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1 U.S. Department of Energy

2

3

4

5 Public Meeting on

6 Energy Conservation Standards for

7 Single-Package Vertical Air Conditioners and

8 Single-Package Vertical Heat Pumps

9

10

11

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

13 Friday, February 6, 2015

14

15 U.S. Department of Energy

16 Room 8E-089

17 1000 Independence Avenue, S.W.

18 Washington, D.C. 20585

19

20

21

22
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1 Moderator:

2 DOUG BROOKMAN, Public Solutions

3

4 DOE Staff:

5 JOHN CYMBALSKY, Program Manager,

6 Appliance Standards

7 RONALD MAJETTE, Project Lead

8 ERIC STAS, Office of General Counsel

9 ASHLEY ARMSTRONG, Program Manager

10 

11

12 Attendees:

13 WES ROAN, Bard Manufacturing Company

14 DICK LORD, Carrier Corporation

15 NICK MISLAK, Air Conditioning, Heating,

16 and Refrigeration Institute

17 VINCE MUCCIOLA, National Comfort Products

18 YOOLANDA WILLIAMS, GE Appliances

19 LOUIS STARR, NEEA

20 MARSHALL HUNT, Pacific Gas and Electric Company

21 BILL STEEL, Bard Manufacturing Company

22 FRANK XU, National Coil Company
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1 Attendees: (continued)

2 AMY SHEPHERD, Air Conditioning, Heating,

3 and Refrigeration Institute

4 RANDY PALM, Allied Air

5 DAVE WINNINGHAM, Allied Air

6 STEVE ROSENSTOCK, Edison Electric Institute

7 JOANNA MAUER, Appliance Standards Awareness

8 Project

9 EDWARD WUESTHOFF, Friedrich Air Conditioning

10 SABBY SABHARWAL, Friedrich Air Conditioning

11

12 Consultants:

13 ED CUBERO, Lawrence Berkeley National

14 Laboratory

15 GREG ROSENQUIST, Lawrence Berkeley National

16 Laboratory

17 CHRIS LAU, Navigant

18 ALISON WILLIAMS, Lawrence Berkeley National

19 Laboratory

20 SAM McCLIVE, Navigant

21 ABINESH SELVACANABADY, Pacific Northwest

22 National Laboratory
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1 Consultants: (continued)

2 SCOTT MORRIS, Pacific Northwest National

3 Laboratory

4 COLLIN WEBER, Navigant

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7

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10

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13

14

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1 C O N T E N T S

2 PAGE

3 Overview 6

4 Market and Technology Assessment; 

5 Screening Analysis 42

6 Engineering Analysis 59

7 Energy Use Analysis; Markups Analysis 113

8 Life-Cycle Cost and Payback Period Analysis 129

9 Manufacturer Impact Analysis 161

10 NOPR Analyses 179

11 Proposed Standards 182

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

2 MR. BROOKMAN: Let's begin. Good 

3 morning, everyone. Apologies for our late start. 

4 Apologies to the Web as well, our Web 

5 participants. We had some difficulty getting all 

6 the people here this morning to start. 

7 Glad to see you here this morning. This 

8 is the Energy Conservation Standards Notice of 

9 Proposed Rulemaking for Single-Package Vertical 

10 Units. Today is February 6, 2015, here in the 

11 Department of Energy, the Forrestal Building. My 

12 name is Doug Brookman, Public Solutions, 

13 Baltimore. Nice to see you here this morning. 

14 Again, apologies for small delay in the start.

15 We are going to have welcoming remarks 

16 this morning from John Cymbalsky.

17 MR. CYMBALSKY: Thanks, Doug.

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

19 Manager for Appliance Standards here at DOE. I 

20 just want to welcome everybody to today's public 

21 meeting. I hope we have a really good dialogue 

22 on the material we are going to present today, 
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1 and then please follow up, as usual, with written 

2 comments during the comment period that's been 

3 established for this product, and I look forward 

4 to a good meeting today. Thank you.

5 MR. BROOKMAN: Thank you. We always 

6 start with introductions. I will start to my 

7 immediate left. You will get used to turning 

8 these microphones on and off. Your name and 

9 organizational affiliation, please.

10 MR. ROAN: I am Wes Roan, Bard 

11 Manufacturing Company.

12 MR. LORD: Dick Lord with Carrier 

13 Corporation.

14 MR. MISLAK: Nick Mislak, Air 

15 Conditioning, Heating, and Refrigeration 

16 Institute.

17 MR. MUCCIOLA: Vince Mucciola, National 

18 Comfort Products.

19 MS. [Yoolanda] WILLIAMS: Yoolanda 

20 Williams, GE Appliances.

21 MR. STARR: Louis Starr, NEEA.

22 MR. HUNT: Marshall Hunt, Pacific Gas and 
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1 Electric Company in the California IOUs.

2 MR. STEEL: Bill Steel, Bard 

3 Manufacturing Company.

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

5 MS. SHEPHERD: Amy Shepherd, Air 

6 Conditioning, Heating, and Refrigeration 

7 Institute.

8 MR. PALM: Randy Palm, Allied Air.

9 MR. WINNINGHAM: Dave Winningham, Allied 

10 Air.

11 MR. ROSENSTOCK: Steve Rosenstock, Edison 

12 Electric Institute.

13 MS. MAUER: Joanna Mauer, Appliance 

14 Standards Awareness Project.

15 MR. STAS: Eric Stas, DOE General 

16 Counsel's Office.

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

18 Department of Energy, Project Lead.

19 MR. BROOKMAN: Let's see if that 

20 microphone works over there.

21 MR. McCLIVE: Sam McClive, Navigant.

22 MR. SELVACANABADY: Abinesh Selvacanabady 
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1 with PNNL.

2 MR. BROOKMAN: Please stand and introduce 

3 yourself.

4 MR. MORRIS: Scott Morris, Pacific 

5 Northwest National Laboratory.

6 MR. BROOKMAN: I think standing will be 

7 sufficient.

8 MR. CUBERO: Ed Cubero, Lawrence Berkeley 

9 Laboratory.

10 MR. ROSENQUIST: Greg Rosenquist, 

11 Lawrence Berkeley National Laboratory.

12 MR. LAU: Chris Lau, Navigant.

13 MR. BROOKMAN: Again, welcome. Thanks to 

14 all of you for being here this morning. 

15 All of you received a packet of 

16 information as you came in today. The agenda is 

17 listed on page 3. Immediately following this 

18 agenda review, there is an opportunity for 

19 anybody that wishes to, to make brief summary 

20 comments, opening remarks, here at the outset.

21 Following on from there, we are going to 

22 dive into the content provided in this packet. 
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1 The purpose of the public meeting, 

2 opening statements, comment, submission, 

3 instructions, regulatory authority, rulemaking 

4 overview, and then moving on from there to some 

5 substantive content, market and technology 

6 assessment, screening analysis, then engineering 

7 analysis. We'll take a break midmorning at 

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

9 Following on from that, energy use 

10 analysis, markups analysis, life-cycle cost, and 

11 payback period analysis, and then shipments, 

12 national impact analysis, and then manufacturing 

13 impact analysis, NOPR analyses, plural, 

14 description of the proposed standards, and we 

15 intend to be entertaining closing remarks.

16 Anything that hasn't been covered 

17 sufficiently, around about noon today -- that's 

18 the plan for finishing the meeting, around about 

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

20 going to follow on after lunch here in this 

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

22 we could pinch that meeting if we need to.
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1 So that's the general plan. Questions or 

2 comments on the agenda?

3 [No audible response.]

4 MR. BROOKMAN: None. I would ask for 

5 your consideration, if you would, please speak 

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

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

8 There will be a complete transcript of this 

9 meeting made available to all. If you could be 

10 concise, share the air time, keep your focus 

11 here. Please turn your cell phones on silent 

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

13 sidebar conversations.

14 Webinar participants, we welcome you. 

15 The Department of Energy is trying hard to make 

16 sure that these meetings are totally accessible 

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

18 and raise your hand via the software to be 

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

20 hear you in the room.

21 I would encourage you, as John Cymbalsky 

22 just did, all participants, including those via 
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1 the Web, please make certain to submit your 

2 written comments after this meeting, and then I 

3 am going to turn it over to Ron Majette.

4 Ron, I haven't done the purpose of the 

5 public meeting.

6 MR. MAJETTE: Good morning, folks. My 

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

8 Energy.

9 Again, we are sorry for that brief delay, 

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

11 just call it what it is. It was cold out there.

12 We are going to go briefly over these 

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

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

15 Purpose of this public meeting is to 

16 present the procedural and analytical approaches

17 to evaluate potential energy savings, energy 

18 conservation standards for single-package 

19 vertical air conditioners and single-package 

20 vertical heat pumps, collectively referred to as 

21 SPVUs.

22 Again, we will continue to keep saying 
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1 this all throughout the day. We invite comment 

2 on this particular subject matter, written as 

3 well as being able to provide testimony for 

4 today.

5 We should actually just go over to Slide 

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

7 authority.

8 The Energy Policy and Conservation Act of 

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

10 Independence and Security Act of 2007, which is 

11 EISA 2007, prescribes energy conservation 

12 standards and definitions for single-package 

13 vertical air conditioners and single-package 

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

15 In this one-time SPVU review, EISA 2007 

16 amended EPCA to require that DOE review the most 

17 recent published ASHRAE Standard 90.1 with 

18 respect to SPVACs and SPVHPs under that 

19 particular cite.

20 The ASHRAE trigger, in which the 

21 Department is required to take action, EPCA also 

22 directs DOE to consider amending the existing 
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1 federal energy conservation standard for each 

2 type of equipment listed, including SPVUs, each 

3 time ASHRAE Standard 90.1 is amended with respect 

4 to such equipment.

5 And here, we're taking our 6-year 

6 lookback. Pursuant to the EISA 2007 and the 

7 American Energy Manufacturing Technical 

8 Corrections Act, amendments to EPCA under 42 USC 

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

10 already-established energy conservation standards 

11 for each class of ASHRAE equipment every 6 years, 

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

13 lookback. This rule simultaneously satisfies all 

14 three reviews and requirements.

15 Briefly, we will go into the rulemaking 

16 history itself. In 2007, EISA 2007 establishes 

17 standard for SPVUs identical to those in the 

18 then-current version of ASHRAE Standard 90.1, 

19 which is referencing 90.1-2004. EISA 2007 

20 directs DOE to conduct a one-time review of the 

21 SPVU standards.

22 In 2011, DOE commenced the statutorily 
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1 required review with a notice of data

2 availability published on May 5, 2011. 

3 Considering levels above those in ASHRAE, which 

4 were still equivalent to the federal standard, as 

5 contained in ASHRAE 90.1-2010.

6 Now, in 2013, prior to DOE issuing a 

7 NOPR, ASHRAE published Standard 90.1-2013, on 

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

9 consider and revise ASHRAE levels for SPVUs 

10 unless clear and convincing evidence justified 

11 high levels.

12 And here we are at 2014. DOE published 

13 an analysis of energy savings potential on April 

14 11, 2014, and DOE published a NOPR on December 

15 30, 2014.

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

17 read this out. These are the definitions as 

18 specified by EISA. It is the definitions for the 

19 single-package vertical air conditioner and 

20 single-package vertical heat pump, those two 

21 definitions as defined by EISA 2007.

22 Slide 12 references the energy 
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1 conservation standards for SPVUs. SPVUs are 

2 divided into six different equipment classes 

3 based on cooling capacity and whether they are 

4 SPVACs or SPVHPs.

5 Energy conservation standards are 

6 distinguished by EER for SPVACs and EER 

7 supplemented by corresponding heating mode 

8 coefficient of performance value for SPHVPs.

9 Do we have any questions regarding this?

10 MR. BROOKMAN: We do have a question.

11 Ron, maybe we should pause here because 

12 some individuals might wish to make an opening 

13 statement as well, although I think the 

14 regulatory overview is useful in this context.

15 But a question here first, please.

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

17 opening statement.

18 MR. BROOKMAN: Yes.

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

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

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

22 statements.
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1 MR. MAJETTE: This is a good point.

2 MR. BROOKMAN: So, Nick, yes.

3 MR. MISLAK: Good morning again. My name 

4 is Nick Mislak. I am the Engineering Manager of 

5 Regulatory Affairs at the Air Conditioning, 

6 Heating, and Refrigeration Institute. AHRI is a 

7 trade association representing 350 manufacturers 

8 of heating, cooling, water heating, and 

9 commercial refrigeration equipment. In the U.S. 

10 alone, AHRI has members employing approximately 

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

12 contractors, and technicians. AHRI represents 

13 over 90 percent of the market affected by this 

14 Notice of Proposed Rulemaking.

15 We appreciate the opportunity to comment 

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

17 Proposed Rulemaking on the energy conservation 

18 standards for single-package vertical air 

19 conditioners and SPVHPs, and we support DOE's 

20 determination to accept ASHRAE 90.1-2013 

21 efficiency levels for most product classes. 

22 However, we have several pressing 
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1 concerns that need to be addressed before this 

2 becomes a final rule.

3 AHRI strongly supports the adoption of 

4 ASHRAE 90.1-2013 efficiency levels for all 

5 cooling capacities of single-package vertical 

6 units.

7 DOE accepted ASHRAE levels for units 

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

9 higher efficiency levels for smaller capacity 

10 units. The levels proposed by 90.1 are 10 EER 

11 and 3.0 COP for units less than 65,000 Btu's an 

12 hour.

13 ASHRAE 90.1 is a public process where 

14 stakeholders are encouraged to present their 

15 views and concerns and develop comments in 

16 support or opposition to selected efficiency 

17 levels.

18 DOE is included in the ASHRAE 90.1 

19 process and is able to comment on the proposed 

20 efficiency levels before they are adopted into 

21 the standard. No comments were received from the 

22 DOE in opposition to proposed efficiency levels, 
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1 yet this NOPR raises minimum efficiency levels 

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

3 will eliminate most product lines from the 

4 market, as the cost to redesign, impact on 

5 shipments, and loss of utilities to customers 

6 will be extremely significant.

7 This is because increasing the physical 

8 size of a unit is not possible, as modifications 

9 to the building construction will be required. 

10 This eliminates equipment retrofit and replacing 

11 existing structures and reduces the potential for 

12 energy savings.

13 The increase in efficiencies will also 

14 translate directly into more expensive units, 

15 which may cause consumers to favor other products 

16 or repair existing units rather than replacing 

17 them. None of these factors were adequately 

18 considered in DOE's technical analysis.

19 AHRI is also very concerned about DOE's 

20 actions outside the statutory authority under 

21 EPCA in this rule. In 2007, Congress determined 

22 that the definition of SPVUs as commercial 
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1 equipment, and while DOE acknowledges this, it 

2 dismisses that definition as a technicality for 

3 certain space-constrained units.

4 DOE can point to nothing within the 

5 congressionally adopted definition in support of 

6 this exclusion. Furthermore, the criteria DOE 

7 used to make this determination is unclear.

8 As a result of this determination, DOE 

9 does not correctly analyze the SPVU market impact 

10 to consumers and impact to competition.

11 Finally, as a full participant in ASHRAE 

12 process, through which the space-constrained 

13 application was adopted, DOE should have acted in 

14 good faith by raising any concerns regarding 

15 these products in the 90.1 discussions. Instead, 

16 DOE failed to make other participants in the 

17 process aware of its interpretation, undermining 

18 consensus standard-setting process that is the 

19 better commercial equipment provisions of EPCA.

20 So, in conclusion, we look forward to 

21 working with Department and others in 

22 establishing workable and credible energy 
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1 conservation standards for SPVUs.

2 Thank you for the opportunity to present 

3 our views, and we will provide more detailed

4 comments in writing.

5 MR. CYMBALSKY: Okay. Thank you, Nick.

6 Do we have other comments here at the 

7 outset? We wanted to provide an opportunity for 

8 anybody to raise at this point?

9 MR. WINNINGHAM: This is Dave Winningham 

10 with Allied Air. Just kind of a minor technical 

11 question.

12 Normally, in these presentations, the 

13 request for comment are included in the issue 

14 boxes throughout the document. For most of the 

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

16 of the document.

17 So I guess I would request that we take a 

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

19 discuss those common issues.

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

21 matter of convenience and a matter of creating a 

22 record that is cogent and hangs together, that if 
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1 you have questions at any point during the 

2 presentation material, that you just ask those 

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

4 operating here. We want the comments to be 

5 contiguous to the presentation material.

6 So don't be constrained by the issue 

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

8 just insert it right there and then, okay?

9 MR. WINNINGHAM: Thank you, Doug.

10 MR. BROOKMAN: Okay, great.

11 MR. CYMBALSKY: Additional comments, 

12 questions, here at the outset? 

13 Amy, do you have a question or comment?

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

15 about the DOE's determination about the exclusion 

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

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

18 place to discuss it.

19 MR. CYMBALSKY: And which slide is that?

20 MS. SHEPHERD: Slide 11.

21 MR. CYMBALSKY: Slide 11. We are right 

22 here now, so let's do.
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1 MS. SHEPHERD: Okay.

2 So my question, I have a couple of issues 

3 on this particular topic, but right here, for 

4 example, it says that these SPVUs are primarily 

5 advertised for multifamily residential use, and 

6 so my question is, given the definition of 

7 residential buildings in EPCA, which excludes 

8 multifamily housing above -- three grades above, 

9 what does multifamily residential use mean, or 

10 where does that definition come from?

11 MS. ARMSTRONG: Everyone is staring at 

12 me, so I guess I will just talk.

13 MR. CYMBALSKY: Ashley Armstrong. Hello, 

14 Ashley.

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

16 statute for a second just to see where exactly 

17 you are quoting from. 

18 MS. SHEPHERD: Okay.

19 MS. ARMSTRONG: So give us a second to 

20 get back to that in terms of --

21 MS. SHEPHERD: Okay. Residential 

22 building is defined in the consumer section, and 
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1 it excludes buildings three grades and above.

2 And this is something that was raised in 

3 comments to the NODA in April as well. 

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

5 ahead and tell us your point of view on this, why 

6 we look at this.

7 MS. SHEPHERD: Okay.

8 MR. CYMBALSKY: Would you get that 

9 microphone closer to you?

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

11 loud.

12 MR. CYMBALSKY: No, you're doing well, 

13 but I'm --

14 MS. SHEPHERD: You're the first person 

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

16 MR. CYMBALSKY: No, no. I didn't say 

17 that.

18 MS. SHEPHERD: Put that in the record.

19 MR. CYMBALSKY: I did not say that, but 

20 these microphones are suspect, so please go 

21 ahead.

22 MS. SHEPHERD: Okay. So from our point 
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1 of view, this is pretty simple because, as DOE 

2 notes in this slide, Congress determined the 

3 definition of SPVUs in these products that have 

4 been excluded meet it.

5 So we have really been trying to figure 

6 out how DOE made that determination, and when we 

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

8 there are sometimes references to 

9 space-constrained product. Sometimes there's 

10 references to residential use. Sometimes there's 

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

12 just a person using it, for example, in a hotel. 

13 So we really have had a hard time determining 

14 exactly how this decision was made.

15 From our point of view, when you look at 

16 the consumers of these products, it is the people 

17 who purchased the product, and that is 

18 commercial. For multifamily housing and these 

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

20 are designing the specs, just like all other 

21 commercial equipment. And so we think that was 

22 the basis for the congressional determination to 
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1 make this part of the SPVU definition, but there 

2 are places in which DOE refers to things like 

3 multifamily residential. To us, that term 

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

5 statue, residential buildings are defined as 

6 buildings other than those that are more than 

7 three levels above grade -- multifamily housing. 

8 Excuse me.

9 So that just adds further un-clarity for 

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

11 definition is, and I think -- you know, we don't 

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

13 flesh that out when we can't clearly understand 

14 what the criteria was.

15 MR. BROOKMAN: Okay. So I think that 

16 description was helpful, and make certain in your 

17 written comments that you include that.

18 Ashley, are you --

19 MS. ARMSTRONG: I'm ready.

20 MR. BROOKMAN: Okay. Ashley Armstrong.

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

22 address this issue, but we will take it back and 
27

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

2 I think to explain a little bit behind 

3 what the Department did is, when 90.1 came out 

4 and we saw that there was a distinction being 

5 made with space-constrained products, what DOE

6 did was we went and looked at the marketing 

7 literature. We went and looked at those 

8 products. We went and reviewed the materials 

9 that manufacturers were putting on their websites 

10 to kind of see what this new space-constrained 

11 product was.

12 So after doing that, what we found was 

13 that some products that were previously 

14 classified as central air conditioners and being 

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

16 sudden being called "space-constrained SPVUs." 

17 So perhaps to turn the question around to 

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

19 central air conditioners, and why are they now 

20 space-constrained SPVUs? What's different?

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

22 noted, the market for this has been the same in 
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1 10 years. The space-constrained definition was 

2 part of the ASHRAE process, which started in 

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

4 of un-clarity as well as to why DOE -- and like 

5 some of the statements in the NOPR were that it 

6 was once -- ASHRAE 90.1-2013 was adopted in 

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

8 part of the process where this definition was 

9 developed, and there weren't any concerned raised 

10 at the time or none of these questions.

11 MS. ARMSTRONG: I don't think that 

12 answers my fundamental question of why were they 

13 once classified and certified to the Department 

14 as central air conditioners and now they are 

15 being called space-constrained SPVUs. I mean, 

16 that's really more of a question about -- for the 

17 manufacturers and the marketing materials, I 

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

19 MS. SHEPHERD: The marketing materials, 

20 do you mean are they being marketed to individual 

21 households or to the multifamily housing and the 

22 hotels?
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1 MS. ARMSTRONG: Both.

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

3 the basis for a manufacturer at this point to 

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

5 using as the marketing materials? 

6 MS. ARMSTRONG: No.

7 MS. SHEPHERD: Is that how they decide?

8 MS. ARMSTRONG: I don't think 

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

10 doing.

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

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

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

14 central air conditioner. Why are they now, all 

15 of a sudden, a space-constrained SPVU?

16 MS. SHEPHERD: When you say all of a 

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

18 after?

19 MS. ARMSTRONG: After.

20 MR. BROOKMAN: Amy, I thought you were 

21 suggesting that the ASHRAE designation turned the 

22 definition or something like that.
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1 MS. SHEPHERD: No. I mean, go ahead. 

2 MR. BROOKMAN: Dave, please go ahead.

3 MR. WINNINGHAM: This is Dave Winningham 

4 with Allied Air.

5 Ashley, I think the fundamental question 

6 was there was not a category. The creation of 

7 this SPVU is, historically speaking, a -- it was 

8 created originally in 2003, 2004, within the 

9 AHRI. That definition was adopted in 2007 and 

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

11 relatively recent category.

12 The creation of the category from our

13 opinion was created because it did not fit well 

14 within the confines of residential products, and 

15 that was the genesis of why this category was 

16 created.

17 In addition to multifamily housing, these 

18 are used in the lodging industry, in the medical 

19 industry, and office facilities, all --

20 commercial three-story buildings, all of which we 

21 regard as commercial applications. These are not 

22 sold to individuals. They are designed as part 
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1 of a building in a commercial application.

2 MR. BROOKMAN: Yoolanda, did you have a 

3 comment here?

4 MS. [Yoolanda] WILLIAMS: Similar and 

5 just a follow-up to that. Again, Yoolanda 

6 Williams.

7 The note references multifamily 

8 residential use, but again, these products are 

9 used in a wide array of applications, such as 

10 hotels, motels, assisted living facilities, so we 

11 consider those to also be commercial. These are 

12 some of the same applications that PTACs are used 

13 in, basically same distribution channels, market 

14 channels, et cetera. Those products are 

15 considered commercial products based on where 

16 those products are being used. These SPVUs are 

17 also used as the same applications, which we, 

18 again, consider commercial. So we think that 

19 they should be classified as commercial products 

20 as well.

21 MS. SHEPHERD: And I think that the 

22 point, too, is that the statute provides the 
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1 clarity and the definition of what an SPVU is, 

2 and if these products meet that statutory 

3 definition, then that's how they should be 

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

5 can say, based on some other criteria, that these 

6 are in fact consumer products and pull them out 

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

8 they meet the definition, but they're advertised 

9 -- DOE concludes that they're advertised 

10 otherwise. There has to be some clarity as to 

11 what that is.

12 We don't think they have that authority, 

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

14 clarity that manufacturers could look at to 

15 decide this is what they mean by that.

16 In terms of the application and the 

17 advertisements, if they are being advertised to 

18 multifamily, if multifamily residential doesn't 

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

20 over into the consumer section.

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

22 So this seems like a fundamental issue. 
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1 Additional thoughts in this same stream of 

2 content? 

3 Dave, do you have anything additional? 

4 Nothing additional?

5 Any other manufacturers that wish to 

6 weigh in on the definition issue?

7 [No audible response.]

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

9 with the content, Ron.

10 MR. MAJETTE: Well, we were finishing up 

11 Slide 12.

12 [Pause.]

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

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

15 selecting Standard Levels.

16 For each type of equipment, EPCA directs 

17 that if ASHRAE 90.1 is amended, DOE must review 

18 and adopt amended standards at the new efficiency 

19 level in ASHRAE Standard 90.1, unless clear and 

20 convincing evidence supports a determination that 

21 adoption of a more stringent efficiency level 

22 would produce significant additional savings, 
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1 energy savings, be technologically feasible, and 

2 be economically justified.

3 DOE must either adopt the amended ASHRAE 

4 levels within 18 months after publication of 

5 90.1, or promulgate more stringent standards not 

6 later than 30 months after publication of ASHRAE 

7 90.1.

8 All right. This is the criteria for 

9 selecting the standard levels in Slide 14, and 

10 these are the seven different criteria that we're 

11 basing that on.

12 Any questions on Slide 14?

13 MR. WINNINGHAM: This is Dave Winningham 

14 with Allied Air.

15 MR. MAJETTE: Yes.

16 MR. WINNINGHAM: I think the 

17 manufacturers -- or Allied, in particular, 

18 doesn't believe that DOE has established clear 

19 and convincing evidence. They are estimating .23 

20 quads of energy savings, which is a significant 

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

22 original intent of the schedule, they would be 
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1 able to see energy savings prior to this NOPR and 

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

3 We would also advocate the adoption of 

4 90.1-2013 per the process that DOE participated 

5 in.

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

7 you.

8 MR. BROOKMAN: Any more questions 

9 regarding that?

10 [No audible response.]

11 MR. BROOKMAN: I think we will probably 

12 have more dialogue about Slide 12 throughout the 

13 conversation today.

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

15 more questions about Slide 11 throughout the 

16 comments today, but are there any more questions 

17 or any further opening remarks anybody would like 

18 to add at this point in time?

19 [No audible response.]

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

21 I am going to turn it back over to you.

22 MR. BROOKMAN: Okay. thank you.
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1 Well, we are going to move on with the 

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

3 we are going to hear next from Sam McClive.

4 MR. McCLIVE: Thank you, Doug.

5 So the first stage of our analysis was 

6 the market and technology assessment, as well as 

7 the screening analysis.

8 To start off --

9 MR. BROOKMAN: Ashley Armstrong has --

10 MS. ARMSTRONG: Before we start.

11 MR. BROOKMAN: -- wishes to make a 

12 comment.

13 MS. ARMSTRONG: So I just want to clarify 

14 two things. 

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

16 account for the energy savings do adopting ASHRAE 

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

18 Second, there's been a couple comments 

19 made with respect to DOE's participation on the 

20 90.1 committee, and that DOE is on the 90.1 

21 committee, and that DOE should be raising issues 

22 during that process or voting against if DOE is 
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1 subsequently going to do something different.

2 DOE is a member of the 90.1 committee. 

3 We do work with our building code folks here in 

4 Appliance Standards.

5 However, outside of the regulatory space, 

6 DOE cannot state its regulatory opinion voting 

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

8 in our rulemaking activities. So that's why 

9 you're seeing DOE's rulemaking opinion or 

10 regulatory opinion come through during the 

11 rulemaking process.

12 MR. BROOKMAN: Amy.

13 MS. SHEPHERD: I just have a follow-up. 

14 So can you not comment at all -- I'm just really 

15 seeking clarification. Can you not comment at 

16 all during ASHRAE process then, or what are the 

17 limitations or parameters around that?

18 MS. ARMSTRONG: So I think given some of 

19 the questions and comments that we've gotten, 

20 especially as of late, we are still working with 

21 our counsel's office to actually talk about what 

22 we can and can't do.
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1 But generally speaking, in terms of 

2 Appliance Standards stuff, we participate in 

3 ASHRAE to provide technical feedback, to ask 

4 questions, but we can't actually express a 

5 regulatory opinion outside of the regulatory 

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

7 far as I'm going to say today.

8 MR. BROOKMAN: Okay. Additional comments 

9 on this subject?

10 Yes, please. Wes.

11 MR. ROAN: This is Wes Roan.

12 I guess one question, Ashley, is the 

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

14 we would see savings starting late 2015. 

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

16 adopted, then it's a state-adopted thing going 

17 forward for new construction or for residential, 

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

19 roll-out during the next few years. Some states 

20 will adopt. Some states are notoriously not 

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

22 participation.
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1 Did you take into consideration full 

2 participation in the calculation or partial?

3 MS. ARMSTRONG: I am going to let Alison 

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

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

6 would be savings earlier, that differential is 

7 accounted for.

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

9 a minimum standard higher than that, you may have 

10 partial adoption for those couple of years, but 

11 when that minimum standard comes in, it's a 

12 federal level. Everyone must comply. So that 

13 partial adoption wouldn't be propagated 

14 throughout many years because the difference in 

15 compliance dates, while not insignificant, to 

16 your point, is small.

17 MR. WINNINGHAM: This is Dave Winningham 

18 with Allied.

19 I recognize that they used 90.1-2013 as 

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

21 wrong here, but at the date of implementation in 

22 2019, that's where the energy savings was --
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1 differential was measured at that point.

2 And I guess my point is -- this is 

3 question -- if that were to be pulled into --

4 kind of per the roll-out of ASHRAE normally 

5 following -- 3 years following.

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

7 the delta between our compliance date and the 

8 ASHRAE compliance date, did we subtract out the 

9 partial energy savings that might be had for 

10 those handful of years, where there might be 

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

12 question.

13 MS. [Alison] WILLIAMS: This is Alison 

14 Williams, LBNL.

15 We don't explicitly account for that, 

16 like we didn't explicitly estimate what we 

17 thought the adoption rate of ASHRAE would be, but 

18 we do have base case efficiency distributions, 

19 and we do assume some default increase in 

20 efficiency in the base case. So we are taking 

21 into account some market-driven changes in 

22 efficiency outside of the federal regulations.
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1 MR. BROOKMAN: Yes, Dick.

2 MR. LORD: Dick Lord with Carrier.

3 This is kind of just a clarification 

4 question. Because these are federally preempted 

5 requirements, my understanding has always been 

6 the states could only adopt it for new 

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

8 new construction implementation?

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

10 that's why you're seeing -- we don't do a full 

11 shift in efficiencies. We just do a partial 

12 shift of the market.

13 If you look at the distribution of 

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

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

16 but it's not a full shift.

17 MR. LORD: Gotcha.

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

19 for it.

20 So, Dave, if you wanted to know that 

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

22 but the effect is ultimately accounted for.
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1 MR. BROOKMAN: Additional subjects on 

2 this subject before we move on?

3 [No audible response.]

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

5 Sam.

6 MR. McCLIVE: Thank you, Doug.

7 So the beginning of our analysis was the 

8 market and technology assessment. So, to briefly 

9 describe what that is, the goal of the market 

10 assessment was to develop a qualitative and 

11 quantitative characterization of the SPVU 

12 industry and the market structure based on data 

13 that DOE gathered from manufacturers, other 

14 interested parties, as well as literature review. 

15 And the technology assessment was performed to 

16 develop a preliminary list of technologies or, as 

17 they will be referred to throughout the remainder 

18 of the presentation, "design options," which 

19 could be potentially used to improve the energy 

20 efficiency of SPVUs.

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

22 the first --
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1 MR. BROOKMAN: Amy, will you say your 

2 name when you speak?

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

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

5 MS. SHEPHERD: Amy Shepherd, AHRI.

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

7 the manufacturers that all this information was 

8 gathered from, is that just the seven that are 

9 identified in the NOPR, or were there other 

10 manufacturers?

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

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

13 identified in the NOPR. I think there were 

14 others.

15 MR. BROOKMAN: Steve Rosenstock.

16 MR. ROSENSTOCK: I'm actually about the 

17 next slides.

18 MR. BROOKMAN: Amy, did you have a 

19 follow-on?

20 [No audible response.]

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

22 Well, then, Sam, proceed.
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1 MR. McCLIVE: Okay. Thank you.

2 So general overview of the market 

3 assessment. SPVACs and SPVHPs are used primarily 

4 for the cooling and heating of educational 

5 facilities, which include modular classrooms 

6 primarily, but as well as site-build 

7 installations, modular and portable buildings, 

8 such as portable office spaces, 

9 telecommunications and electronics enclosures. 

10 And as you can see, approximately 35 of shipments 

11 go to the education sector. About 30 percent go 

12 to the modular and portable buildings sector, and 

13 the remaining 35 percent, approximately, go to 

14 telecommunications and electronics enclosures 

15 sector.

16 MR. BROOKMAN: Steve.

17 MR. ROSENSTOCK: Steve Rosenstock, Edison 

18 Electric Institute.

19 I know this is kind of getting into the 

20 analysis section, but especially for the 

21 educational facilities, what kind of diversity 

22 factor was used for cooling hours for those 
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1 modular classrooms?

2 MR. McCLIVE: Could you specify what you 

3 mean by diversity factor?

4 MR. ROSENSTOCK: What kind of annual --

5 what kind of cooling hours of operation? For 

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

7 during summer school periods, for example, so 

8 they're typically shut off. So what percentage 

9 of the universe of modular classrooms -- what 

10 percentage did you assume were actually being 

11 used for the full summer versus just partial 

12 summer?

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

14 Alison. 

15 That will be in the energies analysis, so 

16 if we can wait till then. Thank you.

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

18 MR. McCLIVE: So, to continue on that 

19 first slide about general overview, SPVUs tend to 

20 have very similar cooling and heating capacities 

21 as other products that are used in residential 

22 applications, but they are subject typically to 
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1 different operational cycles and operating hours 

2 than are encountered in the residential field.

3 As noted earlier, there are products 

4 which meet the EISA 2007 definition of an SPVU 

5 but are advertised in residential applications, 

6 and these products, as noted earlier, are being 

7 classified as residential CACs and are not being 

8 covered under this proposed rule.

9 The market assessment revealed that it is 

10 composed of seven manufacturers, two of which 

11 have major market share. The other five have 

12 somewhat minor market share, and of these seven, 

13 there are two which are domestic, small 

14 businesses, and one of those small business 

15 manufacturers is one of the major manufacturers.

16 MS. SHEPHERD: This is Amy Shepherd with 

17 AHRI.

18 I have a follow-up question. So when you 

19 identified the seven manufacturers, I know that, 

20 for example, in the NOPR, they talk about 

21 excluding those ones that are based on the space 

22 constrained determination.
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1 So all the manufacturers there -- I guess 

2 I am asking how you determined that. Did you 

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

4 Then you carved out the ones you weren't going to 

5 consider through the marketing materials. Is 

6 that how it worked?

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

8 We looked at both the AHRI directory as 

9 well as manufacturers' websites, and we 

10 determined whether certain manufacturers that

11 were posting in AHRI exclusively manufactured the 

12 products that were treated as residential under 

13 this rulemaking, and if that was all they 

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

15 list of seven.

16 MS. SHEPHERD: Okay. Thanks. This is 

17 Amy Shepherd again.

18 And then how did you identify the 

19 manufacturers to look at their websites, other 

20 than the ones listed in the AHRI directory?

21 MR. McCLIVE: We looked at manufacturers 

22 of just commercial cooling equipment as a whole, 
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1 and we examined all of their websites to see if, 

2 potentially, they manufactured something which 

3 was not in the AHRI directory. We figured that 

4 was a thorough enough examination of the market, 

5 seeing as SPVUs are a somewhat small segment.

6 MR. BROOKMAN: Yoolanda.

7 MS. [Yoolanda] WILLIAMS: Yoolanda 

8 Williams.

9 In your first bullet where you're talking 

10 about SPVUs have similar cooling and heating 

11 capacities, products used in residential 

12 application, can you elaborate on what you're 

13 considering those residential applications?

14 MR. McCLIVE: Very simply put, we just 

15 look at the cooling capacities for home 

16 residential applications as well as anything 

17 which is used for the purpose of family, family 

18 use, something which is not installed in a 

19 commercial setting. And we consider that to be 

20 residential.

21 MS. [Yoolanda] WILLIAMS: Because on your 

22 earlier chart, you had three segments that you 
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1 referenced. There were other commercial 

2 applications for this product --

3 MR. McCLIVE: Correct. 

4 MS. [Yoolanda] WILLIAMS: -- that were 

5 not listed on those three.

6 MR. McCLIVE: Correct.

7 MS. [Yoolanda] WILLIAMS: Are there 

8 hotels, medical facilities, that are not listed, 

9 which are commercial applications? And the 

10 examples that you gave for residential 

11 applications did not include those particular 

12 segments.

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

14 I'd have to go back and double-check, but when we 

15 look at this, we're not considering products 

16 which are used in residential by the DOE 

17 definition. We're just looking at what is 

18 considered commercial based on how the product is 

19 used.

20 MS. [Yoolanda] WILLIAMS: How the product 

21 is used and where it is used?

22 Our opinion is where it's used and how 
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1 it's used helps determine whether or not it's 

2 commercial, so hotels and motels are commercial 

3 applications, and products that are used in those 

4 particular facilities are commercial products.

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

6 Navigant. Let me interrupt for a moment.

7 As noted earlier, DOE focused on what we 

8 consider to be commercial SPVU products, and we 

9 proposed the NODA definition of what we consider 

10 to be residential applications.

11 And in the notice, we define not only the 

12 marketing differentiation, but some product 

13 characteristics that we used to help 

14 differentiate between commercial and residential.

15 As a result of that, I think the majority 

16 of the products considered to be commercial were 

17 used in the segments that you saw earlier. So 

18 there was modular offices, schools, and -- I'm 

19 drawing a blank -- oh, and education. Thank you.

20 So that is really the genesis of why 

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

22 those products being applied, and our analysis 
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1 focused on those segments.

2 And recognizing that, I think there is 

3 some disagreement about what should be considered 

4 SPVU, and so products that were being used --

5 products that were being used in multifamily 

6 homes, living facilities, as such, generally did 

7 not fall within the definition that DOE was 

8 focusing on. And I think based on the comments 

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

10 internally about what the definition should be 

11 and whether analysis needs to be updated.

12 MR. BROOKMAN: Yes. Nick.

13 MR. MISLAK: Just a follow-up. This is 

14 Nick Mislak, AHRI. Just a follow-up comment.

15 On the LCC, I believe it breaks the 

16 market down into seven different segments and not 

17 three different segments. Can you clarify why 

18 that is?

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

20 What seven segments are you talking 

21 about?

22 MR. MISLAK: The market segments. I'm 
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1 pretty sure it divides it down. I know you have 

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

3 believe it breaks it down into other segments in 

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

5 but I believe I remember seeing more than three 

6 segments.

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

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

9 I know we talk about several different 

10 business types as well as different building 

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

12 MR. BROOKMAN: Okay. Additional comments 

13 here before we move on?

14 Yes. Wes.

15 MR. ROAN: This is Wes Roan with Bard 

16 Manufacturing.

17 Just one quick one. Is Department aware 

18 that there are other SPVU manufacturers that are 

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

20 are they -- I mean, would that information be 

21 helpful to the Department?

22 MR. BROOKMAN: I think that would be 
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1 helpful. Thank you. 

2 They're domestic?

3 MR. ROAN: Yes.

4 MR. BROOKMAN: Okay.

5 Let's proceed.

6 MR. McCLIVE: All right.

7 So the next step of the market assessment 

8 was to develop the equipment class distribution 

9 that would be used throughout the remainder of 

10 the analysis.

11 We developed a database of products 

12 available on the market by using data, as 

13 previously mentioned, from the AHRI directory of 

14 certified prior performance as well as product 

15 listings available on manufacturers' websites.

16 We compiled a table here depicting the 

17 number of models offered within each equipment 

18 class, as defined by cooling capacity, for both 

19 the SPVAC and SPVHP equipment types, and as you 

20 can see, a large majority of products fall into 

21 the less-than-65,000-Btu-per-hour family, both of 

22 them SPVAC and SPVHP, and about a small 2 percent 
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1 section of the market falls into the 

2 greater-than-65,000 sector for SPVACs.

3 We were not able to identify any products 

4 on the market greater than 135,000 Btu's per hour 

5 in either equipment type area, and we were also 

6 not able to identify any products above 65,000 

7 and less than 135,000 in the SPVHP equipment-type 

8 area.

9 Next, we developed an efficiency 

10 distribution. The most common efficiency 

11 occurring on the market is 9 EER, which is the 

12 current EPCA minimum efficiency level for 

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

14 hour. 19 percent of equipment models have an 

15 efficiency of 9 EER. We also identified the 

16 highest efficiency or max tech unit on the market 

17 to be a 12.3 EER.

18 The distribution of models across 

19 efficiency levels is somewhat skewed towards the 

20 lower end of the efficiency spectrum. Only about 

21 11 percent of models are greater than 11 EER in 

22 efficiency. 
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1 There are no models in the SPVAC 

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

3 hour, which are greater than 10 EER in 

4 efficiency, and as previously mentioned, there 

5 are no models at all in the SPVHP equipment class 

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

7 More detailed information on all of this 

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

9 MR. BROOKMAN: Yes. Wes.

10 MR. ROAN: Wes Roan, Bard Manufacturing.

11 Just one quick item. In those extra 

12 manufacturers that we'll give information on, 

13 there are SPVACs above -- where you said there 

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

15 category.

16 MR. BROOKMAN: Above 12.3 EER?

17 MR. ROAN: No, above the capacity.

18 MR. BROOKMAN: Okay. Okay.

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

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

21 unit that's not in AHRI.

22 MR. BROOKMAN: Okay. Thank you.
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1 MR. WINNINGHAM: This is Dave Winningham 

2 with Allied Air.

3 I think it's important to point out that 

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

5 the models are greater than 11 EER, those models 

6 above -- at or above 11 EER are from two 

7 manufacturers.

8 MR. BROOKMAN: Okay.

9 MR. McCLIVE: Next step of our analysis 

10 was the technology assessment. The purpose of 

11 the technology assessment is to provide a 

12 preliminary list of design options that could be 

13 used to improve the efficiency of SPVUs. This 

14 list gets examined in greater detail with 

15 inappropriate technologies being removed in 

16 subsequent analyses.

17 We identified design options based on 

18 literature review, manufacturer brochures, 

19 specification sheets from commercially available 

20 equipment, as well as comments and input from 

21 stakeholders. And all these design options are 

22 described in Chapter 3 of the TSD.
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1 This is a list of all of the technology 

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

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

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

5 The next step of our analysis --

6 MR. BROOKMAN: Nick has a question or a 

7 comment.

8 MR. MISLAK: Just kind of a general 

9 question.

10 Yeah. For all the things that reference 

11 the increasing coil area and the size of the 

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

13 it also will cause a unit size to increase as 

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

15 analysis done of what actually happens to the 

16 construction cost and things like that when the 

17 units get bigger.

18 Also, keep in mind that a larger unit 

19 will not be able to fit inside of an existing 

20 building. So you're eliminating, replacing a 

21 more efficient unit into a unit that is older 

22 that may need to be replaced. So now you're 
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1 favoring repairing versus replacing, and doing 

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

3 efficiency and energy savings as you go along. I 

4 don't see that taking into consideration, the 

5 analysis.

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

7 discussed in detail later in the LCC analysis 

8 when we talk about installation and repair costs 

9 and stuff.

10 MS. SHEPHERD: This is Amy Shepherd from 

11 AHRI.

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

13 going to talk about the point that Nick just made 

14 about the designs? Because it seems to me like 

15 from the shipment analysis that there's an 

16 assumption that even if additional coils are 

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

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

19 MR. LAU: This is Chris Lau from 

20 Navigant.

21 Right here, Sam presents all the design 

22 options that were considered. In the next slide, 
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1 he'll show the ones that are actually -- these 

2 were considered, but some of these were screened 

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

4 are actually used in engineering analysis, if you 

5 want to just advance one slide.

6 MR. McCLIVE: Sure.

7 MR. LAU: Thanks.

8 But to AHRI's comment earlier, DOE 

9 actually screened out design options that require 

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

11 engineering analysis, I think what they found is 

12 that in some cases -- sorry, not some -- not to 

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

14 -- they did not take into consideration, 

15 technologies that would require a change in size 

16 of the unit, recognizing the fact that there 

17 would be installation impacts.

18 Did I characterize that correctly, Sam?

19 MR. McCLIVE: No. We did take into 

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

21 anticipate there would be a change in size of the 

22 cabinet as well as when you go from 11 to 11.75 
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1 and then also up to 12.3. Each one of those also 

2 has additional increases in cabinet size.

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

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

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

6 that is a design option that was a possibility 

7 for getting the higher efficiency level. 

8 MS. SHEPHERD: This is Amy Shepherd.

9 Can you explain why there was no change 

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

11 coils?

12 MR. McCLIVE: Between 10 and 11? Based 

13 on the units that we examined, we determined that 

14 between 10 and 11, you can achieve that by adding 

15 tube rows to the heat exchanger, which generally 

16 does not necessitate an increase in size of the 

17 cabinet.

18 There are basically two ways to increase 

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

20 rows, like vertical rows of tubes to the heat 

21 exchanger, or you can actually increase the face 

22 area of the heat exchanger.
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1 It's the latter, increasing the face 

2 area, which we found tends to necessitate an 

3 increase in cabinet size.

4 MS. SHEPHERD: Okay. This is Amy 

5 Shepherd again.

6 So because there was one technology that 

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

8 that everyone would choose that technology --

9 MR. McCLIVE: Right.

10 MS. SHEPHERD: -- and therefore, there's 

11 no increase in size?

12 MR. McCLIVE: Right. Manufacturers, they 

13 tend to go for -- when they are looking to 

14 increase efficiency, they will first use 

15 technology options that necessitate the lowest 

16 cost, and we looked and saw -- you know, to go 

17 from 10 to 10.5 and 11, manufacturers were 

18 choosing this technology option, which did not 

19 necessitate an increase in cabinet size. But 

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

21 increase in heat exchanger face area, which does 

22 necessitate an increase in cabinet size. And 
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1 then also, to get to 12.3, it's the same 

2 scenario.

3 MR. WEBER: Just to clarify -- this is 

4 Collin Weber with Navigant.

5 DOE, as a matter of procedure, looks at 

6 individual design options and looks at the way 

7 that they are implemented, but we wanted to make 

8 clear here, this analysis wasn't theoretical in 

9 nature. We weren't saying what could a 

10 manufacturer do absent what's actually happening 

11 in the real world.

12 This analysis in actuality was based on 

13 what manufacturers are already doing and on the 

14 universe of equipment that's already being sold 

15 today.

16 So for someone who is talking about DOE 

17 pushing manufacturers to do something that they 

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

19 already out there being built, and so that -- DOE 

20 looked at only the existing product universe.

21 Yes, we quantified what people are 

22 actually doing to do those, to make those design 
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1 and efficiency jumps, but DOE isn't saying, 

2 speculatively, someone should do this to meet our 

3 standard.

4 MR. BROOKMAN: Nick.

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

6 So adding -- how did you come up with 

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

8 every manufacturer and figure out -- I don't 

9 understand where that even came from, and how did 

10 you quantify that? Did you model every coil 

11 after you were done to determine the efficiency 

12 level?

13 MR. WEBER: Well, no, the manufacturers 

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

15 and we purchase it and tear it down.

16 MR. MISLAK: So every manufacturer, the 

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

18 I mean, I just don't -- the two rows, it's a very 

19 arbitrary number in my mind.

20 MR. WEBER: That's part of the 

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

22 can have full discussion. It will probably be 
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1 more appropriate there, but, I mean, our analysis 

2 reflects what we saw in the field through DOE's 

3 methodology that it uses for a lot of 

4 rulemakings, which is purchasing equipment, 

5 conducting teardowns, and also looking at 

6 manufacturer literature and specification.

7 So DOE felt that on the net, based on 

8 what manufacturers were doing in their design 

9 choices, that was the path that they were taking. 

10 You can feel free, speaking collectively for the 

11 industry, to provide written comment, verbal 

12 comment, detailed specifications that could form 

13 the basis for what you'd consider a more accurate 

14 model.

15 MR. MISLAK: Sure, sir.

16 And just to follow up as well, also, you 

17 know, also, when you increase the depth of the 

18 coil, that also has a negative impact on the fan 

19 power as well. So I'm not necessarily sure that 

20 should be a viable design option.

21 MR. WEBER: So, I mean, again, that would 

22 be rolled into the lumped EER ratings that are 
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1 being provided by manufacturers in these models 

2 that they already have on the market that we're 

3 purchasing, testing, tearing down. So that would 

4 all be considered in that lump-sum package.

5 MR. MISLAK: Okay.

6 MR. BROOKMAN: Okay.

7 Yes, Sam.

8 MR. McCLIVE: So, following the 

9 technology assessment, we went into the screening 

10 analysis to determine which design options should 

11 continue to be considered in the downstream 

12 analyses.

13 We screened out design options if they 

14 were not technologically feasible, were not 

15 practicable to manufacturer install or service, 

16 had adverse impacts on equipment utility or 

17 availability to customers, or had adverse impacts 

18 on health or safety.

19 In this analysis, we also removed from 

20 consideration, technologies that do not affect 

21 the calculated energy consumption, as measured by 

22 the test procedure with the EER metric.
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1 Additionally, technologies that we found 

2 were already common place in baseline SPVU 

3 designs were also not considered further, and we 

4 discuss all of this in detail in Chapter 4 of the 

5 NOPR TSD.

6 MS. SHEPHERD: This is Amy Shepherd from 

7 AHRI.

8 I have a question on bullet number 4. I 

9 don't know if we're going to get into this detail 

10 later, but one of the technologies that wasn't 

11 included was the change in motors, and I had a 

12 specific question about that.

13 In the NOPR, it covers that analysis, and 

14 it talks about excluding -- or it talks about the 

15 units that were gas heat, and it says 18 out of 

16 21 were gas heat. In the technical support 

17 document, it says 18 out of 27, and I was just 

18 wondering which of those was correct.

19 And I'm happy to take that as a follow-up 

20 if somebody could --

21 MR. McCLIVE: Yeah. We do list improved 

22 fan motor efficiency on this slide. So could you 
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1 clarify what you mean?

2 MS. SHEPHERD: Okay. So, in the NOPR, 

3 there is an assumption that baseline, everybody 

4 is going to be using the higher efficiency 

5 motors, and the reason that assumption was made 

6 is because even in the teardowns, although it was 

7 slightly more than half that used the more 

8 efficient motors, but there were still people 

9 using less efficient motors -- because you 

10 determined that -- in the NOPR, you said 18 out 

11 of 21 of those were gas heat units. That is a 

12 small percentage of the market, so we're just 

13 going to assume that, basically, everybody is 

14 using the more efficient motors at 10.

15 So the question is, why did you assume 

16 that 100 percent, when it wasn't 100 percent? 

17 And then when you look at the technical support 

18 document, it was actually not 18 out of 21. It 

19 is 18 out of 27.

20 MR. McCLIVE: Could you put that in a 

21 written comment?

22 MS. SHEPHERD: Sure. I'll follow up with 
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1 you later.

2 MR. McCLIVE: We'll look more into that.

3 MS. SHEPHERD: Okay. Thanks.

4 MR. McCLIVE: Sounds good. Thank you.

5 So let's continue on. The technologies 

6 that we removed, because they do not affect the 

7 energy consumption per the DOE test procedure 

8 under the EER metric were thermostatic expansion 

9 valves, electronic expansion valves, thermostatic 

10 cyclic controls, and also multispeed compressors.

11 And we also eliminated the following 

12 technologies that we found were commonplace in 

13 baseline designs. These are increased fin 

14 density, improved fin design, improved tube 

15 design, and also hydrophilic coating on fins. 

16 Lastly, we also removed microchannel heat 

17 exchangers from further consideration in the 

18 engineering analysis. Although we are aware that 

19 SPVU manufacturers have been experimenting with 

20 this technology, we were not aware of any 

21 research or data that documented the effect that 

22 this technology has on the energy efficiency of 
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1 SPVUs.

2 So the remaining technologies that were 

3 passed onto the engineering analysis were 

4 increased frontal coil area, increased depth of 

5 coil, so adding the two rows as was previously 

6 discussed, dual condenser heat exchangers, 

7 improved fan motor efficiency, as was also noted, 

8 improved fan blades, and improved compressor 

9 efficiency.

10 MR. BROOKMAN: Louis Starr.

11 MR. STARR: So I actually have a question 

12 on -- Louis Starr with NEEA. I have a question 

13 on the last one. You were talking about the 

14 microchannel heat exchangers.

15 MR. McCLIVE: Sure.

16 MR. STARR: So it's not used, but it 

17 could be used, right, or it's just that you 

18 didn't see any available in the market?

19 MR. McCLIVE: Correct.

20 MR. STARR: Okay.

21 MR. McCLIVE: Yeah. Our analysis was all 

22 based on what do we see in the market, what's 
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1 been proven in the market, and we went off 

2 strictly that.

3 If it's been shown to be possible, then 

4 it's something that we consider.

5 MR. STARR: So it's readily available on 

6 other type of equipment, but I take it, it can't 

7 be used in this one. Is that maybe just because 

8 it's not necessary, because you don't have to 

9 reach those levels of efficiency, or is there 

10 some kind of constraints to it?

11 MR. McCLIVE: We just didn't consider it 

12 because we didn't see it on the market. It's 

13 really hard to make any sort of conclusion, if 

14 its' not there.

15 MR. WEBER: This is Collin Weber with 

16 Navigant.

17 I'd just add a little more. Our

18 understanding is that a large portion of why we 

19 don't see it on the market is because there are 

20 some certain concerns from the manufacturing 

21 community with respect to reliability, 

22 serviceability, and that sort of thing. And that 
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1 would also fall under our screening factors as 

2 well.

3 Maybe the manufacturing community can 

4 provide a little more insight as to why it hasn't 

5 been adopted yet. I know in other applications, 

6 there have been concerns.

7 MR. BROOKMAN: Yes, please. Is it frank?

8 MR. XU: Yes. Frank Xu, National Coil 

9 Company.

10 Could you elaborate a little bit more 

11 about the last one, improved compressor 

12 efficiency under EER metric?

13 MR. McCLIVE: Sure.

14 MR. XU: Are you assuming that 

15 manufacturers right now are not using yet the 

16 most efficient compressor available already on 

17 the market?

18 MR. McCLIVE: Basically, the answer is 

19 somewhat. There are obviously going to be 

20 differences in the efficiency of compressors that 

21 are available, not in terms of necessarily major 

22 technological differences in the compressors, but 
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1 some compressors are more efficient at full load 

2 with a constant capacity across them than others, 

3 just because of tighter manufacturing tolerances.

4 So we considered these more efficient 

5 compressors in the engineering analysis because 

6 they have just greater efficiency from tighter 

7 manufacturing tolerances.

8 MR. BROOKMAN: Steve Rosenstock.

9 MR. ROSENSTOCK: Steve Rosenstock from 

10 Edison Electric Institute.

11 In terms of the fan motor efficiency, the 

12 DOE standards for small motors go into effect 

13 this March, the categories that DOE regulates in 

14 small motors, and then larger, the integral 

15 horsepower motors, those standards increase next 

16 year in 2016.

17 So for your improvements, were those over 

18 and above those levels, or were those basically 

19 to those levels that are going to be basically 

20 the baseline later this year or next year?

21 MR. McCLIVE: So the higher efficiency 

22 motors that we examine are motors which would be 
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1 considered in industry to be the ECM or 2.3 ECM 

2 motors.

3 I know that these correlate with the 

4 types of motors that are going to be put into 

5 effect -- well, not put into effect, but are like 

6 the highest efficiency motors that are used in 

7 HVAC equipment in general.

8 I'm not aware of what specifically the 

9 motor type is that you're referring to for this 

10 rule.

11 I'm familiar with the furnace fan 

12 rulemaking, with those motors, but those are not 

13 the types of motors that we're discussing here.

14 MR. ROSENSTOCK: Steve Rosenstock.

15 I was referring to the DOE motor --

16 there's a small motors rule that goes into effect 

17 in March, and then there's -- well, it's 

18 basically between a quarter horsepower and 3 

19 horsepower based on the DOE definition.

20 And then there is the larger horsepower 

21 motors, anywhere from 1 horsepower to 600 

22 horsepower. Again, it's certain -- Design A, 
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1 Design B. I mean, there's all the different 

2 categories that -- again, I'm not sure exactly 

3 which of those motors are used in these units, 

4 but there might be some coverage. That's what I 

5 was wondering about.

6 MR. WEBER: This is Collin Weber from 

7 Navigant. I can speak to that a little bit.

8 So, again, we're having a lot of 

9 discussion pertaining to the methodology of the 

10 engineering analysis, and we're having --

11 MR. BROOKMAN: Hey, Collin, keep that 

12 close to your face.

13 MR. WEBER: Oh, sure.

14 So maybe there is some missing context.

15 The engineering analysis, as mentioned, 

16 was done on sort of a packaged or lump-sum or 

17 black-box sort of basis, which is matching of 

18 AHRI-certified ratings of a whole unit, a 

19 performance level, EER, with cost modeling of 

20 those specific units at the efficiency levels 

21 considered.

22 So, needless to say, this analysis wasn't 
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1 based on, say, first principles modeling of 

2 individual components built up in a package. So 

3 things such as individual motor performance are 

4 not isolated and simulated.

5 Now, if you feel that SPVU manufacturers 

6 and if the manufacturing community agrees that 

7 they will be making substantive changes to the 

8 nature of the motors they are implementing in the 

9 future due to regulations coming on board or that 

10 sort of thing and can provide quantitative data 

11 about how, say, AHRI-certified ratings for these 

12 units might be adjusted upward in lieu of that, 

13 then we would be happy to see that quantitative 

14 data and suggestions for how we could role it 

15 into the final rule analysis.

16 MR. BROOKMAN: Joanna.

17 MS. MAUER: Joanna Mauer.

18 I think Collin may have personally 

19 answered my questions, but oftentimes when there 

20 are technologies that have been proven in the 

21 market but may not have been incorporated in the 

22 specific product or specific combinations in the 
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1 product, DOE will try to use modeling to look at 

2 the impact of that technology.

3 Did you consider for microchannel heat 

4 exchangers in particular, the possibility of 

5 trying to model the impact?

6 MR. McCLIVE: No. No, we did. 

7 And again, as Collin stated earlier, 

8 obviously there are some issues with microchannel 

9 heat exchanger technology that are known in other 

10 product types with regard to liability and 

11 serviceability within the industry. So taking 

12 that into account, we decided it would be best 

13 just not to model it.

14 You are right. Sometimes we will do that 

15 for stuff that isn't necessarily out there in the 

16 market, but only if it's something that really, 

17 really looks feasible, looks like it's worth --

18 MS. MAUER: This is Joanna again.

19 I'm not aware of those issues. Can you 

20 expand on what problems you're referring to?

21 MR. McCLIVE: I'd rather that you just 

22 put that in a written comment. We can discuss it 
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1 later if you want.

2 MS. MAUER: Okay.

3 MR. BROOKMAN: Nick.

4 MR. MISLAK: Nick Mislak, AHRI.

5 I just have kind of a process question, 

6 more or less. At a previous rulemaking, for 

7 instance, large equipment rulemaking, there was 

8 an effort there to model some of these heat 

9 exchangers and calculate -- or work that into 

10 like an efficiency level in order to justify an 

11 increase in efficiency. Why was that not done 

12 here?

13 I mean, it seems like here, they're just 

14 saying, "Yeah, you can do these things," but at 

15 least in the other one, they went through and 

16 attempted to do some modeling to justify an 

17 increase in coil area, per se. So why was that 

18 same process not done here?

19 MR. McCLIVE: Well, we just wanted to 

20 very strictly look at equipment that was on the 

21 market and base our analysis off of that.

22 As you know, SPVUs are a somewhat small 
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1 sector of the market. So to be as accurate as 

2 possible, we wanted to look very specifically at 

3 what the few manufacturers of the equipment were 

4 doing that could be specific to them.

5 MR. MISLAK: Sure. But, I mean, on the 

6 other rulemaking, they spent the time to model 

7 several different capacities.

8 Here, you're talking about, if it's a 

9 small segment, as you say, I would think the time 

10 to do the proper modeling would be less. So I 

11 don't see why it wasn't done.

12 MR. WEBER: This is Collin Weber from 

13 Navigant.

14 Are you suggesting that if we modeled the 

15 performance of the units, theoretically, we'd see 

16 performance levels different than those 

17 incorporated into the AHRI-certified directory?

18 MR. MISLAK: If you're attempting to say 

19 some of these design improvements would cause 

20 efficiency levels, I think you would for sure see 

21 differences in what you're saying they would do, 

22 because we see that anywhere. Any time you model 
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1 anything, the actual test results are going to be 

2 different than the model.

3 MR. WEBER: Sure. And so --

4 MR. MISLAK: In the other rulemaking, 

5 there was modeling and then verification testing 

6 done. That was not done here.

7 MR. WEBER: So are you suggesting we need 

8 to perform verification testing on what's in the 

9 AHRI directory?

10 MR. MISLAK: No, no. Not the AHRI 

11 directory.

12 I'm saying if you are saying these 

13 certain things will change the efficiency level 

14 of a unit or their potential -- I mean, they did 

15 the same thing in the other rulemaking, but they 

16 went through. They did the modeling, and they 

17 did the testing to verify it, because they are 

18 proposing efficiency levels or proposing design 

19 modifications to change the efficiency levels.

20 MR. CYMBALSKY: I think the clarification 

21 here is these are units we purchased and looked 

22 at. They are being built today, and they are 
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1 being certified.

2 MR. MISLAK: But you are only looking at 

3 a very small number of units that are out there 

4 that meet these efficiency levels as it is, and 

5 you're -- it's only a small segment of the 

6 market.

7 MR. CYMBALSKY: So does that mean the 

8 other ones can't do the same thing? Is that what 

9 you are saying?

10 MR. MISLAK: Every design is different, 

11 isn't it? I mean, you are looking at two 

12 manufacturers that make units that meet these 

13 efficiency levels and trying to say that these 

14 designs -- these changes in designs hold across 

15 the entire industry.

16 MR. CYMBALSKY: So it's AHRI's position 

17 that -- are these proprietary designs that these 

18 companies have?

19 MR. MISLAK: I mean, you guys did the 

20 same exact thing in the unitary large equipment 

21 rulemaking. I just don't know why it wasn't done 

22 here. I mean, you looked at the different 
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1 manufacturers and their designs, and then you 

2 went further to try to do these things, to model 

3 them, and then test them to verify it.

4 I mean, you did the same process there, 

5 but that wasn't done here.

6 MR. CYMBALSKY: We'll buy a bunch of 

7 units and test them. That's fine. We can do 

8 that.

9 MR. BROOKMAN: We got your point.

10 MR. MISLAK: Yeah. I mean, that's my 

11 point.

12 MR. BROOKMAN: We got it.

13 MR. CYMBALSKY: We'll test every one on 

14 the market if you want us to. That's fine.

15 MR. BROOKMAN: Let's move on.

16 MR. McCLIVE: So moving on, the next 

17 stage of the analysis was the engineering 

18 analysis. For the engineering analysis, we 

19 incorporated information from product teardowns, 

20 manufacturing cost modeling, manufacturer 

21 interviews, product literature, AHRI product 

22 certification data, and product testing to 
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1 perform our analysis.

2 For each equipment class, we selected 

3 efficiency levels for the analysis, which 

4 included both the EPCA and the ASHRAE 90.1-2013 

5 baseline efficiency levels, efficiency levels 

6 with the highest numbers of models available on 

7 the market, efficiency levels that are only 

8 achievable via substantial, technological 

9 changes, as well as the maximum technologically 

10 feasible or max tech efficiency level.

11 So for SPVAC equipment, these are the 

12 efficiency levels that we identified. As you can 

13 see, we have the EPCA baseline. We have the 

14 ASHRAE baseline, and then we have some 

15 intermediate efficiency levels, the 10.5, 11, and 

16 11.75 for less than 65,000 and then the max tech 

17 at 12.3, and as also, we noted earlier in the 

18 SPVAC greater than 65,000 and less than 135,000 

19 class, we don't have anything above 10 because 

20 the highest efficiency on the market that we 

21 found was 10 EER.

22 It's the exact same thing for SPVHP, 
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1 except you will notice that we have a coefficient 

2 of performance, or COP, values attached to each 

3 efficiency level, and on this next slide, I'm 

4 going to go over how we determine those COP 

5 ratings.

6 MR. BROOKMAN: Let's just pause for a 

7 second.

8 MR. McCLIVE: Sure.

9 MR. BROOKMAN: Questions, comments on 

10 these two tables?

11 Yes, Steve Rosenstock.

12 MR. ROSENSTOCK: Just a real quick 

13 question. Steve Rosenstock, EEI.

14 In a previous slide, you said for units 

15 between 135 and 240, there's no models offered. 

16 So, in a way, I know the actuary baseline is 10, 

17 but no one is making the product in the 

18 marketplace?

19 MR. McCLIVE: Correct. There are no 

20 products on the marketplace.

21 Eric Stas may be able to explain this a 

22 little better, but basically, because ASHRAE set 
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1 the level at 10, we still set the level at 10, 

2 but --

3 MR. ROSENSTOCK: Okay. Thank you.

4 MR. BROOKMAN: Louis.

5 MR. STARR: Is there potential that 

6 ASHRAE is expecting maybe some other equipment 

7 classes to move into this one, and that is why 

8 they are setting levels there? Maybe someone can 

9 speak to that.

10 MR. McCLIVE: I can't really speak to 

11 that.

12 If you could put that in a written 

13 comment, though, I'd appreciate it.

14 MR. CYMBALSKY: There are some ASHRAE 

15 members here.

16 Dick, maybe?

17 MR. LORD: Yeah. I mean, it's a class of 

18 equipment, so you can't put another class of 

19 equipment in this category. Most of the other 

20 equipment goes in the rooftop-type tables, which 

21 have higher efficiencies than these anyway, so --

22 MR. BROOKMAN: Okay. Thanks, Dick.
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1 Okay.

2 MR. McCLIVE: So we'll move on talking 

3 about the relationship between EER and COP.

4 So, based on manufacturing feedback, we 

5 gathered that most of the heat pump equipment are 

6 designed to achieve a certain EER goal, and then 

7 coefficient of performance is -- equipment is 

8 designed for coefficient of performance, 

9 achievement as a secondary concern.

10 So when we selected efficiency levels for 

11 the analysis of the heat pump models, we focused 

12 on selecting and analyzing the EER levels and 

13 choosing appropriate COP levels at each EER level 

14 based on equipment currently on the market, and 

15 we believe that the median COP value at each EER 

16 level is the most representative value of 

17 equipment, performance at that EER level, because 

18 the mean COP level would not be able to represent 

19 it appropriately if, say, there was a large 

20 outlier that skewed the COP above most of the 

21 equipment in that EER bin.

22 To show this pictorially, we took each of 
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1 the five -- well, so there are six efficiency 

2 levels, but we had the five here because there 

3 were very few units at the max tech at 12.3. 

4 Literally, only one product family, which had a 

5 3.9 COP rating, and we looked at the other five, 

6 and we said, "Okay. Here is the COP 

7 distribution. Where is the median COP at?" And 

8 that is going to be the COP value that we used 

9 going forward to associate with that specific EER 

10 level.

11 So going forward, just to get into more 

12 specifically what we did to determine product 

13 cost, we started off with a teardown analysis 

14 where we physically tore down units that we 

15 determined were representative products of 

16 equipment at each efficiency level, and we 

17 generated bills of materials, or BOMs, from this 

18 teardown analysis, and we entered them into a 

19 cost model.

20 The cost model-generated manufacturer 

21 production costs, or MPCs, for each unit torn

22 down, and these included material, labor, 
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1 depreciation, and overhead costs.

2 Manufacturer interviews were also 

3 conducted to further refine the analytical inputs 

4 and the results generated by the cost model after 

5 we developed our MPCs.

6 MS. SHEPHERD: This is Amy Shepherd with 

7 AHRI. 

8 Can I ask a question about how the 

9 physical teardowns correlate with the 

10 manufacturer interviews? So how many -- I know 

11 there are, I think, 14 physical and virtual 

12 teardowns. So how many of those were physical?

13 MR. McCLIVE: Off the top of my head, I 

14 think it was 11.

15 MS. SHEPHERD: Eleven were physical 

16 teardowns?

17 MR. McCLIVE: Yeah.

18 MS. SHEPHERD: And so then I think there 

19 were three manufacturer interviews?

20 MR. McCLIVE: No, no. We did more than 

21 that.

22 MS. SHEPHERD: You did more than that?
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1 MR. McCLIVE: Yeah.

2 MS. SHEPHERD: Because I think the NOPR 

3 says that there were three manufacturers 

4 interviewed.

5 MR. McCLIVE: Right. As you asked 

6 earlier, we did interview other manufacturers too 

7 who manufacture other types of cooling equipment, 

8 but I think what we have in the NOPR there, those 

9 are manufacturers who actually -- like 

10 manufacturer equipment, which is treated as an 

11 SPVU under this rule.

12 MS. SHEPHERD: Okay. But the physical 

13 teardowns were all of the equipment that are 

14 treated as under this rule, right?

15 MR. McCLIVE: Correct.

16 MS. SHEPHERD: So there were three 

17 interviews of manufacturers for these physical 

18 teardowns. So those manufacturers, the ones that 

19 you did the physical teardowns of, like did they 

20 correlate?

21 MR. McCLIVE: Correct, yep.

22 MS. SHEPHERD: So that you weren't doing 
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1 physical teardowns of other than the ones you 

2 interviewed, the three that you interviewed?

3 MR. McCLIVE: That's correct. That's 

4 correct. Yeah.

5 MS. SHEPHERD: Okay. Thanks.

6 MR. CYMBALSKY: I want to get back to the 

7 point Nick raised earlier about the modeling.

8 So every efficiency option that we 

9 evaluated is actually in an SPVU today, and 

10 therefore, we wouldn't build a model for 

11 something we know to exist, can test, and know 

12 what the rating is. So it's a little different 

13 from the analysis that you will see in other 

14 rulemakings.

15 Sure, we can go model and do things that 

16 people aren't doing today, if that's what AHRI 

17 wants us to do. We can do that and make more 

18 efficient packages that don't exist on the market 

19 today through modeling, but I've seen negative 

20 comments to that effect by AHRI in the past, so I 

21 just want to --

22 MR. MISLAK: What I would say, if I can 
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1 just make a comment on that -- I mean, what I'd 

2 say there is the modeling that was done, for 

3 instance, the unitary large, I mean, the things 

4 that you modeled there already existed in other 

5 units also. I mean, you weren't modeling 

6 fictitious units. You picked design 

7 modifications there and attempted to show the 

8 impact.

9 For instance, if we just looked 

10 specifically at this rulemaking here, we 

11 obviously know that one of the challenges or one 

12 of the things that have to be done is to increase 

13 the face area of the coils, and that was one of 

14 the things that was modeled across the unitary 

15 large equipment to see the impact on how big the 

16 coils need to be. 

17 And especially for this unit here, we 

18 obviously know that increasing the coil side is 

19 going to change the dimensional constraints of 

20 the unit, so that does have a large impact.

21 MR. CYMBALSKY: We have that unit, and we 

22 took it apart, and we measured it, and we did all 
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1 those things.

2 MR. WEBER: I was going to say one 

3 difference between the unitary large and what's 

4 going on here is there are a lot of product 

5 classes and capacities in that space, and so the 

6 modeling in that rule, which I'm familiar with, 

7 but I wasn't involved in that, was more for the 

8 purposes of -- let's just call it extrapolation, 

9 if you will, or application, you know, something 

10 that's done here, how can it be applied?

11 Here, due to the homogeneity in the 

12 space, I mean, able to use field proof of concept 

13 and AHRI-certified ratings was deemed sufficient. 

14 So that's sort of a major difference in the 

15 analysis and the cover product.

16 MR. BROOKMAN: Louis.

17 MR. STARR: This is Louis Starr with 

18 NEEA.

19 I'd be real up for modeling equipment. 

20 Things like microchannel that's not being 

21 considered because they don't exist in the 

22 market, better compressors, as was mentioned over 
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1 here. So we'd be all for doing lots of modeling, 

2 getting even higher efficiency levels than 

3 currently showing.

4 And if you model it in the double row 

5 coil and the efficiency doesn't come out, you can 

6 just go back to which actually exists and use 

7 that number instead of the model, so we'd be up 

8 for that if DOE has the money to spend.

9 [Laughter.]

10 MR. CYMBALSKY: So now that comment makes 

11 more sense to me coming from --

12 MR. BROOKMAN: Okay. Thanks, John.

13 Yes. Wes.

14 MR. ROAN: This is Wes from Bard 

15 Manufacturing.

16 One of the issues we have, though, as a 

17 group of manufacturers, there's a wide range of 

18 product that we're talking about here, and SPVU 

19 is not just one model. There's several different 

20 versions of them. Even in the ones that you're 

21 considering as part of this rule, there's several 

22 different versions. There are some that are on 
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1 the outside of structures, some on the inside of 

2 structures, and so they each have their 

3 particular design hurdle to go through.

4 The blanket statement of saying add a row 

5 coil, add two rows of coil just doesn't pass the 

6 test for all types of manufacturers, all types of 

7 units.

8 For instance, you may have to grow the 

9 cabinet to fit two more rows of coil in some 

10 particular models. You may have to jump cabinet 

11 sizes to a larger cabinet. You may have to 

12 redesign the entire backup electric heat for that 

13 particular model because of that extra two rows 

14 of coil. It's not as easy to add two rows of 

15 coil, and for the record, I snapped my fingers.

16 [Laughter.]

17 MR. BROOKMAN: Before too awfully long, 

18 we're going to take a break, just so you'll know, 

19 but we're going to continue with the presentation 

20 material.

21 Sam.

22 MR. McCLIVE: So I'll try and get through 
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1 this somewhat swiftly here.

2 So moving on from the analysis, we 

3 calculated the cost-efficiency curves, and 

4 essentially, these cost-efficiency curves depict 

5 the MPCs that we calculated at each efficiency 

6 level, and we went through four steps to develop 

7 these.

8 First, we developed an MPC representative 

9 of a standard baseline unit. We then identified 

10 design options which were used to achieve 

11 specific efficiency levels above the baseline, as 

12 we found them through our teardowns. We then 

13 calculated the incremental costs needed to 

14 achieve each of the successive efficiency levels 

15 above the baseline, using the data from our 

16 teardowns, as well as component cost data that we 

17 gathered from manufacturer interviews and other 

18 sources.

19 Then lastly, we generated our cost 

20 efficiency curve depicting the relationship 

21 between manufacturer production cost and 

22 efficiency level.
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1 And this diagram shows the different 

2 efficiency levels and the design options that we 

3 determined could be used to achieve these 

4 efficiency levels, as indicated through our 

5 teardown data.

6 So, as you can see, additional tube rows, 

7 we've discussed. That was used at the EL1 and 

8 EL2 levels. As also discussed previously, 

9 improved indoor fan motor efficiency, we found 

10 that to be used to go from the EPCA baseline to 

11 the ASHRAE baseline, and then also increased HX 

12 face area, which includes an increase in cabinet 

13 size. That was used to go from 9 to 10 and also 

14 to go from 11 to 11.75. Higher efficiency 

15 compressors, as was mentioned earlier; we used 

16 that to make the jump from 11 to 11.75.

17 And then at max tech, we have these three 

18 other design options, which were not found to be 

19 used previously.

20 So, I mean, basically, it's important to 

21 remember here that all of this is from what we 

22 found in our teardown. It is not necessarily 
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1 going to be representative of every single unit 

2 on the market, but it's just what we believe from 

3 our teardowns is representative on average of 

4 equipment that is found on the market.

5 MS. SHEPHERD: Can I ask a question about 

6 that? Given the --

7 MR. BROOKMAN: Amy.

8 MS. SHEPHERD: I'm sorry.

9 [Laughter.]

10 MR. BROOKMAN: That's okay. That's okay.

11 MS. SHEPHERD: This is Amy from AHRI.

12 Given the way this market is distributed 

13 in terms of a few number of manufacturers making 

14 large number of equipment, and we don't know who 

15 you interviewed.

16 But you interviewed three manufacturers. 

17 Can you really -- what's the basis for that 

18 determination? That if you interviewed the 

19 manufacturers and you confirmed it with those 

20 three and there is such a concentration of 

21 manufacturers in this market, how can you make 

22 that extrapolation to the rest of the 
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1 manufacturers? How do you know that that's 

2 representative of the rest of the rest of the 

3 manufacturers in the market, what they're capable 

4 of?

5 MR. McCLIVE: It's a good question. I 

6 mean, the basic answer is the manufacturers that 

7 we interviewed, specifically two of those three, 

8 they hold a very dominant market share in the 

9 market, so we felt that based on that, based on 

10 what they told us, their statements would be 

11 fairly representative.

12 But, yes, there are going to be some 

13 segments of the market that are not -- they 

14 aren't representative by what they say. There is 

15 only so much analysis that can really be done, 

16 but we'd be happy to look into revising it in 

17 some way to further represent those other 

18 manufacturers.

19 MS. SHEPHERD: This is Amy Shepherd.

20 I just would say, as to the competitive 

21 impact on this market, I don't really think the 

22 data that we have right now is sufficient to 
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1 conclude that there is not really going to be a 

2 significant competitive impact.

3 MR. BROOKMAN: Eric Stas.

4 MR. STAS: Eric Stas.

5 Sam, did you approach other manufacturers 

6 to interview, and did they decline? What 

7 happened?

8 MR. LAU: I can probably better answer 

9 that question.

10 I am actually going to go back. There is 

11 some discussion about how many manufacturers 

12 there are. In the notice, we say that there's 

13 seven manufacturers, and that's based on DOE's 

14 definition of the SPVU that we're using today.

15 There are other folks that make what DOE 

16 considers to be residential product, and those 

17 folks were not considered as part of this 

18 analysis.

19 Of those 7, we reached out -- I believe 

20 we reached out to every manufacturer and three 

21 accepted, and we went and spoke to everyone who 

22 would have us there, and so, as is the case with 
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1 all the rulemakings, we speak to as many, as much 

2 of the industry as we can, and, of course, we 

3 validate as much of our content as we can, but in 

4 some cases, we're constrained by the willingness 

5 of cooperation in the industry.

6 MR. BROOKMAN: Okay.

7 Louis.

8 MR. STARR: It sounds like maybe AHRI is 

9 willing to get some more people on board to 

10 provide some more information. Would that be an 

11 accurate statement, or do they think three is 

12 enough? What is your thoughts on that?

13 MR. BROOKMAN: Amy.

14 MS. SHEPHERD: I think we always 

15 encourage that, but it's up to them. You know, 

16 it's up to every individual manufacturer, their 

17 decision.

18 MR. BROOKMAN: Joanna.

19 MS. MAUER: Joanna Mauer.

20 So, as I understand it, DOE's engineering 

21 analysis has to be based on the lowest cost way 

22 of meeting a given efficiency level. So it's not 
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1 -- it doesn't have to take into account all the 

2 ways you could possibly get to an efficiency 

3 level.

4 Obviously, every individual manufacturer 

5 can make their own decision about how they meet 

6 an efficiency level, but the analysis has to be 

7 based on the lowest cost way of meeting each 

8 potential level.

9 MR. McCLIVE: Correct. Correct. Yeah.

10 MR. BROOKMAN: Okay. Are we ready to 

11 move on?

12 MR. McCLIVE: Yeah.

13 MR. BROOKMAN: Okay.

14 MR. McCLIVE: So this graph shows the 

15 MPCs that we calculated for SPVAC equipment. In 

16 green, we have equipment that's less than 65,000, 

17 and in yellow, we have the greater than 65,000.

18 Same thing for SPVHPs.

19 So after we calculated the MPCs --

20 MR. HUNT: Excuse me. Marshall Hunt, 

21 PG&E.

22 MR. McCLIVE: Sure.
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1 MR. HUNT: Don't you need something on 

2 the vertical that has a capacity factor in it? 

3 Different capacities will cost different amounts 

4 of money. So is this a table for all 24,000?

5 MR. McCLIVE: Oh, that's a great 

6 question.

7 So we selected a representative capacity 

8 for each of the two -- well, first, I should 

9 note, so, yellow, that's one capacity class, and 

10 the green is a different capacity class. For 

11 each of those capacity classes, we chose one 

12 single capacity that we believed would be 

13 representative of that capacity class.

14 MR. BROOKMAN: I see the legend is in the 

15 bottom right.

16 MR. HUNT: Yeah, I saw that, but then you 

17 went further than that and said within the class, 

18 zero to 65,000, these points represent some 

19 representative -- or from some representative 

20 piece of equipment.

21 MR. McCLIVE: Right.

22 MR. HUNT: What was that? 2, 3 --
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1 MR. McCLIVE: 3 tons.

2 MR. HUNT: 3 tons? Okay. Thank you.

3 MR. McCLIVE: Yeah. And it was 6 tons 

4 for the greater than 65,000.

5 So the last and final step of the 

6 engineering was to derive MSPs, manufacturer 

7 selling prices, from the MPCs. So, essentially, 

8 the MSP is the price at which the manufacturer 

9 can recover all of their production and 

10 nonproduction costs and still earn a profit.

11 Shipping costs are typically considered 

12 as a nonproduction cost and are included in the 

13 MSP, and the shipping costs are presented in 

14 greater detail in Chapter 5 of the NOPR TSD.

15 The MSP is calculated by multiplying the 

16 MPC by a manufacturer markup, and then on top of 

17 that, we add the shipping costs.

18 So this is a very detailed slide, 

19 obviously. I'm not going to go into all of it, 

20 but this shows the structure of how the MSP is 

21 derived. On the left, you have your full 

22 manufacturer production cost, your MPC, and on 
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1 the right, you have all of the stuff that's 

2 included in the markup to the MPC as well as your 

3 shipping costs.

4 Going forward, the manufacturer markup is 

5 normally derived by looking at Securities and 

6 Exchange Commission 10K reports from public 

7 companies, which provide an indicator of industry 

8 profitability. For SPVUs, though, a lot of the 

9 industry is privately held, so it's not really 

10 possible to have this financial information on 

11 hand to perform this sort of analysis.

12 So what we did instead was we looked at 

13 the package terminal, air conditioner, and heat 

14 pump, PTAC industry, because it's a comparable 

15 industry to the SPVU industry, and we took the 

16 markup that was used for the final rule for that 

17 back in 2008, and we used that as a starting 

18 point for developing the markup here.

19 After consultation with industry through 

20 interviews, we estimated that the average 

21 manufacturer markup for SPVUs would be 

22 approximately 1.28.
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1 MR. BROOKMAN: Yes, please. Bill.

2 MR. STEEL: Bill Steel of Bard 

3 Manufacturing.

4 When you were looking at the pricing, was 

5 there any price -- given any consideration of the 

6 price sensitivity of the different markets that 

7 you mentioned, or you're just assuming that each 

8 market can handle the markup that you're 

9 assuming?

10 MR. McCLIVE: I'm going to hand that to 

11 Chris Lau.

12 MR. LAU: This is Chris Lau from 

13 Navigant.

14 So the 1.2 is the average across all 

15 markets. What you'll see later on is when we do 

16 the LCC, we do consider differences in the 

17 distribution chain.

18 This is primarily used for estimating 

19 manufacturer profitability, but we recognize that 

20 resell through different markets results in 

21 different end user prices.

22 MR. STEEL: And some markets are much 
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1 more price sensitive than others.

2 MR. LAU: Right. Agreed.

3 For the MSP, we use a single average 

4 markup across the manufacturers -- sorry --

5 across all products for a given manufacturer.

6 MR. WINNINGHAM: This is Dave Winningham 

7 with Allied.

8 Just a general comment. I find it 

9 somewhat peculiar that you are referencing the 

10 PTAC industry, which they are making a statement 

11 -- or DOE has made a statement that the type of 

12 equipment that they were excluding from this is 

13 probably the most similar to the PTAC industry.

14 In looking at the LCC, there are in fact 

15 six different types of applications that include 

16 health care, general office and retail. Lodging 

17 is included in that, but in the LCC, it says it's 

18 not used. So there appears to be more than the 

19 three types of buildings in your analysis than is 

20 stated in the NOPR.

21 MR. McCLIVE: Again, I am going to pass 

22 that to Chris, unless -- Chris, do you have 
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1 anything to add?

2 MR. LAU: Yeah. This is the manufacturer 

3 markup, so this is the average markup across all 

4 SPVU products for a manufacturer of the 

5 equipment.

6 We do recognize that there are different 

7 distribution chains and different markups based 

8 on those distribution chains, which result in 

9 different end user prices across different -- for 

10 different end uses.

11 MR. WINNINGHAM: This is Dave with 

12 Allied.

13 My comment wasn't necessarily to the 

14 markups, but just the references to the PTAC and 

15 the similarities, and also kind of respond to the 

16 prior question, there is more than the three 

17 categories.

18 MR. BROOKMAN: Yep.

19 MR. WINNINGHAM: In the analysis.

20 MR. BROOKMAN: Okay.

21 MS. SHEPHERD: this is Amy Shepherd. 

22 When you say you recognize that, does 
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1 that mean it's reflected somewhere, or you're 

2 just recognizing it?

3 MR. LAU: No, it is. If you look at the 

4 LCC, they are just different distribution chains.

5 MS. SHEPHERD: And so there's a different 

6 markup for that?

7 MR. LAU: We'll get there, but in DOE's 

8 notice -- it's a little confusing. There is a 

9 manufacturer markup, and then there are 

10 distribution chain markups, and so those two are 

11 separate analyses. 

12 And for the manufacturer markup, it's 

13 assumed to be 1.28 in the base case, and what 

14 you'll see is the manufacturer impact analysis. 

15 We model a change in the manufacturer markup as 

16 manufacturers make investments to comply with the 

17 standard and as their manufacturer production 

18 costs go up. It's an assumption of how much 

19 increased cost they pass on.

20 MR. BROOKMAN: Which we will get to.

21 MR. LAU: Right.

22 MR. BROOKMAN: Yes. Okay.
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1 So now we're moving on.

2 MR. McCLIVE: Okay. So, as I showed you 

3 before, we created cost-efficiency curves. This 

4 time, this represents the MSPs versus the 

5 efficiency, so that's what we have for SPVACs, 

6 and then this is what we have for SPVHPs.

7 Question?

8 MR. BROOKMAN: Yes, please. Steve.

9 MR. ROSENSTOCK: Steve Rosenstock.

10 Yeah. For the heat pump chart that you 

11 have on Slide 45, you show the EERs, and I'm just 

12 curious. Are those representative of the -- for 

13 the COPs, are those across all COPs, for the COPs 

14 that you're putting out as the standard levels?

15 For example, that 12.3 EER, is that with 

16 a 3.9 COP, or the 11 EER, is that with a 3.3 COP 

17 or for all COPs?

18 MR. McCLIVE: Yeah. Yeah, it is.

19 MR. ROSENSTOCK: Okay. It is what?

20 MR. McCLIVE: It is the COP that we 

21 determine corresponds with each EER level.

22 MR. ROSENSTOCK: Okay. So it's 11, and 
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1 that's 3.3 COP, and that --

2 MR. CYMBALSKY: That was listed 

3 previously.

4 MR. ROSENSTOCK: Okay. Thank you.

5 MR. McCLIVE: They all correspond.

6 MR. ROSENSTOCK: It wasn't clear. thank 

7 you.

8 MR. BROOKMAN: Did you finish presenting 

9 45?

10 MR. McCLIVE: Yeah. That's the end of 

11 the engineering analysis.

12 MR. BROOKMAN: Okay. We have covered a 

13 lot of territory here. Additional comments 

14 before we go to break?

15 [No audible response.]

16 MR. BROOKMAN: Okay. Let's go to break. 

17 It's 20 minutes -- go ahead, Emily.

18 ATTENDEE: Ed had a question.

19 MR. BROOKMAN: Who?

20 ATTENDEE: Ed Wuesthoff.

21 MR. BROOKMAN: Ed, please unmute your 

22 phone. Do you have a question or a comment?
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1 MR. WUESTHOFF [via telephone]: Yeah. 

2 This is Ed Wuesthoff at Friedrich. I'm the 

3 Compliance and Regulations Manager, and for some 

4 reason, this link was muted for most of the 

5 webinar portion of it, so I want to just comment 

6 briefly.

7 MR. BROOKMAN: You couldn't hear, or you 

8 couldn't speak?

9 MR. WUESTHOFF [via telephone]: I 

10 couldn't speak.

11 MR. BROOKMAN: Okay. Please. We welcome 

12 you speaking. Go ahead.

13 MR. WUESTHOFF [via telephone]: Okay. 

14 Thanks.

15 Predominantly, Friedrich builds SPVUs for 

16 the commercial hotel/motel section, and we were 

17 also interviewed by Navigant, and we also produce 

18 window air conditions in the residential market. 

19 We primarily consider what we build on the SPVU 

20 as a commercial product going to the hotel/motel 

21 industry.

22 I wanted to comment on the engineering 
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1 analysis in reference to the higher efficiency 

2 compressors. In 2010, we changed from R22 to 

3 R410A, and we added extra coils in order to 

4 achieve the efficiency levels that are used in 

5 today's marketplace.

6 In the past, we had EERs on SPVUs very 

7 close to 11 EER, with rotary compressors that 

8 were efficiency at 11.2 EER. Today, there are no 

9 rotary 410A compressors that are above 10.4 EER. 

10 So we dropped almost a whole point in efficiency.

11 So by adding two coil rows, we were able 

12 to gain with 410A, but adding another two rows to 

13 the current product would mean having a larger 

14 box, which would also mean in a motel and hotel 

15 industry, changing the whole size.

16 One other comment I wanted to make is 

17 there are differences in SPVUs that relate to 

18 both side louvers and non-side louvers, and our 

19 product is primarily a non-side louver 

20 weatherized product.

21 MR. BROOKMAN: Okay. Well, I hope you 

22 will add those comments and add additional 
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1 comments in your written comments, Ed.

2 MR. WUESTHOFF [via telephone]: I sure 

3 will. Thank you.

4 MR. BROOKMAN: Thank you.

5 Do you wish to comment? Okay. Not at 

6 this time.

7 I think we've now finished the 

8 presentation content that goes -- takes us up to 

9 the next break in the content here, so let's take 

10 a break. It's now almost -- let's say it 20 till 

11 11, so that means we will resume here at 5 till 

12 11.

13 I think we are kind of on target with our 

14 timeline here to complete this material, maybe a 

15 little after noon, but we'll plug away as soon as 

16 we return.

17 Please make sure you wear your badge 

18 visible in the hallway. There are rest rooms on 

19 both ends of the hall. If you're going to the 

20 coffee shop, go quickly because we'll be resuming 

21 in 15 minutes, 5 till 11.

22 [Break taken from 10:40 to 10:53 a.m.]
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1 MR. BROOKMAN: Okay. We are going to 

2 pick up where we left off. 

3 All right. Let's start.

4 MR. SELVACANABADY: Good morning, 

5 everyone. My name is Abinesh Selvacanabady, and 

6 I'm from PNNL. I'll be walking you through the 

7 --

8 MR. BROOKMAN: Just speak up, okay?

9 MR. SELVACANABADY: Okay. Can you hear 

10 me now?

11 MR. BROOKMAN: Yeah.

12 MR. SELVACANABADY: All right. Good 

13 morning, everyone. My name is Abinesh 

14 Selvacanabady. I am from PNNL. I will be 

15 walking you through the energy use analysis 

16 today.

17 The objective of the energy use analysis 

18 is to calculate a state-level per-unit energy 

19 consumption value for all equipment classes at 

20 each efficiency level.

21 DOE looked at three basic market sectors, 

22 the education, the education classrooms, the 
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1 offices, and telecom centers. And all of these 

2 buildings are modular buildings. The flowchart 

3 on the slide here describes the methodology that 

4 was used to estimate energy consumption.

5 DOE took an energy plus simulation 

6 approach to calculate state-level values. It 

7 considered all possible combinations of building 

8 types, equipment classes, and efficiency levels, 

9 and for each of these combinations, it would 

10 create an input model, and these input models 

11 received their inputs from four different -- four 

12 separate areas. 

13 The input set one would be building 

14 characteristics. Input set two would be internal 

15 loads and schedules, and these are typically 

16 dependent on the building type that was 

17 considered for that particular instance of 

18 simulation. And three would be SPVU-related 

19 equipment details. These are specification and 

20 performance characteristics. Input four would be 

21 weather data, and that would depend on the 

22 weather station considered for the particular 
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1 simulation.

2 And at the end of all simulation runs, 

3 you will have a bunch of output results or energy 

4 consumption values, and these would get 

5 aggregated by weather station, and then they 

6 would later get hit by a location weighting 

7 factor to come up with a state-level estimate.

8 This slide here tabulates the results for 

9 the less-than-65,000 Btus per hour equipment 

10 class. We have the results for both AC and HP.

11 DOE looked at both EPCA and ASHRAE 

12 baselines. Level 4 is your max tech. For the 

13 larger equipment class, the ASHRAE baseline was 

14 the max tech, and the energy used for that 

15 particular level was slightly greater than -- or 

16 slightly less than twice that of the 3-ton unit 

17 or the small equipment class.

18 MR. BROOKMAN: Nick.

19 MR. SELVACANABADY: Yes.

20 MR. BROOKMAN: Oh, pardon me. Steve, go 

21 ahead.

22 MR. ROSENSTOCK: Hi. Steve Rosenstock, 
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1 Edison Electric Institute, and again, thank you 

2 for this.

3 I am kind of curious, and if it was in 

4 the technical support document, please forgive 

5 me. I'm kind of curious about -- especially for 

6 the educational and the modular buildings, what 

7 kind of diversity factors were you using? For 

8 example, in the education modular classrooms, 

9 what percentage did you assume were running all 

10 summer versus just partial summer?

11 And then for the modular buildings, what 

12 portion did you think had 15-year life versus a 

13 10-year life or 5-year life based on the changing 

14 occupancy patterns?

15 MR. SELVACANABADY: Gotcha. Thank you 

16 for your question.

17 For schools, we did not monitor diversity 

18 factor. The way we did it was using simulation. 

19 So all we did was we fed the weather file, and 

20 then the inputs would be dependent on the 

21 building characteristics. Like, for example, the 

22 schools, we assumed that -- or we did not assume, 
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1 but we took schedules and load profiles from 

2 DOE's commercial prototype, building prototype, 

3 and that stated that there was a lower occupancy 

4 or a lower load profile during summer for 3 

5 months of the summer months and then --

6 MR. ROSENSTOCK: Steve Rosenstock, EEI.

7 Again, that's helpful. So, basically, 

8 when you say lower load profile, does that mean 

9 that the occupancy went down to 80 percent of --

10 MR. SELVACANABADY: The occupancy was 

11 completely zero. The lighting schedules and the 

12 other equipment schedules went down to about 20 

13 percent from 90 percent.

14 MR. ROSENSTOCK: Okay. Thank you.

15 MR. BROOKMAN: And he had a second 

16 question.

17 MR. SELVACANABADY: I'm sorry. The 

18 second question was?

19 MR. ROSENSTOCK: Oh, modular buildings, 

20 the modular buildings about what kind of lifetime 

21 did you assume for the modular and portable 

22 buildings.
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1 MR. SELVACANABADY: For the energy use 

2 analysis, we did not need an equipment lifetime. 

3 The lifetime would be taken care of in the LCC, 

4 but I believe it's 15 off the top of my head.

5 MR. ROSENSTOCK: Well, it was really 

6 building lifetime, not equipment lifetime.

7 MR. SELVACANABADY: That's a good 

8 question.

9 MR. ROSENSTOCK: The reason I'm asking is 

10 that some of these modular portable buildings, 

11 they are only used for 4 or 5 years, and then 

12 they are not used anymore, even though they are 

13 using this equipment that lasts 15 years. The 

14 building themselves might not --

15 MR. CYMBALSKY: This is John from DOE.

16 But that doesn't mean the -- so they'd 

17 move it off for that building and put it on a 

18 different -- they wouldn't just grab the SPVU 

19 unit if they demolished the modular thing after 3 

20 years, right?

21 MR. ROSENSTOCK: Steve Rosenstock.

22 I don't know.
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1 MR. CYMBALSKY: I think they move around. 

2 In DOE, I've seen them move them off of the 

3 little trailers here, so -- and I hate anecdotes, 

4 but I've seen it personally done.

5 MR. SELVACANABADY: So for the analysis 

6 here, we assumed that it would be operational for 

7 the 15 years lifetime.

8 MR. BROOKMAN: Okay. Moving on.

9 MR. SELVACANABADY: I had --

10 MR. BROOKMAN: Oh, Nick, you had a 

11 question?

12 MR. MISLAK: Yeah. I just wanted to kind 

13 of clarify or just ask a question. How did the 

14 analysis consider the economizer use that was in 

15 the units as far as the energy savings goes?

16 MR. SELVACANABADY: I'm sorry. Could you 

17 repeat that question.

18 MR. MISLAK: I said how did the energy 

19 analysis take into consideration the economizers 

20 that are used.

21 MR. SELVACANABADY: So we accounted for 

22 them.
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1 MR. MISLAK: And what capacities that 

2 they were -- and what was the assumption on the 

3 capacity?

4 MR. SELVACANABADY: So we based the 

5 economizer assumptions on the ASHRAE 92.1 

6 standard -- or 90.1 standards -- I'm sorry -- and 

7 the economizers were not operational for the 

8 smaller equipment class. It was operational for 

9 the larger equipment class for the schools and 

10 the offices. Whereas, for the telecom sectors, 

11 we assumed that -- or again, it was not an 

12 assumption. It was based on manufacturer 

13 interviews, and we received information that 45 

14 percent of any unit that got shipped to the 

15 telecom sectors had economizers on them, so we 

16 factored that in, and all those results get fed 

17 into the LCC, and the Monte Carlo simulation 

18 takes care of it from there.

19 MR. BROOKMAN: Wes.

20 MR. ROAN: Wes Roan, Bard Manufacturing.

21 The telecommunications industry use of 

22 economizers has changed dramatically in the last 
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1 few years, and it is now used -- the size of the 

2 equipment doesn't matter. They got a 3-ton unit 

3 on there, they are most likely going to have an 

4 economizer at work. 

5 Not only that, but control schemes now 

6 are bringing in the economizers at a higher 

7 temperature and bringing in two economizers, 

8 because there is usually redundant units on these 

9 structures, lead-lag type of controller. They 

10 are bringing in one economizer. If that doesn't 

11 satisfy it, the second unit's economizer opens 

12 up. So they are getting a lot more energy 

13 savings via the economizers than traditionally 

14 happened 15, 20 years ago.

15 So I would think the Department should 

16 really take a look, maybe reach out to some of 

17 the carriers and get information. The compressor 

18 hours that are run on telecommunications are a 

19 fraction of what they were.

20 MR. BROOKMAN: Okay.

21 MR. SELVACANABADY: Really quickly, the 

22 telecom sector, we did model a redundant unit, 
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1 but that's a good suggestion. If you can send me 

2 that in a written comment, we would consider it 

3 for the next stage in rulemaking.

4 MR. BROOKMAN: If you could estimate 

5 that, that would be very helpful.

6 Okay.

7 MR. SELVACANABADY: Thank you.

8 MR. BROOKMAN: Thank you.

9 MR. MORRIS: Hi. My name is Scott 

10 Morris. I'm from PNNL. I just wanted to touch 

11 base about two things, really quick.

12 To be explicit, regarding the lifetime of 

13 buildings, the way the LCC model and analysis 

14 treated this equipment, it is assumed that the 

15 equipment, the SPVU equipment itself, lasts 

16 between 10 to 25 years, with an average lifetime 

17 of 15 years, and it is just like John said. It 

18 is assumed that the SPVU equipment -- well, 

19 essentially that buildings last as long as the 

20 SPVU equipment does. So the actual lifetime of 

21 the building is not explicitly factored into the 

22 LCC model.
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1 The second comment is regarding the --

2 and I'll get to the LCC modeling in just a few 

3 minutes, but regarding the different business 

4 types that are used in the LCC modeling, the 

5 engineering, the energy use, the LCC modeling, et 

6 cetera, have assumed that there are three 

7 building types: the telecom shelters, the 

8 education portables, and other commercial and 

9 modular buildings.

10 There are approximately seven different 

11 -- well, there's seven that DOE specifically 

12 looked at, and there are more business types that 

13 use those three types of buildings. Those 

14 different businesses have different factors such 

15 as different electricity prices, different 

16 discount rates, different costs of capital, et 

17 cetera, but generally speaking, those business 

18 types use three types of buildings.

19 So I will jump into the markups analysis. 

20 As Chris mentioned earlier, the markups analysis 

21 that's found in Chapter 6 of the NOPR TSD is 

22 different than the manufacturer markups where 
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1 they convert manufacturer production cost to 

2 manufacturer selling prices.

3 The markups analysis converts 

4 manufacturer selling prices from the engineering

5 analysis into the final equipment price that an 

6 end user pays for a unit. The analysis develops 

7 markup factors for each node shown on this 

8 diagram, as well as the relative percentage of 

9 the market that passes through each distribution 

10 channel.

11 There are two main features in this 

12 diagram to consider. It does look big and ugly, 

13 but the two takeaway points are, first, the 

14 distinction between new construction and 

15 replacement markets. It is assumed that 

16 approximately 50 percent of SPVUs that are 

17 manufactured make their way through the new 

18 construction distribution channels on their way 

19 to the end user, and approximately 50 percent of 

20 the units in the aggregate make their way through 

21 a replacement channel into existing structures.

22 The second feature worth noting is that 
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1 most of the units installed in telecommunications 

2 structures travel through different distribution 

3 channels than units intended for other building 

4 types.

5 This is a confusing diagram. The bottom 

6 line is that approximately 50 percent of -- well, 

7 for telecommunication structures specifically, 

8 DOE is aware that telecommunication shelters are 

9 oftentimes built out of concrete and steel as 

10 opposed to wood and metal buildings, and at the 

11 very top of the slide, the concrete shelter 

12 manufacturer, approximately 40 percent -- well, 

13 approximately 80 percent of the SPVUs that are 

14 intended for the telecommunications market will 

15 go through a concrete shelter manufacturer as 

16 opposed to a wood and modular building 

17 manufacturer. The remainder of the 

18 telecommunications buildings, the remainder of 

19 the SPVUs intended for telecommunication shelters 

20 are placed in wood or modular buildings.

21 And the 50 percent of the 

22 telecommunications shelter SPVUs that go through 
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1 the replacement market, down on the replacement 

2 market section, there is that weighted average 

3 modular wholesale distributor box. The SPVUs 

4 going to concrete telecommunication shelters go 

5 through the same concrete shelter wholesale 

6 distribution -- or distributor as shown on the 

7 top there.

8 Any questions about that slide?

9 MR. BROOKMAN: We have a comment or a 

10 question. Rodney Beever says, "Why was the 

11 analysis based singularly on modular structures? 

12 Units also go into brick mortar structures."

13 MR. MORRIS: Thank you.

14 I can't answer that off the top of my

15 head. The actual -- the markup structure and 

16 diagram that we used in our analysis, believe it 

17 or not, is actually much more complex than this, 

18 filled with nasty percentages and stuff. I 

19 appreciate that comment, and we will make sure to 

20 address it.

21 MR. BROOKMAN: Okay. Thank you.

22 MR. MORRIS: Thank you.
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1 MR. BROOKMAN: Let's keep moving on here.

2 MR. MORRIS: The two main takeaways from

3 this slide are that -- well, in general, baseline

4 markups -- are applied to the MSPs to develop 

5 final customer prices for equipment at the 

6 baseline efficiency, and incremental, consistent 

7 with other rulemakings, incremental markups are 

8 developed to address the incremental first cost 

9 difference between baseline and more efficient 

10 equipment.

11 The numbers shown in this table are the 

12 markup factors for each node shown in the 

13 distribution channels in the previous slide, and 

14 these factors are multiplied by the relative 

15 percentages of equipment passing through each 

16 channel to get the overall markups for both new 

17 construction and replacement equipment.

18 As you can see by the bigger green 

19 numbers, which are the overall markups for both 

20 baseline markup, baseline and incremental 

21 markups, as well as new construction and the 

22 replacement market. The equipment intended for 
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1 inclusions in newly constructed buildings are 

2 slightly higher or marked up more than the 

3 equipment destined for the replacement market 

4 because of the extra steps (on average) of SPVUs 

5 being included in buildings before they are 

6 passed to the end user.

7 MR. BROOKMAN: Do we have comments on --

8 yes, Dave.

9 MR. WINNINGHAM: Yeah. This is Dave with 

10 Allied Air.

11 How does DOE come to the assumption that 

12 incremental markups are less than baseline 

13 markups?

14 MR. MORRIS: The baseline markups in 

15 general calculate and incorporate fixed cost, 

16 costs that don't vary with the size or cost of 

17 the equipment.

18 Incremental markups are markups that are 

19 applied to equipment that is more expensive than 

20 the baseline efficiency equipment and cover 

21 things such as insurance costs and profit margins 

22 and stuff like that.
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1 MR. WINNINGHAM: Okay.

2 MR. MORRIS: So it's DOE's position that 

3 in the long term, using a baseline and 

4 incremental markups system is more representative 

5 of economic impact in the long term.

6 MR. WINNINGHAM: Again, this is Dave with 

7 Allied.

8 I think there have been studies that 

9 refute that the reduced incremental markups are 

10 not appropriate, and the real-world reality is 

11 that the baseline markups, when there is a cost 

12 increase, get carried through to the end user.

13 MR. BROOKMAN: Dave, if you could cite 

14 those studies in your -- yeah, that would be 

15 great. Okay.

16 MR. MORRIS: So now I will talk about the 

17 life-cycle cost and payback period analysis.

18 In general, the LCC, the life-cycle cost, 

19 and payback period analysis is typically known as 

20 just the LCC analysis, and generally speaking, 

21 the LCC analysis takes inputs from the 

22 engineering analysis as well as markups analysis 
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1 and the energy use analysis to calculate the 

2 total installed -- I'm sorry -- to calculate the 

3 total operating cost and installed cost, total 

4 cost of ownership basically for customers of 

5 SPVUs.

6 So the purpose of the LCC and payback 

7 period analysis is to estimate the total customer 

8 cost over the lifetime of the equipment for all 

9 equipment classes and efficiency levels, and the 

10 purpose of the payback period is to determine how 

11 many years it takes for customers to recover the, 

12 initially, higher cost of more efficient 

13 equipment through lower operating costs.

14 DOE uses spreadsheet models that 

15 incorporate Monte Carlo simulations to model 

16 customer costs and savings, with the 

17 understanding that there is some substantial 

18 variability in many quantities, for example, 

19 being electricity prices, operating hours, stuff 

20 like that.

21 Yes, Nick.

22 MR. MISLAK: Does the installed cost take 
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1 into consideration if the construction will need 

2 to be modified to fit a larger-sized unit?

3 MR. MORRIS: No. What the installed 

4 costs do consider is whether these SPVUs will be 

5 placed in existing structures or whether they 

6 will be fitted in new buildings, and as part of 

7 the component package, part of the total package.

8 If they're installed in new buildings and shipped 

9 to the final users, essentially there are no 

10 installation costs, per se, of installing SPVU 

11 unit in the building, in a new construction 

12 scenario, because for the most part, it is 

13 assumed that the markups that we talked about 

14 earlier, the markups being a little bit higher 

15 for the new construction channel, include the 

16 cost of installing SPVU in a newly constructed 

17 building. There are installation costs for 

18 installing SPVU equipment considered for 

19 replacement SPVUs that would be installed in 

20 existing structures.

21 MR. MISLAK: And do those reflect the 

22 change in the building construction, if 
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1 necessary, to fit a larger size unit?

2 MR. MORRIS: No, not currently, but we 

3 will take that into consideration, so thank you.

4 MR. BROOKMAN: We have a comment from 

5 someone who is joining us online.

6 Ed Wuesthoff has his hand raised. Ed, 

7 unmute your phone. We'll unmute you here, and we 

8 ought to be able to hear you in the room.

9 MR. WUESTHOFF: Yes. This is Ed 

10 Wuesthoff at Friedrich.

11 I just wanted to comment on that, stating 

12 that since predominantly, the majority of our 

13 Friedrich SPVUs and SPVHPs go into the 

14 hotel/motel industry, there would be a 

15 skyrocketing cost in order to change the 

16 construction envelope for the product that we 

17 would have to modify for the exterior envelope.

18 MR. BROOKMAN: Okay. Thank you.

19 Yes, Louis.

20 MR. STARR: Louis Starr with NEEA.

21 One of the things I was wondering, 

22 typically, these units are going into some of the 
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1 modulars, such as classrooms and some of those 

2 other ones. A lot of times, those really don't 

3 necessarily have the same code requirements in 

4 terms of envelope and some of the other aspects 

5 of it. Is there any modification for how much 

6 energy usage, based upon what kind of structure 

7 it's going in?

8 I mean, the same could be said for 

9 telecom, and actually, it's more of a 

10 heat-generating-type thing. So it might actually 

11 be a good thing in that case, but is there 

12 accounting for the type of facility it's going 

13 into in terms of changing the energy use?

14 MR. SELVACANABADY: The energy simulation 

15 takes care of it. We incorporate R10, I believe, 

16 for the wall characteristics, and these are again 

17 based on information from the shelter

18 manufacturers. That is what our value was based 

19 on for the wall, for the ceiling, and the kind of 

20 construction.

21 MR. STARR: So those assume the code 

22 values of what a typical construction is, or does 
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1 it reflect what's actually in the --

2 MR. SELVACANABADY: It's reflective of 

3 what's really out there.

4 MR. STARR: Okay. Thank you.

5 MR. MORRIS: Okay. Thank you.

6 Generally speaking, the life cycle cost 

7 is the sum of installed and operating costs. 

8 Installed cost is simply the final up-front cost 

9 of the equipment and operating cost is the yearly 

10 cost associated with operating and maintaining 

11 the equipment.

12 Installed costs are simply the sum of the 

13 final purchase price and installation costs, 

14 which are essentially labor and materials.

15 The calculation of installed costs 

16 include provisions for the differences in 

17 installation cost, as I just mentioned, for 

18 equipment installed and new construction versus 

19 the replacement market.

20 Inputs for installed costs include MSPs 

21 from the engineering analysis, overall markups 

22 from the distribution channels that we talked 
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1 about, including sales tax, and the cost of labor 

2 and materials for installing new equipment, as 

3 applicable.

4 Operating cost inputs include equipment 

5 lifetime, operating hours and energy use data 

6 from the energy use analysis, energy prices, and 

7 repair and maintenance costs. Operating costs in 

8 each year are discounted over the lifetime of the 

9 equipment.

10 Nick.

11 MR. MISLAK: I kind of have a general 

12 question. I noticed in the repair section, some 

13 of the assumptions that were made as far as 

14 what's repaired in a unit are different than 

15 previous rulemakings. I don't know if somebody 

16 else can maybe comment on that.

17 Maybe, Dave, do you know?

18 MR. WINNINGHAM: In the commercial role, 

19 and this is --

20 MR. BROOKMAN: Louder, Dave.

21 MR. WINNINGHAM: This is Dave Winningham 

22 with Allied Air.
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1 There was a one-time compressor 

2 replacement in the commercial role, and here, 

3 we're kind of looking at things differently and 

4 just wondered what the basis for that was.

5 I think the analysis here may be more 

6 appropriate here and may be lacking in the 

7 commercial.

8 MR. MORRIS: I can't speak to that. 

9 Sorry, but we'll consider it.

10 MR. CYMBALSKY: We will look at it in the 

11 other docket. How about that?

12 [Laughter.]

13 MR. MORRIS: Thank you.

14 For air conditioning units, DOE is 

15 proposing to adopt EER 11.0 as the standard. As 

16 you can see here, equipment at this TSL have LCC 

17 savings of approximately $180 over their lifetime 

18 and a payback period of approximately 9 years.

19 This information is also found in 

20 Appendix 8B of the NOPR TSD.

21 Steve?

22 MR. ROSENSTOCK: Hi. Steve Rosenstock, 
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1 EEI. 

2 I didn't bring the technical support 

3 document with me.

4 I am looking at the NOPR, and it says 

5 that for the AC units, that 30 percent of 

6 customers would have higher net cost, and I'm 

7 sure it probably says it in the TSD, but I'm kind 

8 of curious. By customer class, for example, in 

9 the education area, what percentage had higher 

10 net cost, if that was broken out like that?

11 MR. MORRIS: We are going to talk about 

12 that, actually. The education customers

13 specifically are identified as a subgroup. 

14 MR. ROSENSTOCK: Yeah.

15 MR. MORRIS: We will talk about that in a 

16 few slides here.

17 MR. ROSENSTOCK: Oh, okay. Great. 

18 Thanks.

19 MR. MORRIS: I don't think there are 

20 actually percentages listed on this slide --

21 MR. BROOKMAN: Dave.

22 MR. MORRIS: -- but I can look them up 
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1 for you.

2 MR. WINNINGHAM: This is Dave Winningham 

3 with Allied Air.

4 I would like to point out for SPVAC, this 

5 is commercial equipment that's sold to commercial 

6 customers. 

7 Typically, a commercial entity is looking 

8 for a payback, much less than 8.4 years, and 

9 exceeds DOE's general rule of rebuttable payback 

10 of 3 years. And the net effect of this will be 

11 that people will repair or -- repair older,

12 inefficient equipment with paybacks of this 

13 length, and I think that needs to be considered 

14 in the analysis.

15 MR. BROOKMAN: Okay. Thank you.

16 MR. MORRIS: Results for the heat pump 

17 systems are on this slide. DOE is proposing 

18 here, EER of 11.0 and a COP of 3.3. Customers of 

19 SPVHPs on average save approximately $400 over 

20 the lifetime of the equipment, have a payback of 

21 roughly 5 years.

22 MR. BROOKMAN: Yes. Dick.
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1 MR. LORD: Yeah. Dick Lord with Carrier.

2 When you do these paybacks, do you ever 

3 show the range of the paybacks from a cold 

4 climate to a warm climate?

5 MR. MORRIS: Well, we do examine them. 

6 They are examined as part of the Monte Carlo 

7 analysis and also in the energy plus simulations 

8 for energy use. But we don't specifically go 

9 region by region and explicitly look at the 

10 results of region-to-region variability. But 

11 they are considered in the Monte Carlo 

12 simulation.

13 MR. LORD: Yeah. It's just something 

14 that will influence like in a northern climate 

15 for a cooling-only unit. You are probably going 

16 to see these paybacks double to triple, and these 

17 guys probably won't use these units.

18 MR. CYMBALSKY: Right. I think that's 

19 where you get into the percent of net cost, so 

20 those guys will be in that bucket.

21 MR. LORD: Not that I want regional 

22 requirements, but --
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1 [Laughter.]

2 MR. CYMBALSKY: I'm not going to comment 

3 on that.

4 MR. LORD: You're not going to comment.

5 [Laughter.]

6 MR. MORRIS: Okay. Moving on to the 

7 life-cycle cost subgroup analysis. This is one 

8 of the analyses that DOE considers in the NOPR 

9 phase of the rulemaking.

10 Life-cycle cost subgroup analysis is 

11 considered -- or is conducted for both NOPR and 

12 final rule stages, and its purpose is to 

13 determine the effects of standards on 

14 identifiable subgroups within the general 

15 population.

16 Specific parameters in the LCC model are 

17 changed to examine the unique characteristics of 

18 each subgroup. The results of the subgroup 

19 analysis can be compared with results from the 

20 general population.

21 So DOE identified three subgroups to 

22 study specifically. Temporary office customers 
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1 are folks in the mining and commercial 

2 construction industries who typically have higher 

3 cost of capital and, by extension, higher 

4 discount rates and higher than average 

5 electricity prices.

6 This combination of higher discount rates 

7 and electricity prices typically serve to offset 

8 each other. However, single-package vertical air 

9 conditioners in the subgroup are also used less 

10 frequently than the average customer.

11 The second subgroup is public education 

12 customers who typically have lower financing 

13 costs and lower discount rates and at the same 

14 time have typically lower electricity prices than 

15 the average customer.

16 Similar to the mining and commercial 

17 construction subgroup, having a lower discount 

18 rate and lower electricity price offset each 

19 other.

20 And finally, businesses with higher 

21 capital costs are typically small businesses 

22 which would find future energy savings less 
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1 attractive than the average customer. The main 

2 distinguishing feature of this subgroup is a 

3 higher discount rate, but other factors, such as 

4 energy prices are assumed to be the same as the 

5 average commercial customer.

6 With all other things being equal, 

7 customers in this subgroup would typically find 

8 more costly, most efficient equipment, less 

9 economically favorable than the average customer.

10 This following slide shows the results of 

11 the LCC subgroup analysis. 

12 Generally speaking, LCC savings are a 

13 little bit lower, and payback periods are a 

14 little bit longer for LCC subgroups relative to 

15 the average customer. The exception is public 

16 education customers who purchase single-package 

17 vertical heat pumps. They actually have higher 

18 LCC savings and shorter paybacks than the average 

19 customer because future energy savings are more 

20 influential and important to them than the lower 

21 cost of energy.

22 Just a note regarding -- Steve, this 
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1 might cut you off. I don't know, but regarding 

2 the negative $60 LCC savings for the temporary 

3 office subgroup, I realize this temporary office 

4 was a bad way to name this slide. This is

5 specific to customers in the mining and 

6 commercial construction industries.

7 The negative $60 LCC savings for these 

8 customers are relative to an approximately 

9 $14,000 life cycle cost that these customers 

10 incur for the entire lifetime of the equipment, 

11 and in this case, because these units are used 

12 less frequently than the average customer -- so 

13 the reason for this [negative LCC savings] is 

14 because this equipment is used less frequently 

15 than the average customer, the higher discount 

16 rates have more influence on the LCC savings than 

17 the higher cost of energy, hence, the slightly 

18 negative LCC savings.

19 MR. BROOKMAN: Steve.

20 MR. ROSENSTOCK: Steve Rosenstock. Thank 

21 you for this slide. It is very helpful.

22 Again, I'm just -- especially for the air 
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1 conditioning units used by education facilities, 

2 if an 8.4-year payback, median payback associated 

3 with 37 percent net cost, you know, a 10-year 

4 median payback is probably close to 45 percent, 

5 48 percent of education customers having higher 

6 net cost. That's a lot higher than other DOE 

7 standards.

8 And I know that's just one subgroup, but 

9 it's just -- especially, at the public education 

10 facilities, and they're always on tight budget to 

11 begin with, I'm a little concerned. Again, just 

12 looking at the subgroup, I'm a little concerned 

13 with the fact that so many education facilities 

14 are going to have such a long payback, and a lot 

15 of them are going to have higher net costs.

16 Thank you.

17 MR. BROOKMAN: Okay. Thanks.

18 MR. MORRIS: Thank you.

19 MR. BROOKMAN: Yes. Bill.

20 MR. STEEL: Bill Steel with Bard 

21 Manufacturing.

22 I hate to sound like a broken record, but 
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1 when I was talking about price sensitivity, I was 

2 talking a lot about the modular office and 

3 modular classroom areas, and a 15-year payback 

4 would dramatically reduce the product going -- of 

5 SPVUs going into that market, and I hope that was 

6 taken into consideration when the sales trend and 

7 the shipment trend is calculated by DOE.

8 MR. BROOKMAN: Thank you.

9 MS. SHEPHERD: I guess that's a question. 

10 Amy Shepherd from AHRI. Was it?

11 MR. MORRIS: Sorry?

12 Alison, can you speak to that?

13 MS. [Alison] WILLIAMS: I'm going to do 

14 shipments right now, so we can talk about that.

15 MR. BROOKMAN: Yeah. Okay.

16 Yes. Wes.

17 MR. ROAN: Wes Roan, Bard Manufacturing.

18 Back on education, there is no question 

19 that that information is going to result in 

20 repair versus replace, and repair of old, 

21 inefficient machines, making them even more 

22 inefficient, because I have not seen a repair 
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1 anywhere that translated into a higher efficient 

2 unit. So that is going to be the reality, is 

3 that there will be many more replacements, 

4 because as was noted, many school districts don't 

5 have any money to begin with, and they are not 

6 going to be able to afford this equipment.

7 MR. BROOKMAN: Okay. Thanks.

8 We are going to move on.

9 MS. [Alison] WILLIAMS: Okay. So I am 

10 going to talk about the shipments analysis. The 

11 purpose of the analysis is to estimate the 

12 shipments over the 30-year analysis period, which 

13 starts in 2015 for adopting ASHRAE level, 2019 

14 for higher levels.

15 These shipments feed into the national 

16 impact analysis and the manufacturer impact 

17 analysis.

18 We basically do an equipment stock 

19 accounting model, so we're talking both 

20 replacements and new construction. Replacements 

21 are estimated based on shipments data from 

22 previous years and the lifetime of the product, 
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1 and in the new construction area, we use input 

2 variables as drivers to the shipments' forecasts; 

3 in this case, mostly construction forecasts.

4 So we started our shipments with 

5 estimates provided by AHRI in the previous 

6 rulemakings, so from 2005. We did not receive any 

7 more recent data for that.

8 As you've seen before, the three main 

9 sectors are education, office, and telecom.

10 So for education, we estimated a 

11 saturation rate for 2005 and applied this to the 

12 AEO 2013 projections of new construction floor 

13 space to project those shipments. We originally 

14 did this for the office sector as well, but we 

15 received comments on the NODA that that was --

16 well, we received comments in general that the 

17 shipments trend was too high.

18 So when we examined our shipments 

19 analysis, we determined that the AEO forecasts 

20 for the office sector don't truly represent the 

21 SPVU market because they are going more into the 

22 modular building. So we reviewed the modular 
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1 building industry literature, and we determined 

2 that it's actually unlikely that that will be 

3 increasing as much as AEO shows for small 

4 offices.

5 So we hold the shipments to offices 

6 constant at 2005 levels for lack of better data 

7 on that.

8 The telecom industry, we're projecting 

9 based on a county business pattern, a time series 

10 for establishments in the power and 

11 communications line construction industries, so 

12 we have data from 2003 to 2011, and we just did a 

13 linear trend to extrapolate that out.

14 This is the resulting shipments on the 

15 left. Left in red is the estimated historical 

16 totals. That is not all actual real data. It is 

17 estimated based on the data that we had for 

18 shipments and some floor space production 

19 information from the modular building industry, 

20 and then on the right, you can see the 

21 replacements is the majority of the market and 

22 then new construction on the bottom.
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1 MR. ROSENSTOCK: Quick question.

2 MR. BROOKMAN: Steve.

3 MR. ROSENSTOCK: Steve Rosenstock, EEI.

4 There is no data to show the impact of 

5 the recession on this market?

6 MS. [Alison] WILLIAMS: Yeah. So that's 

7 part of what we were doing when we initially did 

8 the NODA estimates, and we just projected forward 

9 based on AEO values.

10 When we reviewed the modular building 

11 industry, it definitely did show that there was 

12 an impact from the recession, and because of the 

13 time period, it's kind of difficult. Like most 

14 of the data from that ends in 2011, so it's hard 

15 to really know what's going to happen. And so 

16 that's part of the reason we held the offices 

17 constant, was because of that sort of lack of 

18 information.

19 As you can see, the new construction 

20 shipments are actually nearly flat through this. 

21 It is almost all driven by replacements.

22 MR. WINNINGHAM: This is Dave Winningham 
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1 with Allied Air.

2 To kind of add on to that, I think, 

3 although we may not have specific data, you can 

4 look to similar markets that there is data 

5 available, other HVAC sectors of the market, 

6 which have probably similar trends. And there 

7 was a significant decline in the late 2007, '8, 

8 '9 time frame to which the industry has not 

9 recovered to those levels previous to that.

10 The other question is that you're showing 

11 a continuing trend with increased cost. I think 

12 history has shown us that any time there is a 

13 significant increase in efficiency in cost of 

14 products that volume goes down. Why wasn't that 

15 taken into consideration in the analysis?

16 MS. [Alison] WILLIAMS: Yeah. So we 

17 looked at that. We were trying to determine 

18 whether the amended standards would affect 

19 shipments.

20 Our proposal in the NOPR was that because 

21 SPVU is such a niche product, if you wanted to 

22 switch to a different kind of equipment, there 
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1 would be different -- you would have to install 

2 it on site rather than at the modular building 

3 manufacturer. You have to use a mechanical

4 contractor. There would be extra duct work. So 

5 we thought there were significant reasons why you 

6 would be unlikely to switch as a result of the 

7 increased cost from the standard, but we 

8 certainly welcome any data and comments that 

9 would help us actually estimate something, if 

10 that's not the case.

11 MR. BROOKMAN: Frank.

12 MR. XU: Frank Xu, National Coil.

13 MR. BROOKMAN: Get close.

14 MR. XU: Sorry. Frank Xu, National Coil.

15 We received some information in some 

16 areas, actually mandated to eliminate portable 

17 classrooms in the schools. One of our 

18 neighboring school districts already did that. 

19 So I don't know if anybody heard that kind of 

20 news in other regions of the country.

21 MS. [Alison] WILLIAMS: Yeah. So we 

22 actually reviewed that when we looked at the 
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1 shipments. We identified that there were some 

2 school districts that were trying to get rid of 

3 portables.

4 We didn't explicitly account for that 

5 because the AEO projections for education are 

6 actually declining over the analysis period, so

7 we're already basically modeling a drop in 

8 shipments to education. So we thought that we 

9 may be implicitly capturing that trend, even 

10 though we don't have specific data on it.

11 MR. BROOKMAN: Ed Wuesthoff has a 

12 question or a comment.

13 Ed, we will unmute you. You are next.

14 MR. WUESTHOFF: I did not actually have a 

15 comment at this point. Sorry.

16 MR. BROOKMAN: Okay.

17 Louis.

18 MR. STARR: So, just a general thought, 

19 while some places may be not allowing modular to 

20 be built, I don't anticipate people are wanting 

21 to increase education to funding across the 

22 board, such that this is going to be the cheaper 
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1 option to build and put on there.

2 So the idea that there is going to be 

3 less of them, I have a little bit of hard time 

4 believing that in the future. If anything, I 

5 think there is going to be more of them, unless 

6 all of a sudden, we start funding education at a 

7 greater level than we do. And I don't anticipate 

8 that in the next 4 to 5 years.

9 MR. BROOKMAN: Okay. thank you.

10 MS. [Alison] WILLIAMS: Okay. So I'm 

11 going to move on to the national impact analysis. 

12 That's where we project national energy savings 

13 and national net present value. We do this using 

14 a time series of energy and economic impacts. 

15 This shipments model, of course, estimates the 

16 stock of SPVUs in service.

17 We are aggregating those costs and energy 

18 use each year, and we are reporting estimates as 

19 a change in consumer national net present value.

20 We only report this for levels above 

21 ASHRAE, just as a note, and we are using discount 

22 rates to account for the time value of money.
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1 So, basically, we are taking in the LCC 

2 analysis results, the shipments model, and some 

3 other things to put those into the national 

4 impact analysis model, which gives us national 

5 energy savings and national economic impacts.

6 We do this over the 30-year period-- a 

7 30-year period of shipments, so units shipped for 

8 30 years, and then there are trailing energy 

9 savings and economic impacts throughout the 

10 lifetime of that equipment.

11 For both energy savings and NPV, we are 

12 comparing the standards case to the base case and 

13 looking at the difference between energy use, 

14 also cumulative operating cost savings and 

15 installed cost increase.

16 MS. SHEPHERD: This is Amy Shepherd from 

17 AHRI, and I just want to ask a question before I 

18 think I might have missed my opportunity.

19 On the shipments, where we had the issue 

20 about the price sensitivity in the different 

21 product classes -- not product classes, but the 

22 different market sectors -- is there a difference 
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1 in the price sensitivity between those, as he 

2 noted for the mining and the modular? And I also 

3 was thinking in terms of the education where they 

4 have fixed budgets for periods, like if they 

5 can't necessarily just have a large capital cost, 

6 so that's going to end up being repair decision 

7 instead.

8 MS. [Alison] WILLIAMS: So we're not 

9 currently modeling that explicitly. We are using 

10 the same shipments in the standards case as in 

11 the base case, and so certainly, if you have any 

12 information or data that would indicate that 

13 price sensitivity for certain sectors, we'd be 

14 happy to look at that.

15 Okay. So this is a summary of the inputs 

16 to the national impact analysis. Most of these 

17 have been talked about before as part of the LCC.

18 The total installed cost, we have 

19 equipment costs that vary with efficiency level. 

20 The installation costs remain constant. Repair 

21 costs increase with efficiency level. Maintenance 

22 remain constant.
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1 We are getting the energy use from the 

2 energy use analysis and the LCC, and we are 

3 projecting energy prices using AEO 2013.

4 The base case efficiencies were used, 

5 shipments weighted, and we got the base -- that 

6 information from manufacturer interviews, and 

7 then we projected a growth rate of 1 EER every 35 

8 years in the base case.

9 When we went to the standards case, we 

10 used a roll-up scenario, so we assumed that all 

11 equipment under the standard level would roll up 

12 to meet the standard and equipment above the 

13 standard would not be impacted. However, we then 

14 applied the same 1 EER every 35-year growth rate 

15 in the standards case.

16 We also account for full fuel-cycle 

17 energy savings in this analysis. We used 

18 discount rates of 7 percent and 3 percent, and 

19 we're discounting to the year 2014.

20 So this is also -- just to present the 

21 TSLs we're using in this case, the TSLs are 

22 basically equivalent to the efficiency level, so 
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1 TSL1 is EL1 for the equipment less than 65,000.

2 As you've heard before, there was either 

3 no equipment on the market or no equipment above 

4 the ASHRAE baseline for all the larger equipment 

5 classes, so those are at the ASHRAE level across 

6 all the TSLs.

7 MS. SHEPHERD: This is Amy Shepherd 

8 again.

9 So, on Slide 68, which you just talked 

10 about, when you talked about the roll-up 

11 scenario, so then that means that you're assuming 

12 that all the manufacturers that are currently 

13 producing the products that you see, those 

14 products will roll up, and so those manufacturers 

15 are still in the market, so yes?

16 MS. [Alison] WILLIAMS: It doesn't really 

17 discuss who is still in the market, but it 

18 assumes that every --

19 MS. SHEPHERD: Every product that --

20 MS. [Alison] WILLIAMS: -- all product 

21 would meet at a minimum the standard.

22 MS. SHEPHERD: It is not going to go 
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1 away. This will be offered.

2 MS. [Alison] WILLIAMS: That's not really 

3 partial to the shipments analysis, so we assume 

4 that there will be enough product to meet the 

5 shipments.

6 MS. SHEPHERD: Well, no, I'm talking 

7 specifically about the -- where you say the 

8 roll-up scenario, where you assume that the 

9 products that don't meet the base efficiency will 

10 roll up, so you're assuming that all those 

11 products -- the current suite of products will 

12 still be there, and then it will just all roll 

13 up, right? They're still all offered?

14 MS. [Alison] WILLIAMS: So I think it's 

15 sort of semantics, right?

16 But like we are not necessarily 

17 specifying which products would still be there or 

18 not be there. We're just saying there will be 

19 enough products to meet these shipments, and this 

20 will be --

21 MS. SHEPHERD: Okay.

22 MS. [Alison] WILLIAMS: It's range of 
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1 distribution of those products.

2 MS. SHEPHERD: Okay. Okay.

3 MR. BROOKMAN: Rodney Beever has a 

4 question. He writes, "How can 30 years of 

5 shipments be used when we know that federal rules 

6 will change the efficiency levels 6 to 9 years 

7 out?

8 MS. [Alison] WILLIAMS: So when we do the 

9 next rulemaking, 6 to 9 years out or whenever, 

10 the baseline for that rulemaking would account 

11 for whatever was finally adopted in this 

12 rulemaking, so it would only account for savings 

13 above what we're accounting for here.

14 MR. BROOKMAN: Thank you.

15 MS. [Alison] WILLIAMS: Okay. So these 

16 slides are just the results. You can see them in 

17 the NOPR and the TSD. The total, as someone has 

18 said before, is .23 quads, and we have positive 

19 NPV at both 3 percent and 7 percent.

20 And that's about it for the NIA.

21 MR. BROOKMAN: On to manufacturing impact 

22 analysis. Chris Lau.
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1 MR. HUNT: I'm sorry. This is Marshall 

2 Hunt.

3 MR. BROOKMAN: Yes, Marshall, please.

4 MR. HUNT: On the last slide, page 70, 

5 I'm confused about why ASHRAE's .22 quads and 

6 TSL2 is .23. I think there's a nomenclature 

7 issue.

8 MS. [Alison] WILLIAMS: Sorry. I forgot 

9 to clarify. All the savings above the ASHRAE 

10 level are with respect to ASHRAE as a baseline. 

11 So the value for --

12 Can you go up one slide, Chris?

13 So the value for the ASHRAE level is 

14 compared to the current federal baseline and the 

15 value for TSL2 is compared to the ASHRAE level. 

16 So they would be sort of additive. It's not 

17 exact, but we have to use the ASHRAE baseline --

18 we have to use the ASHRAE level as the baseline. 

19 So the .23 is above ASHRAE.

20 MR. HUNT: Thank you. Good.

21 MR. BROOKMAN: That's a good spot, 

22 Marshall.
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1 MR. LAU: Hi, folks. I'm Chris Lau --

2 MR. BROOKMAN: Okay. Moving on to 

3 manufacturing impact analysis.

4 [Laughter.]

5 MR. LAU: -- with Navigant. I will be 

6 presenting the manufacturing impact analysis, or 

7 the MIA.

8 The primary purpose is to assess the 

9 impacts of an amended standards on SPVU 

10 manufacturers as an industry; the second purpose, 

11 identify and qualify impacts on manufacturing 

12 subgroups, such as small business manufacturers; 

13 and the final portion of MIA involves discussion 

14 of direct employment, competitive considerations, 

15 potential constraints, and other federal 

16 regulations that go into effect around the 

17 compliance of this rule or cumulative regulatory 

18 burden.

19 The primary tool used is a government 

20 regulatory impact model. It's a cash flow model 

21 used to represent industry as a whole. The major 

22 output is industry net present value of metric 
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1 use to distinctly quantify impacts of amended 

2 standards on manufacturers.

3 We conduct interviews to validate and 

4 refine input to the GRIM and to better understand 

5 qualitative issues.

6 We really do this in three phases. In 

7 phase one, we built an industry profile from 

8 publicly available information, research reports, 

9 SEC filings, et cetera. In phase two, we use 

10 public data inputs from the engineering and 

11 shipments analysis to outline industry in the 

12 GRIM, our cash flow model. And in phase three, 

13 key inputs are validated to manufacturers, and 

14 qualitative issues are discussed in interviews. 

15 We use this content to refine the GRIM.

16 As I noted before, to the industry, we 

17 rely on several of the upstream analyses. We 

18 take financial information from the MTA. We take 

19 production costs from the engineering analysis. 

20 We take base case as well as standard case 

21 shipments forecasts from the shipments analysis.

22 To complete our model, we supplement two 
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1 different types of contents. We do a high and 

2 low manufacture markup scenario, and we also do 

3 up our industry conversion costs, which are based 

4 off of the engineering analysis, factory tours, 

5 and interviews.

6 Speaking of those interviews, over the 

7 course of our interviews with manufacturers, we 

8 identified several key issues that manufacturers 

9 highlighted at the time. Manufacturers were 

10 certainly concerned about space constraints, both 

11 footprint and wall space. They're concerned 

12 about compliance tolerances. We also heard 

13 concern about constraint innovation and to build 

14 a customized product as a result of the standard. 

15 MS. SHEPHERD: This is Amy Shepherd from 

16 AHRI. I had a question about that.

17 So I noticed in the NOPR, there is that 

18 reference to the manufacturers interviewed that 

19 had the concerns about size constraints, yet 

20 those size constraints aren't reflected in the 

21 technical analysis. So how does that --

22 So you interviewed manufacturers, and 
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1 they say, "We are really worried about the size 

2 issues that we have here."

3 MR. LAU: I think they are reflected.

4 I misspoke earlier, first of all. I was 

5 confusing two different rulemakings.

6 But the engineering analysis does take 

7 into account growth in cabinet size, and I think 

8 what you will see, based on the engineering 

9 analysis, going from the ASHRAE level to proposed 

10 level, there is no additional increase in cabinet 

11 size.

12 MS. SHEPHERD: Right. But doesn't that 

13 contradict what the manufacturers told you?

14 MR. LAU: No. Well, DOE has to default 

15 ASHRAE -- had to adopt ASHRAE by default as the 

16 lowest standard level.

17 MS. SHEPHERD: Oh, yeah, yeah. I know. 

18 But I'm saying when you from ASHRAE as a baseline 

19 to 10.5 and 11, there is no increase in size 

20 reflected, right?

21 MR. LAU: Well, remember, there is no 

22 proposed level at the time of the interviews. So 
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1 these were general concerns about the potential 

2 impacts of the standard.

3 MS. SHEPHERD: So they thought that 

4 potential impacts could be higher sizes, but you 

5 didn't find that there would be higher sizes; is 

6 that accurate?

7 MR. LAU: Well, I'd say manufacturers 

8 stated that changes in the cabinet size would 

9 lead to increased conversion cost as well as 

10 potential issues in the replacement market, where 

11 there have been such a lineup.

12 MR. BROOKMAN: We have a comment or a 

13 question from Ed. Please, Ed, go ahead.

14 MR. LAU: Ed, you may need to unmute your 

15 own phone.

16 [Pause.]

17 MR. BROOKMAN: We, we can't hear you.

18 MR. WUESTHOFF [via telephone]: I'm 

19 sorry.

20 MR. BROOKMAN: Go ahead.

21 MR. WUESTHOFF [via telephone]: Sabby?

22 MR. BROOKMAN: Yep.
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1 MR. WUESTHOFF [via telephone]: Go ahead.

2 MR. LAU: I think Ed is having someone 

3 else speak for him. The person that is speaking 

4 for Ed is muted. At least that's my best guest.

5 MR. SABHARWAL [via telephone]: Can you 

6 guys hear me?

7 MR. BROOKMAN: Yeah, we can hear you now. 

8 Go ahead.

9 MR. SABHARWAL [via telephone]: Okay. 

10 Yeah. I just wanted to make a couple of quick 

11 points. I missed out on the last section where 

12 we were talking about 15 years as the lifetime of 

13 the product.

14 MR. BROOKMAN: Please identify yourself.

15 MR. SABHARWAL [via telephone]: My name 

16 is Sabby. I'm from Friedrich.

17 MR. BROOKMAN: Okay. Thank you.

18 MR. SABHARWAL [via telephone]: I'm 

19 sorry.

20 So my point was that the feedback from 

21 our customers is that they tend to replace the 

22 units in 8 to 9 years. So I just wanted to make 
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1 that comment that what I've seen is it's not 15 

2 years we'll offer as the lifetime of the product.

3 And the second thing I just wanted to 

4 make a comment was that -- did you guys consider 

5 when we keep increasing the cost of the SPVUs, so 

6 obviously, the price keeps increasing, and the 

7 consumer surplus available to the consumer will 

8 keep in decreasing.

9 So when you are looking at -- when you 

10 are projecting the increase in the shipments, I'm 

11 not sure if you considered the effect of other 

12 technologies eating into the space for these 

13 SPVUs. These are a couple of points I wanted to 

14 make.

15 MR. BROOKMAN: Okay. 

16 MR. LAU: Thank you, and I think 

17 including that in the written comment would be 

18 helpful, particularly your comments about 

19 differences in what you expect in terms of 

20 product lifetime as well as total installed costs 

21 of SPVUs versus alternative products.

22 MR. SABHARWAL [via telephone]: Great. 
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1 All right. I'll do that. I just put it in the 

2 question box that's there.

3 MR. LAU: Thank you.

4 MR. BROOKMAN: Okay. Thank you.

5 MR. LAU: As I noted earlier, we model 

6 high and low markup scenarios for SPVUs, because 

7 there are two different scenarios. One is the 

8 preservation of gross margin percentage, which we 

9 consider to be the upper bound. This assumes 

10 that manufacturers maintain their existing markup 

11 on a percentage basis as products get more 

12 efficient.

13 This would suggest that manufacturers are 

14 able to pass on all increased costs to their 

15 customer, and again, that's why we consider it to 

16 be the high bound.

17 At the lower end, we do a preservation of 

18 operating profit. DOE scaled down the markup of 

19 each TLS to a level that results in the same 

20 operating profit and dollars before and after the 

21 standard. What this means is, as manufacturers 

22 capital base increases as a result of the 
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1 standard and they make these conversion cost 

2 investments, they don't earn additional profit 

3 from those investments. So manufacturers are not 

4 making greater profit in the standards case.

5 Also, we had to estimate conversion cost 

6 for the industry. This is primarily driven by 

7 manufacturer feedback. We took feedback from 

8 manufacturers, did a market-share weighting, and 

9 scaled it up to the industry level.

10 At the proposed standard, industry 

11 conversion costs reached $7.2 million for 

12 industry, and that is invested over the 4-year 

13 period, between the publication of the final rule 

14 and the effective year of the standard.

15 When we take into account all the 

16 upstream inputs as well as our assumptions about 

17 conversion costs and markups, what we find is 

18 that I&P changes on the range of minus 9 percent 

19 to increase of 4 percent, with expected 

20 conversion cost of $7.2 million for the industry.

21 MR. BROOKMAN: Yes, Louis.

22 MR. STARR: I guess back on 79, the 
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1 conversion cost for the different TSL levels are 

2 -- they look like they are the same, and I was 

3 trying to understand. Are they additive?

4 MR. LAU: Sorry. First of all, those 

5 should be millions of dollars, but on the far 

6 right column, those are the cumulative 

7 conversions costs as we move up.

8 MR. STARR: For each standard level?

9 MR. LAU: These are by TSL, not 

10 necessarily about EL. I am trying to remember 

11 off the top of my head what the mapping is.

12 MS. MAUER: This is Joanna.

13 Louis, are you asking about the 2.4? I 

14 think Louis' question is why the capital 

15 conversion costs are the same at TSL1 and TSL2.

16 MR. LAU: Right.

17 So if I remember correctly, TSL -- I'm 

18 sorry. Baseline was ASHRAE. So I think the 

19 issue is that between the conversion costs, TSL1 

20 and TSL2, are similar, because most of the design 

21 options are component changes as opposed to 

22 design options that require new tooling, and I 
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1 could flip way back to the engineering slide that 

2 showed the design options. But I think that's 

3 where we could verify that.

4 MR. BROOKMAN: Do we have another -- no. 

5 No confirmation.

6 Dave.

7 MR. WINNINGHAM: Chris, I didn't see 

8 anything here as to the cumulative regulatory 

9 burden. I know it's in the NOPR.

10 MR. LAU: Right.

11 MR. WINNINGHAM: But I don't see it here.

12 MR. LAU: That's true. We had a very 

13 limited amount of time today, but in the NOPR, we 

14 list out all of the other HVAC-related 

15 rulemakings that affect manufacturers, who also 

16 produce SPVUs.

17 MR. WINNINGHAM: I think it's important 

18 to note that it's a long list of cumulative 

19 regulatory issues that we have in front of us, 

20 and the ability -- the industry within this 

21 section is already driving towards changes to 

22 meet ASHRAE 90.1 in a change that will add 
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1 additional burden to that.

2 The testing that will be required to meet 

3 levels above ASHRAE in addition to commercial 

4 furnaces, the commercial air conditioning rule, 

5 standards for central air conditioners and 

6 furnaces, there is likely not to be sufficient 

7 engineers or test facilities to accomplish those 

8 things.

9 MR. BROOKMAN: Thanks, Dave.

10 MR. LAU: One thing, I am certainly 

11 sensitive to this issue. DOE lists all those 

12 rules, and it's dealt with in a relatively 

13 qualitative manner, but what you just said 

14 actually really helps because it identifies the 

15 key constraint across rules, engineering and lab 

16 space.

17 To the extent that we can help us 

18 quantify the amount of total engineering 

19 resources needed versus what's available and the 

20 costs of the additional lab space required, if 

21 you are to meet all those cumulative simultaneous 

22 rules, it would allow us to do something more 
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1 quantitative.

2 MR. WINNINGHAM: We appreciate that, and 

3 we will provide that in our feedback.

4 And just a general comment, I think there 

5 are conversion costs here. The levels are likely 

6 underestimated by quite a bit.

7 MR. LAU: Okay.

8 MR. BROOKMAN: Okay. Put that also in 

9 your comments.

10 Frank?

11 Wes? Go ahead, Wes.

12 MR. ROAN: This is Wes Roan, Bard 

13 Manufacturing.

14 I echo that as well. The reality that we 

15 will be building 9, 10, and then working on 11 

16 EER, from a manufacturer standpoint, from an 

17 engineering standpoint, it is an overwhelming 

18 task, especially for small businesses.

19 MR. BROOKMAN: Okay. Thank you.

20 Frank?

21 MR. XU: Yeah. I am going to say here it 

22 may be outside the scope. I understand the 
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1 definition of small business, but for us, for 

2 example, we may not be categorized as small 

3 business. But we would run as a separate entity. 

4 So compared to the traditional definition of 

5 small business, we are probably a microbusiness.

6 Resources available to do this is 

7 extremely, extremely limited, and considering 

8 that we make other type of products and also 

9 under this kind of regulatory demand, it is 

10 extremely, extremely challenging. I think it's 

11 understatement.

12 MR. BROOKMAN: Okay. Thank you.

13 Ed, you have a question. Please speak.

14 MR. WUESTHOFF [via telephone]: Yeah. 

15 This is Ed Wuesthoff at Friedrich.

16 I also wanted to add that for us, it 

17 would also be quite a cumulative burden, as we 

18 also look at new room air conditioner 

19 energy-efficiency standards that are coming out 

20 in effect this October along with building SPVUs 

21 that are going to be a 9, 10, and getting to that 

22 10 level in our full product line.
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1 Just one final note, my understanding of 

2 a residential central air conditioner is one that 

3 typically has an evaporator ducted unit inside 

4 and the condensing unit sitting outside 

5 someplace, and that's much different than a 

6 single packaged air conditioner that we build 

7 today.

8 MR. BROOKMAN: Okay. Thank you.

9 MR. WUESTHOFF [via telephone]: You're 

10 welcome.

11 MR. BROOKMAN: Moving on to emissions.

12 Yes, Steve.

13 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

14 It is always dangerous for the engineer 

15 with a calculator.

16 I am looking at the EE10 compliance date 

17 expected conversion expenses. For the values 

18 shown, again, they are different years, so it's 

19 not exactly apples to apples because it's 

20 different years, 2007, 2009.

21 For the values shown, I just use a 

22 calculator, $701 million for the rules shown, and 
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1 then there's others that are shown to be 

2 determined because the compliance dates will be 

3 in the future, 2018 through 2022, but $701 

4 million, anywhere from 2007 through 2013 dollars, 

5 so not adjusted for inflation.

6 MR. BROOKMAN: Okay. Yes. Please, Bill.

7 MR. STEEL: Thank you, Doug. Bill Steel 

8 from Bard Manufacturing.

9 Before we leave the manufacturer impact, 

10 it is important to point out that just because a 

11 manufacturer has a 10 EER product or an 11 EER 

12 product does not mean that we're done with that 

13 development. 

14 We have been gearing up towards the 

15 ASHRAE standard, and we had 10 EER product, but 

16 we have gone through thousands and thousands and 

17 thousands of hours of development time to get to 

18 10 EER, to prepare our customers for the 10 EER. 

19 And just because we have an 11 EER product 

20 doesn't mean that we are not going to have to do 

21 the same thing to get to 11 EER, and that puts a 

22 tremendous burden on a small business like us.
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1 MR. LAU: I guess when Wes from Bard had 

2 noted that conversion costs were underestimated, 

3 I saw a few heads nodding.

4 We certainly want this to reflect the 

5 industry and be as accurate as possible.

6 I know when we did our interviews a while 

7 back, often it's sort of the first time we walk 

8 you through what DOE is considering, and so to 

9 the extent that you can revise your input, we 

10 would take that into account in the final rule 

11 analysis.

12 Specifically, I would encourage you to 

13 give us -- or to submit revised conversion cost 

14 numbers with justifications.

15 You can do that through the written 

16 comment process. You can note what data should 

17 be redacted from public record. Those of you who 

18 have done interviews with me, you also have my 

19 contact information.

20 MR. BROOKMAN: Yes, please. Frank.

21 MR. XU: Frank Xu, National Coil Company.

22 One piece of information I don't know can 
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1 be revealed, in terms of when we did the teardown 

2 analysis, are those all like wall-mount products, 

3 or are some of them actually floor-mount 

4 products? Is that information available. 

5 Because when you talk about higher EER -- and the 

6 reason I asked for that is, technically, it may 

7 be easier to achieve higher EER on the 

8 floor-mount as the wall-mount, and that it is 

9 different, 4, 5 years down the road. Say telecom 

10 shelter, that size don't grow. So you have that 

11 limitation, right? More stringent than the 

12 other. So I'm just wondering what type of 

13 product the teardown, if that information is 

14 available.

15 MR. McCLIVE: This is Stan McClive with 

16 Navigant.

17 We saw 11 EER products that were 

18 wall-mount, and we saw ones that were floor-mount 

19 too, but there was really no distinction between 

20 which ones occupy which share of the market. 

21 There were plenty of wall-mount, 11 EER products, 

22 and there were plenty of noes that were 
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1 floor-mount. It's just across the board. Same 

2 distribution are used in wall-mount and 

3 floor-mount applications for 11 EER, just as 9 

4 EER products are used in both applications also.

5 MR. LAU: Thank you.

6 MR. BROOKMAN: Thank you.

7 And just to be clear -- and I think all 

8 of you know this that are familiar with this 

9 process -- you can execute a nondisclosure 

10 agreement with Navigant, just to make sure that 

11 any information you provide is protected.

12 Now to Alison.

13 MS. [Alison] WILLIAMS: Thanks.

14 So I am going to speed through this, so 

15 that we can get out at 12.

16 So we did some additional downstream 

17 analyses. The first one is the emissions 

18 analyses. We basically take the time series of 

19 energy savings and used the National Energy 

20 Modeling System to represent the emissions 

21 reductions that would result from those energy 

22 savings.
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1 So this is a summary of those impacts.

2 MR. BROOKMAN: Steve Rosenstock.

3 MR. ROSENSTOCK: Steve Rosenstock, EEI.

4 I have asked this before, but, you know, 

5 there is the American Clean Air toxics rule that 

6 went into effect this year that affects mercury 

7 and other emissions, and then there is the EPA 

8 Clean Power Plan, which is going to be finalized 

9 this June and go into effect next year.

10 Has mercury been accounted for in this 

11 analysis, and is there a sensitivity analysis 

12 done for the EPA Clean Power Plan to account for 

13 future reductions?

14 MS. [Alison] WILLIAMS: So, as you know, 

15 DOE uses the most recent version of AEO to do 

16 their emissions analysis.

17 This one is currently in AEO 2013, and we 

18 will be revising it to the most updated AEO for 

19 the final rule.

20 MS. SHEPHERD: This is Amy Shepherd from 

21 AHRI.

22 On that point, the 2014 AEO came out in 
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1 May of last year, in April of last year, but it 

2 wasn't used in this NOPR. So why wasn't -- I 

3 mean, I know that this is a long process, but 

4 given that multiple times throughout this NOPR, 

5 it notes how much there is a reduction in these 

6 values that are going to be calculated, they are 

7 going to end up with the national benefits.

8 There is no ability for any stakeholder 

9 to review that analysis and comment on it before 

10 the final rule. So I think it's imperative, 

11 given how important this is to the analysis, that 

12 that most recent data that's the Department's own 

13 data is used, and there is a supplemental NOPR at 

14 least for people to have a chance to review that 

15 and comment on it.

16 MR. BROOKMAN: Okay.

17 MS. [Alison] WILLIAMS: Okay. In the 

18 emissions monetization, DOE uses the most recent 

19 social cost of carbon values provided by an 

20 inter-agency process. The 2013 estimates of this 

21 are listed here, and DOE also monetizes NOx

22 emissions, which you can also see the average 
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1 values we use. These are the estimated results 

2 for CO2 and NOx, and we also do a utility impact 

3 analysis to estimate changes in electric 

4 installed capacity and generation resulting from 

5 the standards. You can see these results in the 

6 TSD.

7 We did an employment impact analysis. So 

8 the MIA estimates the direct impacts from 

9 employment. We use the ImSET model to estimate 

10 the indirect employment impacts, and we find that 

11 those are negligible over the small time frame 

12 that we use here.

13 Finally, we do a regulatory impact 

14 analysis to investigate impacts of non-regulatory 

15 alternatives to the mandatory standards, and 

16 again, there is a chapter for that in the TSD.

17 So these are the proposed standards, and 

18 that is all I have. Thank you.

19 MR. BROOKMAN: Thank you.

20 And now we are going to move on to the 

21 proposed standards.

22 Sam is going to --
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1 MS. [Alison] WILLIAMS: No. We're done.

2 MR. BROOKMAN: No? Okay.

3 There, you see a summary sheet, though, 

4 on Slide 89 and 90.

5 As we had promised this morning first 

6 thing, any closing remarks at this point? Any 

7 final statements?

8 Steve Rosenstock.

9 MR. ROSENSTOCK: Not a closing remark. 

10 Steve Rosenstock, EEI.

11 On Slide 90, I noticed in the burden side 

12 that there is no mention of the fact that the 

13 significant number of customers are going to have 

14 higher life-cycle costs. There is no mention of 

15 that whatsoever.

16 Thank you.

17 MR. BROOKMAN: Okay. thank you.

18 As we move towards closure, final remarks 

19 there? Closing comments?

20 Yes, please, Yoolanda.

21 MS. [Yoolanda] WILLIAMS: Yoolanda 

22 Williams, GE Appliances.
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1 First of all, I want to thank DOE for the 

2 opportunity to participate in this process. We 

3 recognize the amount of effort and hard work that 

4 goes into the analysis and into the NOPR.

5 There's been some discussion earlier in 

6 the meeting about certain SPVUs that were 

7 excluded from the analysis and the NOPR based on 

8 the fact that DOE considers them to be 

9 residential. Our position is that some of those 

10 products, again, we feel should be considered as 

11 commercial products.

12 In the case of GE, we sell both SPVU 

13 products and PTAC products. Those products are 

14 sold to the same types of commercial customers 

15 that are using similar applications, such as the 

16 lodging industry.

17 DOE, in their definition of PTACs, 

18 defined those as commercial products. Our 

19 position is that SPVUs are used in those same 

20 applications as PTACs and should also be 

21 considered as commercial products.

22 So we would ask the DOE to review those 
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1 applications and to treat those SPVUs, those 

2 products are commercial SPVUs, and include those 

3 in the analysis and in the NOPR -- or 

4 supplemental NOPR.

5 MR. MAJETTE: Okay. That is duly noted, 

6 and thanks for bringing that up.

7 MR. BROOKMAN: Thank you, Ron.

8 Other comments here in closing?

9 Dave, please.

10 MR. WINNINGHAM: This is Dave with Allied 

11 Air. 

12 And I would echo much of what Yoolanda 

13 said. We also make products, not of the exact 

14 same configuration, but that compete in different 

15 market arenas that was categorized and presented 

16 as today, and I think there are significant 

17 impacts to the market by not categorizing those 

18 as commercial.

19 Allied has been in that segment of the 

20 business for many years, and we strongly believe 

21 that those should be categorized as commercial 

22 products.
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1 In addition, I think given the many 

2 factors of what we probably think are inaccurate 

3 shipments, repair versus replace scenarios, that 

4 it is going to be difficult for DOE to establish 

5 clear and convincing evidence to go beyond ASHRAE 

6 90.1 and would strongly suggest that they review 

7 the levels that were proposed in 90.1 to ensure 

8 that they have established that clear and 

9 convincing, if they choose to go beyond that.

10 MR. BROOKMAN: Okay.

11 Final comments?

12 [No audible response.]

13 MR. BROOKMAN: I will turn it to Ron 

14 Majette for closing remarks.

15 MR. MAJETTE: Just in closing, I thank 

16 you very, very much for indulging for our late 

17 start this morning, and thank you for coming out. 

18 That's it.

19 [Whereupon, at 12:03 p.m., the public 

20 meeting concluded.]

21

22
187 

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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