE: Ed had a question. 18



### MR. BROOKMAN: Who? 19



### ATTENDEE: Ed Wuesthoff. 20


### MR. BROOKMAN: Ed, please unmute your 21


### phone. Do you have a question or a comment? 22110

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### MR. WUESTHOFF [via telephone]: Yeah. 1



### This is Ed Wuesthoff at Friedrich. I'm the 2


### Complia nce and Regulations Manager, and for some 3


### reason, this link was muted for most of the 4


### webinar portion of it, so I want to just comment 5


### briefly. 6


### MR. BROOKMAN: You couldn't hear, or you 7


### couldn't speak? 8


### MR. WUESTHOFF [via telephone]: I 9


### couldn't speak. 10



### MR . BROOKMAN: Okay. Please. We welcome 11


### you speaking. Go ahead. 12


### MR. WUESTHOFF [via telephone]: Okay. 13



### Thanks. 14


### Predominantly, Friedrich builds SPVUs for 15


### the commercial hotel/motel section, and we were 16


### also interviewed by Navigant, and we also produce 17



### wi ndow air conditions in the residential market. 18


### We primarily consider what we build on the SPVU 19


### as a commercial product going to the hotel/motel 20


### industry. 21


### I wanted to comment on the engineering 22111

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### analysis in reference to the higher efficiency 1



### compressors. In 2010, we changed from R22 to 2



### R410A, and we added extra coils in order to 3


### achieve the efficiency levels that are used in 4


### today's marketplace. 5


### In the past, we had E E Rs on SPVUs very 6


### close to 11 EER, with rotary compressors that 7


### were efficiency at 11.2 EE R. Today, there are no 8


### rotary 410A compressors that are above 10.4 EER. 9


### So we dropped almost a whole point in efficiency. 10


### So by adding two coil rows, we were able 11


### to gain with 410A, but adding another two rows to 12


### the current product would mean having a larger 13


### box, which would also mean in a motel and hotel 14


### industry, changing the whole size. 15



### One other comment I wanted to make is 16



### there are differences in SPVUs that relate to 17



### both side l ouvers and non

- side lo uvers , and our 18


### product is primarily a non

- side l ouver 19


### weatherized product. 20


### MR. BROOKMAN: Okay. Well, I hope you 21



### will add those comments and add additional 22112

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### comments in your written comments, Ed. 1


### MR. WUESTHOFF [via telephone]: I sure 2


### will. Thank you. 3


### MR. BROOKMAN: Thank you. 4


### Do you wish to commen t? Okay. Not at 5



### this time. 6



### I think we've now finished the 7


### presentation content that goes

-- takes us up to 8



### the next break in the content here, so let's take 9



### a break. It's now almost

-- let's say it 20 till 10


### 11, so that means we will resume here at 5 til l 11



### 11. 12


### I think we are kind of on target with our 13


### timeline here to complete this material, maybe a 14


### little after noon, but we'll plug away as soon as 15



### we return. 16


### Please make sure you wear your badge 17


### visible in the hallway. There are rest rooms on 18



### both ends of the hall. If you're going to the 19


### coffee shop, go quickly because we'll be resuming 20



### in 15 minutes, 5 till 11. 21



### [Break taken from 10:40 to 10:53 a.m.] 22113

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### MR. BROOKMAN: Okay. We are going to 1


### pick up where we left off. 2


### All right. Let's start. 3



### MR. SELVA CANABADY: Good morning, 4


### everyone. My name is Abinesh Selvacanabady, and 5


### I'm from PNNL. I'll be walking you through the 6



### -- 7


### MR. BROOKMAN: Just speak up, okay? 8


### MR. SELVACANABADY: Okay. Can you hear 9



### me now? 10



### MR. BROOKMAN: Yeah. 11



### MR. SELVACANABADY: Al l right. Good 12


### morning, everyone. My name is Abinesh 13


### Selvacanabady. I am from PNNL. I will be 14


### walking you through the energy use analysis 15


### today. 16


### The objective of the energy use analysis 17



### is to calculate a state

- level per

- unit energy 18


### consumption value fo r all equipment classes at 19


### each efficiency level. 20



### DOE looked at three basic market sectors, 21


### the education, the education classrooms, the 22114

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### offices, and telecom centers. And all of these 1


### buildings are modular buildings. The flowchart 2



### on the slide here desc ribes the methodology that 3



### was used to estimate energy consumption. 4


### DOE took an energy plus simulation 5


### approach to calculate state

- level values. It 6


### considered all possible combinations of building 7


### types, equipment classes, and efficiency levels, 8



### and for each of these combinations, it would 9


### create an input model, and these input models 10


### received their inputs from four different

-- four 11



### separate areas. 12


### The input set one would be building 13


### characteristics. Input set two would be internal 14



### loads and schedules , and these are typically 15


### dependent on the building type that was 16


### considered for that particular instance of 17



### simulation. And three would be SPVU

- related 18


### equipment details . These are specification and 19


### performance characteristics. Input four would be 20



### wea ther data , and that would depend on the 21


### weather station considered for the particular 22115

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### simulation. 1


### And at the end of all simulation runs, 2


### you will have a bunch of output results or energy 3


### consumption values, and these would get 4


### aggregated by weather statio n, and then they 5


### would later get hit by a location weighting 6


### factor to come up with a state

- level estimate. 7



### This slide here tabulates the results for 8



### the less

- than

- 65,000 Btus per hour equipment 9



### class. We have the results for both AC and HP. 10



### DOE looked at both EPCA and ASHRAE 11


### baselines. Level 4 is your max tech. For the 12


### larger equipment class, the ASHRAE baseline was 13


### the max tech, and the energy used for that 14


### particular level was slightly greater than

-- or 15


### slightly less than twice that of the 3

- ton un it 16


### or the small equipment class. 17



### MR. BROOKMAN: Nick. 18



### MR. SELVACANABADY: Yes. 19


### MR. BROOKMAN: Oh, pardon me. Steve, go 20



### ahead. 21


### MR. ROSENSTOCK: Hi. Steve Rosenstock, 22116

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### Edison Electric Institute, and again, thank you 1



### for this. 2



### I am kind of curious, and if it was in 3


### the technical support document, please forgive 4



### me. I'm kind of curious about

-- especially for 5


### the educational and the modular buildings, what 6


### kind of diversity factors were you using? For 7


### example, in the education modular classrooms, 8


### what p ercentage did you assume were running all 9


### summer versus just partial summer? 10


### And then for the modular buildings, what 11


### portion did you think had 15

- year life versus a 12



### 10

- year life or 5

- year life based on the changing 13



### occupancy patterns? 14



### MR. SELVACANABADY: Gotcha. Thank you 15


### for your question. 16


### For schools, we did not monitor diversity 17


### factor. The way we did it was using simulation

. 18


### So all we did was we fed the weather file, and 19


### then the inputs would be dependent on the 20


### building characteristics. Like, for example, the 21



### schools, we assumed that

-- or we did not assume, 22117

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### but we took schedules and load profiles from 1



### DOE's commercial prototype, building prototype, 2


### and that stated that there was a lower occupancy 3


### or a lower load profile during summer for 3 4



### mon ths of the summer months and then

-- 5



### MR. ROSENSTOCK: Steve Rosenstock, E E I. 6


### Again, that's helpful. So, basically, 7


### when you say lower load profile, does that mean 8


### that the occupancy went down to 80 percent of

-- 9


### MR. SELVACANABADY: The occupancy was 10



### co mpletely zero. The lighting schedules and the 11


### other equipment schedules went down to about 20 12


### percent from 90 percent. 13


### MR. ROSENSTOCK: Okay. Thank you. 14



### MR. BROOKMAN: And he had a second 15


### question. 16


### MR. SELVACANABADY: I'm sorry. The 17


### second question w as? 18


### MR. ROSENSTOCK: Oh, modular buildings, 19


### the modular buildings about what kind of lifetime 20


### did you assume for the modular and portable 21


### buildings. 22118

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### MR. SELVACANABADY: For the energy use 1


### analysis, we did not need an equipment lifetime. 2



### The lifetime wou ld be taken care of in the LCC, 3


### but I believe it's 15 off the top of my head. 4


### MR. ROSENSTOCK: Well, it was really 5


### building lifetime, not equipment lifetime. 6


### MR. SELVACANABADY: That's a good 7


### question. 8



### MR. ROSENSTOCK : The reason I'm asking is 9



### that some of these modular portable buildings, 10


### they are only used for 4 or 5 years, and then 11


### they are not used anymore, even though they are 12


### using this equipment that lasts 15 years. The 13


### building themselves might not

-- 14



### MR. CYMBALSK Y : This is John from DOE. 15



### But that doesn't mean the

-- so they'd 16


### move it off for that building and put it on a 17



### different

-- they wouldn't just grab the SPVU 18


### unit if they demolished the modular thing after 3 19


### years, right? 20



### MR. ROSENSTOCK: Steve Rosenstock. 21



### I don't know. 22119

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### MR. CYMBALSK Y : I think they move around. 1



### In DOE, I've seen them move them off of the 2



### little trailers here, so

-- and I hate anecdotes, 3


### but I've seen it personally done. 4


### MR. SELVACANABADY: So for the analysis 5



### here, we assume d that it would be operational for 6



### the 15 years lifetime. 7


### MR. BROOKMAN: Okay. Moving on. 8



### MR. SELVACANABADY: I had

-- 9


### MR. BROOKMAN: Oh, Nick, you had a 10


### question? 11


### MR. MISLAK: Yeah. I just wanted to kind 12


### of clarify or just ask a question. How did the 13


### analysis consider the economizer use t hat was in 14


### the units as far as the energy savings goes? 15


### MR. SELVACANABADY: I'm sorry. Could you 16



### r epeat that question. 17


### MR. MISLAK: I said how did the energy 18


### analysis take into consideration the economizers 19



### that are used. 20



### MR. SELVACANABADY: So we acco unted for 21



### them. 22120

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### MR. MISLAK: And what capacities that 1


### they were

-- and what was the assumption on the 2


### capacity? 3



### MR. SELVACANABADY: So we based the 4


### economizer assumptions on the ASHRAE 92.1 5



### standard

-- or 90.1 standards

-- I'm sorry

-- and 6



### the economizer s were not operational for the 7


### smaller equipment class. It was operational for 8


### the larger equipment class for the schools and 9


### the offices. Whereas, for the telecom sectors, 10



### we assumed that

-- or again, it was not an 11


### assumption. It was based on manufactu rer 12


### interviews, and we received information that 45 13


### percent of any unit that got shipped to the 14



### telecom sectors had economizers on them, so we 15


### factored that in, and all those results get fed 16



### into the L C C, and the Monte Carlo simulation 17



### takes care of it fro m there. 18



### MR. BROOKMAN: Wes. 19


### MR. ROAN: Wes Roan, Bard Manufacturing. 20


### The telecommunications industry use of 21


### economizers has changed dramatically in the last 22121

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### few years, and it is now used

-- the size of the 1


### equipment doesn't matter. They got a 3

- ton un it 2


### on there, they are most likely going to have an 3



### economizer at work. 4


### Not only that, but control schemes now 5


### are bringing in the economizers at a higher 6


### temperature and bringing in two economizers, 7


### because there is usually redundant units on these 8



### struc tures, lead

- lag type of controller. They 9


### are bringing in one economizer. If that doesn't 10


### satisfy it, the second unit's economizer opens 11


### up. So they are getting a lot more energy 12


### savings via the economizers than traditionally 13


### happened 15, 20 years ago. 14


### So I would think the Department should 15


### really take a look, maybe reach out to some of 16


### the carriers and get information. The compressor 17



### hours that are run on telecommunications are a 18


### fraction of what they were. 19


### MR. BROOKMAN: Okay. 20



### MR. SELVACANABADY: Re ally quickly, the 21


### telecom sector, we did model a redundant unit, 22122

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### but that's a good suggestion. If you can send me 1


### that in a written comment, we would consider it 2


### for the next stage in rulemaking. 3


### MR. BROOKMAN: If you could estimate 4



### that, that would be v ery helpful. 5


### Okay. 6


### MR. SELVACANABADY: Thank you. 7


### MR. BROOKMAN: Thank you. 8


### MR. MORRIS: Hi. My name is Scott 9


### Morris. I'm from PNNL. I just wanted to touch 10


### base about two things, really quick. 11


### To be explicit, regarding the lifetime of 12


### buildings, th e way the LCC model and analysis 13


### treated this equipment, it is assumed that the 14


### equipment, the SPVU equipment itself, lasts 15


### between 10 to 25 years, with an average lifetime 16


### of 15 years, and it is just like John said. It 17


### is assumed that the SPVU equipment

-- well, 18


### essentially that buildings last as long as the 19


### SPVU equipment does. So the actual lifetime of 20


### the building is not explicitly factored in to the 21



### LCC model. 22123

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### The second comment is regarding the

-- 1


### and I'll get to the LCC modeling in just a few 2



### minut es, but regarding the different business 3


### types that are used in the LCC modeling, the 4


### engineering, the energy use, the LCC modeling, et 5



### cetera, have assumed that there are three 6


### building types: the telecom shelters, the 7


### education portables, and other comm ercial and 8


### modular buildings. 9


### There are approximately seven different 10



### -- well, there's seven that DOE specifically 11


### looked at, and there are more business types that 12


### use those three types of buildings. Those 13



### different businesses have different factors suc h 14


### as different electricity prices, different 15


### discount rates, different cost s of capital, et 16


### cetera, but generally speaking, those business 17


### types use three types of buildings. 18


### So I will jump into the markups analysis. 19


### As Chris mentioned earlier, the marku ps analysis 20


### that's found in Chapter 6 of the NOPR TSD is 21


### different than the manufacturer markups where 22124

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### they convert manufacturer production cost to 1


### manufacturer selling prices. 2


### The markups analysis converts 3


### manufacturer selling prices from the engineering 4


### analysis into the final equipment price that an 5


### end user pays for a unit. The analysis develops 6


### markup factors for each node shown on this 7


### diagram, as well as the relative percentage of 8


### the market that passes through each distribution 9



### channel. 10



### There are two main features in this 11


### diagram to consider. It does look big and ugly, 12


### but the two takeaway points are, first, the 13



### distinction between new construction and 14


### replacement markets. It is assumed that 15


### approximately 50 percent of SPVUs that are 16



### manufacture d make their way through the new 17



### construction distribution channels on the ir way 18


### to the end user, and approximately 50 percent of 19


### the units in the aggregate make their way through 20


### a replacement channel into existing structures. 21



### The second feature worth no ting is that 22125

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### most of the units installed in telecommunications 1


### structures travel through different distribution 2


### channels than units intended for other building 3



### types. 4


### This is a confusing diagram. The bottom 5


### line is that approximately 50 percent of

-- wel l, 6


### for telecommunication structures specifically, 7



### DOE is aware that telecommunication shelters are 8



### oftentimes built out of concrete and steel as 9


### opposed to wood and metal buildings, and at the 10


### very top of the s l ide, the concrete shelter 11


### manufacturer, appro ximately 40 percent

-- well, 12


### approximately 80 percent of the SPVUs that are 13



### intended for the telecommunications market will 14


### go through a concrete shelter manufacturer as 15


### opposed to a wood and modular building 16



### manufacturer. The remainder of the 17



### telecommuni cations buildings, the remainder of 18



### the SPVUs intended for telecommunication shelters 19


### are placed in wood or modular buildings. 20


### And the 50 percent of the 21


### telecommunications shelter SPVUs that go through 22126

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### the replacement market, down on the replacement 1



### marke t section, there is that weighted average 2



### modular wholesale distributor box. The SPVUs 3


### going to concrete telecommunication shelters go 4


### through the same concrete shelter wholesale 5



### distribution

-- or distributor as shown on the 6


### top there. 7


### Any questions abo ut that slide? 8



### MR. BROOKMAN: We have a comment or a 9


### question. Rodney Be e ver says, "Why was the 10


### analysis based singularly on modular structures? 11


### Units also go into brick mortar structures." 12


### MR. MORRIS: Thank you. 13


### I can't answer that off the top of my 14



### head. The actual

-- the markup structure and 15


### diagram that we used in our analysis, believe it 16


### or not, is actually much more complex than this, 17


### filled with nasty percentages and stuff. I 18


### appreciate that comment, and we will make sure to 19



### address it. 20



### MR. BROOKMAN: Okay. Thank you. 21


### MR. MORRIS: Thank you. 22127

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### MR. BROOKMAN: Let's keep moving on here. 1


### MR. MORRIS: The two main takeaways from 2



### this slide are that

-- well, in general, baseline 3


### markups

-- are applied to the MSPs to develop 4


### final customer prices for equipment at the 5


### baseline efficiency , and incremental , consistent 6


### with other rulemakings , i ncremental markups are 7


### developed to address the incremental first cost 8



### difference between baseline and more efficient 9


### equipment. 10



### The numbers shown in this tabl e are the 11


### markup factors for each node shown in the 12


### distribution channels in the previous slide, and 13


### these factors are multiplied by the relative 14


### percentages of equipment passing through each 15


### channel to get the overall markups for both new 16



### construction and replacement equipment. 17


### As you can see by the bigger green 18


### numbers, which are the overall markups for both 19


### baseline markup, baseline and incremental 20


### markups, as well as new construction and the 21


### replacement market

. T he equipment intended for 22128

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### inclusions in newly constructed buildings are 1


### slightly higher or marked up more than the 2


### equipment destined for the replacement market 3


### because of the extra steps ( on average ) of SPVUs 4


### being included in buildings before they are 5


### passed to the end user. 6



### MR. BROOKMAN: Do we have comments on
-- 7



### yes, Dave. 8



### MR. WINNINGHAM: Yeah. This is Dave with 9



### Allied Air. 10


### How does DOE come to the assumption that 11


### incremental markups are less than baseline 12


### markups? 13


### MR. MORRIS: The baseline markups in 14


### general calculate and incorporate fixed cost, 15


### costs that don't vary with the size o r cost of 16


### the equipment. 17


### Incremental markups are markups that are 18


### applied to equipment that is more expensive than 19


### the baseline efficiency equipment and cover 20


### things such as insurance costs and profit margi ns 21



### and stuff like that. 22129

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### MR. WINNINGHAM: Okay. 1


### MR. MORRIS: So it's DOE's position that 2


### in the long term, using a baseline and 3


### incremental markups system is more representative 4


### of economic impact in the long term

. 5


### MR. WINNINGHAM: Again, this is Dave wi th 6



### Allied. 7



### I think there have been studies that 8


### refute that the reduced incremental markups are 9


### not appropriate, and the real

- world reality is 10


### that the baseline markups, when there is a cost 11


### increase, get carried through to the end user. 12



### MR. BROOKMAN: D ave, if you could cite 13


### those studies in your

-- yeah, that would be 14


### great. Okay. 15



### MR. MORRIS: So now I will talk about the 16



### life

- cycle cost and payback period analysis. 17


### In general, the LCC, the life

- cycle cost, 18


### and payback period analysis is typically kn own as 19


### just the LCC analysis, and generally speaking, 20


### the LCC analysis takes inputs from the 21


### engineering analysis as well as markups analysis 22130

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### and the energy use analysis to calculate the 1



### total installed

-- I'm sorry

-- to calculate the 2


### total operating cost and installed cost, total 3


### cost of ownership basically for customers of 4



### SPVUs. 5


### So the purpose of the LCC and payback 6


### period analysis is to estimate the total customer 7


### cost over the lifetime of the equipment for all 8


### equipment classes and efficiency levels, and the 9


### purpose of the payback period is to determine how 10


### many years it takes for customers to recover the, 11


### initially, higher cost of more efficient 12


### equipment through lower operating costs. 13


### DOE uses spreadsheet models that 14


### incorporate Monte Carlo simulat ions to model 15


### customer costs and savings, with the 16


### understanding that there is some substantial 17


### variability in many quantities, for example, 18


### being electricity prices , operating hours, stuff 19



### like that. 20



### Yes, Nick. 21



### MR. MISLAK: Does the installed cost take 22131

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### into consideration if the construction will need 1


### to be modified to fit a larger

- sized unit? 2



### MR. MORRIS: No. What the installed 3



### costs do consider is whether these SPVUs will be 4


### placed in existing structures or whether they 5


### will be fitted in new buildings , and as part of 6


### the component package, part of the total package

. 7



### If they're installed in new buildings and shipped 8


### to the final users, essentially there are no 9


### installation costs, per se, of installing SPVU 10


### unit in the building, in a new construction 11



### sce nario, because for the most part, it is 12


### assumed that the markups that we talked about 13


### earlier, the markups being a little bit higher 14



### for the new construction channel, include the 15


### cost of installing SPVU in a newly constructed 16


### building . T here are installati on costs for 17


### installing SPVU equipment considered for 18


### replacement SPVUs t hat would be installed in 19


### existing structures. 20



### MR. MISLAK: And do those reflect the 21


### change in the building construction, if 22132

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### necessary, to fit a larger size unit? 1



### MR. MORRIS: No, n ot currently, but we 2



### will take that in to consideration, so thank you. 3



### MR. BROOKMAN: We have a comment from 4


### someone who is joining us online. 5


### Ed Wuesthoff has his hand raised. Ed, 6


### unmute your phone. We'll unmute you here, and we 7


### ought to be able to hea r you in the room. 8



### MR. WUESTHOFF: Yes. This is Ed 9



### Wuesthoff at Friedrich. 10


### I just wanted to comment on that, stating 11


### that since predominantly, the majority of our 12



### Friedrich SPVUs and SPVH P s go into the 13


### hotel/motel industry, there would be a 14


### skyrocketing cost in order to change the 15


### construction envelope for the product that we 16


### would have to modify for the exterior envelope. 17


### MR. BROOKMAN: Okay. Thank you. 18


### Yes, Louis. 19



### MR. STARR: Louis Starr with NEE A. 20


### One of the things I was wondering, 21


### typically, the se units are going into some of the 22133

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### modulars, such as classrooms and some of those 1


### other ones. A lot of times, those really don't 2


### necessarily have the same code requirements in 3


### terms of envelope and some of the other aspects 4


### of it. Is there any modificat ion for how much 5


### energy usage, based upon what kind of structure 6


### it's going in? 7


### I mean, the same could be said for 8


### telecom, and actually, it's more of a 9



### heat

- generating

- type thing. So it might actually 10


### be a good thing in that case, but is there 11



### accountin g for the type of facility it's going 12


### into in terms of changing the energy use? 13


### MR. SELVACANABADY: The energy simulation 14


### takes care of it. We incorporate R10, I believe, 15



### for the wall characteristics, and these are again 16



### based on information from the she lter 17



### manufacturers . That is what our value was based 18



### on for the wall, for the ceiling, and the kind of 19



### construction. 20



### MR. STARR: So those assume the code 21


### values of what a typical construction is, or does 22134

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### it reflect what's actually in the

-- 1



### MR. SELVACAN ABADY: It's reflective of 2


### what's really out there. 3


### MR. STARR: Okay. Thank you. 4


### MR. MORRIS: Okay. Thank you. 5


### Generally speaking, the life cycle cost 6


### is the sum of installed and operating costs. 7


### Installed cost is simply the final up

- front cost 8



### of th e equipment and operating cost is the yearly 9


### cost associated with operating and maintaining 10


### the equipment. 11


### Installed costs are simply the sum of the 12


### final purchase price and installation costs, 13


### which are essentially labor and materials. 14



### T he calculation o f installed costs 15


### include provisions for the differences in 16


### installation cost, as I just mentioned, for 17


### equipment installed and new construction versus 18


### the replacement market. 19


### Inputs for installed costs include MSPs 20


### from the engineering analysis, overall markups 21



### from the distribution channels that we talked 22135

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### about, including sales tax, and the cost of labor 1


### and materials for installing new equipment, as 2


### applicable. 3


### Operating cost inputs include equipment 4


### lifetime, operating hours and energy use data 5



### from t he energy use analysis, energy prices, and 6


### repair and maintenance costs. O perating costs in 7


### each year are discounted over the lifetime of the 8


### equipment. 9



### Nick. 10


### MR. MISLAK: I kind of have a general 11


### question. I noticed in the repair section, some 12



### of the assumptions that were made as far as 13


### what's repaired in a unit are different than 14


### previous rulemakings. I don't know if somebody 15


### else can maybe comment on that. 16


### Maybe, Dave, do you know? 17



### MR. WINNINGHAM: In the commercial role, 18



### and this is

-- 19



### MR. BROOK MAN: Louder, Dave. 20


### MR. WINNINGHAM: This is Dave Winningham 21



### with Allied Air. 22136

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### There was a one

- time compressor 1


### replacement in the commercial role, and here, 2


### we're kind of looking at things differently and 3


### just wondered what the basis for that was. 4



### I thin k the analysis here may be more 5


### appropriate here and may be lacking in the 6



### commercial. 7


### MR. MORRIS: I can't speak to that. 8


### Sorry, but we'll consider it. 9



### MR. CYMBALSK Y : We will look at it in the 10



### other docket. How about that? 11


### [Laughter.] 12



### MR. MORRIS: Thank you. 13


### For air conditioning units, DOE is 14


### proposing to adopt EER 11.0 as the standard. As 15


### you can see here, equipment at this TSL have LCC 16


### savings of approximately $180 over their lifetime 17


### and a payback period of approximately 9 years. 18



### This informat ion is also found in 19


### Appendix 8B of the NOPR TSD. 20



### Steve? 21


### MR. ROSENSTOCK: Hi. Steve Rosenstock, 22137

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### EEI. 1


### I didn't bring the technical support 2



### document with me. 3


### I am looking at the NOPR, and it says 4


### that for the AC units, that 30 percent of 5



### customers woul d have higher net cost, and I'm 6


### sure it probably says it in the TS D , but I'm kind 7


### of curious. By customer class, for example, in 8


### the education area, what percentage had higher 9


### net cost, if that was broken out like that? 10


### MR. MORRIS: We are going to talk about 11


### that, actually. The education customer s 12


### specifically are identified as a subgroup. 13



### MR. ROSENSTOCK: Yeah. 14



### MR. MORRIS: We will talk about that in a 15



### few slides here. 16


### MR. ROSENSTOCK: Oh, okay. Great. 17



### Thanks. 18



### MR. MORRIS: I don't think there a re 19


### actually percentages listed on this slide

-- 20



### MR. BROOKMAN: Dave. 21



### MR. MORRIS:

-- but I can look them up 22138

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### for you. 1



### M R. WINNINGHAM: This is Dave Winn ingham 2



### with Allied Air. 3


### I would like to point out for SPVAC, this 4


### is commercial equipment that's sold to commercial 5



### customers. 6


### Typically, a commercial entity is looking 7


### for a payback, much less than 8.4 years, and 8


### exceeds DOE's general rule of rebuttable payback 9


### of 3 years. And the net effect of this will be 10


### that people will repair or

-- repair older, 11


### inefficient equipment with paybacks of this 12


### length, and I think that needs to be considered 13


### in the analysis. 14


### MR. BROOKMAN: Okay. Thank you. 15


### MR. MORRIS: Results for the heat pump 16


### systems are on this slide. DOE is proposing 17



### here, EER of 11.0 and a COP of 3.3. Customers of 18


### SPVHPs on average save approximately $400 over 19


### the lifetime of the equipment, have a payback of 20


### roughly 5 years. 21



### MR. BROOKMAN: Yes. Dick. 22139

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### MR. LORD: Yeah. Dick Lord with Carrier. 1


### When you do these paybacks, do you ever 2



### show the range of the paybacks from a cold 3



### climate to a warm climate? 4


### MR. MORRIS: Well, we do examine them. 5


### They are examined as part of the Monte Carlo 6


### analysis and also in the energy plus simulations 7


### for energy use. But we don't specifically go 8


### region by reg ion and explicitly look at the 9


### results of region

- to

- region variability. But 10


### they are considered in the Monte Carlo 11



### simulation. 12


### MR. LORD: Yeah. It's just something 13



### that will influence like in a northern climate 14


### for a cooling

- only unit. You are probably going 15


### to see these paybacks double to triple, and these 16


### guys probably won't use these units. 17



### MR. CYMBALSK Y : Right. I think that's 18


### where you get into the percent of net cost, so 19


### those guys will be in that bucket. 20


### MR. LORD: Not that I want regional 21



### req uirements, but

-- 22140

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### [Laughter.] 1



### MR. CYMBALSK Y : I'm not going to comment 2



### on that. 3


### MR. LORD: You're not going to comment. 4


### [Laughter.] 5


### MR. MORRIS: Okay. Mov ing on to the 6



### life

- cycle cost subgroup analysis. This is one 7


### of the analyses that DOE considers in the NOPR 8


### phase of the rulemaking. 9



### Life

- cycle cost subgroup analysis is 10



### considered

-- or is conducted for both NOPR and 11


### final rule stages, and its purpose is to 12



### determine the effects of standards on 13


### identifiable subgroups within the general 14


### population. 15


### Specific parameters in the LCC model are 16


### changed to examine the unique characteristics of 17


### each subgroup. The results of the subgroup 18


### analysis can be compared with results from the 19


### general population. 20


### So DOE identified three subgroups to 21


### study specifica lly. Temporary office customers 22141

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### are folks in the mining and commercial 1


### construction industries who typically have higher 2


### cost of capital and, by extension, higher 3


### discount rates and higher than average 4


### electricity prices. 5


### This combination of higher disco unt rates 6


### and electricity prices typically serve to offset 7


### each other. However, single

- package vertical air 8


### conditioners in the subgroup are also used less 9


### frequently than the average customer. 10


### The second subgroup is public education 11


### customers who typica lly have lower financing 12



### costs and lower discount rates and at the same 13


### time have typically lower electricity prices than 14


### the average customer. 15


### Similar to the mining and commercial 16


### construction subgroup, having a lower discount 17


### rate and lower electricity price offset each 18



### other. 19


### And finally, businesses with higher 20


### capital costs are typically small businesses 21


### which would find future energy savings less 22142

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### attractive than the average customer. The main 1


### distinguishing feature of this subgroup is a 2


### higher disco unt rate, but other factors, such as 3


### energy prices are assumed to be the same as the 4


### average commercial customer. 5


### With all other things being equal, 6


### customers in this subgroup would typically find 7


### more costly, most efficient equipment, less 8


### economically f avorable than the average customer. 9


### This following slide shows the results of 10


### the LCC subgroup analysis. 11


### Generally speaking, LCC savings are a 12


### little bit lower, and payback periods are a 13


### little bit longer for LCC subgroups relative to 14


### the average custom er. The exception is public 15


### education customers who purchase single

- package 16


### vertical heat pumps. They actually have higher 17


### LCC savings and shorter paybacks than the average 18


### customer because future energy savings are more 19


### influential and important to them than the lower 20


### cost of energy. 21


### Just a note regarding

-- Steve, this 22143

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### might cut you off. I don't know, but regarding 1


### the negative $60 LCC savings for the temporary 2


### office subgroup, I realize this temporary office 3


### was a bad way to name this slide. This is 4


### specific to customers in the mining and 5



### commercial construction industries. 6


### The negative $60 LCC savings for these 7



### customers are relative to an approximately 8


### $14,000 life cycle cost that these customers 9


### incur for the entire lifetime of the equipment, 10



### and in this case, because these units are used 11


### less frequently than the average customer

-- so 12



### the reason for this [negative LCC savings] is 13


### because this equipment is used less frequently 14


### than the average customer, the higher discount 15



### rates have more influenc e on the LCC savings than 16


### the higher cost of energy, hence, the slightly 17


### negative LCC savings. 18



### MR. BROOKMAN: Steve. 19



### MR. ROSENSTOCK: Steve Rosenstock. Thank 20


### you for this slide. It is very helpful. 21


### Again, I'm just

-- especially for the air 22144

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### conditionin g units used by education facilities, 1



### if an 8.4

- year payback, median payback associated 2


### with 37 percent net cost, you know, a 10

- year 3


### median payback is probably close to 45 percent, 4


### 48 percent of education customers having higher 5



### net cost. That's a lot hi gher than other DOE 6



### standards. 7


### And I know that's just one subgroup, but 8


### it's just

-- especially, at the public education 9


### facilities, and they're always on tight budget to 10


### begin with, I'm a little concerned. Again, just 11


### looking at the subgroup, I'm a litt le concerned 12


### with the fact that so many education facilities 13


### are going to have such a long payback, and a lot 14


### of them are going to have higher net costs. 15


### Thank you. 16


### MR. BROOKMAN: Okay. Thanks. 17


### MR. MORRIS: Thank you. 18



### MR. BROOKMAN: Yes. Bill. 19



### MR. S TEEL: Bill Steel with Bard 20


### Manufacturing. 21


### I hate to sound like a broken record, but 22145

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### when I was talking about price sensitivity, I was 1


### talking a lot about the modular office and 2



### modular classroom areas, and a 15

- year payback 3


### would dramatically reduce the product going

-- of 4


### SPVUs going into that market, and I hope that was 5



### taken into consideration when the sales trend and 6


### the shipment trend is calculated by DOE. 7


### MR. BROOKMAN: Thank you. 8


### MS. SHEPHERD: I guess that's a question. 9


### Amy Shepherd from AHRI. Was it? 10



### MR. MORRIS: Sorry? 11


### Alison, can you speak to that? 12


### MS. [Alison] WILLIAMS: I'm going to do 13


### shipments right now, so we can talk about that. 14


### MR. BROOKMAN: Yeah. Okay. 15



### Yes. Wes. 16


### MR. ROAN: Wes Roan, Bard Manufacturing. 17



### Back on education, th ere is no question 18


### that that information is going to result in 19


### repair versus replace, and repair of old, 20


### inefficient machines, making them even more 21


### inefficient, because I have not seen a repair 22146

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### anywhere that translated into a higher efficient 1



### unit. So th at is going to be the reality, is 2


### that there will be many more replacements, 3


### because as was noted, many school districts don't 4


### have any money to begin with, and they are not 5


### going to be able to afford this equipment. 6


### MR. BROOKMAN: Okay. Thanks. 7



### We are going to move on. 8


### MS. [Alison] WILLIAMS: Okay. So I am 9


### going to talk about the shipments analysis. The 10


### purpose of the analysis is to estimate the 11


### shipments over the 30

- year analysis period, which 12


### starts in 2015 for adopting ASHRAE level, 2019 13


### for highe r levels. 14


### These shipments feed into the national 15


### impact analysis and the manufacturer impact 16


### analysis. 17


### We basically do an equipment stock 18


### accounting model, so we're talking both 19


### replacements and new construction. Replacements 20


### are estimated based on ship ments data from 21


### previous years and the lifetime of the product, 22147

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### and in the new construction area, we use input 1


### variables as drivers to the shipments' forecasts; 2


### in this case, mostly construction forecasts. 3


### So we started our shipments with 4


### estimates provid ed by AHRI in the previous 5


### rulemakings , so from 2005 . We did not receive any 6



### more recent data for that. 7


### As you've seen before, the three main 8



### sectors are education, office, and telecom. 9


### So for education, we estimated a 10


### saturation rate for 2005 and applie d this to the 11


### AEO 2013 projections of new construction floor 12


### space to project those shipments. We originally 13


### did this for the office sector as well, but we 14



### received comments on the NODA that that was

-- 15


### well, we received comments in general that the 16


### shipm ents trend was too high. 17


### So when we examined our shipments 18


### analysis, we determined that the AEO forecasts 19


### for the office sector don't truly represent the 20


### SPVU market because they are going more into the 21


### modular building. So we reviewed the modular 22148

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### buildi ng industry literature, and we determined 1


### that it's actually unlikely that that will be 2


### increasing as much as AEO shows for small 3



### offices. 4


### So we hold the shipments to offices 5



### constant at 2005 levels for lack of better data 6



### on that. 7


### The telecom industry, we're projecting 8



### based on a county business pattern, a time series 9


### for establishments in the power and 10


### communications line construction industries, so 11


### we have data from 2003 to 2011, and we just did a 12


### linear trend to extrapolate that out. 13



### This is the resu lting shipments on the 14



### left. Left in red is the estimated historical 15



### totals. That is not all actual real data. It is 16



### estimated based on the data that we had for 17


### shipments and some floor space production 18


### information from the modular building industry, 19



### an d then on the right, you can see the 20


### replacements is the majority of the market and 21



### then new construction on the bottom. 22149

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### MR. ROSENSTOCK: Quick question. 1



### MR. BROOKMAN: Steve. 2



### MR. ROSENSTOCK: Steve Rosenstock, EEI. 3


### There is no data to show the impact of 4



### the recession on this market? 5



### MS. [Alison] WILLIAMS: Yeah. So that's 6


### part of what we were doing when we initially did 7


### the NODA estimates, and we just projected forward 8



### based on AEO values. 9


### When we reviewed the modular building 10


### industry, it definitel y did show that there was 11


### an impact from the recession, and because of the 12


### time period, it's kind of difficult. Like most 13


### of the data from that ends in 2011, so it's hard 14


### to really know what's going to happen. And so 15


### that's part of the reason we held the offices 16



### constant, was because of that sort of lack of 17



### information. 18


### As you can see, the new construction 19


### shipments are actually nearly flat through this. 20


### It is almost all driven by replacements. 21


### MR. WINNINGHAM: This is Dave Winningham 22150

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### with Allied Air. 1


### To kind of add on to that, I think, 2


### although we may not have specific data, you can 3



### look to similar markets that there is data 4


### available, other HVAC sectors of the market, 5


### which have probably similar trends. And there 6


### was a significant decline in the lat e 2007, '8, 7


### '9 time frame to which the industry has not 8


### recovered to those levels previous to that. 9


### The other question is that you're showing 10


### a continuing trend with increased cost. I think 11


### history has shown us that any time there is a 12


### significant increa se in efficiency in cost of 13


### products that volume goes down. Why wasn't that 14


### taken into consideration in the analysis? 15



### MS. [Alison] WILLIAMS: Yeah. So we 16


### looked at that. We were trying to determine 17



### whether the amended standards would affect 18


### shipments. 19


### Our proposal in the NOPR was that because 20


### SPVU is such a niche product, if you wanted to 21


### switch to a different kind of equipment, there 22151

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### would be different

-- you would have to install 1


### it on site rather than at the modular building 2



### manufacturer. You have to use a mechanical 3



### contractor . There would be extra duct work. So 4


### we thought there were significant reasons why you 5


### would be unlikely to switch as a result of the 6


### increased cost from the standard, but we 7


### certainly welcome any data and comments that 8



### woul d help us actually estimate something, if 9



### that's not the case. 10



### MR. BROOKMAN: Frank. 11



### MR. XU: Frank Xu, National Coil. 12



### MR. BROOKMAN: Get close. 13


### MR. XU: Sorry. Frank Xu, National Coil. 14



### We received some information in some 15


### areas, actually mandated to eliminate portable 16



### classrooms in the schools. One of our 17


### neighboring school districts already did that. 18


### So I don't know if anybody heard that kind of 19


### news in other regions of the country. 20



### MS. [Alison] WILLIAMS: Yeah. So we 21


### actually reviewed that when we looked at the 22152

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### shipments. We identified that there were some 1


### school districts that were trying to get rid of 2


### portables. 3


### We didn't explicitly account for that 4


### because the AEO projections for education are 5


### actually declining over the analysis period, so 6


### we're already basically modeling a drop in 7


### shipments to education. So we thought that we 8


### may be implicitly capturing that trend, even 9


### though we don't have specific data on it. 10



### MR. BROOKMAN: Ed Wuesthoff has a 11


### question or a comment. 12


### Ed, we will unmute you. You are next. 13


### MR. WUESTHOFF: I did not actually have a 14


### comment at this point. Sorry. 15


### MR. BROOKMAN: Okay. 16



### Louis. 17


### MR. STARR: So, just a general thought, 18


### while some places may be not allowing modular to 19


### be built, I don't anticipate people are wa nting 20


### to increase education to funding across the 21


### board, such that this is going to be the cheaper 22153

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### option to build and put on there. 1


### So the idea that there is going to be 2



### less of them, I have a little bit of hard time 3


### believing that in the future. If any thing, I 4


### think there is going to be more of them, unless 5


### all of a sudden, we start funding education at a 6


### greater level than we do. And I don't anticipate 7


### that in the next 4 to 5 years. 8


### MR. BROOKMAN: Okay. thank you. 9


### MS. [Alison] WILLIAMS: Okay. So I'm 10


### going to move on to the national impact analysis. 11


### That's where we project national energy savings 12


### and national net present value. We do this using 13


### a time series of energy and economic impacts. 14


### This shipments model, of course, estimates the 15



### stock of SPVUs in service. 16


### We are aggregating those costs and energy 17


### use each year, and we are reporting estimates as 18


### a change in consumer national net present value. 19


### We only report this for levels above 20


### ASHRAE, just as a note, and we are using discount 21



### rates to account for the time value of money. 22154

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### So, basically, we are taking in the LCC 1


### analysis results, the shipments model, and some 2


### other things to put those into the national 3


### impact analysis model, which gives us national 4


### energy savings and national economic im pacts. 5



### We do this over the 30

- year period

-- a 6



### 30

- year period of shipments, so unit s shipped for 7


### 30 years, and then there are trailing energy 8


### savings and economic impacts throughout the 9


### lifetime of that equipment. 10


### For both energy savings and N PV, we are 11



### c omparing the standards case to the base case and 12


### looking at the difference between energy use, 13


### also cumulative operating cost savings and 14



### installed cost increase. 15


### MS. SHEPHERD: This is Amy Shepherd from 16


### AHRI, and I just want to ask a question before I 17



### th ink I might have missed my opportunity. 18


### On the shipments, where we had the issue 19


### about the price sensitivity in the different 20


### product classes

-- not product classes, but the 21



### different market sectors

-- is there a difference 22155

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### in the price sensitivity betwee n those, as he 1


### noted for the mining and the modular? And I also 2


### was thinking in terms of the education where they 3


### have fixed budgets for periods, like if they 4


### can't necessarily just have a large capital cost, 5


### so that's going to end up being repair decisio n 6



### instead. 7



### MS. [Alison] WILLIAMS: So we're not 8


### currently modeling that explicitly. We are using 9


### the same shipments in the standards case as in 10


### the base case, and so certainly, if you have any 11



### information or data that would indicate that 12


### price sensitivit y for certain sectors, we'd be 13


### happy to look at that. 14


### Okay. So this is a summary of the inputs 15


### to the national impact analysis. Most of these 16


### have been talked about before as part of the LCC. 17



### The total installed cost, we have 18


### equipment costs that vary with efficiency level. 19


### The installation costs remain constant. Repair 20



### costs increase with efficiency level. M aintenance 21



### remain constant. 22156

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### We are getting the energy use from the 1


### energy use analysis and the LCC, and we are 2


### projecting energy prices using AE O 2013. 3


### The base case efficiencies were used, 4


### shipments weighted, and we got the base

-- that 5


### information from manufacturer interviews, and 6


### then we projected a growth rate of 1 EER every 35 7


### years in the base case. 8



### When we went to the standards case, we 9



### u sed a roll

- up scenario, so we assumed that all 10


### equipment under the standard level would roll up 11


### to meet the standard and equipment above the 12


### standard would not be impacted. However, we then 13


### applied the same 1 EER every 35

- year growth rate 14



### in the standards case. 15



### We also account for full fuel

- cycle 16


### energy savings in this analysis. We used 17


### discount rates of 7 percent and 3 percent, and 18


### we're discounting to the year 2014. 19



### So this is also

-- just to present the 20


### TSLs we're using in this case, the TSLs are 21



### bas ically equivalent to the efficiency level, so 22157

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### TSL1 is EL1 for the equipment less than 65,000. 1


### As you've heard before, there was either 2


### no equipment on the market or no equipment above 3


### the ASHRAE baseline for all the larger equipment 4



### classes, so those are at the ASHRAE level across 5



### all the TSLs. 6


### MS. SHEPHERD: This is Amy Shepherd 7


### again. 8


### So, on Slide 68, which you just talked 9


### about, when you talked about the roll

- up 10


### scenario, so then that means that you're assuming 11



### that all the manufacturers that are curr ently 12


### producing the products that you see, those 13


### products will roll up, and so those manufacturers 14


### are still in the market, so yes? 15


### MS. [Alison] WILLIAMS: It doesn't really 16


### discuss who is still in the market, but it 17


### assumes that every

-- 18



### MS. SHEPHERD: Every product that

-- 19



### MS. [Alison] WILLIAMS:

-- all product 20



### would meet at a minimum the standard. 21


### MS. SHEPHERD: It is not going to go 22158

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### away. This will be offered. 1


### MS. [Alison] WILLIAMS: That's not really 2


### partial to the shipments analysis, so we assum e 3


### that there will be enough product to meet the 4


### shipment s

. 5


### MS. SHEPHERD: Well, no, I'm talking 6


### specifically about the

-- where you say the 7



### roll

- up scenario, where you assume that the 8


### products that don't meet the base efficien cy will 9


### roll up, so you're as suming that all those 10


### products

-- the current suite of products will 11


### still be there, and then it will just all roll 12


### up, right? They're still all offered? 13



### MS. [Alison] WILLIAMS: So I think it's 14


### sort of semantics, right? 15


### But like we are not necessarily 16



### s pecifying which products would still be there or 17


### not be there. We're just saying there will be 18


### enough products to meet these shipments, and this 19



### will be

-- 20


### MS. SHEPHERD: Okay. 21


### MS. [Alison] WILLIAMS: It's range of 22159

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### distribution of those products. 1



### MS. S HEPHERD: Okay. Okay. 2



### MR. BROOKMAN: R odney Bee ver has a 3


### question. He writes, "How can 30 years of 4


### shipments be used when we know that federal rules 5


### will change the efficiency levels 6 to 9 years 6



### out? 7



### MS. [Alison] WILLIAMS: So when we do the 8



### next rule making, 6 to 9 years out or whenever, 9


### the baseline for that rulemaking would account 10


### for whatever was finally adopted in this 11


### rulemaking, so it would only account for savings 12


### above what we're accounting for here. 13


### MR. BROOKMAN: Thank you. 14



### MS. [Alison] WI LLIAMS: Okay. So these 15


### slides are just the results. You can see them in 16



### the NOPR and the TS D . The total, as someone has 17



### said before, is .23 quads, and we have positive 18



### N PV at both 3 percent and 7 percent. 19



### And that's about it for the NIA. 20



### MR. BROOKMAN : On to manufacturing impact 21


### analysis. Chris Lau. 22160

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### MR. HUNT: I'm sorry. This is Marshall 1



### Hunt. 2


### MR. BROOKMAN: Yes, Marshall, please. 3


### MR. HUNT: On the last slide, page 70, 4


### I'm confused about why ASHRAE's .22 quads and 5



### TSL2 is .23. I think there's a n omenclature 6



### issue. 7


### MS. [Alison] WILLIAMS: Sorry. I forgot 8


### to clarify. All the savings above the ASHRAE 9


### level are with respect to ASHRAE as a baseline. 10



### So the value for

-- 11


### Can you go up one slide, Chris? 12



### So the value for the ASHRAE level is 13


### compared to the current federal baseline and the 14


### value for TSL2 is compared to the ASHRAE level. 15


### So they would be sort of additive. It's not 16


### exact, but we have to use the ASHRAE baseline

-- 17



### we have to use the ASHRAE level as the baseline. 18



### So the .23 is above AS HRAE. 19


### MR. HUNT: Thank you. Good. 20


### MR. BROOKMAN: That's a good spot, 21



### Marshall. 22161

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### MR. LAU: Hi, folks. I'm Chris Lau

-- 1


### MR. BROOKMAN: Okay. Moving on to 2


### manufacturing impact analysis

. 3


### [Laughter.] 4



### MR. LAU:

-- with Navigant. I will be 5


### presenting the manufacturing impact analysis, or 6



### the MIA. 7


### The primary purpose is to assess the 8


### impacts of an amended standards on SPVU 9


### manufacturers as an industry; the second purpose, 10


### identify and qualify impacts on manufacturing 11


### subgroups, such as small business manu facturers; 12


### and the final portion of MIA involves discussion 13


### of direct employment, competitive considerations, 14


### potential constraints, and other federal 15


### regulations that go into effect around the 16


### compliance of this rule or cumulative regulatory 17



### burden. 18



### The primary tool used is a government 19


### regulatory impact model. It's a cash flow model 20


### used to represent industry as a whole. The major 21


### output is industry net present value of metric 22162

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### use to distinctly quantify impacts of amended 1



### standards on manufacturers. 2



### W e conduct interviews to validate and 3


### refine input to the GRIM and to better understand 4


### qualitative issues. 5


### We really do this in three phases. In 6


### phase one, we built an industry profile from 7


### publicly available information, research reports, 8


### SEC filings, e t cetera. In phase two, we use 9


### public data inputs from the engineering and 10


### shipments analysis to outline industry in the 11


### GRIM, our cash flow model. And in phase three, 12


### key inputs are validated to manufacturers, and 13


### qualitative issues are discussed in int erviews. 14



### We use this content to refine the GRIM. 15


### As I noted before, to the industry, we 16


### rely on several of the upstream analyses. We 17



### take financial information from the MTA. We take 18


### production costs from the engineering analysis. 19



### We take base case as well as standard case 20


### shipments forecasts from the shipments analysis. 21


### To complete our model, we supplement two 22163

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### different types of contents. We do a high and 1


### low manufacture markup scenario , and we also do 2


### up our industry conversion costs, which are base d 3


### off of the engineering analysis, factory tours, 4



### and interviews. 5


### Speaking of those interviews, over the 6


### course of our interviews with manufacturers, we 7


### identified several key issues that manufacturers 8


### highlighted at the time. Manufacturers were 9



### certainl y concerned about space constraints, both 10


### footprint and wall space. They're concerned 11


### about compliance tolerances. We also heard 12



### concern about constraint innovation and to build 13


### a customized product as a result of the standard. 14



### MS. SHEPHERD: This is A my Shepherd from 15


### AHRI. I had a question about that. 16


### So I noticed in the NOPR, there is that 17



### reference to the manufacturers interviewed that 18


### had the concerns about size constraints, yet 19



### those size constraints aren't reflected in the 20


### technical analysis. S o how does that

-- 21


### So you interviewed manufacturers, and 22164

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### they say, "We are really worried about the size 1



### issues that we have here." 2


### MR. LAU: I think they are reflected. 3


### I misspoke earlier, first of all. I was 4


### confusing two different rulemakings. 5



### But the engineering analysis does take 6


### into account growth in cabinet size, and I think 7


### what you will see, based on the engineering 8


### analysis, going from the ASHRAE level to proposed 9


### level, there is no additional increase in cabinet 10



### size. 11


### MS. SHEPHERD: Right. But doesn't that 12


### contradict what the manufacturers told you? 13



### MR. LAU: No. Well, DOE has to default 14



### ASHRAE

-- had to adopt ASHRAE by default as the 15



### lowest standard level. 16


### MS. SHEPHERD: Oh, yeah, yeah. I know. 17


### But I'm saying when you from ASHRAE as a baseline 18


### to 10.5 and 11, there is no increase in size 19


### reflected, right? 20



### MR. LAU: Well, remember, there is no 21


### proposed level at the time of the interviews. So 22165

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### these were general concerns about the potential 1


### impacts of the standard. 2



### MS. SHEPHERD: So t hey thought that 3


### potential impacts could be higher sizes, but you 4


### didn't find that there would be higher sizes; is 5



### that accurate? 6


### MR. LAU: Well, I'd say manufacturers 7


### stated that changes in the cabinet size would 8



### lead to increased conversion cost as well as 9


### potential issues in the replacement market, where 10


### there have been such a lineup. 11



### MR. BROOKMAN: We have a comment or a 12


### question from Ed. Please, Ed, go ahead. 13


### MR. LAU: Ed, you may need to unmute your 14


### own phone. 15



### [Pause.] 16



### MR. BROOKMAN: We, we can' t hear you. 17


### MR. WUESTHOFF [via telephone]: I'm 18



### sorry. 19



### MR. BROOKMAN: Go ahead. 20


### MR. WUESTHOFF [via telephone]: Sabby? 21



### MR. BROOKMAN: Yep. 22166

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### MR. WUESTHOFF [via telephone]: Go ahead. 1


### MR. LAU: I think Ed is having someone 2


### else speak for him. The perso n that is speaking 3


### for Ed is muted. At least that's my best guest. 4


### MR. SABHARWAL [via telephone]: Can you 5


### guys hear me? 6


### MR. BROOKMAN: Yeah, we can hear you now. 7



### Go ahead. 8


### MR. SABHARWAL [via telephone]: Okay. 9


### Yeah. I just wanted to make a couple o f quick 10


### points. I missed out on the last section where 11


### we were talking about 15 years as the lifetime of 12


### the product. 13


### MR. BROOKMAN: Please identify yourself. 14


### MR. SABHARWAL [via telephone]: My name 15


### is Sabby. I'm from Friedrich. 16


### MR. BROOKMAN: Okay. Thank you. 17


### MR. SABHARWAL [via telephone]: I'm 18



### sorry. 19


### So my point was that the feedback from 20


### our customers is that they tend to replace the 21


### units in 8 to 9 years. So I just wanted to make 22167

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### that comment that what I've seen is it's not 15 1


### years we'll offer as the lifetime of the product. 2


### And the second thing I just wanted to 3



### make a comment was that

-- did you guys consider 4


### when we keep increasing the cost of the SPVUs, so 5


### obviously, the price keeps increasing, and the 6


### consumer surplus available to the cons umer will 7


### keep in decreasing. 8


### So when you are looking at

-- when you 9


### are projecting the increase in the shipments, I'm 10


### not sure if you considered the effect of other 11


### technologies eating into the space for these 12


### SPVUs. These are a couple of points I wante d to 13



### make. 14


### MR. BROOKMAN: Okay. 15


### MR. LAU: Thank you, and I think 16


### including that in the written comment would be 17


### helpful, particularly your comments about 18


### differences in what you expect in terms of 19


### product lifetime as well as total installed costs 20



### of SPV Us versus alternative products. 21


### MR. SABHARWAL [via telephone]: Great. 22168

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### All right. I'll do that. I just put it in the 1


### question box that's there. 2


### MR. LAU: Thank you. 3


### MR. BROOKMAN: Okay. Thank you. 4


### MR. LAU: As I noted earlier, we model 5


### high and low markup scenarios for SPVUs, because 6



### there are two different scenarios. One is the 7


### preservation of gross margin percentage, which we 8


### consider to be the upper bound. This assumes 9


### that manufacturers maintain their existing markup 10


### on a percentage basis as p roducts get more 11



### efficient. 12


### This would suggest that manufacturers are 13


### able to pass on all increased costs to their 14


### customer, and again, that's why we consider it to 15


### be the high bound. 16


### At the lower end, we do a preservation of 17


### operating profit. DOE scale d down the markup of 18



### each TLS to a level that results in the same 19


### operating profit and dollars before and after the 20



### standard. What this means is, as manufacturers 21


### capital base increases as a result of the 22169

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### standard and they make these conversion cost 1



### inves tments, they don't earn additional profit 2



### from those investments. So manufacturers are not 3


### making greater profit in the standards case. 4


### Also, we had to estimate conversion cost 5


### for the industry. This is primarily driven by 6



### manufacturer feedback. We too k feedback from 7


### manufacturers, did a market

- share weighting, and 8


### scaled it up to the industry level. 9


### At the proposed standard, industry 10



### conversion costs reached $7.2 million for 11


### industry, and that is invested over the 4

- year 12


### period, between the publicatio n of the final rule 13


### and the effective year of the standard. 14



### When we take into account all the 15


### upstream inputs as well as our assumptions about 16


### conversion costs and markups, what we find is 17


### that I&P changes on the range of minus 9 percent 18



### to increase of 4 percent, with expected 19


### conversion cost of $7.2 million for the industry. 20



### MR. BROOKMAN: Yes, Louis. 21


### MR. STARR: I guess back on 79, the 22170

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### conversion cost for the different TSL levels are 1



### -- they look like they are the same, and I was 2


### trying to understand. Are they additive? 3


### MR. LAU: Sorry. First of all, those 4


### should be millions of dollars, but on the far 5


### right column, those are the cumulative 6


### conversions costs as we move up. 7



### MR. STARR: For each standard level? 8


### MR. LAU: These are by TSL, not 9



### necessar ily about EL. I am trying to remember 10


### off the top of my head what the mapping is. 11



### MS. MAUER: This is Joanna. 12


### Louis, are you asking about the 2.4? I 13


### think Louis' question is why the capital 14



### conversion costs are the same at TSL1 and TSL2. 15


### MR. LAU: Rig ht. 16


### So if I remember correctly, TSL

-- I'm 17


### sorry. Baseline was ASHRAE. So I think the 18


### issue is that between the conversion costs, TSL1 19


### and TSL2, are similar, because most of the design 20


### options are component changes as opposed to 21


### design options that requ ire new tooling, and I 22171

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### could flip way back to the engineering slide that 1


### showed the design options. But I think that's 2


### where we could verify that. 3



### MR. BROOKMAN: Do we have another

-- no. 4



### No confirmation. 5



### Dave. 6


### MR. WINNINGHAM: Chris, I didn't see 7



### any thing here as to the cumulative regulatory 8



### burden. I know it's in the NOPR. 9


### MR. LAU: Right. 10



### MR. WINNINGHAM: But I don't see it here. 11


### MR. LAU: That's true. We had a very 12


### limited amount of time today, but in the NOPR, we 13



### list out all of the other HVA C

- related 14


### rulemakings that affect manufacturers, who also 15


### produce SPVUs. 16


### MR. WINNINGHAM: I think it's important 17


### to note that it's a long list of cumulative 18


### regulatory issues that we have in front of us, 19


### and the ability

-- the industry within this 20



### section is already driving towards changes to 21


### meet ASHRAE 90.1 in a change that will add 22172

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### additional burden to that. 1


### The testing that will be required to meet 2



### levels above ASHRAE in addition to commercial 3


### furnaces, the commercial air conditioning rule, 4



### standards for central air conditioners and 5


### furnaces, there is likely not to be sufficient 6


### engineers or test facilities to accomplish those 7


### things. 8



### MR. BROOKMAN: Thanks, Dave. 9


### MR. LAU: One thing, I am certainly 10



### sensitive to this issue. DOE lists all those 11



### rules, and it's dealt with in a relatively 12


### qualitative manner, but what you just said 13


### actually really helps because it identifies the 14


### key constraint across rules, engineering and lab 15



### space. 16


### To the extent that we can help us 17


### quantify the amount of total engineer ing 18



### resources needed versus what's available and the 19


### costs of the additional lab space required, if 20


### you are to meet all those cumulative simultaneous 21


### rules, it would allow us to do something more 22173

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### quantitative. 1


### MR. WINNINGHAM: We appreciate that, and 2



### we w ill provide that in our feedback. 3


### And just a general comment, I think there 4


### are conversion costs here. The levels are likely 5


### underestimated by quite a bit. 6


### MR. LAU: Okay. 7


### MR. BROOKMAN: Okay. Put that also in 8



### your comments. 9



### Frank? 10



### Wes? Go ahead, W es. 11



### MR. ROAN: This is Wes Roan, Bard 12


### Manufacturing. 13


### I echo that as well. The reality that we 14


### will be building 9, 10, and then working on 11 15


### EER, from a manufacturer standpoint, from an 16


### engineering standpoint, it is an overwhelming 17


### task, especially for small businesses. 18


### MR. BROOKMAN: Okay. Thank you. 19



### Frank? 20


### MR. XU: Yeah. I am going to say here it 21


### may be outside the scope. I understand the 22174

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### definition of small business, but for us, for 1


### example, we may not be categorized as small 2



### business. But we w ould run as a separate entity. 3


### So compared to the traditional definition of 4


### small business, we are probably a microbusiness. 5



### Resources available to do this is 6


### extremely, extremely limited, and considering 7


### that we make other type of products and also 8



### unde r this kind of regulatory demand, it is 9


### extremely, extremely challenging. I think it's 10



### understatement. 11


### MR. BROOKMAN: Okay. Thank you. 12


### Ed, you have a question. Please speak. 13


### MR. WUESTHOFF [via telephone]: Yeah. 14



### This is Ed Wuesthoff at Friedrich. 15



### I also wanted to add that for us, it 16


### would also be quite a cumulative burden, as we 17



### also look at new room air conditioner 18



### energy
- efficiency standards that are coming out 19


### in effect this October along with building SPVUs 20


### that are going to be a 9, 10, and gett ing to that 21


### 10 level in our full product line. 22175

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### Just one final note, my understanding of 1



### a residential central air conditioner is one that 2


### typically has an evaporator ducted unit inside 3


### and the condensing unit sitting outside 4


### someplace, and that's much dif ferent than a 5


### single packaged air conditioner that we build 6


### today. 7


### MR. BROOKMAN: Okay. Thank you. 8


### MR. WUESTHOFF [via telephone]: You're 9



### welcome. 10


### MR. BROOKMAN: Moving on to emissions. 11



### Yes, Steve. 12



### MR. ROSENSTOCK: Steve Rosenstock, EEI. 13



### It is alw ays dangerous for the engineer 14



### with a calculator. 15


### I am looking at the E E 10 compliance date 16


### expected conversion expenses. For the values 17


### shown, again, they are different years, so it's 18


### not exactly apples to apples because it's 19


### different years, 2007, 2009. 20


### For the values shown, I just use a 21


### calculator, $701 million for the rules shown, and 22176

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### then there's others that are shown to be 1


### determined because the compliance dates will be 2


### in the future, 2018 through 2022, but $701 3


### million, anywhere from 2007 through 2 013 dollars, 4


### so not adjusted for inflation. 5


### MR. BROOKMAN: Okay. Yes. Please, Bill. 6


### MR. STEEL: Thank you, Doug. Bill Steel 7


### from Bard Manufacturing. 8


### Before we leave the manufacturer impact, 9


### it is important to point out that just because a 10



### manufacture r has a 10 EER product or an 11 EER 11


### product does not mean that we're done with that 12


### development. 13


### We have been gearing up towards the 14


### ASHRAE standard, and we had 10 EER product, but 15


### we have gone through thousands and thousands and 16



### thousands of hours of de velopment time to get to 17


### 10 EER, to prepare our customers for the 10 EER. 18


### And just because we have an 11 EER product 19


### doesn't mean that we are not going to have to do 20


### the same thing to get to 11 EER, and that puts a 21



### tremendous burden on a small business li ke us. 22177

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### MR. LAU: I guess when Wes from Bard had 1


### noted that conversion costs were underestimated, 2


### I saw a few heads nodding. 3


### We certainly want this to reflect the 4


### industry and be as accurate as possible. 5



### I know when we did our interviews a while 6



### back, of ten it's sort of the first time we walk 7


### you through what DOE is considering, and so to 8


### the extent that you can revise your input, we 9



### would take that into account in the final rule 10


### analysis. 11


### Specifically, I would encourage you to 12


### give us

-- or to submit re vised conversion cost 13


### numbers with justifications. 14


### You can do that through the written 15


### comment process. You can note what data should 16


### be redacted from public record. Those of you who 17


### have done interviews with me, you also have my 18



### contact information. 19



### M R. BROOKMAN: Yes, please. Frank. 20


### MR. XU: Frank Xu, National Coil Company. 21


### One piece of information I don't know can 22178

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### be revealed, in terms of when we did the teardown 1


### analysis, are those all like wall

- mount products, 2


### or are some of them actually floor

- m ount 3


### products? Is that information available. 4


### Because when you talk about higher EER

-- and the 5


### reason I asked for that is, technically, it may 6


### be easier to achieve higher EER on the 7



### floor

- mount as the wall

- mount, and that it is 8


### different, 4, 5 years dow n the road. Say telecom 9


### shelter, that size don't grow. So you have that 10


### limitation, right? More stringent than the 11


### other. So I'm just wondering what type of 12


### product the teardown, if that information is 13



### available. 14



### MR. McCLIVE: This is Stan McClive wit h 15


### Navigant. 16


### We saw 11 EER products that were 17



### wall

- mount, and we saw ones that were floor

- mount 18


### too, but there was really no distinction between 19


### which ones occupy which share of the market. 20


### There were plenty of wall

- mount, 11 EER products, 21



### and there were plenty of noes that were 22179

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### floor

- mount. It's just across the board. Same 1



### distribution are used in wall

- mount and 2



### floor

- mount applications for 11 EER, just as 9 3


### EER products are used in both applications also. 4


### MR. LAU: Thank you. 5


### MR. BROOKMAN: Thank you

. 6


### And just to be clear

-- and I think all 7


### of you know this that are familiar with this 8



### process
-- you can execute a nondisclosure 9


### agreement with Navigant, just to make sure that 10



### any information you provide is protected. 11



### Now to Alison. 12



### MS. [Alison] WILLI AMS: Thanks. 13


### So I am going to speed through this, so 14


### that we can get out at 12. 15



### So we did some additional downstream 16


### analyses. The first one is the emissions 17


### analyses. We basically take the time series of 18


### energy savings and used the National Energy 19



### Mo deling System to represent the emissions 20


### reductions that would result from those energy 21


### savings. 22180

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### So this is a summary of those impacts. 1



### MR. BROOKMAN: Steve Rosenstock. 2



### MR. ROSENSTOCK: Steve Rosenstock, EEI. 3


### I have asked this before, but, you know, 4



### th ere is the American Clean Air toxics rule that 5


### went into effect this year that affects mercury 6


### and other emissions, and then there is the EPA 7


### Clean Power Plan, which is going to be finalized 8


### this June and go into effect next year. 9


### Has mercury been account ed for in this 10


### analysis, and is there a sensitivity analysis 11



### done for the EPA Clean Power Plan to account for 12



### future reductions? 13


### MS. [Alison] WILLIAMS: So, as you know, 14



### DOE uses the most recent version of AEO to do 15


### their emissions analysis. 16



### This one is currently in AEO 2013, and we 17


### will be revising it to the most updated AEO for 18



### the final rule. 19


### MS. SHEPHERD: This is Amy Shepherd from 20



### AHRI. 21


### On that point, the 2014 AEO came out in 22181

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### May of last year, in April of last year, but it 1



### wasn't used in this NOPR. So why wasn't

-- I 2


### mean, I know that this is a long process, but 3


### given that multiple times throughout this NOPR, 4



### it notes how much there is a reduction in these 5


### values that are going to be calculated, they are 6


### going to end up with the national benefits. 7


### There is no ability for any stakeholder 8


### to review that analysis and comment on it before 9


### the final rule. So I think it's imperative, 10


### given how important this is to the analysis, that 11


### that most recent data that's the Department's own 12


### data is used, and the re is a supplemental NOPR at 13


### least for people to have a chance to review that 14



### and comment on it. 15


### MR. BROOKMAN: Okay. 16


### MS. [Alison] WILLIAMS: Okay. In the 17



### emissions monetization, DOE uses the most recent 18


### social cost of carbon values provided by an 19



### in t er
- agency process. The 2013 estimates of this 20



### are listed here, and DOE also monetizes NO x 21


### emissions, which you can also see the average 22182

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### values we use. These are the estimated results 1



### for CO 2 

### and NO x 

### , and we also do a utility impact 2



### an a lysis to estimate cha nges in electric 3



### install ed capacity and generation resulting from 4



### the standards. You can see these results in the 5



### TSD. 6


### We did an employment impact analysis . So 7



### the MIA estimates the direct impacts from 8


### employment. We use the ImSET model to estimate 9



### the indirect employment impacts, and we find that 10


### those are negligible over the small time frame 11



### that we use here. 12


### Finally, we do a regulatory impact 13


### analysis to investigate impacts of non

- regulatory 14


### alternatives to the mandatory standards, and 15


### again, there i s a chapter for that in the TSD

. 16


### So these are the proposed standards, and 17


### that is all I have. Thank you. 18


### MR. BROOKMAN: Thank you. 19


### And now we are going to move on to the 20


### proposed standards. 21


### Sam is going to

-- 22183

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### MS. [Alison] WILLIAMS: No. We're done. 1


### MR. BROOKMAN: No? Okay. 2


### There, you see a summary sheet, though, 3



### on Slide 89 and 90. 4


### As we had promised this morning first 5


### thing, any closing remarks at this point? Any 6



### final statements? 7



### Steve Rosenstock. 8


### MR. ROSENSTOCK: Not a closing remark. 9



### Stev e Rosenstock, EEI. 10


### On Slide 90, I noticed in the burden side 11



### that there is no mention of the fact that the 12


### significant number of customers are going to have 13


### higher life

- cycle costs. There is no mention of 14



### that whatsoever. 15


### Thank you. 16


### MR. BROOKMAN: Okay . thank you. 17



### As we move towards closure, final remarks 18


### there? Closing comments? 19


### Yes, please, Yoolanda. 20



### MS. [Yoolanda] WILLIAMS: Yoolanda 21


### Williams, GE Appliances. 22184

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### First of all, I want to thank DOE for the 1


### opportunity to participate in this process. We 2


### recognize the amount of effort and hard work that 3


### goes into the analysis and into the NOPR. 4



### There's been some discussion earlier in 5


### the meeting about certain SPVUs that were 6


### excluded from the analysis and the NOPR based on 7



### the fact that DOE considers t hem to be 8


### residential. Our position is that some of those 9


### products, again, we feel should be considered as 10


### commercial products. 11



### In the case of GE, we sell both SPVU 12


### products and PTAC products. Those products are 13


### sold to the same types of commercial cust omers 14


### that are using similar applications, such as the 15


### lodging industry. 16


### DOE, in their definition of PTACs, 17


### defined those as commercial products. Our 18


### position is that SPVUs are used in those same 19


### applications as PTACs and should also be 20



### considered as com mercial products. 21



### So we would ask the DOE to review those 22185

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### applications and to treat those SPVUs, those 1


### products are commercial SPVUs, and include those 2


### in the analysis and in the NOPR

-- or 3


### supplemental NOPR. 4


### MR. MAJETTE: Okay. That is duly noted, 5



### and thanks for bringing that up. 6


### MR. BROOKMAN: Thank you, Ron. 7


### Other comments here in closing? 8


### Dave, please. 9



### MR. WINNINGHAM: This is Dave with Allied 10



### Air. 11



### And I would echo much of what Yoolanda 12


### said. We also make products, not of the exact 13


### same config uration, but that compete in different 14


### market arenas that was categorized and presented 15


### as today, and I think there are significant 16


### impacts to the market by not categorizing those 17



### as commercial. 18


### Allied has been in that segment of the 19


### business for many yea rs, and we strongly believe 20


### that those should be categorized as commercial 21


### products. 22186

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### In addition, I think given the many 1


### factors of what we probably think are inaccurate 2


### shipments, repair versus replace scenarios, that 3


### it is going to be difficult for DOE to establish 4


### clear and convincing evidence to go beyond ASHRAE 5


### 90.1 and would strongly suggest that they review 6


### the levels that were proposed in 90.1 to ensure 7


### that they have established that clear and 8


### convincing, if they choose to go beyond that. 9



### MR. BRO OKMAN: Okay. 10



### Final comments? 11


### [No audible response.] 12



### MR. BROOKMAN: I will turn it to Ron 13


### Majette for closing remarks. 14


### MR. MAJETTE: Just in closing, I thank 15


### you very, very much for indulging for our late 16


### start this morning, and thank you for coming ou t. 17



### That's it. 18


### [Whereupon, at 12:03 p.m., the public 19


### meeting concluded.] 20

21

22187

1 

### CERTIFICATE OF NOTARY PUBLIC

2 

### I, Brian Knieser, Notary Public in and

3 

### for the District of Columbia, the officer before

4 

### whom the foregoing testimony was taken, do hereby

s 

### certify that the testimony which appears in the

6 

### foregoing transcript was taken by me and

7 

### thereafter reduced to typewriting under my

8 

### direction; that said testimony is a true record

g 

### of the testimony given; that I am neither counsel

10 

### for, related to, nor employed by any of the

11 

### parties to the action in which this testimony is

12 

### taken; and, further, that I am not a relative or

13 

### employee of any of the parties hereto, nor

14

15

16

17

18

19

20

21 

### financially or otherwise interested in the

outcome of the action.

BRIAN KNIESER

Notary Public in and for

The District of Columbia

Commission Expires: 03.14.2019

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