1 U.S. DEPARTMENT OF ENERGY

3 *** 1 J

4 WATER HEATER WORKSHOP

5 ***

6

7 U.S. Department of Energy

8 1000 Independence Avenue, S.W.

9 Room 1E-245

10 Washington, D.C. 20585

11

12 Tuesday, June 14, 1997

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14 The above-entitled matter commenced pursuant to

15 notice at 9:05 a.m., before Jim Raba, Facilitator

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1 DEPARTMENT OF ENERGY STAFF PRESENT:

2 JIM RABA

3 CARL ADAMS

4 BRYAN BERRINGER

5 BILL HUEY

6 TERRY LOGEE

7 EUGENE MARGOLIS

8

9 ATTENDEES:

10 C. EDWARD BARBOUR, Arthur D. Little Inc.

11 JOHN E. BATEY, Oil Heat Manufacturers Association

12 DONALD M. BRUNDAGE, Southern Company

13 DAVID C. DELAQUILA, Honeywell Inc.

14 CHUCK FOSTER, Edison Electric Institute

15 DAVID B. GOLDSTEIN, Natural Resources Defense

16 Council

17 MARIE C. GUERRERO, National Rural Electric

18 Cooperative Association

19 WILBUR L. HAAG, JR., A.O. Smith Water Products

20 HAROLD W. HEISS, American Electric Power

21 ROBERT J. HEMPHILL, Gas Research Institute

22 CARL HILLER, EPRI

23 BERTRAM KALISH, American Gas Association

24 MARK KREBS, Laclede Gas

25 B.J. KUMAR, Energetics

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1 KIRSTIE L. KUMMER, American Gas Association

2 GEORGE M. KUSTERER, Bock Water Heaters

3 JOHN P. LANGMEAD, Water Heater Consortium

4 ERIC M. LANNES, Bradford White Corporation

5 JEFF LEMEN, Otter Tail Power Co.

6 DAVID F. LEWIS, Lennox International Inc.

7 STANLEY T. LIU, National Institute of Standards

8 and Technology

9 QUENTIN LOONEY, PRA, Inc.

10 JOSEPH M. MATTINGLY, Gas Appliance Manufacturers

11 Association

12 JAMES McMAHON, Lawrence Berkeley National

13 Laboratory

14 LAWRENCE S. MELENCHEK, Pennsylvania Power &

15 Light Company

16 PIERRE MOFFROID, Controlled Energy

17 R. DEAN MORRISON, Rheem Manufacturing Co.

18 STEVEN M. NADEL, American Council for an

19 Energy-Efficient Economy

20 JOHN NORTON, Controlled Energy

21 DARRELL PAUL, Battelle

22 MIKEL D. PISTOLE, Effikal International Inc.

23 WILLIAM M. PRYOR, State Industries, Inc.

24 JIM RANFONE, American Gas Association

25 ELLA C. ROGERS, Tennessee Valley Authority

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1 STEVE ROSENSTOCK, Edison Electric Institute

.a 2 MIKE RIVEST, Arthur D. Little

3 JAMES SAWRUK, General Machine Corporation

4 GLENN R. SCHLEEDE, EMPA Inc.

5 FRED SCHREINER, State Industries

6 SRIRAM SOMASUNDARAM, Battelle Pacific Northwest

7 National Laboratory

8 ANDREW G. STADNIK, U.S. Consumer Product Safety

9 Commission

10 FRANK A. STANONIK, Gas Appliance Manufacturers

11 Association

12 RICHARD STEIDL, Otter Tail Power Co.

13 CHARLIE STEPHENS, Oregon Office of Energy

14 OTTO Z. VAGO, State Industries, Inc.

. 15 TED A. WILLIAMS, American Gas Association

16 RICK ZAMBEK, American Water Heater Group

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1 PROCEEDINGS

2 MR. RABA: Good morning. Welcome, everyone. I'm

3 Jim Raba. I'll be your facilitator. On behalf of the

4 Department of Energy, welcome. Thank you for the time

5 you're taking to participate in today's workshop. We need

6 process for the water heater standards rulemaking.

7 Today we'll focus on the analytical framework and

8 information-gathering process for the water heater standards

9 rulemaking. We're going to lay out the tools and examine

10 them that are going to be used in the process.

11 My role is to observe, encourage and help you with

12 your discussions and, to make the meeting more successful,

13 to help you work effectively. Bryan Berringer is the team

14 leader for the water heater rulemaking standards.

. 15 If you have not already done so, please fill out

16 the information requested at the table, the check-in, and

17 check to see if you've picked up a copy of the draft water

18 heater rulemaking framework we're discussing today and the

19 Appendix B supplement, the Technology Assessment and

20 Screening Analysis.

21 Also, for those at the table, I would ask that you

22 would sign in with your name and organization in the order

23 in which you're sitting. Thank you. As we're doing this,

24 this is a good time to ask you to introduce yourselves, too.

25 Please speak into the microphone. This is for the record.

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1 Thank you. Go ahead, Otto.

2 MR. VAGO: Otto Vago, State Industries.

3 MR. BRUNDAGE: Don Brundage, Southern Company.

4 MR. ROSENSTOCK: Steve Rosenstock, Edison Electric

5 Institute.

6 MR. BATEY: John Batey, Oil Heat Manufacturers

7 Association.

8 MR. BERRINGER: Bryan Berringer, Department of

9 Energy.

10 MR. LOGEE: Terry Logee, Department of Energy.

11 MR. HILLER: Carl Hiller of the Electric Power

12 Research Institute.

13 MR. GOLDSTEIN: David Goldstein, Natural Resources

14 Defense Council.

. 15 MR. LANGMEAD: Jack Langmead, Water Heater Joint

16 Industry Research and Development Consortium.

17 MR. HAAG: Wilbur Haag, A.O. Smith Water Products.

18 MR. HEMPHILL: Bob Hemphill, Gas Research

19 Institute.

20 MR. RANFONE: Jim Ranfone, American Gas

21 Association.

22 MR. KUSTERER: George Kusterer, Bock Water

23 Heaters.

24 MR. MORRISON: Dean Morrison, Rheem Manufacturing.

25 MR. STANONIK: Frank Stanonik, GAMA.

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1 MR. MATTINGLY: Joe Mattingly, GAMA.

^ 2 MR. LEWIS: Dave Lewis, Lennox.

3 MR. SOMASUNDARAM: Sriram Somasundaram, Battelle

4 Pacific Northwest Laboratory.

5 MR. RABA: Thank you. Let's see if this one

6 works, too. We'll pass this around.

7 MR. PISTOLE: Mike Pistole, Effikal International.

8 MR. SAWRUK: Jim Sawruk, General Machine

9 Corporation.

10 MR. McMAHON: Jim McMahon, Lawrence Berkeley

11 National Lab.

12 MR. STEPHENS: Charlie Stephens, Oregon Energy

13 Office.

14 MR. RIVEST: Mike Rivest, Arthur D. Little.

. 15 MS. GUERRERO: Marie Guerrero, National Rural

16 Electric Cooperative Association.

17 MR. PAUL: Darrell Paul, Battelle Columbus.

18 MR. WILLIAMS: Ted Williams, American Gas

19 Association.

20 MS. KUMMER: Kirstie Kumar, American Gas

21 Association.

22 MR. PRYOR: Mike Pryor, State Industries.

23 MR. SCHREINER: Fred Schreiner, State Industries.

24 MR. ZAMBEK: Rick Zambek, American Water Heater

25 Group.

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1 MR. MELENCHEK: Larry Melenchek, Pennsylvania

2 Power & Light.

3 MR. DELAQUILA: Dave Delaquila, Honeywell.

4 MR. LIU: Stanley Liu, NIST.

5 MR. HUEY: Bill Huey, DOE.

6 MR. LEMEN: Jeff Lemen, Otter Tail Power Company.

7 MR. STEIDL: Richard Steidl, Otter Tail Power

8 Company.

9 MR. HEISS: Harold Heiss, American Electric Power.

10 MR. FOSTER: Chuck Foster, Edison Electric

11 Institute.

12 MR. BARBOUR: Ed Barbour, Arthur D. Little.

13 MS. ROGERS: Ella Rogers, Tennessee Valley

14 Authority.

. 15 MR. KUMAR: B.J. Kumar, Energetics.

16 MR. ADAMS: Carl Adams, DOE.

17 MR. MARGOLIS: Eugene Margolis, DOE.

18 MR. RABA: Thank you. Good group, good group.

19 Thanks a lot, everybody.

20 Now, for the opening remarks, I turn the meeting

21 over to Bryan Berringer.

22 MR. BERRINGER: Good morning. Thank you,

23 everybody, for coming today. As Jim said, I'm currently the

24 team leader for water heaters in the Office of Codes and

25 Standards. We also have on the team Bill Huey, who is not

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1 here now.

2 MR. HUEY: I'm here.

3 MR. BERRINGER: I'm sorry, Bill. Hiding back

4 there. Okay. Jim Raba is helping us facilitate today; Carl

5 Adams; Barry Berlin is not here; Gene Margolis from the

6 General Counsel; and Mark Friedrichs from Office of Policy

7 and International Affairs, who is not here at this time.

8 There is a recent change in the office. There are

9 some personnel changes. Terry Logee, who introduced

10 himself, will be taking over as lead on water heaters. I'll

11 also be involved on the team. I'll be moving over to

12 clothes washer team lead, and, again, I will be still

13 involved on that.

14 Again, on behalf of the Department of Energy, I

15 would like to thank everybody for coming and participating

16 at this meeting today, the first under the new process for

17 water heaters. This is our kick-off meeting to discuss the

18 procedures that were outlined in the July 15th process rule.

19 Again, we want to discuss the draft framework

20 report. We sent that out on June 11th. I hope everybody

21 has received that. If not, you can see Sandy. Today, we're

22 discussing the Appendix B as a supplemental to that report,

23 talking about, more or less, the technology in screening,

24 which we would like to discuss today in the afternoon and

25 get in a little bit more detail on that. Realizing that

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1 you've just seen it today, we'll open it up for comments

2 and, hopefully, we'll have a good discussion as far as those

3 are concerned.

4 Also, Carl Hiller has a handout, if you haven't

5 received it. EPRI has some meetings -- training seminar,

6 WATSIM, different things -- so if you're interested in

7 those, those are also available on the table.

8 Again, the screening and engineering analysis has

9 been done prior to this, so obviously it was done a while

10 back for the 1994 notice. Under the new process, all this

11 work -- the screening and engineering analysis -- would be

12 done before an ANOPR was issued. Here, we've already issued

13 a NOPR -- a notice of proposal making -- so we will be

14 reissuing that, and we're planning to do that in July of

15 1998.

16 Again, we sent a letter out on May 22nd announcing

17 this workshop and also, on June 11th, the draft report.

18 Again, the supplemental Appendix B is being provided today.

19 There also was a Federal Register notice on June 10th of

20 '97.

21 Comments received here today and those submitted

22 during written comment will be assisting the department in

23 developing a revised notice of proposal making. Written

24 comments, data submission for the workshop should be

25 submitted by July 31st of '97 unless otherwise justified.

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1 We can discuss that when we talk about the schedule. All

2 comments and data will be considered before we go forward

3 with the engineering analysis and a revised proposed rule.

4 Late comments will not be considered due to the time

5 committed as far as the schedule. Again, we'll discuss that

6 today.

7 I am the presiding officer for the workshop. Jim

8 Raba is facilitating the workshop today. In approximately

9 two weeks, we should have the transcripts available in the

10 Freedom of Information room, which is located right across

11 the hall in Room 1E-190. If you want to purchase them, you

12 can also talk to the court reporter about that.

13 The workshop will be conducted in accordance with

14 the Administrative Procedures Act and the DOE Organizational

15 Act. To provide the Department with as much pertinent

16 information that maybe viewed reasonable, we ask that you

17 express your views for the record.

18 The workshop will be conducted in accordance with

19 the following procedures. The focus of the workshop will be

20 to listen to your comments based on the framework document

21 and the supplemental Appendix B. We'll review the agenda,

22 expand on it if necessary, give everybody an opportunity to

23 discuss their topics.

24 DOE will remain the main lead speaker, but we're

25 going to have an open forum. We'll go through and have open

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1 discussion, so we don't want to do too much presentation.

2 Most of the slides are laid out for you. I would just like

3 to go through those and the questions.

4 We'll have a break about noon for lunch. Lunch

5 will be on your own. There is a snack bar one floor below

6 us for breaks. There is a cafeteria in the West Building,

7 and there's also restaurants up the street at L'Enfant

8 Plaza.

9 We ask that you do speak into the mikes. Say your

10 name and your company first before speaking, for the court

11 reporter. We ask that you keep all side conversations to a

12 minimum. If you need to, you can go in the back corner or

13 out in the hallway, if a lengthy discussion is needed.

14 Again, we'll try to keep to the schedule and get

15 everything in today. We may have to cut off some

16 discussion, so if anything is not completed today, there is

17 an opportunity for written comments for that. We're looking

18 at a time frame of July 31st for comment period. Again,

19 that's something we can discuss.

20 All written comments will be available for public

21 inspection in the Freedom of Information room. The phone

22 number there is 202-586-6020. Written comments should be

23 addressed to the Department of Energy, as noted in the

24 Federal Register notice. If you need that information, you

25 can get that from Sandy.

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1 We request that eight copies of the comments and

2 data be submitted. In addition, we would appreciate

3 electronic copies. We're currently using Word Perfect 6.1.

4 No faxed comments, please.

5 Any person submitting information that you feel is

6 confidential, you should submit one complete copy and then

7 six copies with the information deleted. In accordance with

8 the federal regulations, the department will determine

9 whether the information is exempt from public disclosure or

10 not. That cite is 10 C.F.R. 1004.11.

11 In keeping with the regulations of this facility,

12 there's no smoking allowed in the building. Rest rooms are

13 located on either ends of the hall. Again, we appreciate

14 the time and effort you've spent to come here today, and we

15 appreciate receiving your comments and your opinions.

16 I would just like to reiterate, we would like to

17 go over the draft report. I hope everybody has had a chance

18 to see that and review it, and also the Appendix B with the

19 supplement, which you received today.

20 At this time, I would like to turn it over to Jim

21 Raba for agenda review.

22 MR. RABA: Questions? Go ahead. Joe.

23 MR. MATTINGLY: Joe Mattingly from GAMA. Bryan, I

24 had one administrative question, too. Can we assume that

25 comments made during the workshop have the same status as

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1 written comments submitted later, so that we don't need to

2 repeat everything we've said during the workshop?

3 MR. BERRINGER: Yes. It will be on the transcript

4 and in the official record.

5 MR. RABA: Everybody get that? The comments in

6 today's workshop will be in the official record. Go ahead.

7 MR. LEWIS: Dave Lewis, Lennox. Since you had

8 made the comment that you would like to get comments, will

9 you be making the transcripts of these meetings available on

10 the Internet, as well?

11 MR. BERRINGER: We do have an Internet site. I

12 don't know that we've gone to that capability yet. We're

13 just starting up a web site. It's fairly new.

14 MR. LANGMEAD: Could I just -- even if you can't

15 right now, as you're requesting electronic submissions from

16 us.

17 MR. BERRINGER: Sure.

18 MR. LEWIS: So it would seem like it would be good

19 to have electronic submissions from you.

20 MR. BERRINGER: That's a good suggestion.

21 MR. RABA: That's good. Thank you. Good idea.

22 Other questions? Administrative questions? Housekeeping

23 items? Take a look at your agenda, please. Pull it out.

24 The purpose of today's workshop, the objective of

25 the workshop will be to discuss the process and methodology

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1 to be utilized throughout the water heater standards

2 rulemaking process. Again, we're going to examine the tools

3 of the process, and the outcomes, we hope, will be to agree

4 upon the process and the tools to be used for the water

5 heater rulemaking and to make some determination on how to

6 proceed with the screening and engineering analysis.

7 Now, for the agenda. We're going over the agenda

8 review right now. That's between 9:00 and 9:30. We'll keep

9 pressing on that and the topics for discussion today.

10 Looking at the rulemaking schedule, the framework

11 report, the issues for analysis, the analytical methods and

12 tools we're going to use, data requirements and data

13 collection methods == this will be very interesting --

14 industry characterization, identification of experts and

. 15 other interested parties, identification of contractor

16 qualifications.

17 Other issues, things that will come up -- we'll

18 put the other issues, when they do come up, on the parking

19 lot. They'll be later on your agenda, as well. And then,

20 the next steps. Where will we go from here when we're done

21 with today's meeting? An overview of the rulemaking

22 schedule.

23 MR. BERRINGER: That's getting into the next item.

24 Does anybody have anything else on the agenda they think is

25 missing or needs to be added or deleted from the agenda?

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1 Does it look acceptable?

2 MR. RABA: Thank you, Bryan. I missed that. But

3 yeah. Anything else for the agenda, any topics? We can

4 pick up some of those, too, as we go along. There might be

5 some item that does come up you'll think about, and again,

6 we can put it under other issues or work it in. Carl.

7 State your name, please.

8 MR. HILLER: This is Carl Hiller from EPRI.

9 MR. RABA: Thank you.

10 MR. HILLER: The issue of greatest contention in

11 the last ANOPR was, of course, bottom line translated as

12 outlawing electric resistance water heaters. I would like

13 to see a direct discussion of that point on the agenda.

14 It's kind of implied by some of these issues, and I think we

15 need to take a more direct approach to addressing that

16 issue.

17 MR. BERRINGER: Some of that may be addressed when

18 we go over the supplemental B, as far as the screening.

19 MR. RABA: And that issue again, please, Carl?

20 MR. HILLER: About whether or not you're going to

21 require heat pump water heaters -- translate, require heat

22 pump water heaters and/or outlaw resistance water heaters,

23 which was the effect of the last proposal.

24 MR. RABA: Okay. We'll have that in the parking

25 lot. That will be in the screening analysis part of the

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1 phase. We'll look there for the process. Thank you. We'll

2 keep that in mind. Charlie.

3 MR. STEPHENS: Charlie Stephens, Oregon Energy

4 Office. I don't see anything explicit here about the test

5 procedure status. Is that something that we're going to

6 discuss??

7 MR. BERRINGER: In the slide, slide number 3, we

8 have the schedule. We're looking at July to finish up, the

9 July time frame. In order to meet that, we're working on it

10 now. We had some discussion of maybe doing some peer

11 review, possibly, before we release that, before we go to

12 final rule, so we can meet that July time frame.

13 Right now, it's in the drafting phases, and we

14 still have to go through all the steps, as far as

15 internally, to get that approved. We didn't get into

16 detailed discussion on slide 3 in your handouts. We just

17 put it as finishing that by the end of July.

18 MR. STEPHENS: Yeah, I remember the workshop. I

19 haven't heard anything since the workshop, so I'm kind of

20 curious as to where we're going or what got changed, if

21 anything, or, you know, kind of an update on what you're

22 doing.

23 MR. BERRINGER: Well, we need to discuss more of

24 that with GC and Policy before we do that, but one of the

25 things, before we go to final rule, is to possibly do a peer

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1 review and send it out for comment. But before we talk to

2 General Counsel and Policy, I would like not to discuss the

3 issues or determinations until they're finalized.

4 MR. HILLER: I strongly encourage another round of

5 peer review before you go final. As long as we're on that

6 subject, I would just point out -- it will come up in the

7 discussions today, presumably -- but there are some energy

8 efficiency issues that either can be met or not met,

9 depending on what you do to those standards, like the

10 inclusion of the smaller water heaters and the smaller

11 gallons per day to do that. You can't meet the standards if

12 you do that.

13 So there are some issues that cannot be resolved

14 in the energy efficiency side of things until we resolve the

15 testing standards.

16 MR. RABA: Good point, good point. Thank you.

17 Further agenda items at this time?

18 [No response.]

19 MR. RABA: Just an overview of the schedule.

20 We're committed to publishing a final rule by July '99, not

21 too far away. Now, we're going to be asking, is this date

22 realistic? Shall we ask this now, Bryan? Is this date

23 realistic, July '99?

24 MR. MATTINGLY: That depends.

25 MR. RABA: What does the group think about it, the

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1 team?

2 MR. MATTINGLY: This is Joe Mattingly from GAMA.

3 One thing that's bound to come up today -- I know DOE is

4 sick of hearing me mention this, I've mentioned it so many

5 times -- there is another activity going on that may affect

6 the design of gas water heaters, and that is something

7 that's being closely supervised by the Consumer Product

8 Safety Commission. It has to do with an attempt to make gas

9 water heaters resistant to flammable vapor ignition.

10 Some of the water heater manufacturers have formed

11 a joint research project to try to attempt this and are in

12 that process, I think, well into it. Jack Langmead is here

13 representing the Water Heater Consortium.

14 The interpretive rule has in it a pledge by DOE to

15 mitigate the effects of overlapping regulation. We think

16 this is something that falls right under that rubric. It

17 will affect, or may affect, the schedule, not just the final

18 rule, but the proposed rule.

19 I can see it may be complicating this whole

20 information-gathering activity, which is difficult enough as

21 it is, but if you're trying to project ahead in order to

22 publish a proposed rule, what the predicted cost, price,

23 shipments of gas water heaters are, this is going to

24 complicate it, I think.

25 Of course, I think the manufacturers, if they're

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1 going to redesign gas water heaters, would like to do it all

2 at once, rather than one one year and the next year another.

3 And, more importantly, I think we better keep our

4 priorities straight here. We're certainly in favor of

5 energy conservation, but this other issue has to do directly

6 with public safety, and I want you all to keep that in mind.

7 Like I say, I've said this many times. We said it a year

8 ago, and we've said it several times since.

9 MR. RABA: Thank you. Health and safety are

10 always very important. We'll be sure we bring it up in the

11 screening. Bryan.

12 MR. BERRINGER: That's one of the reasons for the

13 next question. Keeping that in mind, if we can do some sort

14 of negotiated rulemaking where we could look at changes with

15 the safety issues and efficiencies at the same time and work

16 together on those issues.

17 MR. MATTINGLY: Again, whether it's negotiated or

18 whether it's done in a more traditional way, if it's more

19 difficult to predict the future because you don't know what

20 the technology is going to be to address these other issues,

21 it doesn't matter how you do it, it's still going to be

22 difficult.

23 MR. RABA: Indeed. Thank you. Steve.

24 MR. NADEL: Steve Nadel, ACEEE. Joe, since you

25 raised the issue about coordinating the schedules of this

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1 rulemaking with the work that's going on to address the

2 flammable vapor ignition issue, I was wondering whether you,

3 or perhaps Jack, could talk a little bit more directly about

4 what is the schedule and plan regarding addressing vapor

5 ignition so we can best understand it and try to get the two

6 schedules to coincide.

7 MR. LANGMEAD: Yes, I can address that, Steve.

8 The answer is no. No, you can't address that issue at this

9 time. Steve asked if you could address the schedule, and I

10 said no, you cannot at this time.

11 MR. RABA: The technologies are still being

12 explored?

13 MR. LANGMEAD: The technologies are being

14 explored. What they're doing is proprietary and

. 15 confidential. It can't be done at this point in time.

16 MR. NADEL: Anything about when you're hoping to

17 have certain information by or make certain points, or do we

18 just sort of keep going and hope that later they can

19 coincide?

20 MR. LANGMEAD: We have been asked to reevaluate

21 our schedule by CPSC. We have not completed that

22 reevaluation yet. Matter of fact, we haven't even started

23 that reevaluation yet. So I don't know when it will be

24 completed. But Steve, when we can coordinate, when we get

25 in a position that we can coordinate, we will coordinate.

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1 We are not in a position to coordinate at this present time,

2 but when we can, we will.

3 MR. RABA: Okay. That's good. Thank you.

4 MR. RANFONE: Just a question for DOE. If you

5 were to come out with a final rule in July of 1999, what

6 leeway does the law allow DOE to set an effective date? Is

7 there a five-year? Does it have to be five years after the

8 final rule? Could it be ten years?

9 Is there anything in the law that allows DOE to

10 take into consideration other attributes of what's going on

11 in the industry to establish a different effective date?

12 MR. RABA: Can I call upon our general counsel to

13 answer that question?

14 MR. MARGOLIS: We heard yesterday that the Program

15 Office was acting as general counsel.

16 MR. RABA: That's Gene Margolis, general counsel.

17 [Laughter.]

18 MR. MARGOLIS: The statute says that the effective

19 date shall be, say, three years or five years. That does

20 not say that it cannot be greater than that. I want to take

21 a look, and I'll give you an answer after the break this

22 morning. But I think that, in refrigerators, we have

23 slipped and given an effective date that's beyond what is

24 stated in the statute. Therefore, I don't see any reason

25 why we cannot do that with water heaters.

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1 MR. RABA: Thank you, Gene. I'll put that in the

2 parking lot for you. Any comments or questions on the

3 agenda?

4 MR. GOLDSTEIN: No, this is a comment on the

5 discussion of date. I think we need to hit at least the

6 schedule that's up there on the board of 1999 for the final

7 rule and should try to accelerate that as much as possible

8 within the Department's capabilities, the reason being that

9 the Department is already several years behind the statutory

10 requirement for when the standard is supposed to be out.

11 As far as coordinating with the Consumer Product

12 Safety Commission, I would certainly support anything that

13 coordinates and reduces the need to design twice, but you

14 can't coordinate with a moving target.

15 So my proposal is that the DOE go ahead with this

16 rulemaking, keeping in mind all opportunities for

17 coordination and taking advantage of them if they are

18 timely. But let's not wait for something when we don't know

19 what the schedule of it is.

20 MR. RABA: Now, you do make a good point there,

21 David. The second question here, what can be done to

22 elevate this schedule? Are there any thoughts as to what

23 can be done to elevate the schedule, make it move along

24 faster? Also, the question, is an effective date of 2002

25 acceptable, to the question that Jim had over there, too.

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1 So these two, let's take a look at these, as well.

2 What could we do to accelerate this?

3 MR. MATTINGLY: Jim, I think when you say,

4 "accelerate," I think Steve would say this, not that I'm

5 proposing negotiated rulemaking or anything, but you could

6 negotiate certain things to make the process work faster.

7 That doesn't mean you automatically accelerate the effective

8 date of the standard.

9 MR. NADEL: Right.

10 MR. RABA: Sure. Good point. Thank you. Steve

11 Nadel.

12 MR. NADEL: I would agree with Dave and Joe. I

13 think it's in everyone's interest to try to move this

14 rulemaking along as quickly as possible so that we have a

15 final decision, which doesn't mean that the effective date

16 is necessarily three years beyond. The sooner we resolve

17 it, the sooner the water heater manufacturers know what they

18 have to deal with. If we can do it sooner, that may give

19 you more than three years to prepare, for example.

20 MR. RABA: That's good.

21 MR. MATTINGLY: Steve, I think you just

22 mischaracterized what I said, but I wanted to clarify the

23 record on that point.

24 MR. RABA: Do you want to restate that?

25 MR. MATTINGLY: No. It's just that I said I

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1 wasn't necessarily advocating here a negotiated rulemaking.

2 I'm just saying that that wouldn't automatically accelerate

3 the effective date of the standard if we did it.

4 MR. NADEL: I'm agreeing with you.

5 MR. RABA: So I guess the thing is to get on with

6 the process, make some decisions, and then give the

7 manufacturers and everybody enough time when the effective

8 date goes into effect to fulfill what their requirements

9 are.

10 MR. STANONIK: If you look at the schedule that

11 you've mapped out here --

12 MR. RABA: What page is that on, Frank?

13 MR. STANONIK: Three.

14 MR. RABA: Three? Okay. Your agenda, your

15 handout, the big draft.

16 MR. STANONIK: The only thing I want to point out

17 is that I think, for all parties, if we focus on the block

18 of time from, basically, this July to next July -- I'm

19 saying, I think, maybe in another way what people have said.

20 If we focus on that and hopefully resolve many of

21 the issues of difference or whatever, it seems to me, if

22 anything, that the last time period potentially could end up

23 being shorter because, in fact, we've worked everything out

24 one way or another. Some of those final review periods

25 could be shorter.

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1 I guess my point is that if there is opportunities

2 to accelerate things, I see them happening not in the coming

3 year, but the year after that. It might be a little too

4 soon to predict that, but to me the period from July '97 to

5 July '98 is the critical one.

6 MR. RABA: Okay. Carl first. Go ahead.

7 MR. ADAMS: On some of our other rulemakings on

8 both refrigerators, as Gene Margolis has mentioned, as well

9 as the work that we're doing on clothes washers, our intent

10 is to try to get through the rulemaking process as quickly

11 as we can. At least by this schedule, if there are ways to

12 accelerate it, that would be very good.

13 That is not necessarily going to mean -- in fact,

14 it's not going to mean -- that we would pull the effective

15 date along with it, which is what we have done previously in

16 rulemakings. But in both the refrigerator rulemaking, where

17 we had some negotiations going on, the effective date is

18 beyond three years from the issuance date, and we are

19 exploring that possibility for clothes washers, as well, so

20 this could also be applicable in this case.

21 If we can get through the rulemaking, it wouldn't

22 mean that the effective date gets moved up with it. The

23 effective date is something that would be open for

24 discussion, certainly to the extent that it could be

25 coordinated with other things that are going on, such as the

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1 Consumer Product Safety Commission work.

2 MR. LANGMEAD: I just wanted to point out some of

3 the things that are going to be extremely difficult, as

4 Frank noted, to handle. That's why I answered Steve Nadel

5 as I did.

6 During the '97-'98 time frame you've got two

7 activities in there that are extremely difficult to get

8 done. One is the revised engineering analysis, about the

9 third one or fourth one down. Down further on, you've got

10 the manufacturing impact analysis. In those time frames, in

11 the time frames you've got set, it's going to be extremely

12 difficult to do those tasks that are critical in looking at

13 whatever standard you're setting. They can be done.

14 MR. RABA: Sounds like a challenge. How could we

15 do those, do you think? We'll have to cross it when we come

16 to it. Steve.

17 MR. NADEL: Yeah. Picking up on my understanding

18 of what Joe said, what I'm wondering is if we should proceed

19 with the rest of the agenda and then come back at the end to

20 the agenda. To the extent we worked out certain approaches

21 to deal with different issues, it will give us a much better

22 sense to say, okay, it's two months here, four months here.

23 There may be some things we have shortened. There may be

24 some things we'll lengthen. But let's work on the process

25 and then come back to the schedule.

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1 MR. RABA: That sounds good. How does the team

2 feel about that? Are you okay about that? Because then I

3 think we'll get some idea of what's involved as we go

4 through and see what these little gray bars up here really

5 have inside them, in the details there, too. So we could do

6 that. We'll come back to this. We can take a look at this.

7 But this will just give you an idea of a ballpark where the

8 schedule is, at least projected that it could be, and we can

9 always take a look at that for sure.

10 We'll have discussion on the rulemaking framework

11 and the items that will be included in the framework

12 discussion, the issues for analysis.

13 MR. KUSTERER: Excuse me. I have a question.

14 MR. RABA: Yes, go ahead, George.

15 MR. KUSTERER: On page 2, we have three questions.

16 MR. RABA: Okay.

17 MR. KUSTERER: Each sentence ended in a question

18 mark, yet I didn't hear any answers. Am I missing

19 something?

20 MR. BERRINGER: I think what we were suggesting is

21 that we come back to the schedule after we've gone through

22 the process and see what we can do to modify the schedule.

23 So we'll come back to this later on -- the schedule, itself.

24 MR. RABA: I think any time we do things like that

25 we have a tendency to lose them, and then it's 4:00 and

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1 everybody wants to leave.

2 So we have those in the parking lot for later on,

3 and I appreciate the emphasis, also, that we do capture

4 those as we go along. Thank you, George.

5 So in our open discussion on the framework for the

6 rulemaking, the issues for analysis, the methods and tools

7 of the analysis, the data requirement and data collection

8 methods, industry characterization, identification of

9 experts and other interested parties, and the contractor

10 qualifications. Again, you can see the breaks. Discussion

11 of the rulemaking framework pretty much throughout the day

12 today. Any final issues to be resolved and maybe even

13 revisit the schedule a little bit. If someone does have to

14 catch a plane early, we can maybe readjust as we go along

15 later in the day, see how we progress through the breaks and

16 after the lunch, to see where we are in our workshop today.

17 I may make some adjustments to the schedule if we need to

18 today. Then the next steps thereafter will really be based

19 upon what the outcome of today's session is about, what

20 we're going to do next. Then, how to improve future

21 workshops, give you a handout, some suggestions to get fed

22 back to us how we can make these better for your behalf.

23 and then, I guess, dismissed for the summer or something. I

24 don't know. School's out. So anyway, let's proceed.

25 From that agenda, is there anything else, any

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1 comments, other issues? We've heard some already about

2 what's going to happen to heat pump water heaters and

3 resistance water heaters and the effective date of the rule

4 and the schedule. These are agenda items to add, issues.

5 In the back, your name, sir.

6 MR. NORTON: John Norton from Controlled Energy.

7 I have a question about the agenda. The TDS is appended to

8 the document, and I'm wondering if the assumptions that are

9 contained in the TDS will be addressed at all in the agenda

10 today so that we can put them into the process.

11 MR. RABA: Bryan, can you help me? Will the

12 assumptions in the TDS be addressed today?

13 MR. BERRINGER: You're referring to the TSD?

14 MR. NORTON: I'm sorry, TSD.

. 15 MR. BERRINGER: That's one of the items, when we

16 talk about engineering analysis and so forth, as far as what

17 needs to be updated in that, but I think, if we go through

18 the slides and the framework, I think a lot of the issues

19 will come out, and that's one of the things that we will

20 talk about, updating the analysis and so forth.

21 MR. NORTON: Thank you

22 MR. RABA: Okay. So today's workshop is in

23 keeping with the process rule that was published in the

24 Federal Register on 15 July '96. It's open to two-way

25 communication, that communication being between the

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1 Department and the stakeholders during the process of

2 rulemaking.

3 So this, as you can see, is a much more open

4 forum, certainly more give-and-take discussion, not the

5 talking heads there used to be in the past. I think we've

6 come a long way with improvement in the process of our

7 rulemaking as we go along.

8 I notice a lot of familiar faces here, some new.

9 We did it the first time we met -- oh, some months ago --

10 for water heaters. We went over some ground rules for our

11 workshop. I think we're close enough to each other --

12 figure of speech, of course -- that we can change it into

13 norms, norms for our meeting.

14 If we can take a look at these and see if we can

15 kind of adopt some of these -- that we could speak one at a

16 time. Say the name and organization for the record, please.

17 Listen as an ally; we're working together. Focus on the

18 process, the information-gathering issues in the process,

19 and not on individual products. They're very important, but

20 we're looking to use the process to get to those.

21 The format for our discussion is informal. Maybe

22 if you see less of me and more of Bryan in your own

23 discussions you would be better off. But indeed, informal

24 discussion today and, yes, there will be a public comment

25 period afterwards. What we capture today in your comments,

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1 in the transcript, will be certainly carrying a great

2 weight, as they would for written comments, as well.

3 Any other norms or ground rules or things to add

4 to this list, perhaps, that would help?

5 [No response.]

6 MR. RABA: Okay, great. Everybody happy? Okay.

7 Thank you. So we do appreciate the time and the effort you

8 put into preparing and spending with us today at the

9 workshop. So Bryan, over to you.

10 MR. BERRINGER: Jim, if you would put up slide

11 number 4. Basically, the slides from here on in address the

12 process in the draft, an outline of the draft framework

13 report.

14 If you could turn to page 2 in the draft framework

15 report, this is the framework or, really, the process.

16 Obviously, not everything is in there, but the major steps

17 and the approaches, the inputs and the outputs and how

18 everything should flow under the new process is laid out

19 there. Of course, the numbered blocks are the major steps

20 and, really, the outline of what we're going to discuss

21 today.

22 Does anybody have any comments about this

23 particular figure, as far as the way it's laid out? Is

24 there something missing? I know a lot of the water heaters,

25 we've gone to the TSD stage. We haven't gone through all of

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1 the full analysis of flow water heaters. Does anybody have

2 any comments, questions about the flow chart?

3 MR. KUSTERER: What flow chart are you looking at?

4 MR. BERRINGER: Page 2 in the draft report.

5 MR. HILLER: My primary comment would be, the

6 devil is in the details. While you list this here, the

7 success or failure of this approach -- the approach is

8 somewhat vague here depending on exactly what it is that

9 gets considered and how it gets considered, and it's those

10 details that make or break the success, more so than the

11 general outline.

12 MR. ROSENSTOCK: I guess one thing that also might

13 be nice -- I guess following up with Carl Hiller -- is to

14 give some sort of estimated weighting -- you have basically

15 15 steps here. Some people might be interested to see, you

16 know, is there any sort of impact or what -- for example,

17 let's say step 11 has so much impact on the overall

18 analysis, or maybe a key gate on some of these, as well.

19 I mean it shows kind of equal weighting at the

20 various times. I mean is there an equal weighting for all

21 of these steps, or do certain steps have a higher impact on

22 the process than others? That's my only comment.

23 MR. BERRINGER: I would say, at this point,

24 different products will have different weights. We're just

25 looking at the key outputs for all the process. So, at this

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1 point, we do not have any specific weight, but that's

2 something we could look at.

3 MR. HILLER: Just to expand on what I was talking

4 about, if you looked at the box that says Life Cycle Cost

5 Analysis, you could come up with just about any answer you

6 want out of that, depending on how you do that. There are

7 so many ways of doing life cycle cost analysis.

8 For example, certain technologies, like heat pump

9 water heaters, ought to be done on a regional basis, because

10 they make some sense in some areas and don't in other areas.

11 If you analyze it that way, then you'll find that out. If

12 you don't analyze it that way and you try and use some

13 national average, you get an entirely different result. So

14 there's a lot of details about exactly how you do things

15 that will determine your conclusions.

16 MR. BERRINGER: Are there any more comments about

17 the figure? We can get into a little bit more detail as we

18 go through the report and the different areas.

19 If there's other issues for specific engineering

20 analysis, life cycle costs, any of the major steps, we can

21 raise that as we go through there. We're really looking to

22 see what tools the water heater industry, what this group

23 wants to use in the process that we can use to come up as

24 far as a good rulemaking, to see if we can get some sort of

25 agreement on that and what the best methods and approaches

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1 are. So if we could go ahead and proceed.

2 One of the things -- and a lot of this information

3 is in the Appendix B, talking about the technology and

4 market assessment. We're just concerned what information

5 should be in the market assessment, and should the

6 information be distributed for a comment period?

7 A lot of the information that we're looking at is

8 public information, so we're not looking to look at

9 confidential information, but would people feel that this

10 information should be distributed, and what information can

11 be collected?

12 MR. RABA: Comments? Thoughts?

13 MR. BERRINGER: What about any initiatives? I

14 know there was water heating collaboration. Are there any

15 other groups, like voluntary programs that are out there

16 that would be advocating efficiencies, that we could look at

17 also? Is anybody aware of any initiatives from that

18 standpoint, non-regulatory programs?

19 MR. GOLDSTEIN: Yeah. At least a couple of years

20 ago, the northwest put together specifications for electric

21 water heaters with an EF of .94, maybe. At any rate, it's

22 something that can be looked up and you should find, because

23 a lot of products were redesigned to meet that.

24 MR. HILLER: There have been a variety of

25 encouragement efforts, if you want to call them that, by the

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1 electric utilities around the country, you know, for a

2 number of years, giving incentives for people to put in

3 higher efficiency water heaters or giving rebates for heat

4 pump water heaters, that sort of thing. So there have been,

5 and there are still, some of those programs ongoing, and

6 they work.

7 MR. ROSENSTOCK: To follow up with Carl Hiller,

8 there has been a lot of publications information and

9 seminars on water heaters, advances in water heaters. EPRI

10 has put out software. The ACEEE has there consumer guide to

11 savings that lists a whole range of, on the residential

12 side, what water heaters are out there and what the

13 efficiency ranges are.

14 So there are plenty of non-regulatory information

15 out there and programs out there. Some are on a national

16 bases; some are regional; and then some are local. I don't

17 know how much detail you're looking for, Bryan. There's

18 activities all over the place. So again, I don't know.

19 Some have obviously been more successful than others, but

20 there's a lot out there.

21 MR. STANONIK: A couple of points. First of all,

22 as far as gathering information on what products are out

23 there, you can probably identify what is offered. I'm not

24 aware -- in fact, I would love to see, if somebody has got

25 it, information that tells you what's actually in the field

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1 at different levels of efficiency. We've never collected

2 that data, and I'm not aware that other folks have.

3 As far as the issue of other initiatives, you can

4 consider this second-hand information, but, certainly for

5 the last few years, I've been hearing that utilities are

6 tending to get out of the incentive business rather than

7 adding or having more and more companies getting involved in

8 it.

9 Now, I don't pretend to even know what's driving

10 that, but I think what I'm hearing is that, in fact, that's

11 becoming a less popular thing and, as I say, a lot of

12 utilities are looking to stop doing that.

13 Changing slightly in this market assessment, one

14 of the things you mentioned in the draft is looking at

15 manufacturer market share. I just want to point out, I

16 think it is probably worthwhile and necessary for DOE to

17 have a sense of -- I'm going to call them orders or

18 magnitude of types of manufacturers.

19 I don't know that you need -- in fact, I would

20 encourage you not to get to the level of detail of trying to

21 figure out, okay, exactly within plus or minus 2 percent,

22 what is each manufacturer's share. That's really not

23 critical to the analysis.

24 What will be critical to the analysis is the

25 ability to distinguish, perhaps, from -- I'll give you an

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1 extreme example -- somebody like a Bock, whose primary

2 product is residential oil-fired water heaters, where the

3 whole industry probably sells 50,000 a year, give or take,

4 as opposed to a manufacturer who has a full line of gas,

5 electric and oil, where, if you totaled all those shipments

6 now, you're looking at more like 8-1/12, 9 million a year

7 for the whole industry.

8 So I think the key point, when you look at

9 manufacturers/market shares is, again, to identify -- and

10 I'm not sure what those categories are going to be -- but

11 identify categories of manufacturers relative to their

12 levels of business, rather than saying Company X has this

13 much of the market, Y has this much, whatever. You don't

14 need that. Plus it's a lot easier.

15 MR. NORTON: This market assessment, I presume it

16 addresses the U.S. market for water heaters but I think it

17 should be useful for DOE to look, at least in a broad brush,

18 at the market share of technologies outside of the U.S.,

19 because that distribution of technologies to market share is

20 considerably different than it is in the United States, and

21 it would inform your process here, I think.

22 MR. RABA: Thank you.

23 MR. STANONIK: With all due respect to that

24 opinion, I think if DOE goes too far into that we're going

25 to have another heat pump water heater rule situation, where

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1 you're going to, in fact, try and turn the industry upside

2 down. Or we can talk about horizontal clothes washers or

3 whatever.

4 If you start considering other technologies that,

5 in fact, aren't the mainstream in the United States, you're

6 asking every major water heater manufacturer to turn their

7 production upside down, and we'll be back here in another

8 three years talking about another schedule and everything,

9 because it will be a replay of the heat pump water heaters.

10 MR. KUSTERER: I agree with my colleague, Frank.

11 We have the technology here in the United States. In fact,

12 not to disagree with the gentleman from CEC, but the

13 majority of water heating appliances throughout the world do

14 not use water heaters. It is an American technology, and

15 most of us actually ship overseas. So I would strongly,

16 strongly say that we evaluate what we have here and not look

17 at other markets.

18 MR. RABA: In the back, please.

19 MR. MOFFROID: Yes, Pierre Moffroid, president of

20 Controlled Energy, to dispute that and to make an analogy.

21 For example, the world uses the metric system; the United

22 States is still not using the metric system. The world is

23 using a technology that is not a storage tank; it is mostly

24 instantaneous, on-demand water heater. We just ask that

25 that kind of technology be recognized, since it is worldwide

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1 and that it has a test method to it specifically.

2 MR. RABA: Good points on both sides. You might

3 want to hang on to that down there for now. Thank you.

4 Steve.

5 MR. NADEL: Just to add one or two comments on

6 some of the points that have been brought up. There has

7 been a lot of activity by electric utilities in the past to

8 promote higher efficiency water heaters.

9 There has also been some activity by gas

10 utilities, as well. I think, particularly in the northwest,

11 there have been a number of programs where the gas utilities

12 have been promoting higher efficiency equipment, as I

13 recall. Typically, and they were .61, .62 energy factor

14 type range.

15 The other thing is, I would agree with Frank in

16 terms of looking at market share information. You don't

17 need to go into too much detail, but there are a couple of

18 published industry summaries where people have made educated

19 guesses and so on, and those should be adequate -- you know,

20 things like the News in Appliance magazine and a few others.

21 MR. RABA: Okay. We got that, too. Thanks,

22 Steve. I've got the idea of both comments preceding, too,

23 on the board up here. We captured those, as well, keeping

24 them for evaluation for later on.

25 Further questions or comments on this topic?

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1 Bryan? Go ahead, Steve.

2 MR. ROSENSTOCK: Just a quick one. On the last

3 line, Data Request Forms, in Appendix A, it asks about the

4 shipment-weighted energy factors. The only comment I would

5 have is that, if the test procedure is changing and the

6 definition of energy factor is changing, for the data

7 request form, I don't know whether you're going to be able

8 to go back to the old definition or new definition.

9 If it changes in the next month with the new test

10 procedure, you might want to highlight that on the form,

11 because they might be using the old definition, rather than

12 the new definition.

13 MR. GOLDSTEIN: I think that's a really important

14 point, that if you're going to go to all the trouble of

15 collecting data, you've got a test procedure teed up, you

16 should make sure that it's timed such that the new procedure

17 is out first and the data collection is on the new test

18 procedure, because otherwise you have the risk of comparing

19 apples and oranges.

20 MR. RABA: Say that again, David, about the test

21 procedure.

22 MR. GOLDSTEIN: I'm saying it is crucial to get

23 the new test procedure published and out in the real world

24 so that, when the data requests go to manufacturers, the

25 data received is in terms of the new test procedure.

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1 MR. RABA: Thank you. Continue.

2 MR. BERRINGER: One of the things that I have next

3 is Appendix B. We'll save the detailed discussion for

4 later. There was a question about the TSD. On page B-7,

5 Table 6 lists the design options for gas, oil, and electric

6 storage type water heaters. Again, a lot of this

7 information was in the TSD, and if you had seen the data

8 collection forms, it was addressed there.

9 Are there any technologies or design options that

10 needed to be added? Again, we'll discuss later what should

11 be eliminated as far as the screening process. Also, one of

12 the things we'll talk about that Joe had brought up is the

13 baseline unit for gas may change with the redesign, as far

14 as the CPSC requirements. But based on what we know today,

. 15 these design options look reasonable.

16 MR. HILLER: I think it is unfair to hand us

17 something and, five minutes later, ask us to comment on the

18 appropriateness. I, at least, need most of the day to read

19 through this document that you gave us and see what's in

20 here and what's not in here. I'm not prepared to glance at

21 this list in 10 seconds and say yes, everything's in here

22 that needs to be in here.

23 MR. BERRINGER: Okay, fine.

24 MR. HILLER: I'm on page 2 of the document so far.

25 MR. STANONIK: Bryan, are you specifically looking

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1 for additions, or -- which?

2 MR. BERRINGER: If there's additions or if there's

3 things that you think that should -- we can discuss it later

4 this afternoon. I realize, Carl, that we gave this out to

5 you today, and that's why we're leaving comment period.

6 But, based on what was already out in the TSD and what was

7 in the framework document as far as in the data collection,

8 people had an idea of what technologies made sense and what

9 technologies didn't. But again, I have that for further

10 discussion this afternoon, so we can do that then. A

11 question in the back?

12 MR. RABA: There's one in the back there.

13 MR. NORTON: We're in a bit of a quandary here

14 because, in the first page of the TSD, it says that the

15 water heater technology that we represent will be considered

16 within the rubric of the gas-fired storage tank water

17 heater. I'm speaking specifically of the gas-fired

18 instantaneous water heater. We've got a problem with that

19 whole idea.

20 But then, when you move to this discussion of the

21 technology options, you're looking only, I presume, at

22 technology options related to the improvement of the

23 performance of storage tank water heaters.

24 If that's correct, then we have no comment on that

25 particular table, but we definitely want to make the point,

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1 hopefully not ad nauseam, that the gas-fired instantaneous

2 water heater is a different technology that needs

3 consideration in a different context in the storage tank.

4 MR. HILLER: Just very quickly looking at the

5 list, I see one right off the bat that ought to be on here

6 that's not, and that's consideration of the use of outdoor

7 air for combustion.

8 MR. STANONIK: Disagree.

9 MR. HILLER: I didn't say they had to use it. I

10 said they should consider it.

11 MR. STANONIK: It's not a design option. In terms

12 of the efficiency of the water heater, it's not a design

13 option. If we want to drag in whole-house energy combustion

14 and all that it entails, we can drag it in, but in terms of

15 the test procedures and the efficiency of the water heater,

16 the issue of whether it uses outdoor air or indoor air

17 doesn't matter, not to any high degree.

18 MR. HILLER: There may be other activities that

19 will force all gas appliances to look outdoors for their

20 air, but they shouldn't be efficiency standards.

21 MR. RABA: I'll just capture that up on the board.

22 We have both sides, now, of that, too. Just the notion of

23 considering the outside -- it may be unconsidered, but we

24 can still put it up here. George, you had your hand up.

25 MR. KUSTERER: There are a few that I disagree

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1 with, but one that strikes me right away is condensating

2 flue gases for oil-fired equipment. On B-17 it says it

3 doesn't work; your Brookhaven National Laboratory says it

4 doesn't work; and everybody else in the world says it

5 doesn't work, so why do we have it in there?

6 MR. BATEY: I'm formerly with Brookhaven National

7 Laboratory, and I concur with what George said. There was a

8 lot of effort going into this program many years ago.

9 Basically, when you look at what the benefits are versus the

10 cost, it doesn't make sense. That's why the program for

11 boilers was terminated many years ago.

12 MR. KUSTERER: I would also have to eliminate

13 pulse combustion. It works fine for gas, but it doesn't

14 work for oil.

15 MR. MATTINGLY: Bryan, are we going to have a

16 chance to do this this afternoon?

17 MR. BERRINGER: Yeah. I just wanted to see if

18 there was anything that's missing, but we will get into

19 further detail this afternoon.

20 MR. RANFONE: I have a question for Bryan on the

21 baseline unit.

22 MR. BERRINGER: Yes.

23 MR. RANFONE: In your write-up, you chose to use

24 .57. Are you suggesting you're going to use .57 as a

25 baseline unit, or .56? Why wouldn't you use the NAECA

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1 requirement of .54?

2 MR. BERRINGER: That's something we can discuss.

3 As far as what the baseline, out of the GAMA directory, I

4 know we've discussed it off-line. What the baseline is now,

5 what's showing in the GAMA directory, is why that level is

6 high.

7 MR. RANFONE: Well, my point is, it says on

8 section 2.2 on page 5, for each product class the baseline

9 unit generally represents a model with the maximum allowable

10 energy use specified by NAECA, as amended. If that's the

11 case, then that would be the .54 for a 40-gallon water

12 heater, not .57 or .56, because I don't think you do that

13 for the other energy sources. I think an analysis of a

14 directory doesn't give you an indication of what the cost

15 effectiveness of it is. I mean it doesn't mean anything.

16 MR. GOLDSTEIN: David Goldstein, agreeing with Jim

17 Ranfone on that. What is clearly going on there is at least

18 a two-part national market, one for the new construction

19 market in California where there are credits for

20 high-efficiency water heaters.

21 I don't have any data, but anyone who works with

22 builders knows that about at .60 is the typical water heater

23 for a new construction in California. That's going to

24 weight the national average up, but it's not typical of what

25 the standard is affecting. So I think Mr. Ranfone is on the

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1 right track with his recommendation.

2 MR. RABA: Jim, which water heater did that

3 effect, please?

4 MR. RANFONE: It's the gas water heater analysis,

5 section 2.2, the comment in there of using a baseline of

6 .56.

7 MR. RABA: Okay. Thank you.

8 MR. HILLER: Just to ask for clarification, you

9 got the .56 by counting the number of models in the

10 directory, or did you get that from manufacturer-weighted

11 shipments? It certainly looks like you've been inconsistent

12 between the three types of water heaters. I'm trying to

13 understand why. Maybe it was just an oversight. You

14 certainly can't count the number of models listed and take

. 15 the average that way, because that doesn't represent a

16 market-weighted average.

17 MR. BERRINGER: Well, those are some of the things

18 that we've asked, if these values are correct or if the

19 descriptions are appropriate for this. So we are looking

20 for your feedback if there's better numbers and what should

21 be used.

22 MR. HILLER: It seems to me you ought to be using

23 the minimums allowed by the current regulations, unless

24 you've got some other really strong justification for using

25 something different. You've certainly done that in the

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1 other two cases.

._ 2 Matter of fact -- I haven't finished reading this

3 document yet -- but for the electrics, in the original

4 preliminary mailing on June 11th, you were using an energy

5 factor that was below what was allowed by the legal minimums

6 -- I'm hoping due to round-off error. But the inconsistency

7 was very visible.

8 MR. RABA: Thank you.

9 MR. STANONIK: Just one final point regarding to

10 whatever extent you may have used our directory. Even just

11 counting the listings in the directory and taking the

12 average, that's just plain incorrect, because what you need

13 to identify is what are the base models.

14 There is a lot of name branding that goes on the

. ~15 in the water heater industry. There is a lot of redundant

16 listing, because if Sears wants a listing, we're going to

17 give them a listing. But Sears is getting models from

18 somebody else, and that's just a redundant listing.

19 So when this draft document talks about average EF

20 for models on the market in 1995 was .564, if you just

21 counted all the listings and did the math and came to an

22 average, the fact is that fact is wrong.

23 Whoever is doing that has to apply some additional

24 knowledge to identify what are the basic models, pull those

25 out, and then look, if you want to see the average of what's

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1 offered. But, following up what Carl said, that doesn't

2 tell you what got sold, which is the critical thing.

3 MR. BERRINGER: In the Appendix B on Tables 4 or 5

4 and 6 is where the models are listed. Now, as you said,

5 they may not be the sales. It may be just something else we

6 have to look at. These models are out there, and maybe

7 they're not the average model or the best-selling models.

8 So that's something we have to look at.

9 MR. STANONIK: These energy factors look high to

10 me compared to what probably is being mostly sold.

11 MR. NADEL: Let me ask a question on this. Does

12 GAMA collect data from its members and try to develop a

13 sales-weighted average? I know the other trade associations

14 do. I know you do for furnaces. Do you do it for water

15 heaters?

16 MR. STANONIK: Not on water heaters.

17 MR. HILLER: My comment about looking high was

18 specifically on the gas water heaters.

19 MR. McMAHON: Bryan.

20 MR. BERRINGER: Yes.

21 MR. McMAHON: Jim Lutz from LBL was involved in

22 this. I'm sorry that he's not here. He's ill. I believe

23 the methodology here was to try to identify from the

24 directory the baseline model for each manufacturer. So I

25 guess the question is, are there models that have lower

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1 energy factors than the ones in these tables that should be

2 used as the baseline models, or are these the baseline

3 models currently offered for sale on the market?

4 MR. STANONIK: No, there's models at the federal

5 minimum, .54. They're listed.

6 MR. ROSENSTOCK: Just as another clarification for

7 the electric storage water heaters -- I think Carl was

8 saying -- I think there is a rounding off error. The

9 calculation would make the minimum .864, rather than .86.

10 So in some of your calculations it will. I don't know

11 whether you want to take it out to three digits or not.

12 MR. BERRINGER: No.

13 MR. ROSENSTOCK: You might want to.

14 MR. RABA: Do some speed reading. Further

15 comments at this time? We can revisit this later on, as

16 well, when you've had a chance to look at it and digest it

17 some more.

18 MR. HILLER: I think we're all going to need time

19 to read this Appendix B before we make too many more

20 comments. We're all shooting from the hip now.

21 MR. RABA: I read it on the bus last night, coming

22 home, in about 45 minutes. It was good. It kept me awake.

23 It was good. It's good reading.

24 Let's move on, then. What do you say? Want to?

25 We can pick this up as we go along. I'll keep this posted,

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1 and we can keep adding to some of these ideas and thoughts

2 and issues and whatever as we go along so that we capture as

3 we proceed.

4 MR. BERRINGER: We'll get into that. Again, we'll

5 leave Appendix B as, definitely, we anticipate comments. We

6 didn't expect you to do that. We just wanted to look at

7 what technologies you thought that were out there and leave

8 it open for further written comment and discussion.

9 So if we could just go into preliminary baseline

10 shipment forecasts. We asked what existing baseline

11 initiatives -- examples, DSM programs -- should DOE

12 consider? What approaches could be used to establish the

13 base case shipments? What information sources show past

14 shipment data be efficiency level, which we've sort of

15 touched on? Are the data requests in Appendix A

16 appropriate? So this is sort of what we touched on.

17 I think -- pointing to what you're saying, Frank

18 -- we don't really have any shipment data as far as

19 efficiency levels. Are there any sources or any place that

20 we can obtain that type of information? Manufacturers

21 willing to give that information, as far as confidentially?

22 MR. MATTINGLY: I think, in the past, a lot of

23 information gathering has been done through GAMA. Again,

24 it's based on the willingness of our members, of course, but

25 GAMA continues to offer its good offices to collect and

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1 aggregate average -- whatever has to be done -- information

2 you need, if we can get it.

3 MR. BERRINGER: One of the things we looked at as

4 far as the base case and as far as shipments and so forth,

5 methods, are there any other methods that we could use to

6 look at efficiency levels versus shipments or project the

7 sales or anything as far as that? Is there another option

8 we could use for the analysis that anybody is aware of?

9 MR. STANONIK: This might be a -- let's call it

10 kind of a secondary approach. I think somewhere in here I

11 remember seeing that DOE was also planning to do some kind

12 of forecasts of energy prices. I believe that, if you had a

13 forecast of energy prices that you had some pretty good

14 level of confidence in, you could almost use that data to

15 predict product shipments in the absence of new standards.

16 That's easier to do after the fact if your

17 forecast predicts that there's not going to be a lot of

18 change in energy prices, because in that case you could

19 reasonably say the market's not going to change much.

20 Conversely, if DOE's crystal ball said that, oh my

21 God, in the new millennium energy costs are going to go

22 through the ceiling, you would be totally justified in

23 saying that the shipment forecasts without new standards are

24 going to change dramatically. History shows you that. But

25 granted, that would not be a direct measurement or a direct

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1 forecast. As Joe said, to the extent we can get

2 information, we'll provide it, but it might give another way

3 to do it.

4 MR. RANFONE: Question for Bryan. How did you do

5 it for the first round, when you proposed it? How did you

6 get those numbers, the projection?

7 MR. BERRINGER: I don't know. Would you know,

8 Jim?

9 MR. McMAHON: The method was to use the

10 residential energy model, the forecasting model that's at

11 LBL, and that has algorithms that are sensitive to energy

12 price and the price of the equipment. We ran that out using

13 the DOE forecast of energy prices to get the shipments. It

14 was done for two markets -- hew construction and exiting

. 15 homes.

16 MR. RANFONE: As far as the gas proposal, I think

17 it was adequate, and I would urge you to continue using the

18 same model with the same assumption.

19 MR. LEWIS: While I generally agree with what Jim

20 Ranfone just said, I would also state that if you are going

21 to be using the historic black box models, which had a lot

22 of discussion during several workshops, it would certainly

23 be beneficial for a very simple explanation to be available

24 to the public, to the manufacturers, as to how those results

25 came about, because I think the whole goal of this is a much

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1 more transparent process.

@s 2 I'm concerned whenever I hear that we would go

3 back to what we had been using before, where a lot of

4 suspicion existed. That's not to say that the model is bad,

5 necessarily. It's just that the information and how you got

6 there needs to be available to all of us.

7 MR. RABA: Yeah, part of the process improvement,

8 certainly, is to make more transparent that proverbial black

9 box, surely. We'll do the best we can there.

10 MR. GOLDSTEIN: That's something very easy to

11 implement, and, for all I know, the contractors may be

12 trying to do that already. If you come up with a simple

13 spread sheet model that predicts shipments, you will see,

14 first of all, that it tracks within reasonable accuracy the

. ~15 LBL models, so you can see that there aren't any mistakes

16 being made.

17 Secondly, it gives someone a chance to play "what

18 if?" and come at least in the ballpark of what the right

19 answer is without having to run the more complex model.

20 MR. RABA: Good point, David. Thank you.

21 MR. BERRINGER: All right. We touched on the

22 screening a little bit when we were looking at the

23 Appendix B, and there were comments as far as the product

24 classes, what was proposed in the TSD and as far as gas

25 instantaneous.

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1 Does anybody have any other issues out of the

2 draft report pertaining to screening analysis in the classes

3 specified?

4 MR. ROSENSTOCK: In the draft report, the

5 June 11th draft, there's a box on page 5 about the product

6 classes listed in the 1993 TSD. The last sentence in the

7 first paragraph says, "The efficiency levels determined for

8 storage water heaters will apply to classes 4 and 5

9 according to fuel type," classes 4 and 5 being gas-fired

10 instantaneous and electric instantaneous.

11 We have talked to some members, and we have

12 problems with that, because it's not really consistent with

13 the test procedures. They have lumped storage and the

14 instantaneous together in terms of efficiency levels. We

15 just wanted to note that. We thought that that last

16 sentence should be deleted, probably.

17 MR. HILLER: Just to reiterate, that's one of the

18 issues where you can't make statements of that nature until

19 we know what the test standards say.

20 MR. STANONIK: Steve, are you asking that they

21 should have higher levels for instantaneous? Recognizing

22 the issue or the situation with instantaneous water heaters

23 in the United States, I think that's a totally reasonable

24 statement. Just to take the efficiency levels determined

25 for storage water heaters, apply it to instantaneous, and

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1 move on.

2 The only other option is you set a higher level

3 for instantaneous, and all you're going to do is make it a

4 little more difficult for those products where it may

5 already be difficult in the market anyhow.

6 MR. BRUNDAGE: So what you're saying is, even

7 though the test procedure is not applicable for

8 instantaneous water heaters, since instantaneous water

9 heaters inherently will have higher efficiency than storage

10 type because you don't have tank losses, you would apply the

11 efficiency level obtained through the storage tank test

12 procedures to the instantaneous ones, giving them a lower

13 level of efficiency?

14 MR. STANONIK: Not exactly, because I'm not sure

. 15 where the issue is. Certainly, right now, the test

16 procedures apply to gas instantaneous. I'm not sure what

17 kind of electric instantaneous you have in mind, but I

18 imagine that -- I'm thinking in terms -- and maybe this is

19 my problem -- I'm thinking in terms of an electric

20 equivalent of a gas instantaneous water heater, not the

21 little -- excuse the plug -- not the little Insinkerator

22 thing or whatever.

23 So I'm thinking of the equivalent of a gas-fired

24 instantaneous water heater, and if they're covered in the

25 test procedures, they'll be there, and if they're not, good

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1 for you. .0 2 MR. BRUNDAGE: The point was the test procedures

3 for a storage water heater are not really applicable to an

4 electric instantaneous water heater. If you're looking at

5 taking a one-number percent efficiency factor from the

6 electric storage and apply it to an instantaneous without

7 applying the same test procedure -- is that what you're

8 saying?

9 MR. HILLER: Let me just refresh everybody's

10 memory about what we did or what we talked about at that

11 meeting on February 12th. A lot of instantaneous water

12 heaters, when tested under the DOE energy factor test

13 procedure, will deliver cold water. They won't deliver hot

14 water. They can't deliver that high a flow rate.

. 15 So to try and give them an efficiency rating on

16 that rating when they don't deliver hot water wouldn't be

17 correct. Giving them a lower flow rate -- as soon as you

18 start playing with the flow rates and the gallons delivered,

19 now you're not comparing apples and apples.

20 So the general consensus of that meeting was, if

21 we're going to have some sort of a test procedure and a

22 standard for instantaneous water heaters, it ought to be

23 different and clearly stated than the tank types, because if

24 you try and give it anything that looks like the same

25 rating, people will think they're equivalent when they're

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1 not.

2 MR. STANONIK: All right. I'll restate what I'm

3 trying to say, because I think I've got the picture here.

4 You guys may want to put this down somewhere and hold it

5 forever, but I trust the DOE will have the right test

6 procedures when they write them and that they will establish

7 requirements consistent with the test procedures.

8 I still think -- if you believe my assumptions --

9 that the test procedures will be okay. Whatever number they

10 pick for electric storage water heater, I think, can still

11 be the minimum for an electric instantaneous.

12 MR. HILLER: Very trusting, Frank.

13 MR. NORTON: I agree with Frank. We're

14 comfortable with the efficiency standard being the same.

15 We're not comfortable with the test procedure, because I've

16 done the test procedure on the gas instantaneous. As it's

17 currently written, it's not the same as a gas storage tank

18 water heater, and you get results that are all over the map.

19 So I would agree with Frank that the standard can

20 stay with the storage tank, but the procedure has to be

21 written recognizing how the technology works. Otherwise you

22 get garbage, and it's not going to benefit any of us.

23 MR. HILLER: I guess I'm not as trusting as Frank.

24 Since I know that the test procedures are going to have to

25 be dramatically different, I'm not going to assume a priori

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1 that the efficiencies that you get from the test procedure

2 are going to compare in any way to the current tank-type

3 test procedure, and they may even change that for all we

4 know at this point. I'm not willing to make that

5 assumption.

6 MR. RABA: Go ahead.

7 MR. BRUNDAGE: This is an issue where it's

8 important to emphasize the need for adequate time between

9 the issuance of the final rule for test procedures and

10 making comments on this matter in this proceeding, because

11 what you decide on test procedures will determine the

12 reasonableness of what you have here.

13 MR. RABA: Interesting issue.

14 MR. BERRINGER: We've talked briefly about the

15 baseline unit already, as far as the descriptors and what

16 information should be used as far as the minimum values.

17 We've also discussed issues as far as the CPSC is concerned.

18 This may, for gas water heaters, change the design. We've

19 talked about the time frame, and when we come back to

20 schedule, when we find more information, we can maybe detail

21 with that.

22 As far as the design options, we have who should

23 do peer review for this particular section? We may have

24 peer reviewers different for different stages, the

25 engineering analysis versus the manufacturing impact.

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1 Does anybody have any suggestions as far as who

2 may or who would be acceptable as peer reviewers to look

3 over this information? Obviously, we would send it out to

4 stakeholder, but are there any particular experts in the

5 field that somebody would suggest?

6 MR. MATTINGLY: Arthur D. Little does everything

7 else.

8 MR. STANONIK: Or Battelle.

9 MR. GOLDSTEIN: I would suggest a strong caution

10 against financially interested peer reviewers, that is

11 someone who has done business or expects to do business with

12 any stakeholder here, whether it's a manufacturer or a

13 public interest organization or a state.

14 MR. BERRINGER: What we've done with clothes

15 washers, we also had retired industry experts, too. So if

16 there's anybody that does consulting work that is familiar

17 with the products, if you have a name, if you could let us

18 know that.

19 MR. HILLER: While I understand the intent of what

20 you're saying, Dave, you could eliminate all experts from

21 consideration if you're not careful. The people in the

22 field are the people who are involved in some aspect of the

23 industry, and they are the experts. If you remove anybody

24 who has any kind of an interest, then there's nobody left to

25 examine.

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1 MR. GOLDSTEIN: Well, I didn't say remove people.

2 I said bias against, in the sense that if there are people

3 who are independent they would be strongly preferable. If

4 they're not, then it seems to me you would need enough

5 consultants that you get a balance between the significant

6 interests that might disagree.

7 I think it should be pretty obvious from the

8 attendance list what sorts of axes of balance you would

9 need. You would clearly need industry, compared to public

10 interest or state energy office. You would clearly need gas

11 industry versus electric industry.

12 MR. KUSTERER: The so-called experts, basically,

13 are the design engineers, the manufacturers, and I think

14 that we all have an interest in what goes on. I have no

. 15 problem with Arthur D. Little or any of these other

16 organizations, but without getting the actual design

17 engineers, the people that put these things together, I

18 think you're making a big mistake.

19 We do live in America. We are one nation under

20 God, and I think we all have to be kind of trustworthy. So

21 I guess we're all interested. My biggest fear is giving

22 someone a gas-fired water or an oil-fired water heater that

23 has never even seen one and then evaluates it.

24 So I think we have to, if we're going to go to the

25 experts, let's go to the experts. Let's not horse around

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1 and play games. We've been doing that long enough.

2 MR. RABA: Thank you, George. In the back,

3 please.

4 MR. MOFFROID: If it's of interest at all to the

5 Department of Energy, I would consider the Europeans

6 definitely the experts when it comes to instantaneous water

7 heating, since they've been at it for quite a while. If

8 there was interest at all, we have the European standards

9 that have been published. They're in English; they're in

10 German; they're in whatever you want. That could be

11 furnished.

12 MR. RABA: Thank you.

13 MR. KUSTERER: One last comment. I totally

14 disagree with my colleague. All that information was

15 basically developed here in this country, and we far exceed

16 any standards that are any place in the world, and why are

17 we looking outside of the United States? Thank you.

18 MR. HILLER: If we come at this from assuming we

19 want to get peer review from knowledgeable people in the

20 field, then let me go on the record as saying, in terms of

21 the minimum of who you ought to distribute things to for

22 review would be all of the industry trade organizations like

23 GAMA, GRI, AGA, EPRI, EEI.

24 We all have our own distribution networks within

25 these organizations for sending it out for review. All the

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1 manufacturers. Anybody think of anybody else? If you hit

2 those, at a minimum, you'll get a pretty good set of

3 reviews, because most of those will distribute within their

4 own community.

5 MR. MATTINGLY: Now, I had assumed you would be

6 doing that, too, that you were looking for a so-called third

7 party.

8 MR. BERRINGER: Right.

9 MR. MATTINGLY: I would assume that the players

10 get to do peer review, too.

11 MR. BERRINGER: Right. We've sent it out to that

12 group. What we've gotten into before is DOE selected peer

13 reviewers, and we've come back and we've gotten comments

14 that, "Well, you said in the new process, the stakeholders

15 get input on who those should be."

16 For us to say A.D. Little or Battelle or anyone

17 else or have them comment may not be acceptable to the

18 stakeholders. So we don't want to waste any effort on

19 something that's not going to be acceptable. That's what

20 we're looking for.

21 MR. ROSENSTOCK: Bryan, are you asking us whether,

22 for the peer reviews, that you would pay these third parties

23 to review it? What, exactly, are you saying.

24 MR. BERRINGER: That's a possibility, yes.

25 MR. ROSENSTOCK: With all these stakeholders

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1 around you, I don't think you would necessarily have to.

2 MR. HILLER: You probably wasted your money.

3 You're going to get pretty good reviews from all the

4 stakeholders as it is.

5 MR. BERRINGER: Well, as George suggested, one of

6 the options would be a retiree that has done design

7 engineering work, that has worked for a water heater

8 manufacturer, has done that for his life and would be a

9 reputable source of information and there wouldn't be any

10 dispute. That's the type of things we're looking for.

11 MR. RABA: Other comments and suggestions?

12 [No response.]

13 MR. RABA: Well, this has been really a good

14 discussion. I hate to cut it off, but we're due for a

15 break. What do you say? What does the group think? Come

16 back at 11 o'clock? Thank you.

17 [Recess.]

18 MR. RABA: It's 11 o'clock, and it's a good time

19 to start again. At the reception table there is the

20 statement from Controlled Energy Corporation. You might

21 want to take this for your consideration. Bryan is handing

22 out a status report on Gas-Fired Water Heater Ignition,

23 flammable vapors, October 1996, from the CPSC. I commend

24 this to your attention, also.

25 Steve has pointed out, on page 3 of this handout,

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1 that right above the 3.2 heading, the last sentence says,

2 "Based on that estimate, CPSC staff currently expects that

3 the revised standard incorporating vapor ignition protection

4 will be sent to ANSI in 1999 for approval as a national

5 standard." That's what they say.

6 MR. LANGMEAD: I think that needs some

7 clarification.

8 MR. RABA: Yes.

9 MR. LANGMEAD: That standard is a test method.

10 That standard isn't a level or something else, it's a test

11 method.

12 MR. RABA: Good point, Jack. Oftentimes in the

13 industry the word, "standard," is used interchangeably with

14 a recognized procedure for testing, also. So thank you for

15 your clarification. That's good.

16 Let's pick up now. Is there any further

17 discussion about this morning's topics? Carl.

18 MR. HILLER: Somehow, when we were on the subject

19 of product classes, we jumped very quickly to baseline

20 units, and I had a question and a comment. I had begun to

21 read Appendix B here, and where it talks about product class

22 on page B-3, gas-fired outdoor auxiliary water heaters, it

23 says, "Another product class covered by the standards for

24 gas...water heaters are gas-fired outdoor auxiliary units."

25 Now, if I understand, what that's saying is that

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1 DOE is labeling remote-mount, remote-connected gas-fired

2 water heaters that would hook up to some other storage

3 tanks, they are considering that a separate product class

4 from tank-type gas water heaters. Is that correct?

5 MR. RABA: Help me out, Bryan.

6 MR. BERRINGER: At this point, we're not

7 considering it a separate class, but we were just looking at

8 that as a design.

9 MR. HILLER: On page B-3, it says, "Another

10 product class."

11 MR. HEMPHILL: I'm not aware of any remote

12 gas-fired water heater effort.

13 MR. HILLER: They exist. They're already on the

14 market. There's one product called the Seahorse unit, for

15 example.

16 MR. HEMPHILL: Is that a degree of market

17 penetration that would even indicate the need for a method

18 of test or, much less, involvement as a part of this ruling?

19 MR. HILLER: Yeah, I understand the method-of-test

20 issue. I'm coming to another point here in just a second,

21 but first I want to get this point clarified, because it

22 looks to me, the way this is stated on B-3, that DOE is

23 saying that they consider that another product class. I

24 want to see if that's true or not.

25 MR. HEMPHILL: On that issue, the second paragraph

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1 refers to work that GRI is doing, and GRI is not doing any

2 work on a remote gas-fired unit that uses an internal tank.

3 MR. RABA: Thank you. We have a very patient

4 gentleman at the microphone. Go ahead, sir.

5 MR. KREBS: Thank you. Mark Krebs, Laclede Gas.

6 Earlier this morning, the subject came up on non-regulatory

7 alternatives, and there was some discussion on utility

8 efforts to promote high-efficiency water heaters. I think

9 it would behoove DOE to investigate that further and

10 determine the percentage of those programs that require

11 taking out a gas water heater to qualify. Thank you.

12 MR. RABA: Thank you.

13 MR. HILLER: Restating my question again, I am

14 still waiting to hear the answer from DOE.

15 MR. BERRINGER: I'll have to get back to you.

16 We'll put that on the parking lot.

17 MR. HILLER: Let me follow on, then. It looks to

18 me, the way this is stated, whether you meant to or not,

19 you're saying you're going to consider a remote-mounted gas

20 water heat that hooks up to another tank as a separate

21 product class. If you're going to do that, you ought to do

22 the same for heat pump water heaters. They are very

23 comparable products in terms that they're remote-mounted and

24 they hook to the tank.

25 MR. GOLDSTEIN: I think Carl's raising an

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1 important point. It is our recommendation that you do not

2 consider the gas water heater that Carl referred to as a

3 separate product class, the reason being that it provides

4 the same utility to the consumer as the storage gas water

5 heater. You can choose to analyze it or not -- that's a

6 different question -- but I can't see any reason for making

7 it a separate product class, particularly given there are so

8 few exemplars of it out there in the marketplace.

9 MR. RABA: Other comments? Steve.

10 MR. NADEL: A couple of comments, and I'm not

11 exactly clear where in the agenda these go, so I'll make

12 them briefly now, and we can either discuss them later or

13 get into more detail now.

14 First, in terms of some of the measures that are

15 included in the engineering analysis, it appears to me,

16 based on the review of the last TSD, that some measure were

17 missing that are in the market but are not reflected in the

18 analysis.

19 Specifically, in the case of electric water

20 heaters, the analysis only went as high as an energy factor

21 of .93 for an electric resistance heater, and there's quite

22 a number of models on the market now or .94 or .95, even

23 .96.

24 The question is, has DOE since gone back, as some

25 commenter suggested, and looked at what are the features in

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1 these higher efficiency models and added those to the

. 2 analysis? I'm not saying that they're going to necessarily

3 screen as the most cost effective measures, but clearly

4 there are commercialized products with higher efficiencies

5 that are not there.

6 Similarly for gas, the previous analysis went up

7 to an energy factor of .57 and then jumped to condensing,

8 basically, or enough condensation that you had to reline

9 flues.

10 If you look at the GAMA directory, basically, more

11 than half of the models in the directory are above .57

12 energy factor, but have recovery efficiencies of 80 percent

13 or less. So there's clearly something in the market, and

14 more than half the models in the market, that was not

15 reflected in the DOE analysis.

16 So the question is, has DOE gone back and added

17 things or are there things in this list that try to get at

18 that? Like I noticed for baffles, they've decided to divide

19 it into three categories now. I was wondering if Bryan

20 could tell us a little bit more about what they're doing to

21 examine what's in the market and make sure that those

22 measures are adequately reflected in these design options.

23 MR. BERRINGER: One of the things that LBL was

24 working on, too, was trying to get product literature and

25 seeing what was on the market, but the gas, you have

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1 different combinations to get to the same level. I mean I

2 don't have any information. There hasn't been any

3 additional work done since, really, as far as the TSD.

4 That's one of the things we can discuss here, is

5 what additional information should be looked at for these

6 products, but there hasn't been any additional work.

7 MR. GOLDSTEIN: I think Steve's comment should

8 then be turned into a recommendation for the path for

9 analysis, that there should be a track where you look at --

10 actually, I would suggest two separate tracks.

11 The one Steve described is a track wherein you use

12 measures that improve the energy factor while keeping the

13 recovery efficiency low enough that there's no condensation

14 problem in existing installations.

15 The second track is that you do the same thing but

16 assure that there's no condensation problem in new

17 construction applications. In other words, this may be the

18 kind of water heater where, if you put it in an existing

19 flue that's combined with the one in existing use for a gas

20 furnace, you would have a problem, but if you put it into

21 new construction, you wouldn't have a problem.

22 And then, finally, the full condensing is a

23 separate category.

24 MR. RABA: In the back. Comment, please.

25 MR. PAUL: The issue of looking at water heaters

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1 with higher energy factors that have recovery efficiencies

2 less than 80 percent is something we, in fact, did look at

3 back in 1990-91. When we issued our report. In fact, I

4 think there is some confusion here as a result of people

5 confusing recovery efficiency with flue loss efficiency.

6 Flue loss efficiency is typically equal to

7 recovery efficiency plus the standby losses. Now, standby

8 losses can be anywhere between 3, 4 percent, depending on

9 the water heater. So water heaters in the GAMA directory

10 that have recovery efficiencies of 76 percent actually have

11 flue loss efficiencies close to 80 percent.

12 So if you look at the guidelines based on water

13 heaters with flue loss efficiencies having to be less than

14 80 percent before you have to reline masonry chimneys or do

15 other cost measures for venting requirements, we in fact

16 have taken that into account, and it's in our GRI report

17 that was issued back in 1991.

18 MR. NADEL: I have reviewed your report. I still

19 think that there's an awful lot of models and measures that

20 seem to fall between the cracks, as well, in your report and

21 need to be reflected in this revised DOE analysis.

22 The other point I say -- and this gets into my

23 second point -- is a critical issue with respect to the gas

24 water heater. At what point do you start getting enough

25 potential for condensation that you need to reline chimneys?

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1 I've seen people suggest recovery efficiencies of 80, 80.5,

2 82, different levels.

3 That's going to be a key issue, I think, here, and

4 I think DOE should plan on devoting a little bit of

5 resources to looking at the literature, talking with some of

6 the experts, and DOE's going to have to make its judgment

7 call about where we draw that line.

8 MR. HEMPHILL: You can look at the directory all

9 you want. I think you ought to maintain technical

10 competence in knowing the difference between recovery

11 efficiency and flue loss efficiency -- don't confuse the two

12 -- and get the technical facts straight.

13 You can make a policy decision. That's fine. But

14 don't say it's a policy decision based on technology if it's

15 not correct. Again, you use the word, "recovery

16 efficiency." That has nothing to do, except by, perhaps, a

17 formula of some sort, with flue loss efficiency. Flue loss

18 efficiency is what is the measure. It's not a well-known

19 number; it's a number that the manufacturers have on their

20 individual designs. It's not a published number. That's

21 what you need to use when you talk about condensing in

22 chimneys.

23 MR. KUSTERER: I also agree with my colleague.

24 We're talking about combustion efficiency or flue loss

25 efficiency. There is gas-fired equipment out there that's

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1 running at 84, 85 percent combustion efficiency that's not

2 condensating, so let's not compare apples to doughnuts.

3 Let's stay with the recoveries and let's not talk about our

4 combustion efficiencies or our flue loss efficiencies,

5 because it has nothing to do with condensation.

6 MR. NADEL: I don't know where we want to put it

7 on the agenda, but there are two issues here. One, how does

8 DOE decide what is the point where you have to start

9 worrying about condensation, and two, how do we review

10 what's in the market and make sure that we have the

11 appropriate efficiency levels in this analysis?

12 MR. RABA: Thank you, Steve.

13 MR. LANGMEAD: I just want to caution DOE that

14 you're headed into an area, again, that gets into some

15 trade-offs between efficiency and safety. As you start to

16 push the area toward condensing events, you're getting into

17 a safety area, and you better be careful, darned careful,

18 awfully careful about how you go and how far you go in that

19 direction.

20 If you're going to err in that direction, you had

21 better err back on the side of safety, which is backing away

22 from making chimneys fall down or vents collapse with time.

23 And yes, there is a lot to know and a lot of different

24 terminology, and it's a difficult and complex science about

25 what is going to cause condensate in that vent and what

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1 isn't and when it's going to happen, but it's an important

2 subject.

3 I couldn't agree with Steve more, but let's do it

4 thoroughly and do it correctly, and if there's any error on

5 the side, leave it back on the side of safety.

6 MR. RABA: David.

7 MR. GOLDSTEIN: To elaborate a little bit, the

8 safety issue, again, is different for new construction than

9 it is for retrofit. This standard is preemptive of state

10 building codes, so this is an important issue to bring up.

11 I would want DOE to consider, at least in the

12 analytical stages, whether there aren't two numbers that

13 ought to be promulgated, one number which is a standard

14 applied at the point of manufacture and another higher

. 15 number which is available as a non-preemptive level for

16 states to use in building codes.

17 So, in other words, this higher number would say

18 -- and I'm not sure whether there are some legal issues

19 here -- this second number would say that a state that

20 wanted to use that number would not be preempted from

21 putting that into a code for new construction.

22 There is certainly interest by a number of states

23 in doing something to improve the efficiency of the water

24 heater, and I think it would be a lot better for industry

25 and for everybody else if those state actions converged on a

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1 single number everywhere that a state chose to do it, rather

2 than coming up with different proposals and going through

3 this argument in 10 different states.

4 MR. MATTINGLY: That's some other program that

5 hasn't been invented yet, David, because I think, under

6 NAECA, there's no context provision for that kind of

7 multiple standards.

8 MR. GOLDSTEIN: I'm not sure that's right.

9 MR. RABA: Engineering analysis?

10 MR. STANONIK: Did you want to address the

11 engineering models issue?

12 MR. BERRINGER: We're just going to go through

13 that. Let's just go down the list. As far as the

14 engineering analysis we have discussed, the TSD was brought

15 up. I know that some people said they support the analysis.

16 Obviously, a lot of it was done. It's 1990 data.

17 We just want to get a feel for if we can go, if

18 it's proportionally changed, if we can use what's existing

19 or do we need to update it, and if so, what information

20 should be updated as far as the current engineering

21 analysis, the '93 TSD? Any comments?

22 MR. STANONIK: Bryan, speaking specifically on

23 manufacturing costs, I'm not so sure it it's a question of

24 being updated, as opposed to maybe just revisited, because I

25 think, in this process, the manufacturers may have a little

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1 more opportunity to provide some critical comments as to

2 assumed manufacturing costs or whatever.

3 It may be an issue of do we need to revisit those

4 just to see if they're reasonable values, rather than trying

5 to regenerate them. As far as the energy use data, I guess

6 I would have to go back. I haven't looked at it. I guess,

7 at this point, I wouldn't see that it needs to be updated,

8 because I'm not sure how much you would add to it. Maybe

9 another year. The most recent TSD was, well -- I guess two

10 years ago.

11 MR. HILLER: It's hard for me to tell exactly

12 where the best place to throw some of these comments is.

13 Let me throw one out here. It seems like this might be an

14 appropriate place.

15 Heat traps, for example. I think heat traps are a

16 good thing, but we've had a whole series of tests run at ETL

17 testing laboratories that confirm what the manufacturers of

18 heat traps have told us, and that the newer ones, with the

19 vented seats, aren't as good as the original data on the

20 ones with unvented seats.

21 So I just caution you, if you're going to look at

22 the cost effectiveness of heat traps, to make sure you're

23 working with modern data and not the old data, because the

24 old ones were better than the new ones because the old ones

25 didn't have vented seats, especially the hot heat trap.

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1 They're still pretty good, but they're not as good. That's

2 modern data on heat traps.

3 MR. BERRINGER: Next, we talked about, in the data

4 collection, the uncertainty of -- maybe this is something

5 that Jim McMahon can talk a little bit about -- as far as

6 data uncertainty and variability when we're looking at the

7 data collection, competence levels and so forth as far as

8 that's concerned.

9 Should we continue to use the same assumptions for

10 uncertainty? Are there any suggestions as far as the data

11 collection? Again, we're looking at information that, if it

12 needs to be updated, what factors should we consider as far

13 as uncertainty and variability and, also, the approaches?

14 It has been talked about in other workshops as far

15 as a design option approach, which has been in the past,

16 versus an efficiency level approach, which is addressed in

17 Appendix C. Some people considered the ASHRAE approach,

18 where you're just looking at cost efficiency curves and

19 ranges and so forth.

20 What tools shall we use? Again, Carl Hiller has

21 WATSIM, and there's TANK. He has brought some of that, if

22 people want to look at lunch or during the breaks. He has

23 that available as far as what models and tools could be used

24 in the engineering analysis.

25 Again, what contractor qualifications are we

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1 lacking contractor qualifications? Should we look at more

2 peer review again? In the new process, we're opening it up.

3 Anything we do we're putting out for review and comment, so

4 if people have any suggestions on how we can improve the

5 engineering analysis or what we should do to go forward.

6 MR. HILLER: I would just like to point out that

7 the first significant upgrade to WATSIM, which is going to

8 be called WATSIM for Windows, will be out before the end of

9 the year.

10 MR. RABA: I'll reserve a copy. Thank you.

11 Others, please? Other models we could use or take into

12 consideration?

13 MR. KREBS: Any such model ought to be publicly

14 available. I'm not sure what the status is of EPRI's

. 15 models. Perhaps the man from EPRI would address that.

16 MR. HILLER: In anticipation of the need for that

17 for use in regulatory purposes, the original WATSIM has been

18 put in the public domain and anyone can buy it.

19 MR. RABA: Very good. Thank you.

20 MR. BERRINGER: What about the approaches? I know

21 there has been support as far as the engineering analysis,

22 that we just need to revise or revisit it. In the clothes

23 washer industry, they like that particular method as far as

24 that. Is there any support for an efficiency level type of

25 approach?

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1 MR. KUSTERER: First, do people understand the

2 difference between the two approaches?

3 MR. HILLER: What? Water heaters and washers?

4 [Laughter.]

5 MR. BERRINGER: They both use hot water.

6 MR. HILLER: No. One makes hot water; one uses

7 it.

8 MR. BERRINGER: Basically, you're looking at

9 efficiency levels. We're looking at the efficiency method.

10 You're looking at percent increases and plotting those. We

11 might have ranges, so you might not know a specific design

12 option, or we wouldn't really be looking at what it takes to

13 get to that level. You would just look at costs of that

14 efficiency level for each manufacturer.

15 One of the drawbacks is you wouldn't have, as we

16 had in the Appendix B, a detailed design option, knowing how

17 that would approach, to arrive at the various efficiency

18 increases.

19 MR. STANONIK: At this point, that may be a little

20 difficult to respond to, only because, talking specifically

21 about water heaters, the fact is that, up to this point, in

22 terms of whenever we've been addressing efficiencies -- and

23 I'm going to talk about traditional storage water heaters --

24 we always thought in terms of specific identified measures

25 you can do and then try and make some estimate as to what

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1 benefit that gives you in terms of the efficiency

2 improvement.

3 So, even if we were to change the approach and

4 say, "Okay, let's just look at this analysis in terms of

5 efficiency levels," and do the analysis on that basis, I

6 think that many manufacturers would still, nonetheless, see

7 that number and, in their own mind, translate it to

8 identifiable discrete measures because, in fact, with the

9 storage water heater, there just aren't that many things you

10 can do, anyhow.

11 So I don't know that, right now, we can really

12 tell you that, yeah, let's go for the efficiency level

13 analysis kind of approach. I mean theoretically, it's a lot

14 purer. It doesn't tell you how to do it. It just says this

. 15 is where you've got to get to, and you're up to your own

16 ingenuity.

17 I think, on a theoretical basis, really, that's

18 the way it should work, but the practical reality is that

19 we've always, in this industry, looked at you do this or you

20 do that. It's a discrete thing you can do to the product,

21 and what benefit does it do you?

22 So I'm not sure that, necessarily, manufacturers

23 have a good grasp at this point of is it worth going to a

24 different system? I think that's going to require a little

25 more discussion.

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1 When we get off of this subject, if we're not

2 already, we've got to go back to manufacturing costs.

3 There's a major thing we've got to talk about.

4 MR. BERRINGER: Okay.

5 MR. RANFONE: Before you go on, your question

6 about the efficiency analysis approach, I guess we'll call

7 it. How would you take into account ancillary things that

8 would have to be done to an installation -- for example,

9 upgrading the venting system, adding electrical supply in

10 the proximity of a gas water heater which currently doesn't

11 require it, or a battery option? How would you do that

12 under the efficiency analysis?

13 MR. BERRINGER: I'm not sure how we would

14 incorporate that, other than, when we the economic analysis

. 15 for it, to consider it then.

16 MR. RANFONE: I think that's a very important

17 aspect that we really have to keep in consideration as you

18 go this route, or if you take a look at the efficiency

19 analysis approach, because I think you wouldn't capture all

20 the added costs for upgrading a system.

21 MR. BERRINGER: Thank you.

22 MR. NADEL: I guess, hearing all the comments and

23 knowing that you need to proceed, I suggest that maybe we

24 should continue doing the analysis on this product the way

25 we have been in the past with the engineering approach. We

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1 already have a lot of information. People understand it.

2 We can get new data. We can add and subtract measures.

3 I'm certainly interested in pursuing ways that we

4 can maybe simplify it a bit so we don't have quite as many

5 parallel paths going on. But to make a major change now

6 strikes me as a lot of work for unclear benefits. I throw

7 that out for comments from other people as a suggestion.

8 MR. LANGMEAD: Once again, I find myself in the

9 unusual position of supporting Steve.

10 [Laughter.]

11 He's right on track. Why change it? You know, it

12 has worked, and the analysis is there. It would force you

13 do redo all your old analyses. You don't want to do that.

14 There has been a lot of time and money spent in those old

15 analyses. They aren't perfect. People have disagreements

16 about them. But we know what those are. If anything, work

17 at trying to refine those old analyses, rather than

18 inventing new analyses.

19 MR. RABA: Carl.

20 MR. ADAMS: I guess, picking up on that -- and I

21 realize we have it, I think, in the parking lot -- about the

22 base case unit, if we're going to go with a component

23 engineering approach, it seemed like, earlier, at least in

24 my opinion, there seemed to be some consensus that we ought

25 to be starting with a NAECA minimum water heater in each of

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1 those cases of gas, electric, and oil.

2 This seems like maybe a good place to pick up on

3 that again, and if we're going to do component engineering,

4 is that where we should start from?

5 MR. NADEL: Carl, to attempt an answer, I think I

6 heard around the room, the answer is yes. I would point out

7 that, in your last TSD, you did start, in the case of gas,

8 from .54. So it's actually less work to start at the

9 baseline than it is to do a new baseline as you were

10 suggesting earlier.

11 MR. McMAHON: Let me address that. What I think

12 happened here is that Jim Lutz did some checking in major

13 markets with distributors and was unable to find .54's

14 actually available for sale. They are in the directory.

. 15 The question came up whether that's the appropriate

16 baseline, given that they may not be being sold.

17 MR. KUSTERER: Where was that? Was that west

18 coast, east coast, mid-Atlantic states?

19 MR. McMAHON: He did phone checks with several

20 places. I'm sorry that he's not here to answer that

21 question. We can give you more details later.

22 MR. KUSTERER: Because they are available in the

23 northeast and the mid-Atlantic, so I'm not sure where that

24 was taken.

25 MR. McMAHON: I don't have the specifics. I know

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1 he checks not just on the west coast but in other markets,

2 but I don't know specifically which ones.

3 MR. KUSTERER: Thank you.

4 MR. HILLER: Actually, if you just call people

5 cold and try and find out what energy factor water heaters

6 they're selling, that's not an easy thing to determine. You

7 have to really ask them the model number and then track down

8 the model number against the listing.

9 MR. HAAG: The .54 is not exclusively, but are

10 more congregated in the stubby class of water heater. They

11 typically are not quite as easy to get the higher energy

12 factors. Although there are some available, typically, your

13 .54 would be a short one.

14 MR. RABA: Thank you.

15 MR. BERRINGER: You had a question?

16 MR. STANONIK: Yeah. Going back to the

17 manufacturing costs, I just realized there is certainly one

18 that needs to be updated. We're looking at an effective

19 date of, potentially, 2002, thereabouts. The issue of what

20 foam insulation is going to go on water heaters in -- HCFC's

21 get phased out in 2003, but if you're in the water heater

22 business, very likely by 2002, if not a little earlier,

23 you're going to know -- in fact, probably the earlier the

24 better -- you're going to know what your substitute is.

25 I'm sure people are having some considerations.

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1 To my knowledge right now -- and you can correct me if I

2 don't have the right knowledge or information -- but all

3 manufacturers currently are using some HCFC-based blowing

4 agent, so they're going to have to make another change.

5 So my point is, in the manufacturing costs, to the

6 extent we can get the information -- and I'm saying GAMA

7 will try and help you get the information -- you're going to

8 need to try and get some information or assumptions on what

9 the new blowing agents are going to be and what they're

10 going to cost.

11 Then you just start from what the cost is just to

12 maintain the current level and then look at increases. But

13 that specific issue, you will have a new set of costs, I

14 believe.

15 MR. STEPHENS: I think that information is going

16 to be available, probably within the year, before the end of

17 this year, from Allied Signal. At the very least, they've

18 got a product that they've already written to DOE that they

19 will be making available to the industry by the year 2000,

20 third quarter of the year 2000. So it's the likely

21 replacement.

22 I don't know what the cost is. That's the one

23 thing that I have not seen yet. But it will probably be

24 available before the end of the year. I have talked to the

25 people at Allied Signal, and they basically have said that

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1 it will be available, but it isn't now.

2 MR. LANNES: What material are you talking about?

3 MR. STEPHENS: 245-FA.

4 MR. LANNES: This is Eric Lannes from Bradford

5 White. You have to remember, we're talking liquid versus

6 gas. When you talk to water heater and what we're using

7 with CFC's and HCFC's, it's being applied with liquid.

8 When you're talking about the processing and mean

9 tank temperatures that you're experiencing with water

10 heaters, you're going to be in a gaseous state. So it's

11 going to require -- the K's are naturally going to be

12 higher. This is going to have a direct impact on what's

13 going on.

14 MR. VAGO: All indication that the cost will be

15 higher, we don't know what that cost is going to be, at

16 least so far, what information we have been given. What we

17 are quite sure about is that insulating value will be going

18 down, whether there be a water-blown system or whatever

19 system they will be coming up with.

20 MR. BRUNDAGE: If I remember correctly, there was

21 some language in the refrigerator standard issued earlier

22 this year where there was a presumption that the new

23 refrigerant blowing agent, non-HCFC, would be certified as

24 safe for use.

25 There was some language in that final rule, I

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1 believe, that DOE would revisit the issue and open the

2 standard if necessary, if that refrigerant was not available

3 for use as a blowing agent in insulation. A similar

4 approach could be done here, operating under the assumption

5 that the refrigerant is available and make necessary changes

6 if it turns out not to be.

7 MR. NADEL: If we were going to a final rule in

8 the next couple of months, yes, we would need to. In this

9 case, my understanding is that the safety certifications are

10 pretty close, and those issues will long since be resolved

11 before we get to a final rule on this product.

12 The other thing is to address the comment from the

13 gentleman from State. My understanding is the new blowing

14 aid, 245-FA, is basically the same type of U factor as the

15 existing, I believe it's 141-B. There is a cost premium --

16 we don't know how much -- but there shouldn't be a

17 performance penalty.

18 MR. LANNES: That's not true. That's not true at

19 all. The K of the vapor may be equivalent, but when you get

20 into a solubility issue and with regard to the way you trap

21 that within the cell, that's not a true statement at all.

22 Freezers and refrigerators have to be looked upon

23 much, much differently than a water heater. When you talk

24 about a mean storage tank temperature of a water heater of,

25 let's say, in excess of 100 degrees, versus a freezer or

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1 refrigerator, that's where the issue comes in.

2 When you start looking at mean temperatures

3 40 degrees and below, you're going to see closer to the

4 equivalency of an HCFC material to a 134-A or the HFC-HFA

5 issues, but you cannot say that's equivalent based on the

6 vapor K's or the U's. That's not true. You have to look at

7 the applied situation.

8 MR. NADEL: No, I agree. You need testing data in

9 actual water heaters. It's not just laboratory K factors.

10 And so any data you have on the blowing agent in tests of

11 water heaters would be very useful.

12 MR. RABA: This is certainly a very complex issue,

13 as these are, for engineering. If there are any data out

14 there that could be shared with the Department, we would

., 15 most welcome that data so we could have a good basis for the

16 process of gathering information for the engineering

17 analysis.

18 Good discussion. Keep it up, gentlemen, ladies.

19 Go ahead.

20 MR. KUSTERER: So then, in actuality, Otto's

21 statement was correct, and I just wanted to make sure that

22 that remains on the record.

23 Also, I'm somewhat concerned, the constant

24 misinformation with regard to refrigerators and water

25 heaters. I would ask the moderator to keep the discussion

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1 to water heaters and let's leave refrigerators out of this

2 for now.

3 MR. RABA: Thank you, George. David.

4 MR. GOLDSTEIN: I would suggest you also check

5 with Michael Martin of the California Energy Commission. He

6 did some testing of water heaters probably six years ago, a

7 while ago. One of the other issues on insulation areas that

8 things could be improved was to remedy some of the thermal

9 short circuiting or quality control problems in water

10 heaters.

11 In other words, there were some issues he

12 discovered then that may or may not be issues today with

13 respect to whether, for example, three inches of insulation

14 was three inches everywhere, rather than five inches

15 someplace and one inch someplace else -- to make up numbers

16 just to illustrate what I'm talking about -- and also

17 whether thermal short circuiting around the insulation could

18 be remedied as another way of improving the recovery

19 efficiency without necessarily going to thicker levels of

20 insulation overall.

21 MR. RABA: Any other comments or questions on the

22 engineering analysis?

23 MR. HILLER: Can we assume that you're going to

24 use WATSIM and TANK, or do we have to make a specific

25 recommendation that you're going to use WATSIM and TANK?

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1 MR. BERRINGER: I think we need to have specific

2 recommendations from people, what they feel we should use.

3 That has come up in the past. If you support something or

4 if you don't support something, don't assume because you

5 support something that a no comment means something will

6 happen. So please, one way or the other, comment if you

7 agree or disagree with something.

8 MR. HILLER: In that case, I recommend you use

9 WATSIM and TANK in your analysis.

10 MR. STANONIK: Carl, I have almost nil experience

11 with WATSIM, but I always assumed that it was more a tool

12 for predicting usage and consumption of electric water

13 heaters. Is that a correct assumption, or is it in fact a

14 tool you can look at to, for lack of a better word here,

15 tinker with the design and predict energy factors?

16 MR. HILLER: WATSIM is a detailed second-by-second

17 full transient analysis model which accepts all engineering

18 details on the tank. For example, you put in the wall

19 thickness; you put in the thermal conductivity of the wall;

20 you put in the insulation values for top, side, and bottom,

21 and their thermal conductivities.

22 You put in the height of the support ring on the

23 bottom, or if there isn't one, the location of the fittings

24 so you can move the fittings around. So it's a engineering

25 model that's capable of predicting the performance of tanks

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1 that have never been built.

2 MR. STANONIK: Okay.

3 MR. HILLER: And it has been very thoroughly

4 verified. We had ETL do independent tests on it. It can do

5 both gas and electric, by the way. It was originally

6 developed mostly for electric and heat pump kind of things.

7 It does a reasonably good job of at least the simpler types

8 of fossil. I don't claim it to be and it wasn't meant to be

9 a fossil model, but we put factors into it like input

10 efficiency, et cetera.

11 So you could use TANK -- Darrell can probably

12 comment on this to some extent. I understand that TANK's

13 inputs are pretty much limited to the water draws for the

14 DOE test cycle and the conditions for the test cycle. I

15 don't know if that has been changed. Certainly the version

16 of TANK that I have is that way.

17 WATSIM can take any input condition that you want

18 to put into it. You could, for example -- and I'll analyze

19 some cases with TANK, which is limited under certain

20 conditions, and then take the results from that to tweak the

21 WATSIM model to simulate that kind of a tank under a more

22 broad range of operating conditions.

23 MR. HEMPHILL: We've worked very well with LBL in

24 the past with our TANK model, and we look forward to working

25 with any of the DOE contractors and the DOE in the future.

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1 If there's a problem, we'll help resolve any issues.

2 MR. RABA: So I heard recommendations both for

3 WATSIM and TANK.

4 MR. BERRINGER: The last question was, is there

5 anything as far as contractor qualifications for doing any

6 of this that people have suggestions or recommendations on?

7 MR. RANFONE: Go with low bidder.

8 MR. HILLER: Let me just make one recommendation

9 that whoever you hire to do that work should be adequately

10 trained on the analysis tools to be used.

11 MR. BERRINGER: Manufacturing costs. One of the

12 things I see with data -- again, data is fairly old on the

13 information as far as doing the manufacturing impact

14 analysis. Again, this is something we're going to come back

15 to, maybe after we finish the framework document, come back

16 to the schedule and look at what data such as engineering

17 data, cost data, needs to be collected or revised, updated,

18 revisited.

19 So, as far as your first question, we'll come back

20 to the timetable. We're looking at July-August time frame.

21 Again, that's the next couple of months. I know that people

22 want to have time to look at what information is requested

23 and time to prepare for that, so that's something we can

24 come back to this afternoon.

25 I'm not sure if people are familiar as far as the

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1 GRIM analysis, using that as far as cash flow. Can it be

. 2 individual data collected from the manufacturers? At the

3 manufacturing impact workshop -- I'm not sure how many

4 people participated in that from the water heating industry

5 -- there were suggestions, again using spread sheets to do

6 some of the analysis, that individual manufacturers could

7 use their own input and supply that or using, again,

8 somebody like GAMA as a third party, to collect and

9 aggregate the information. That's another thing, if people

10 have a preference on what they would prefer to do.

11 MR. LANGMEAD: I just want to point out again,

12 you're back into an area that, with the time frame that you

13 have specified for this task and in our position in trying

14 to build safer water heaters that won't ignite flammable

. 15 vapor when it's spilled outside a water heater, we are

16 unable to be in a position to advise you as to even what

17 type of product we're going to be using at this time.

18 So when we start to get into manufacturing costs,

19 it's not there. The schedule has a problem. We stated that

20 earlier, just want to restate it here.

21 MR. NADEL: Maybe a way to proceed, let's proceed

22 with the engineering analysis, and then we'll have, I guess,

23 a workshop or something to discuss the engineering analysis

24 and, hopefully, at that point we'll have a much better idea

25 of where things stand in terms of the vapor ignition issue

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1 and discuss how to proceed. But we do have multiple months

2 of work on the engineering before we have to get into the

3 manufacturing.

4 MR. LANGMEAD: There are ways to proceed. That's

5 one of them, yes.

6 MR. BERRINGER: Again, we talked about

7 characterizing uncertainty, data collection, competence

8 levels that were done in the past. I guess there's mostly

9 support for continuing to use existing information, use

10 methods that have done in the past. Is there any other

11 suggestions as far as the average manufacturing costs,

12 approaches and so forth? The same thing, variability

13 between costs, between the manufacturers, GRIM analysis.

14 That's something, again, if people were willing to supply

15 the information to a third party, if they want to run the

16 analysis themselves. I know we have copies that we gave out

17 of the manufacturing impacts, so if people want to get a

18 copy of the GRIM analysis run on Excel, that's available.

19 We've talked about the different approaches as far

20 as costing approach and engineering analysis. I think what

21 I hear is that we stick with the design option approach, the

22 manufacturing impact analysis was performed using GRIM, the

23 design option approach is used.

24 Mike Rivest, do you have anything to say as far as

25 GRIM? Are people familiar with GRIM?

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1 MR. RIVEST: I have been involved with the process

2 improvement over the last year or so and more recently in

3 developing a generic methodology for manufacturing impact

4 analyses. A general comment, what strikes me is that -- I

5 guess this is a good thing -- just how different people this

6 rulemaking is approaching the methods and tools, compared to

7 the clothes washers, contrasting the selection of the design

8 option approach here, compared to the efficiency level

9 approach. So in that sense, the ability to customize is a

10 good thing.

11 Recognizing also that the difficulty at this time

12 of proceeding with detailed manufacturer-specific type cost

13 analysis, given the uncertainty of the base case and

14 proprietary designs, it seems that one option is to have the

15 GRIM analysis conducted later and the analysis of data

16 necessary to run those cash flows would be available later

17 in the rulemaking. If there are any questions concerning

18 the GRIM analysis at this time, I would be happy to answer

19 them.

20 MR. LANGMEAD: What is it?

21 MR. RIVEST: The GRIM is the standard financial

22 modeling spread sheet which calculates net present value of

23 future cash flows. So, for a given standard level, for each

24 manufacturer or sub group of manufacturer chosen, you would

25 try to assess the impact on cash flow of a standard by

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1 tracking changes in manufacturing costs, shipments, prices,

2 and key financial indicators of the firms.

3 MR. LANGMEAD: Would it catch the impact of

4 separate and different rulemakings on the same product at

5 closely associated times?

6 MR. RIVEST: The GRIM is currently being revised

7 to be able to take into account cumulative burden, which is

8 different rulemakings at different times, and trying to

9 assess that specific to one manufacturer, as opposed to

10 doing the whole industry. So, for example, if one

11 manufacturer's full line has to consider redesigns on gas

12 water heaters and others to stress heat pumps, that could be

13 modeled specifically that way.

14 MR. LANGMEAD: That isn't finished yet? I've been

15 retired four years now.

16 MR. RIVEST: The decision that was taken at the

17 workshop in March is that further modifications to the GRIM

18 would be product-specific so that how we handle any

19 enhancements to GRIM for water heaters would be decided

20 here.

21 MR. BERRINGER: Thank you, Mike.

22 MR. LANGMEAD: Okay. Maybe I'm still holding it

23 up.

24 MR. NADEL: Excuse me, Michael. That last

25 statement you made, does that say that, while most of the

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1 discussion about the specifics of how we do this

2 manufacturing impact model has been postponed until later,

3 that if we want to have revisions made to the model, now

4 might be a good time to figure out in general what changes

5 so that the changes could be made so that at future

6 workshops we can have a model available and start talking

7 about inputs to the model?

8 MR. RIVEST: What we've done so far is, we've

9 compiled all comments received on suggested enhancements to

10 the GRIM, and what I offered to do -- I'm looking at you,

11 Bryan -- is we could perhaps send those suggested

12 enhancements to the people here in attendance and to the

13 associations, and we could solicit further comment.

14 MR. BERRINGER: Sounds like a good suggestion.

15 Proprietary designs, obviously this really wasn't looking at

16 the CPSC or the vapor proprietary designs, but designs as

17 far as efficiency concerns, so we will consider them in the

18 engineering and economic analysis.

19 We just wanted to get an idea of what proprietary

20 designs might be out there that we should consider that we

21 haven't that may be something that we add to the Appendix B

22 as far as design options.

23 What stage in development? Are they in prototype?

24 Are there working models? Are they on the market? Again,

25 being proprietary, should DOE collect and report the costs?

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1 Should there be a third party involved in collecting the

2 data, a confidentiality agreement or something to that

3 effect? Is anybody aware of any proprietary designs that we

4 should consider in the rulemaking?

5 MR. HILLER: Let me just voice a concern. I

6 notice in some of the materials -- notably the mailing on

7 June 11th -- that you comment that you do have some

8 proprietary designs in mind. I'm guessing that some of

9 those have to do with heat pump water heaters and what not.

10 I don't know at all what you have in mind, but you do make a

11 statement to that effect.

12 I have a great concern. My experience -- and I've

13 been involved in a number of product development efforts

14 over the years -- is, again, the devil's in the details.

15 You can come up with what looks like a simple, low-cost

16 design, but when you actually start to manufacture it on an

17 assembly line and see what happens on the assembly line and

18 see what actually makes it reliable in the broadest sense in

19 the field, the costs tend to go up.

20 So you got to be careful exactly how you apply

21 that analysis to decision-making on the federal level. My

22 experience is costs have never gone down. They've always

23 gone up when you hit the field with something.

24 MR. STANONIK: Let me add one other thing to that.

25 Certainly, if you're looking at proprietary designs actually

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1 relative to all field types, I think it's absolutely

2 necessary that DOE be assured that those designs have

3 satisfied all applicable safety requirements and, in fact,

4 can continue to pass those requirements on a mass-produced

5 basis.

6 I mean Carl pointed another issue of actually

7 going from a design to something that actually works the way

8 you want it to, but with these products it's equally

9 important that unless, very early in the game, if not

10 initially in the game, DOE is certain or has enough

11 knowledge to be certain that these products will comply with

12 safety standards, then they shouldn't be considered. Waste

13 of time.

14 MR. BERRINGER: That's one of the things we looked

15 at when we start getting into screening. Health and safety

16 is one of the criteria that we've address there. Thank you.

17 Was there any other questions, comments on the

18 manufacturing costs, life cycle costs of payback analysis,

19 just to ask as far as the variables that we're considering,

20 what data sources are available, looking at retail price,

21 annual hot water use, energy price, lifetime discount rates,

22 again taking into consideration, service, and installation

23 costs. Do these look like acceptable variables to consider?

24 Are there additional?

25 MR. HILLER: I think it is extremely important

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1 that you consider geographic or climatic effects. There is

2 a strong impact of both the entering cold water temperature

3 on the cost effectiveness of products it dramatically

4 impacts the energy consumption.

5 Also, there's a dramatic difference in the

6 application. That's precisely why we have so many water

7 heating options out there now, because if you look, for

8 example, at what water heaters are most commonplace in the

9 south versus what water heaters are most commonplace in the

10 north, you can find out that you can get away with a smaller

11 water heater in the south because the entering cold water

12 temperatures are warmer.

13 Even for the same application, for the same total

14 gallons at the point of view, you use less hot water out of

15 the tank when the entering cold water temperature is warmer,

16 at least in human uses. So it's very important that you not

17 simply do analyses on a national average basis, but you look

18 at different applications and different geographic regions.

19 MR. ROSENSTOCK: To follow up with that, the

20 industry advisory committee met yesterday and received

21 recommendations from the working group involved with energy

22 pricing and life cycle cost analysis. Some of the people

23 that are in this room today were at the meeting yesterday.

24 I would highly recommend that you follow the

25 recommendations of that working group, because I think a lot

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1 of ground was covered yesterday, and I think it's going to

2 be a lot of improvements. It will help improve the

3 analysis, again. Have you had a chance to see any of the

4 reports or any of the subgroup?

5 MR. BERRINGER: No. If you could forward those to

6 us, that would be great. That's one of the things, what

7 data sources are available.

8 MR. ROSENSTOCK: We went over that -- at least on

9 the electric side, we went over that at the meeting and some

10 of the work that was done for the working group.

11 MR. BERRINGER: Great. Did the variables look

12 acceptable that are on there -- retail price, energy, hot

13 water use, and so forth? Are those reasonable factors to

14 consider?

. 15 MR. HILLER: The annual hot water use issue is

16 application-specific, and worse yet, the averages that DOE

17 has been using in the past -- the 64.3 gallons -- were

18 pretty much sure, even if you did a national average

19 analysis, that's not the right number any more. We're

20 trying to come up with some recommendations out of an ASHRAE

21 subcommittee right now.

22 MR. RABA: Response from Jim McMahon, then the

23 question or comment in the back.

24 MR. McMAHON: I think this is an appropriate time

25 to make a comment of what LBL has proposed to the Department

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1 in terms of the analysis for life cycle costs.

2 What we're proposing is to do, basically, a

3 house-by-house simulation where we take account of the

4 demographics and the household characteristics -- things

5 like inlet water temperature, ambient air, all of those

6 appropriate characteristics -- to develop a national sample

7 of households and do this analysis that way so that we can

8 account for the variability.

9 It's clear for this product that that's critical,

10 and we agree that national average values are not going to

11 tell you very much.

12 MR. RABA: Comment in the back?

13 MR. NORTON: This is a question. The annual water

14 usage seems to me -- if this is a payback analysis based

15 against the energy factor that is the baseline criteria for

16 the water heater, I wonder how that relates to a payback

17 analysis where you look at annual energy use that's not 64.3

18 gallons a day. I just want to understand how DOE's going to

19 sort that difference out.

20 MR. BERRINGER: I think one of the things we're

21 going to look for this is a sensitivity analysis and look at

22 the different ranges as far as that's concerned and not just

23 look at one value.

24 MR. RANFONE: Bryan, just a comment. Even thought

25 you have them all here lumped together, I think you need to

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1 separate maintenance, service, and installation costs. I

2 think each one is highly important in your life cycle cost

3 analysis, and I guess the way you've approached it here, it

4 looks like they're all going to be considered in a lump.

5 Perhaps that wasn't your intention, but that's the way it's

6 presented, and they're substantially different aspects that

7 will impact your life cycle costs.

8 MR. BERRINGER: Thank you.

9 MR. STANONIK: I'm sitting here trying to -- I'm

10 listening to this discussion and the recognition that you

11 have a wide variety of variables across the United States,

12 and I'm trying to understand -- I guess it's not clear to me

13 how that gets used to come up with what is still going to be

14 a federal minimum for the United States.

15 I guess it's true that, yeah, retail prices vary;

16 energy prices vary; hot water use varies. You could even

17 take that further and you could even probably create a

18 separate range of hot water use for each volume size of

19 water heater.

20 But I guess I'm not quite sure how that comes back

21 to establishing a federal minimum, unless you're going to

22 take the -- I'm going to call it the base set of variables.

23 I mean the one that has the minimum acceptable payback under

24 the worst case variable conditions.

25 But I have one other question. The gentleman from

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1 LPL, would you just give me a little more detail about this

2 average -- you didn't say average -- this simulated

3 household or whatever you're creating.

4 MR. McMAHON: Yeah.

5 MR. STANONIK: I'm not sure I quite understood

6 that.

7 MR. McMAHON: The intention is to develop a model

8 that simulates the hot water draw for a particular household

9 and then use information for a national sample of households

10 to drive that. So, for example, the number of people in the

11 house, the location of the house in terms of water

12 temperature on energy price -- just for some of the

13 variables. I won't go through the whole list.

14 And then you would step through that and say, if

15 there's this many people -- in fact, we're looking at

16 demographics, so if it's a single senior, they use much less

17 hot water than a single 20-year-old, that kind of stuff.

18 So we'll segment the population, simulate a sample

19 of households, for each house estimate how much hot water

20 they're using, look at the inlet water temperature and

21 perform an engineering analysis with TANK or WATSIM to see

22 what the energy consumption is going to be. All of that

23 goes into this population, so we wind up with not one life

24 cycle cost calculation, but maybe a thousand.

25 MR. STANONIK: What do you do with it?

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1 MR. McMAHON: Well, we're going to report back to

2 the Department, this is the life cycle cost increase or

3 decrease for X percent of the population, and the Department

4 is going to have to decide, based upon that, what an

5 acceptable standard is.

6 If, in fact, there are very low users with very

7 low energy prices, they may be impacted by the standard such

8 that they don't recover any increased cost. On the other

9 hand, there's going to be a population of high users that

10 are going to get much more than average benefits. The

11 Department is going to have more information with which to

12 make a determination where they can set the standard that's

13 fair.

14 MR. MATTINGLY: We got some of this yesterday at

15 the meeting, and I think it's impressive and a much more

16 sophisticated approach that I think will provide a much more

17 defensible and wise basis for a national standard where

18 you're not just trying to average everything, but you're

19 looking at the impacts from regions, subgroups, et cetera.

20 MR. HILLER: I forget who it was yesterday at that

21 advisory meeting who said this, but I'll try and paraphrase

22 what they said, because I thought it was a good point. What

23 you're really doing, people always have the option of going

24 up in efficiency. You can buy a better water heater. You

25 know, you don't have to buy the minimum efficiency one.

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1 So, by setting minimum energy efficiency

2 standards, you don't benefit those people. All you do is

3 penalize the people who can no longer buy the less efficient

4 model. So it's minimizing the deficit, because there's no

5 limit on the up side.

6 MR. GOLDSTEIN: I just need to respond on the

7 record. People do not always have the option of going up.

8 The whole point of NAECA is that there are mass national

9 markets in water heaters and other products. If you could

10 just say, "All right. These guys want it .73 and these guys

11 want it .54," you could have separate state standards, and

12 the states with high energy costs would pick the high

13 numbers, and maybe states without masonry flues would pick

14 high numbers.

. 15 The whole point of this proceeding and the law

16 it's operating under is that that kind of choice is

17 illusory. There is plenty of reports about people who try

18 to buy more efficient water heaters, and if you don't want

19 to wait three weeks without hot water, you can't do it.

20 So there are people who benefit from a standard

21 because they get to purchase a higher efficiency piece of

22 equipment that they just couldn't have done in the real

23 world, in the market, notwithstanding what economic theory

24 says markets ought to look like in the ivory tower in

25 abstract.

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1 So yeah, the analysis is going to show winners and

2 losers. I would suspect, given the previous analysis, that

3 all this is going to do is show that there are a lot of

4 winners and few, if any, losers for the levels of efficiency

5 that are likely to be considered seriously in this

6 rulemaking.

7 I mean maybe if we went back and looked at the

8 proposals that DOE made or considered last time around,

9 there might be more of a distribution of winners or losers,

10 but with the more modest goals of efficiency improvement

11 that I think the Department has in mind now, this shouldn't

12 be a major controversial point.

13 MR. RABA: Comments on the life cycle costs and

14 payback analysis at this point?

15 MR. NADEL: One or two other little comments. I

16 note that in this report you refer to using average

17 electricity, gas, and oil prices to residential customers

18 for the year 2003. My understanding is that we're using the

19 EIA projection, though you have projections for lots of

20 different years -- 2003, 2004, 2005.

21 I think the price of electricity they're showing

22 is that prices will go down slightly. Rather than just take

23 a single year, you should look at that series of prices.

24 That will give you a better estimate of what the likely life

25 cycle cost impacts are.

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1 The other issue is to come back to something that

2 someone else mentioned, what size household are you using

3 for the analysis? Certainly, for the life cycle costs,

4 where you're doing lots of individual households, that

5 sounds very good, but for the engineering analysis, there's

6 also the question of what is the baseline hot water draw?

7 Is it a family of four or is it a "average" family, which I

8 believe is 2.3 people or something like that? I say you

9 probably should use the average rather than the test

10 procedure.

11 MR. RABA: Comment in the back?

12 MR. NORTON: Yes. This is a question, at the risk

13 of maybe creating a lot of problems. Is this group resolved

14 on the outlet water temperature of the water temperature of

15 the water heater? I presume that, if that number moves

16 around, that's going to affect the engineering analysis and

17 the calculation of annual energy and the life cycle costs.

18 Right now, it's 135 degrees, I believe, or thereabouts. Is

19 that an accepted number? Considering state jurisdictional

20 or safety issues.

21 MR. ROSENSTOCK: Yeah, I guess the revised test

22 procedure will really dictate that, won't it?

23 MR. BERRINGER: Yeah. Again, the analysis -- the

24 test procedure is separate as far as that goes. We can do,

25 again, some sort of sensitivity analysis to look at the

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1 temperature ranges and usage as far as that's concerned, but

2 as far as the test procedure, yeah, it's currently 135.

3 MR. KUSTERER: I seems that we've been there

4 before. We've done that. It has kind of been resolved. I

5 mean didn't we do this in February? Why are we bringing it

6 up again? I mean we're not even through our agenda. To the

7 best of our knowledge, that was resolved. Am I correct,

8 Joe?

9 MR. MATTINGLY: Well, I'm trying to -- what was

10 resolved?

11 MR. KUSTERER: The water temperature issue, that

12 we were going to stay with 135. Isn't that correct?

13 MR. MATTINGLY: I don't recall that.

14 MR. HILLER: Let me just paraphrase what I just

15 heard Bryan say. For the test procedure, there's some set

16 of temperatures that you use to evaluate whether it meets

17 the standard or not.

18 MR. KUSTERER: Right.

19 MR. HILLER: But for the evaluation of options to

20 decide what to set the level to, they don't necessarily have

21 to limit themselves to that same temperature. They can look

22 at the impact of temperature for evaluating the cost

23 effectiveness and the sensitivity of the cost effectiveness

24 to that.

25 MR. KUSTERER: Right.

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1 MR. HILLER: So they're somewhat decoupled. You

2 know, once you decide what you're going to go for, then

3 setting the standard to determine it. But you don't have to

4 use the same temperatures.

5 MR. KUSTERER: We've been there. We've done that

6 already, and I think we should continue on with this agenda,

7 rather than try to bring in something else that's just going

8 to prolong the program.

9 MR. RANFONE: What's DOE's target for life cycle

10 cost analysis in terms of payback? What's the reasonable

11 payback that DOE is looking for? Life of the appliance?

12 Three years? Five years? What's your criteria?

13 MR. BERRINGER: I think one of the criteria is the

14 three years, but that's just one of the criteria as far as

15 payback.

16 MR. RANFONE: Well, when you make your decision on

17 what number to propose, what's going to be the criteria?

18 MR. BERRINGER: Carl, do you have any response for

19 that?

20 MR. ADAMS: There is no fixed number. There is no

21 formula, that I've ever been aware of, of selection. The

22 many factors are all looked at, the payback being one.

23 The three-year payback, which is often talked

24 about is in the legislation that says, if something has a

25 three-year payback or less, it's assumed to be economically

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1 justified, but that can be rebutted by other factors. But

2 there's not anything that says that we cannot consider

3 paybacks greater than three years.

4 So again, there is no fixed number. I believe we

5 did say, for example, that we would not consider paybacks

6 that exceed the life of the product, which seems certainly

7 reasonable, but there is no fixed number.

8 [Laughter.]

9 MR. RANFONE: I think this is a key aspect of this

10 entire rulemaking, and I understand your comments, Carl, but

11 I don't completely agree that you can't establish some kind

12 of a level. You've done it before on other products --

13 dryers. I don't understand why you wouldn't do it for water

14 heaters or make it public and let us at least understand

15 what that number is, what that criteria is. Even though

16 you've got different variables here, I think it's prudent

17 that the Department does provide that.

18 MR. BERRINGER: I think it's kind of arbitrary,

19 though, too, until you do all the analysis, that you can

20 come up with the criteria and sit there and say that we

21 won't consider something.

22 MR. RANFONE: Well, looking ahead in some of your

23 options already, I've seen you made some decisions or are

24 proposing some decisions, and I think that's what has

25 prompted me to ask this question now.

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1 MR. GOLDSTEIN: I didn't want to let the morning

2 end without having agreed with George on something, so I

3 wanted to endorse sticking with 135 degrees for the

4 analysis.

5 Not only is it simple and straightforward, but if

6 you change it, then you've got to get into the issue of how

7 does that affect the annual gallons of use, because some

8 things, like clothes washers, just take gallons and don't

9 know the temperature. Other things, like bath water, it

10 depends. So you just open up a Pandora's box of other

11 things you've got to consider if you change it from 135.

12 MR. KUSTERER: You've made my day. Thank you.

13 MR. STANONIK: If the analysis is going to look at

14 the impact of varying inlet water supply temperature, if

15 you're going to include that, you have to consider the

16 effect of differing outlet water temperatures, because it's

17 the same -- the people in the south who have their inlet

18 water coming in at 70 degrees or whatever are also the

19 people most likely to, if you will, get by with lower

20 thermostat settings because, in fact, the energy they need

21 delivered -- which is what we're really talking about -- to

22 get a comfortable temperature when they're mixing hot and

23 cold is less than somebody living in the upper reaches of

24 the north that's trying to get a comfortable bath water

25 temperature when they're mixing 35-degree water in the

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1 middle of the winter. They're going to want a higher

2 temperature water coming out of their water heater.

3 So I think the previous discussion, there was some

4 confusion about what's going to be in the test procedure and

5 what should be in the analysis, but if you think it's

6 important to factor in the effect of different inlet water

7 temperatures, I think you have to have at least some

8 sensitivity analysis of the effect of different water

9 thermostat settings.

10 MR. MATTINGLY: Especially since we're encouraging

11 the public to set their thermostats at 120 degrees.

12 MR. ROSENSTOCK: Again, it's another variable with

13 a range. I would have to concur with my GAMA colleagues

14 there.

15 MR. NADEL: I think the bigger question is, is the

16 data available? We do not have the time or resources to do

17 a survey of 1,000 household on their outlet temperature. I

18 don't know to what extent is this data readily available.

19 Jim, maybe you could answer.

20 MR. GOLDSTEIN: One other comment on that. I did

21 a study a number of years ago on the number of gallons per

22 day, and the data availability issue is something DOE needs

23 to confront, or its contractors, because a lot of gallonage

24 is back calculated, assuming you know the outlet temperature

25 at 135 or 140.

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1 If you relax that assumption, you're going to have

@s 2 to go back to all of the original source studies and see

3 whether that changes the gallons number, because the two are

4 linked, as all of the speakers have been indicating.

5 To get into a regional analysis, you would also

6 have to ask data questions. Are there regionally different

7 patterns of usage of hot water? I would assume, without

8 having any data, that if you live in a hotter southern area

9 you're going to take more showers and wash your clothes more

10 often than if you live in a northern area. So it's

11 complicated, and if you have the data, that's fine.

12 MR. HILLER: Let me put your minds at ease to some

13 extent. If you indeed use WATSIM to do a lot of this

14 analysis and you do the regional type of analysis that the

. ~15 gentleman from LBL was describing, WATSIM works on

16 point-of-use draws, so if you change the tank setpoint

17 temperature, WATSIM will automatically change the amount of

18 hot water taken from the tank during human usage. So all

19 you have to do is parametrically -- the issue of what

20 temperatures to use for the analysis, especially if you're

21 using a WATSIM-like analysis, is separate from whether that

22 represents some national average. You can do 120, you can

23 do 135, and you can see the difference, and that's pretty

24 straightforward, because it will automatically adjust for

25 the amounts of draws taken from the tank.

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1 MR. RABA: Charlie.

. 2 MR. STEPHENS: I think you really are on a pretty

3 slippery slope there. Once you start that, you not only

4 have to be able to know what the impact is for a particular

5 household when you change that temperature, but you have to

6 know then which households have what temperature. I mean

7 when they get it and a year later and five years later or

8 whatever.

9 And then, on top of that, you may find that the

10 location of the water heater, whether it's in the garage or

11 the basement or if it's in a southern climate outdoors or

12 something, starts to have an impact on things like standby

13 losses. You can really go down that road.

14 The problem I see is exactly what David was

15 suggesting, that even though you can calculate what the

16 impact is on a water heater and water heater use in a

17 household, I'm not sure we know or have the data to say who

18 has what conditions around the country after that to scale

19 it up.

20 MR. MATTINGLY: I just remember that we got in a

21 lot of trouble with heat pump water heaters when we relied

22 on test procedure figures as if that reflected the real

23 world, and we were using the wrong water usage. It seems

24 like we would be doing the same thing here, if we're trying

25 to do a real world analysis based on test procedure figures.

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1 If we can do better than that, why not try?

2 MR. BERRINGER: Any other comments? This looks

3 like a good time to take a lunch break. Come back in about

4 an hour.

5 [Whereupon, at 12:30 p.m., the meeting was

6 recessed for lunch, to reconvene at 1:30 p.m., this same

7 day.]

8

9

10

11

12

13

14

. 15

16

17

18

19

20

21

22

23

24

25

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1 AFTERNOON SESSION

2 [1:35 p.m.]

3 MR. RABA: Thank you for coming back. We have

4 some positive and negative feedback. The positive has to do

5 with the ladies and gentlemen on our team, all of you. The

6 negative feedback is in the microphone system, somehow, in

7 that there's a ringing, a constant ringing.

8 We thought that by not touching the mikes would be

9 of help, or maybe tipping them down lower, away from the

10 overhead might be helpful. Those that would like to speak

11 in the back can use the passed-around microphone, the

12 portable. The mikes may be fine-tuned too much that it's

13 still very sensitive, so please bear with us on that and

14 help us out.

15 Is there anything that you would like to bring up,

16 anything we might tie up from this morning before we proceed

17 to this afternoon's discussion and pick up with our agenda?

18 MR. BERRINGER: Retail prices, life cycle costs.

19 In the report, we said that there's three potential

20 approaches -- conducting surveys of existing market,

21 surveying manufacturers and other market experts, and

22 applying various markups over variable costs. The question

23 is, are these approaches sound approaches? Are there other

24 options or other ways of verifying prices?

25 MR. STANONIK: Bryan, just a caution in terms of

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1 conducting a survey of existing prices, DOE will, I assume,

2 in addition to looking at, let's say, the major retailers,

3 will also be talking to plumbers, which are really the other

4 way that the products end up being sold.

5 My caution is only that, when you talk to that

6 segment of the market, it needs to be clear that we're

7 distinguishing the price of the unit from the price of

8 installation, because I think the practice is often that the

9 plumber just says, "All right. You want a new water heater

10 installed in the next three hours. Here it is, X dollars."

11 The consumer pays for that, without necessarily knowing

12 which cost was what. It's just the bottom line, so to

13 speak.

14 MR. BERRINGER: That was one of the questions, how

. 15 should DOE consider different markup structures relative to

16 distribution channels? You're referring to the plumbing

17 distributors versus the retailers.

18 MR. STANONIK: We'll just deal.

19 MR. KUSTERER: Independence Day is coming.

20 MR. BERRINGER: I know we have issues as far as

21 shipments, but as far as future prices, are there any

22 resources that we could use? Would the industry be willing

23 to give any type of suggested future prices? I know this

24 comes to be a big issue as far as markup, pass-throughs, all

25 those type of things. Are there any other sources out

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1 there?

2 Again, we talked about industry cash flow

3 approaches, determining manufacturer prices. Would

4 manufacturers be willing to provide future manufacturing

5 prices if there's any information or confidential

6 information, stuff that could be done through GAMA, third

7 party, some way of aggregating information.

8 MR. RABA: Charlie has a question.

9 MR. STEPHENS: To what extent was this an issue in

10 the last analysis? I mean did the last analysis and the way

11 prices were developed last time work out well enough for

12 everybody, or do we need to invent something new?

13 MR. HILLER: The answer to that is no, they

14 weren't done very well. If you look at what happened last

15 time -- I'm talking about the 1994 proposal -- there were

16 some very arbitrary assumptions about the manufacturing

17 costs and the cost to the consumer of heat pump water

18 heaters that weren't borne out by what was going on in the

19 field. There really wasn't much scientific justification

20 for the numbers. They were kind of pulled out of thin air.

21 MR. GOLDSTEIN: But heat pump water heaters are

22 proposed to be screened out. So the question is, aside from

23 that, are there any gross errors that people have identified

24 in the previous analysis?

25 MR. BERRINGER: I think mainly in the analysis in

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1 the past it was more or less from the oil side in the design

2 options that were trying to look at gas options and oil

3 options as the same design options, but I don't know as far

4 cost. I don't know.

5 MR. GOLDSTEIN: Well, I think that's important,

6 because we can save a lot of money. We can advance the

7 schedule if we're just talking about incremental refinements

8 and edits on what was done before. On the other hand, if

9 there's something fundamentally wrong with what was done

10 before, then we need to go back and more comprehensively fix

11 it.

12 MR. LANNES: There were comments submitted that

13 identified gross errors on both gas and oil.

14 MR. HEMPHILL: As far as I know, the numbers that

. 15 were used in our report for costing for water heaters were

16 accurate, as well as the best we could come up with and

17 resulted in a good determination. I mean I would hate to

18 throw out those numbers just because other numbers may be

19 challenged.

20 MR. MATTINGLY: Again, we've heard the issues of

21 the blowing agent using the insulation on electric water

22 heaters being still kind of undetermined and, of course, the

23 gas water heaters with the new design for flammable vapor

24 resistance. At this stage, part of our process in

25 predicting prices is we don't know what the product is yet.

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1 MR. BERRINGER: Yeah, we realize that could affect

2 the baseline model, just looking at that. Any other

3 comments, questions about manufacturing? Prices, retail

4 prices, so forth?

5 [No response.]

6 On the shipments, as far as forecasting shipments,

7 we've heard earlier that there's not really any information

8 on shipments and so forth. Is there any type of spread

9 sheet models using residential energy model or other experts

10 or historical trends that could be used?

11 MR. MATTINGLY: GAMA does publish some shipment

12 information for gas and electric and oil water heaters. For

13 what it's worth, we can make that available. That's

14 historical shipments.

O 15 MR. BERRINGER: Any other suggestions as far as

16 shipments?

17 MR. ROSENSTOCK: Arthur D. Little has a report

18 that went out, put out by NCIS recently, in terms of

19 historical shipments. It's on the Internet, too. I've

20 downloaded it off the Internet. It's put out by NCIS,

21 National Computer Information Service.

22 MR. STANONIK: Bryan, you have two questions

23 there. Are you just looking for, let's say, a forecast of

24 overall shipments? You also mentioned some kind of forecast

25 for shipments of various efficiency levels.

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1 I would say that that second question, I don't

2 think you're going to get an answer to that one. Again, we

3 have not, as a matter of course, tracked shipments by

4 efficiency for the industry at all, so I'm not sure how

5 anybody would come up with a forecast on that one.

6 I mean, conversely, if you just want to forecast

7 overall shipments, we do some of that on a kind of a

8 five-year projection that, with the manufacturers'

9 agreement, we could probably provide.

10 But I think equally useful there would be if you

11 could get, also, some projections on housing starts, and

12 that obviously becomes one of the factors. At least today,

13 most new houses have a water heater when they're built.

14 That is one segment of it, but it becomes another valuable

. ~15 data point.

16 MR. BERRINGER: Any other comments, questions

17 about shipments? Should the Department use the residential

18 energy model or simple spread sheets? Again, trying to move

19 away from the black boxes.

20 Jim, do you want to give a brief description about

21 the residential energy model, talk about that at all?

22 MR. McMAHON: The LBL residential energy model is

23 an end use-specific model that was built originally at Oak

24 Ridge Lab. It combines the engineering information with

25 economic information.

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1 The major drivers of the future forecast have to

Is ~2 do with housing starts, housing stocks, future energy

3 prices, income projects, and those kind of macroeconomic

4 things. Energy prices are clearly important. This is the

5 model that has been used to date in all of analyses of

6 appliance standards and was used for water heaters

7 previously. It could be used again.

8 Alternatives are the REFS model, which was

9 developed by EPRI as another residential end use forecasting

10 model. DOE has the NEMS model, which doesn't have the level

11 of detail and technologies that the LBL model does, but is

12 another alternative.

13 With regard to spread sheets -- should I continue?

14 MR. RABA: Please.

. 15 MR. McMAHON: We have begun some preliminary work

16 to create a spread sheet that has the basic elements of REM

17 but not all the detail. I think, in answer to Dave Lewis's

18 question earlier this morning about black boxes, we view

19 this as a teaching tool that would explain what's going on

20 in the programming code of REM so that it could be more

21 accessible and people could do a reality check and make sure

22 that it makes sense.

23 Does that provide what you need, Bryan?

24 MR. BERRINGER: Thank you.

25 MR. ROSENSTOCK: Also, just to mention that report

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1 I was talking about earlier for the industry advisory

is ~2 committee, the working group also looked at calculations of

3 energy savings, as well, on the electric side, and again, it

4 will be in that report. Some of the recommendations that

5 talked about that are in that report that discussed it.

6 So I'll forward that on in terms of future

7 projections of marginal heat rate and things like that. On

8 the electric side, you get to the quad calculations, so that

9 will be forwarded to you, as well. But again, it's part of

10 that working group for the industry advisory committee.

11 MR. BERRINGER: It sounds like the past methods,

12 nobody really has, other than the initial data part using

13 the residential energy model, to be for consistency,

14 verification, also using other means to back up and verify

. 15 data is acceptable.

16 Employment impacts. Are there any ways or methods

17 or models that we should be using to look at employment,

18 impacts on employment? Is there any type of data that we

19 can utilize that's out there?

20 MR. RABA: Tough group after lunch.

21 MR. BERRINGER: Again, if anybody has comments

22 when they take this back and have more time to look over the

23 draft report, please provide us comments. We would

24 appreciate it.

25 Revised pre-ANOPR. Basically, going back to

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1 figure 1, a lot of this work will be done under the new

2 process before the advance notice is issued, so the

3 engineering would have workshops such as this.

4 We're really sort of at a starting point, although

5 we've already done the engineering analysis. We just want

6 to go back. We're committed to using the new process for

7 water heaters, by opening up the process, but we have issued

8 a notice before, so we're just going to reissue the notice,

9 but all the analysis and so forth that's laid out in the

10 schedule would be done prior to the revised notice.

11 Consumer impacts, consumer sub-group analysis. As

12 far as how many households are not better off with standards

13 and by how much, is there any type of information that we

14 have or that is available for doing consumer-type analysis?

. ~15 I guess we're missing Glenn Schleede here to talk about our

16 consumer aspect this afternoon.

17 Variations in energy prices? Are there any data

18 sources that can be used that look at the consumer

19 sub-group? Appropriate market segmentation and analysis

20 methods? Variables to be considered?

21 This morning we talked about households and so

22 forth before, but if there's any consumer information or

23 consumer groups that can be represented or talk about the

24 operation and so forth of the water heaters. Is anybody

25 aware of any studies or data that could be used?

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1 MR. LANGMEAD: If you get into how many household

2 would be better off with standards, I think you've got to

3 look at how many might not be as well off with standards, if

4 you are basing it on efficiency alone and not taking account

5 water heaters that would resist the ignition of flammable

6 vapors.

7 If those two come into play against each other,

8 you're going to create a problem. I don't want to drub on

9 that too much this afternoon, but be it noted here. Here's

10 an impact on consumers, potentially.

11 MR. ROSENSTOCK: Some of these last categories

12 were already kind of discussed previously in some of the

13 other aspects, so I don't really think there's any special

14 need in this area. It has been covered in other areas,

15 really, when you get right down to it.

16 MR. BERRINGER: Potential impacts, first costs, on

17 consumers -- affordability, financing. Again, if there's

18 any type of consumer information or studies that would

19 address these issues, if there's any information on consumer

20 decision-making as far as thinking on the product classes.

21 MR. GOLDSTEIN: This is related, but it's not

22 covered in one of your categories. If you're looking at

23 differential impacts, it's important to look at the

24 differential health impacts of the failure to have

25 efficiency standards.

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1 NRDC did a study that tried to use epidemiological

O0 2 data to relate air pollution levels to mortality, and so

3 there are ways of estimating, at least in a ballpark, how

4 many lives are going to be lost due to given levels of

5 efficiency or inefficiency.

6 That can be compared, both with safety impacts --

7 if there's a trade-off, which there hopefully isn't -- and

8 also can be used in terms of the differential impacts on

9 poor and minorities, because there's lots of information

10 showing that poor and minority citizens are exposed

11 differentially to the health-related impacts of lack of

12 efficiency.

13 MR. BERRINGER: Thank you, David. We did talk

14 about demonstration projects, consumer groups. Is anybody

. ~15 aware of any consumer groups that can be contacted that are

16 involved? Trying to get consumer groups involved in the

17 process has been very difficult, even in the advisory

18 committee, to keep the interest up. If there's anybody, if

19 they have points of contact or so forth, if they could let

20 us know.

21 MR. ROSENSTOCK: Consumer Federation of America --

22 that's Mark Cooper -- addressed the Industry Advisory

23 Committee recently. AARP has sent a representative who

24 works on consumer issues. Jane Hardin, I believe her name

25 was. Mark Cooper is on one of the working groups from

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1 Consumer Federation of America. I'm sure there's other

2 groups out there, as well, who work with consumers.

3 There have been lots of studies before on consumer

4 preferences. Utilities have done studies. Other

5 manufacturers and retailers have done consumer studies. If

6 it's available and if it's not proprietary, you might want

7 to ask for some of that information, because a lot of

8 companies do market research that try to predict consumer

9 demand for products. It's out there.

10 MR. STADNIK: My name is Andy Stadnik, CPSC. CFA

11 is probably the biggest one to look at for a varied input

12 from that side of things. They probably have a big network

13 that they can use to tap into.

14 MR. BERRINGER: Okay. Thank you.

15 MR. STADNIK: Have you gotten involved with any

16 retailers that sell the water heaters? I didn't see a lot

17 of Walmarts or Home Depot types involved in the process.

18 From their perspective, you might want to contact them.

19 MR. BERRINGER: I think Circuit City and Home

20 Depot are involved in the Advisory Committee.

21 MR. STADNIK: The Advisory Committee?

22 MR. BERRINGER: But yeah, that's another source.

23 I know that Circuit City has been involved and so forth in

24 the last year with our process.

25 Let's move on to section 11, industry cash flow.

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1 Just looking at some of the data on some of the very last

2 page, Appendix D of the draft framework report, just looking

3 at these numbers as default values, if they make sense.

4 People are familiar with the GRIM analysis, if these are

5 starting points or assumptions. If you feel there need to

6 be changes or suggestions for those values.

7 This is page D-1, the very last page of your

8 document. It has tax rate, interest rate, working capital,

9 depreciation capital.

10 MR. GOLDSTEIN: The general comment is you should

11 try to verify these with real numbers from data on the

12 industry. The one that I can assure you is wrong is the

13 interest rate at 12 percent, which is 12 percent plus

14 inflation, the way your models work.

15 There are two things that's wrong with that.

16 First of all is that the cost of capital has to be

17 desegregated into debt and equity. Debt is tax deductible.

18 The model needs to account for that. What's the cost of

19 debt? It's probably prime rate, maybe prime plus 1, maybe

20 prime minus 1. But prime rate is 8-1/2 nominal, which is 5

21 real, so 12 is nowhere close.

22 For equity, the rate of return from American

23 corporations for the past 80 years has been no higher than

24 6 percent, so 12 is way out of the ballpark. Again, real

25 dollars. Nominal will be higher.

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1 MR. BERRINGER: Any other comment son those

2 values?

3 MR. MATTINGLY: I seem to recall, didn't we have

4 an exercise in this -- was it a year ago or two years ago,

5 where each of us provided information, economists'

6 information? I guess it was when we were arguing about

7 discount rates. I'm just saying there may be some

8 information there --

9 MR. KUSTERER: '94.

10 MR. MATTINGLY: -- that's worth resurrecting and

11 taking a look with.

12 MR. KUSTERER: That variable overhead percentage

13 seems to be a little on the low side. I do agree with my

14 friend from the NRDC. We're even.

15 MR. GOLDSTEIN: All right.

16 [Laughter.]

17 MR. BERRINGER: Are there any other comments,

18 suggestions as far as the Appendix D or the cash flow?

19 Charlie.

20 MR. STEPHENS: The question is, the depreciation

21 of what? Buildings? Or equipment, or some combination of

22 both?

23 MR. KUSTERER: Employees.

24 [Laughter.]

25 MR. STEPHENS: There's a big difference in the

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1 treatment of those things, at least for tax purposes. I

2 just want to know what it is.

3 MR. LEWIS: Could you just explain what we're

4 looking at in Appendix D as far as how this is going to be

5 used?

6 MR. BERRINGER: These are basically inputs that

7 are used in the GRIM analysis as far as the inputs. They

8 just wanted as the initial inputs for doing their factual

9 analysis and so forth.

10 MR. LEWIS: So, in fact, that 3-1/4 percent would

11 come off of the interest rate of 12 percent?

12 MR. BERRINGER: I'm not sure on that. We'll try

13 and get some more clarifications on the definitions for

14 these as far as depreciation and so forth, what they're

15 talking about.

16 MR. LEWIS: And also, obviously -- I know DOE is

17 aware of this -- but it's clear that what a manufacturer

18 experiences and what a consumer experiences are obviously

19 different. When a consumer goes out and buys something,

20 they're buying it at, generally, what the credit card rate

21 is, and obviously a manufacturer is not going to be exposed

22 to the exact same number.

23 MR. LANGMEAD: I just wonder if anybody around the

24 room here remembers how much of what the industry

25 recommended on the government regulatory impact model was

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1 adopted and what wasn't adopted from the recommendation made

2 some several years ago. There was a whole major study done

3 on my industry on that model and a whole series of

4 recommendations. I don't know whether these recommendations

5 match that or don't. Are we reinventing the wheel?

6 MR. RIVEST: The GRIM model was adopted as is, as

7 submitted by industry. The only modifications that have

8 been made have been to increase its user friendliness by

9 providing a Windows interface, but the functionality is the

10 same.

11 MR. BERRINGER: Again, on manufacturer sub-group

12 analysis, contractor qualifications, what type of

13 qualifications will be needed to do this analysis? Has the

14 past analysis been acceptable? Do we just need to revise

15 it, update it?

16 We're looking at possibly, as far as part of the

17 data collection, going out and doing interviews. Are there

18 any suggestions as far as what manufacturers -- all of them,

19 large, small, medium? Is there any way of categorizing them

20 as far as who we should interview and how we should look at

21 the market and so forth?

22 We've talked about market earlier and percent

23 market share and what methods should be used to do this type

24 of analysis. Should we put them in certain categories,

25 individuals, again using the GRIM analysis? What type of

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1 information should we collect?

2 MR. RIVEST: Maybe I can say a few words.

3 Essentially, as I understand it, there's not a consensus

4 yet, but there was a feeling that the manufacturing cost

5 data that has been presented in the past was reasonable.

6 There may be some updating and some design options that have

7 to be looked at, but there was no major problem with some of

8 the cost data.

9 But the data was not collected to reflect back

10 that some manufacturers may have largely different cost

11 structures than others. Eventually, as we do a

12 manufacturing impact analysis, we'll need to consider that a

13 high-volume manufacturer may have largely different impacts

14 from the norm, if you will, or from the average.

15 When we collect that data and we run our

16 spreadsheets, looking at net present value of these

17 different firms, we'll have to either do a GRIM analysis for

18 each firm -- which I don't know if it's realistic or

19 practical -- or we might try and categorize the firms to get

20 representative samples of the impacts on different groups --

21 oil versus gas versus full line, for example.

22 So I think that's down in the future, but if we

23 can start thinking about how we might collect any future

24 information so that it will be easy, then, to incorporate

25 within those categories.

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1 MR. BERRINGER: Thank you, Mike. Competitive

2 impacts, having CPSC, trying to make sure we get other

3 people involved early in the process. We have been in touch

4 with EPA as far as environmental. We talked about the

5 phase-out of the HCFC's and CFC's and how that would affect.

6 So if they become issues, EPA will say they're willing to

7 get more involved or to be involved in the process. So

8 we're just trying to make sure we get other government

9 agencies involved early in the process.

10 In cumulative burden, we've talked about CPSC's

11 involvement, EPA. We talked earlier about ways we could

12 maybe work together and come up with a rulemaking that

13 wasn't a burden on the manufacturers, get some sort of

14 negotiated rulemaking, if that's acceptable, if there's

15 other ways of doing it.

16 Andy's here from CPSC. He wasn't here earlier.

17 Does anybody have any general questions for him while we're

18 on this subject, as far as the flammable vapor ignition?

19 MR. GOLDSTEIN: This isn't a specific question,

20 but the real issue is DOE has proposed a schedule for

21 completing this rulemaking. They're already, on that, seven

22 years behind the statutory schedule for a standard that was

23 supposed to come out in '95. This would have it coming up

24 in 2002. So, waiting to see what you do and then starting

25 their analysis isn't the best approach.

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1 The question is, how can the two processes be

2 integrated best so that we get an expeditious answer out of

3 the DOE process and we get one that allows industry to

4 redesign once to meet both safety and energy efficiency?

5 MR. STADNIK: In answering that question, it

6 really comes down to, DOE has changed their process, and how

7 they bring us into the fold is something that's sort of

8 beginning to evolve, which is a different process than what

9 was used before.

10 Clearly, there's a requirement, from our

11 perspective, that we want to see dealt with and eliminate

12 part of the hazard in a particular class of products. How

13 industry is choosing to do that, we're cautiously optimistic

14 of the progress they're making.

15 As they are well aware in this room about the

16 pressure that my colleague, Don Sweitzer, and myself and our

17 chairman puts on them, so they are moving as best one could

18 move with the threat of our regulatory action behind it.

19 Not that regulatory action is a threat, but it's

20 an issue we want pushed along real quick, because right now,

21 today, with at least 17 to 20 people a year dying from

22 flammable vapor issues, we're not happy with that. In our

23 mode of operation, that's roughly $100 million of societal

24 cost right there, because the average value of a life, from

25 our economic models, is $3 to $7 million. Clearly, we feel

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1 that the benefits of moving along here can outweigh that.

2 How they meld together -- clearly, if the industry

3 is working on the flammable vapor issue, they have to be

4 keeping in the backs of their minds what DOE is doing and

5 participating in that process.

6 Hopefully -- we don't know what the design is

7 going to be, ultimately. I mean there's lots of different

8 promises out there, lots of technologies that are in the

9 trade press of ways to deal with things. Until we see some

10 success in that area, in the test methods that we're talking

11 about in the standards development process, we can't predict

12 how well they're going to perform.

13 There may be things that are being considered,

14 when we get into some of the trade-offs and some of the

15 design options that are being considered -- not heat traps,

16 themselves, but other types of things, issues with changing

17 the flue designs and things -- so that may also impact the

18 flammable vapor issue.

19 We're just coming to see those now in this revised

20 output from DOE, and those are issues we need to think

21 about, and we're just starting to look at those.

22 MR. GOLDSTEIN: Okay.

23 MR. STADNIK: We're trying to get together with

24 DOE. We're just going to start to increase that dialogue.

25 MR. GOLDSTEIN: I would encourage you to do that.

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1 From my point of view, my organization is very concerned

2 with the public health as perhaps our primary environmental

3 issue. We look at hundreds of deaths per year caused by the

4 air pollution emitted to power water heaters, and the

5 potential of saving -- I don't know -- 10 percent, to make

6 up a number from this rulemaking, could be dozens or

7 hundreds of deaths per year prevented.

8 And so, again, the schedule from getting an energy

9 standard is just as important as the schedule from getting a

10 safety standard. The challenges to find a way where we're

11 not sequentially -- you know, you wait for DOE to make some

12 decision before you can proceed, and then DOE waits for you

13 to make some decision before they can, and so both processes

14 get delayed despite the goal to protect public health by .| 15 moving forward.

16 MR. KREBS: On the issue of flammability of vapors

17 that may be spilled, it's futile to try to regulate out of

18 existence stupidity. You can only regulate it in.

19 MR. BERRINGER: Are there any other regulatory

20 burdens that we haven't accounted for, any other factors

21 that we should think about in this particular segment?

22 MR. VAGO: There might be NOX requirements in the

23 State of California.

24 MR. BERRINGER: Okay. Let's move on to utility

25 impacts

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1 MR. GOLDSTEIN: A brief comment on that. I guess

2 I would recommend that you really deemphasize this analysis

3 at this stage. I can't imagine anyone in this room or out

4 of it who would want to get up in public and say that they

5 could describe the shape of the utility industry in the year

6 2003 with enough accuracy to do any kind of analysis. You

7 know?

8 There may or may not be restructuring bills in 50

9 states and at the federal level, and they may or may not

10 require utilities to be compensated for lost revenues from

11 efficiency standards. They may or may not allow the

12 continuation of vertically integrated utilities.

13 There's no way you can predict how that's going to

14 turn out. So maybe you have to do something that's the

. 15 least amount of work and recognize that you're hitting one

16 of 100 possible scenarios for how this might work out.

17 MR. ROSENSTOCK: Again, for the model, just for

18 clarification, is it publicly available where people could

19 use it, or is this a proprietary DOE model? That's one

20 aspect. And again, in terms of having your energy and

21 avoided reliability costs, I don't really see that as being

22 a factor in any sense

23 Also, again, the future will be much different.

24 Again, it might be interesting to see, does the model assume

25 vertically integrated utilities, be it gas or electric, when

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1 you get right down to it. So in the future it is going to

2 be a little more difficult, but I think it's a useful

3 exercise.

4 MR. LEWIS: I don't see how you could go through

5 this process and say that utility impacts are too difficult

6 to figure, therefore, let's leave them out, because they'll

7 be controversial.

8 It's probably a good argument. I mean I think

9 they will be controversial, and I think they will be

10 complicated, but the impact on the consumer, who ultimately

11 is supposed to benefit from this whole process, must be

12 taken into consideration as far as, you know, if gas prices

13 drop in half or raise half again above where they are today,

14 that would be a tremendous impact as far as the efficiency

15 standard that DOE sets. Similarly, on the electric side.

16 So I don't have a good suggestion as far as what's

17 done on the utility side, but I just can't believe that

18 neglecting this important area that will have tremendous

19 impact, with 43 states today that are already looking very

20 aggressively at deregulation, I just don't see how it could

21 be written off.

22 MR. RABA: Charlie, in the back.

23 MR. STEPHENS: Looking at one of the questions on

24 your outline there, as far as gas utilities, I know I have

25 at least three gas utilities who can tell you what the

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1 impact on them would be.

2 Their analyses have already been done. They're

3 public; they're recent; and they will make them public,

4 along with, I think, if I asked they to do it, they would

5 probably provide you a summary of what they think this

6 means, what their analysis means in terms of impact of a

7 standard on their water heater population.

8 Like I say, they've already done it, and it's

9 public already, and none of the analyses is more than two

10 years old, so if you want it, I'm sure we can get that for

11 you. I mean it's one little piece, but it's there.

12 MR. BERRINGER: That would be useful. Thank you,

13 Charlie.

14 MR. RABA: Steve, do you have a comment?

15 MR. NADEL: Yeah. I guess I would like to agree

16 with both Dave and Dave -- and let me explain how I could

17 agree with both of them.

18 MR. GOLDSTEIN: How do you do that?

19 MR. NADEL: I agree with Dave Lewis that it is

20 important -- you can't just ignore -- but I agree with Dave

21 Goldstein that we should probably keep this analysis pretty

22 simple, because the assumptions will drive the analysis, and

23 the assumptions, such as what plants will be backed out, are

24 highly speculative. You don't need a big, fancy computer

25 model when certain key assumptions will drive it.

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1 So I think we should keep the analysis relatively

2 simple. You talk about spreadsheet models; you have an

3 existing model which you want to use. Try to keep it at

4 that level. Let's not get too fancy.

5 MR. RANFONE: I guess, legislatively, you would

6 have to take a look at impact on utilities anyhow, and you

7 picked out gas utilities, because I think you haven't done

8 that, really, in the past. It has basically been on

9 electric utilities, the analyses that I've seen. We would

10 be glad to help you there.

11 One of the questions, the last question, says,

12 should the Department consider what elements to assess the

13 likelihood of impacts of fuel switching? I guess, when I

14 read Appendix B and I see the analysis eliminating a number

15 of design options from the electric storage water heater,

16 what this leads me to believe is that the DOE is looking at

17 strictly gas side right now.

18 You're going to disagree with me, but if you take

19 away the design options for heat pump, add on integral, then

20 what you're left with on the electric side is very little.

21 So, basically, what you're looking at is impacting the gas

22 water heater.

23 If you indeed do establish minimums that provide a

24 substantial or even a minimized increase in cost -- I guess

25 we'll leave it at that -- then you are going to cause fuel

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1 switching. Now, if that's in the best interests of the

2 consumer and the energy use of our country, then you should

3 continue down that path.

4 Number one, I don't like you to leave an analysis

5 out that doesn't include heat pumps. I think it should be

6 there. You've included gas-fired condensing units. You've

7 outlined a whole bunch of options that you're going to

8 consider. Yet, through this draft, this Appendix B, you've

9 lopped off some major options.

10 Now, I'm not saying that's what the minimum is

11 going to be, but I think you need to consider it in your

12 analysis and not just go this path and lop it off right at

13 the up-front because you receive 6,000 comments on the first

14 proposal. I think you need to continue that.

. 15 AGA and gas utilities were not surprised by the

16 minimum efficiency requirements for gas water heaters

17 because we did our homework. We were supportive of that.

18 What you did on electric was your business, not ours.

19 But when you ask this question now about fuel

20 switching, if indeed you do lop off those options and don't

21 consider them, then you're going to have fuel switching. If

22 that's what you want and you raises the minimums for gas

23 that causes that, that's what you're going to wind up with.

24 MR. RABA: Steve.

25 MR. NADEL: As a practical way to address this

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1 issue, I would recommend that we postpone deciding how we're

2 going to deal with it until after we have the draft

3 engineering analysis and look at what measures and what

4 efficiency levels are most likely to emerge as candidate

5 standard levels and, as Jim pointed out, look at the

6 incremental costs for those technologies.

7 If they're comparable, then we may not need to do

8 a whole detailed fuel switching analysis, whereas if there

9 are very significant differences in the incremental costs

10 between electric and gas, then probably a much more rigorous

11 analysis will be needed. That doesn't deal with the issue,

12 which we'll get to later, on the screening analysis and

13 whether heat pump water heaters is or is not screened out at

14 this point in time.

. 15 MR. STEPHENS: I guess I should mention now --

16 we're at that point -- we also have a substantial amount of

17 data out where we are on fuel switching and the thresholds

18 for that between gas and electric. I admit that our five

19 and six cents a kilowatt hour is a little bit different than

20 most of the rest of the country, but, if anything, it tends

21 to buy us things in the wrong direction, if you will.

22 So we can provide that, too. It's all in the

23 public domain.

24 MR. RABA: Thank you, Charlie. Jim McMahon.

25 MR. McMAHON: There was a question asked about the

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1 availability of this model. The assumed model is a

.s 2 spreadsheet that was built at LBL. It has been in use for

3 some years. It's applied to electric utilities. It's in

4 the public domain. We'll be happy to give you a copy.

5 We do not have a similar model for the gas utility

6 side. There was some work done some years ago, but starting

7 two years ago in the budget cuts, those staff were laid off

8 and that work was suspended. We would be happy to take that

9 up again if so directed by the Department.

10 MR. RABA: Further comments, questions?

11 MR. MATTINGLY: We're still going to be talking

12 about design options a little bit later; right?

13 MR. BERRINGER: Yeah. I think we're about there.

14 Environmental analysis again. Again, we've talked about the

. ~15 model that Jim just mentioned. Is it appropriate as far as

16 environmental analysis? Are there additional factors the

17 DOE should consider as far as NOX, SOx, carbon dioxide?

18 MR. RABA: Steve, comment?

19 MR. ROSENSTOCK: If you're not using any monetary

20 values, then obviously it does not impact the life cycle

21 cost analysis at all.

22 My question is, you're looking at three, but

23 you're not looking at the other ones that are products of

24 the water heaters. I mean either try to do all or try to do

25 none is what I would say. So to just use those three and

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1 ignore the fact that there's carbon monoxide or

2 multi-organic compounds or particulate matters produced by

3 water heaters just seems to be absurd.

4 Also, to make it easier on yourselves, I would say

5 just try to avoid an environmental analysis at all and then

6 just concentrate on the energy side. But if you're going to

7 do it, do them all.

8 MR. GOLDSTEIN: Some of this is so obvious I'm not

9 even going to have to say it. I think there is a clear

10 statutory requirement in the DOE Authorization Act, if not

11 NAECA, to consider environmental impacts. That's obviously

12 one of the motivations for the whole program and interacts

13 with a lot of other issues like safety, where you're also

14 talking about mortality and morbidity consequences, which

. 15 can be calculated.

16 I do agree with Steve to the extent that it would

17 be useful to add these additional pollutants to the extent

18 that it's possible to do that, particularly particulate

19 matter, since that is directly implicated in a lot of the

20 epidemiological studies.

21 If you can do it, you would be even better to

22 separate it in terms of particle size, PM 10 and PM 2.5

23 handled separately. But you know, it's like any other set

24 of analyses. You have models that are capable of doing

25 what's up there, so you got to do it. If you can get the

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1 data and do the analysis for other pollutants, you should do

2 it, but we can't ask you to do the impossible.

3 It goes without saying that everything here needs

4 to be done even-handedly between gas and electric. There

5 are obvious fuel-sharing competitive issues that need to be

6 addressed properly in the analysis so that you can handle

7 these things as much as possible on a policy and analytic

8 basis and not on a political basis.

9 MR. RANFONE: I assume, on this analysis, you're

10 talking about the overall environmental impacts,

11 source-based overall impacts of these rulemakings. You're

12 not talking about it on a site-based appliance-by-appliance.

13 Is that correct? I mean the law says -- I believe it says

14 your environmental impact is on source-based overall what

15 the impact is going to be.

16 MR. BERRINGER: That's open to you.

17 MR. RANFONE: Isn't that what the law says? I'm

18 not talking abut the efficiency level at site, how it's

19 measured. I'm talking about the environmental impact.

20 MR. LEWIS: I do think that the Department should

21 go ahead and recognize the past work that has been done in

22 the environmental externalities area -- the findings that

23 the Department reached when that issue was discussed at

24 length -- and, I would trust, move on from there, rather

25 than reopen an issue that was very contentious and, I think,

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1 really without resolution.

2 MR. RANFONE: I think we'll disagree on that.

3 MR. ROSENSTOCK: Like I said before, too look at

4 one and not look at the other is pretty absurd.

5 MR. KUSTERER: David Goldstein.

6 [Laughter.]

7 With regard to the amount of emissions that have

8 to be considered, again, at the point of origin for the

9 energy, so for the electric it would have to be at the power

10 plant and at the source, or if it were a residential model,

11 such as gas or oil, obviously, at the source.

12 On David Goldstein's behalf, I would like to move

13 that data up, because if we have to check all the

14 considerations that were asked to be checked, could we go to

15 the year 2010 for the possible proposal?

16 [Laughter.]

17 I'm only joking. Sorry, David.

18 MR. BERRINGER: Are there any more issues, then,

19 as far as environmental analysis?

20 [No response.]

21 I had proposed on the agenda that we look at

22 Appendix B after this. Now that we've gone through the

23 report, do we want to focus on Appendix B, the screening, or

24 would people like to go back to the schedule and talk about

25 the schedule now that we've sort of gone through.

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1 MULTIPLE PARTICIPANTS: The screening.

2 MR. BERRINGER: Okay. The screening, Appendix B.

3 Realizing that everybody has just gotten this today and

4 looked at it briefly earlier, on B-7, table 6 lists the

5 various design options. It just sort of puts together gas,

6 oil, and electric. There may be questions as far as where

7 it's applicable, where it's marked X.

8 Basically, if you cut to the chase and you look at

9 page B-21, look at tables 7 and 8, it shows you basically

10 the design options that are eliminated and the design

11 options that are remaining. There's reasoning throughout

12 the document if something was eliminated.

13 We've already heard from Jim Ranfone that he feels

14 the heat pump should be left in. Can we just go down the

15 list and maybe, on table 7, see if there's agreement on the

16 items that are eliminated thus far? Table 7 is page B-21.

17 MR. ROSENSTOCK: Bryan, just a quick -- under

18 table 8, should that be plastic tank?

19 MR. BERRINGER: Yes. Thank you.

20 MR. MATTINGLY: Is this the time to add to

21 table 7?

22 MR. BERRINGER: If we just want to go down the

23 list and just if people agree or disagree, and then we can

24 do like you said, Joe, add to that.

25 MR. KUSTERER: One quick question. Table 7, you

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1 have submerged combustion as being deleted or eliminated,

2 yet on table 8 you have it back in again.

3 MR. BERRINGER: Yeah. There's two different ones.

4 You've got submerged combustion chamber.

5 MR. KREBS: Their definitions are different in the

6 document. One is the combustion chamber; the other is

7 direct contact between the gases and the water.

8 MR. BERRINGER: This is still a draft. We can

9 change that if there's better wording. I noticed that, too.

10 MR. NADEL: Unless someone objects, we're about to

11 eliminate one of them. If I understand the question, Bryan,

12 the question is, are there any objections to any of the

13 eliminations on table 7 besides the issue that Jim Ranfone

14 raised?

15 MR. KREBS: I would like to add to Jim's

16 objection. When you look at the add-on heat pump, DOE's

17 language states, "This design option involves a separate

18 heat pump that can be attached to an existing electric

19 storage type water heater."

20 Maybe some drug screening analysis is in order

21 here or something, because most of those add-on heat pumps

22 are added on to electric units. They've been done so for at

23 least 10 or 15 years -- been added on to gas units, I should

24 say. It has been well demonstrated, as an electric utility

25 load-building DSM program. DSM stands for deceptive

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1 strategic marketing.

2 MR. ROSENSTOCK: We don't have to get into

3 name-calling here, I don't think. DSM programs for both gas

4 and electric utilities have increased the amount of

5 efficient products used in the marketplace on both side, so

6 I don't think we should get into any sort of name-calling

7 like that. I think it distracts from the process. Thank

8 you.

9 MR. RANFONE: Just to comment on your rationale

10 for deleting some of these, "The Department believes that

11 this design option should be screened out due to the lack of

12 demonstrated practicability to manufacture, install and

13 service and lack of product availability." Is that what

14 you're standing behind on eliminating these design options?

15 I assume. I mean is there any more detail to that

16 statement?

17 MR. BERRINGER: What we've heard, as far as even,

18 out in Monterey, the manufacturers that were out there

19 seemed to --

20 MR. RANFONE: Out in Monterey? I'm sorry.

21 MR. BERRINGER: I'm sorry. There was an EPRI

22 meeting --

23 MR. RANFONE: Oh, okay.

24 MR. BERRINGER: -- last year which a lot of the

25 manufacturers that are here were at. What I heard was the

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1 manufacturing, the commercial market would probably be an

2 option, but it was just the residential, between problems

3 with installation -- what I've heard in the past -- you

4 know, plumbers versus heating and air conditioning people --

5 and just the product availability.

6 MR. HILLER: Infrastructure issue there.

7 MR. RANFONE: You can do this with any

8 above-the-baseline options and make the same kind of

9 arguments. There is product available, and I think Mr.

10 Nadel at one time -- weren't you heading up an electric heat

11 pump water heater consortium? Do you agree with this

12 rationale for deleting it?

13 MR. NADEL: In general, we're for doing an

14 analysis where the analysis is going to help inform the

15 decision and not doing an analysis for analysis' sake. We

16 have and continue to work on heat pump water heaters; we're

17 very interested in the technology.

18 However, I would say that the technology probably

19 has made a couple of steps backwards, compared to '94, in

20 terms of where we think we're at -- a number of

21 manufacturers withdrawing products from the market; some of

22 the products that are out there have some technical

23 problems.

24 We're not as comfortable now promoting them to

25 consumers as we were a couple of years ago because of these

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1 problems. I think with time this will develop, but, at this

2 point, to mandate them, I think, would be very

3 problematical.

4 MR. RANFONE: Well, I'm glad to hear what your

5 position is, because I think it's a little different now

6 than it was a few years ago. I hope you take the same kind

7 of view when you look at the gas side and the options,

8 because I think that's going to have a similar type impact

9 on those products.

10 We had this discussion this morning about the

11 difference between flue loss efficiency and recovery

12 efficiency, and you seemed to gloss over some of that, but

13 we would be glad to provide you with more detailed in so we

14 could be very clear as to what's at stake here.

15 MR. MATTINGLY: Why don't we go down table 8, and

16 maybe we can address some of these concerns.

17 MR. RABA: We could do that in just a moment. We

18 have two other commenters first. Thank you, Joe.

19 MR. KREBS: Before we leave table 6, I don't think

20 that DSM as deceptive strategic marketing is name-calling.

21 That term was coined by Joe Gilbert, a consultant to EEI and

22 EPRI.

23 Basically, what you've done, once again, is set a

24 higher standard for natural gas. The upshot of table 6

25 appears to be an attempt to set the installed cost of

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1 natural gas water heaters significantly higher, thereby

2 incenting the speculative builder to install electric

3 resistance water heating, thereby gaining market shares,

4 taking the consumer out of the loop.

5 MR. RABA: Thank you. David.

6 MR. GOLDSTEIN: I'm going to make a couple of

7 comments that I hope are somewhat of a middle ground between

8 what you've been hearing between my colleagues in the

9 electric and the gas industry.

10 NRDC is willing to accept the screening that's in

11 the tables that screens out heat pump water heaters,

12 conditionally and because of some other things that are

13 going on.

14 The condition is that this is consistent with the

15 schedule that sounded pretty fast track at DOE. I don't

16 believe that it would be possible for DOE to establish a

17 heat pump water heater standard within that schedule.

18 I don't want to get into what the technical merits

19 are. I think, practically, that is not going to happen and

20 that we would be better off, from an energy-saving point of

21 view, in coming up with a program -- which you've got here

22 -- for a more modest increase in electric efficiency and do

23 it quickly. So the schedule is intimately connected to

24 NRDC's acceptance of this kind of a screening.

25 Regarding what my friends at AGA have said, I

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1 believe that it is appropriate to leave in the more advanced

2 gas options at this stage of the analysis because DOE is

3 required to do impact analyses later downstream that will

4 address the truth of the allegations that the AGA folks have

5 made.

6 I believe their statements will turn out to be

7 correct and borne out by the analysis, that if DOE were to

8 require condensing gas products, but only small improvements

9 in electric products, that it would result in fuel shifting

10 that would increase consumer costs on average and increase

11 pollution on average.

12 However, I would like to actually do the analysis,

13 rather than making the assumption now on what it will come

14 out with. But again, I think that's the likely state, so I

15 would predict that, if we follow the path that this document

16 proposes we go down, we'll get some useful information on

17 cost effectiveness of condensing products, and you will find

18 later on that a modest improvement in efficiency on the gas

19 side, coupled with the more modest improvement on the

20 electric side, will be a standard that meets the economic

21 justification tests.

22 MR. RABA: Thank you, David.

23 MR. KREBS: The only problem with that is that you

24 won't get any information on the heat pump options.

25 MR. RABA: Charlie, want to address that?

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1 MR. STEPHENS: We're among the organizations that

2 developed some of the information on the heat pump water

3 heating side. We still have units in the field right now

4 that we monitor on an ongoing basis, and we have been doing

5 it.

6 We know what the costs are. We know what the

7 infrastructure issues are. We are among the people who are

8 recommending that it would not be a good idea to be

9 recommending this product for a standard at this time. It

10 is not ready for the market, based on our experience with it

11 thus far, though we do like the concept, and we're going to

12 stay with it until we think it is.

13 But for now, we would be among those people that

14 would recommend that, for reasons that don't have to do,

15 necessarily, with cost effectiveness -- for which you do

16 need an analysis, and we've done some preliminary analyses

17 -- it shouldn't be considered. It's not cost effectiveness

18 there.

19 Now, in other cases, there is gas product. We

20 have a lot of gas utility and electric utility DSM programs

21 going on. They've been going on for some years now.

22 We have a really good handle on what the

23 incremental cost is for the higher efficiency gas products,

24 for the higher efficiency electric products, how consumers

25 respond to these things and how many they buy, what kind of

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1 market share you can get for how much incentive.

2 We think we know where the standards should

3 probably land on that basis, which leads me to disagree with

4 the gas-electric war going on here, as well. I'm with

5 David. I think we're going to end up in a place that

6 probably everybody will be okay with by the time we do the

7 analysis.

8 But there are substantial numbers of things,

9 options on this list that I don't really know as much about

10 that I would like to know at least a little bit about so I

11 can feel comfortable saying, "Yeah, that's going to be too

12 costly to make sense," or "That isn't going to meet safety

13 requirements," or whatever it is, I would like to know what

14 those are on paper so I can say, "Yeah, okay. That's good."

15 MR. RABA: Joe is being very patient here. Two

16 more, then we'll go on with Joe's request. Jim was up

17 first.

18 MR. RANFONE: To make sure our position is clear,

19 we don't mind DOE looking at all these design options for

20 the gas products. Our comment is that it has really been

21 done already. The reports that were presented to DOE during

22 the hearing, after the hearing in written comments, are

23 documents and analysis that we stand behind. We don't want

24 you going back and reinventing the wheel. Looking at these

25 analyses for the water heaters, cost effectiveness, economic

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1 justification, the technical feasibility, it's all there.

2 That's what we're saying to you. That's it.

3 MR. RABA: Thank you. Go ahead.

4 MR. LANGMEAD: Jim just said most of what I was

5 going to say, but let me remind you again that we are

6 working on an effort right now to improve the safety of gas

7 water heaters, to reduce their potential of igniting

8 flammable vapors, that is based on the technology that is

9 non-condensing technology.

10 As we go down and we have to depend on not going

11 to non-condensing technology, we're scrapping one research

12 program and going on with another R&D program on top of

13 another R&D program. We're going to have difficulty

14 tailoring these programs altogether.

15 I'm sure, once we go through the process, we'll

16 find out that condensing water heaters, number one, aren't

17 economically feasible and, number two, would cause fuel

18 switching.

19 But we're going to go through this whole process

20 of going through all that documentation to wind up where we

21 could concentrate our effort on what you can do to a gas

22 water heater to look at improving its efficiency, short of

23 condensing. I don't know why we're complicating the devil

24 out of what we're trying to do.

25 MR. RABA: Thank you. Let's go on, now. Go

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1 ahead, Joe.

2 MR. MATTINGLY: Well, I don't guess I have

3 anything left to say. Jack said it pretty well. I think,

4 if we're trying to move things along and use our time

5 efficiently, I think we ought to decide right now to

6 eliminate condensing gas water heaters and use our time more

7 profitably.

8 If you want to have some academic exercise to look

9 at them somewhere else besides this proceeding, go ahead,

10 but I think we are complicating things when we already know

11 the answer. Let's not waste our time doing it.

12 MR. RABA: Were we going to go down through the

13 list now? Was that what DOE wanted to do? I'll get you in

14 just a second, Charlie.

15 MR. STANONIK: I was just going to say that, as

16 far as what's in table 7, the original question was, does

17 anybody disagree as to those that already are listed as

18 being eliminated, and I just want to say that I agree that

19 all of those should be eliminated. I was interested in

20 moving on to table 8, so let's talk about some other things

21 that really are not reasonable design options that should be

22 eliminate.

23 MR. RABA: Charlie.

24 MR. STEPHENS: I'm a little bit confused after

25 this morning. My impression from this morning, at least on

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1 the gas side, that there was an awful lot of stuff up in the

2 air right now because of this Consumer Product Safety

3 Commission redesign work. That left me wondering just what

4 a gas water heater is going to look like by the time that's

5 done.

6 I would be a little nervous about going too far

7 into any more reanalysis, which means, to that extent, I

8 really side on the side of let's not reanalyze what has

9 already been analyzed if everybody in the industry agrees

10 that what has been done is still valid.

11 But I am a little leery about what's going to

12 happen when we finish the CPSC redesign. What's a gas water

13 heater going to look like, and what's it going to cost then

14 for the same level of performance we have today?

15 Until you know that, you don't even know what the

16 base case is, I don't think. Then we look and see what's

17 cost effective in relation to that, I would guess.

18 MR. KREBS: Just to give you an analogy, could you

19 imagine an automobile designed by OSHA? That's probably

20 what a natural gas water heater designed by CPSC will look

21 like.

22 MR. STEPHENS: I rest my case.

23 MR. STADNIK: You could probably buy a house for

24 cash, but the water heater you would have to take a mortgage

25 on.

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1 [Laughter.]

.s 2 MR. STADNIK: I'm not going to let that go. Just

3 for the record, first of all, the CPSC is not designing the

4 water heater. The industry, the consortium with which Jack

5 is involved, is in the process of doing that.

6 In the business that they're in -- and they can

7 speak for themselves -- they're working real hard to make

8 sure that their product is going to be very cost competitive

9 out there. So I don't envision that you're going to see a

10 gas water heater that costs as much as a Jaguar.

11 MR. RABA: Steve.

12 MR. NADEL: A couple of issues on the table I

13 wanted to address. First, Jim was concerned that,

14 basically, we're taking all the electric options off and

. ~15 lots of gas options on.

16 Here's a point, to reiterate the point I made

17 previously, that there are some electric resistance options

18 that are not on here, that the electric resistance analysis

19 tops out at .93 energy factor, and we should look at the

20 higher efficiency options because there are higher

21 efficiency electric resistance products on the market that

22 will address somewhat the point Jim made.

23 Second, I would be supportive of, I guess a couple

24 of people have made the comment that it doesn't make sense

25 to analyze the condensing, the full condensing gas options.

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1 They're not going to screen in. As Jack mentioned, there

2 are safety issues with them. I've also heard how readily

3 can they be applied to all the existing homes?

4 As Joe said, let's not spend lots of time

5 analyzing something that you know is not going to be the

6 standard.

7 Finally, in terms of what we should be analyzing

8 for gas, I think, in order to keep the energy standard and

9 the vapor ignition issue on somewhat parallel tracks, we do

10 need to be doing the analysis soon.

11 My understanding -- and this is based on a very

12 imperfect knowledge of some of the options being considered

13 for vapor ignition -- that most of these design options here

14 should apply, and therefore, our first cut engineering

15 analysis based on the current baseline will get us into the

16 ballpark.

17 At that point, we should hopefully have a much

18 better idea on what specifically will be done to deal with

19 the vapor ignition issue and have to do some revisions,

20 revising baseline and maybe some other revisions to make it

21 most useful for our final rule. But to do a draft now,

22 based on current baseline, I think, will be useful and will

23 help advance the process.

24 MR. RABA: Thank you, Steve. Was I hearing that

25 table 7 looks pretty good as it is? Was that what everybody

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1 was nodding their heads yes?

2 MR. MATTINGLY: No, it needs to be edited.

3 MR. RABA: No? Yes, edited?

4 MR. STANONIK: Well, that's why we want to go to

5 table 8, so we can add to it.

6 MR. RABA: Right. So I'm saying, there's nothing

7 to change as it is on 7 except, maybe, to add other things.

8 MR. LANGMEAD: A lot of other things.

9 MR. RABA: Okay. So we're going to turn the page

10 over to table 8 on page B-21.

11 MR. STANONIK: We don't have to turn the page.

12 MR. RABA: Oh, okay. I have a different version.

13 Okay. I've got it on one page. So, at least on table 8, we

14 would start with heat traps at the top, the first item.

15 Over to you, gentlemen, ladies. How would you like us to

16 look at these different design options? What are your

17 thought on these? How should DOE look at these? How would

18 you propose we look at these?

19 MR. STANONIK: I would suggest let's just go down

20 the list.

21 MR. RABA: Fine.

22 MR. STANONIK: Get either discussion or general

23 consensus or whatever.

24 MR. NADEL: Frank, do you want to kick it off and

25 make a list of thing that you suggest moving from 8 to 7?

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1 MR. STANONIK: Well, okay. I'll give you

2 Stanonik's version, and then everybody can kick at that.

3 Heat traps can stay as a design option, although I think

4 they're basically implemented in most models today.

5 Plastic tank, I would recommend deleting, putting

6 that as a design option to be eliminated. From my

7 perspective, I don't really consider it an efficiency design

8 option.

9 MR. MATTINGLY: Remember, Frank, these are going

10 to apply to both gas and electric at this point, the way

11 table 8 is written.

12 MR. STANONIK: I know. That's why I'm suggesting

13 it be eliminated. A minor point, but rather than just

14 characterize certain levels of insulation, I think the

15 design option is increased insulation.

16 MR. RABA: Right.

17 MR. MATTINGLY: Just whatever amount is cost

18 effective to do.

19 MR. STANONIK: The next three, the gas-filled

20 panel, the aerogel, and the evacuated panel insulation, I

21 would recommend all of those be eliminated. All of those

22 involve, basically, you would be asking the industry to

23 completely restructure how they do appliance insulation.

24 I just can't envision that the cost involved and

25 the capital to do that, to reset or redesign their

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1 production lines and all of the related changes that would

2 be needed, would in any way justify those. I mean they've

3 been kicked around for years, and I've just never seen

4 anything that says how you could practically put them into

5 production.

6 Forced draft, as far as a design option to look

7 at, can stay. I mean it can be looked at. The improved

8 flue baffling, that would stay on the list.

9 The next two, submerged combustion chamber and

10 multiple flues, I would recharacterize that as increased

11 heat exchanger area and not get into how you do that,

12 whether you make a combustion chamber look different or

13 whether you provide more flue tube, the bottom line in

14 either case is you've increased the surface area for heat

15 exchange.

16 MR. HILLER: I don't think that's 100 percent

17 true. I think they both would include that, but there's

18 another aspect, and that's tank heat loss reduction when you

19 have a submerged combustion chamber.

20 MR. STANONIK: The submerged combustion chamber

21 product has basically disappeared.

22 MR. KUSTERER: Nonexistent.

23 MR. STANONIK: Wilbur, are you guys making yours

24 any more?

25 MR. HAAG: There's a small market in the

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1 Netherlands.

2 MR. STANONIK: In the Netherlands. Okay. The

3 other company that was in that business, they have somebody.

4 I guess my response is on the basis of the fact we had a

5 couple of major manufacturers making that product several

6 years ago, and the market interest, which was, "We're not

7 impressed."

8 Rather than identify that as a distinct option, I

9 would just say that the real option here is, somehow, you

10 increase your heating stage area.

11 MR. NADEL: Frank, one clarification. On that

12 improved heat exchange area, is that now --

13 MR. STANONIK: Increased.

14 MR. NADEL: Increased?

15 MR. STANONIK: Yeah.

16 MR. NADEL: Is that a condensing option or a

17 non-condensing option?

18 MR. STANONIK: I'm looking at it within the

19 context of still being non-condensing.

20 MR. NADEL: Okay.

21 MR. STANONIK: Air-atomized burner, I'll defer to

22 the oil burner experts, since I assume that's what we're

23 talking about. That's an oil burner option, I believe. I

24 don't know what slow recovery is. I'm going to put that one

25 aside.

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1 MR. KUSTERER: That's the opposite of fast

2 recovery. Just the opposite, Frank.

3 [Laughter.]

4 MR. RABA: I see a head nod from George. Go

5 ahead, George.

6 MR. KUSTERER: I believe that the air-atomization

7 burner for oil-fired equipment is extremely beneficial and

8 should be left in.

9 MR. RABA: Thank you. Go ahead, Frank. You were

10 on a roll there.

11 MR. HILLER: The description that's in this

12 document of the slow recovery is basically is basically a

13 conventional fossil-fired water heater, but with a smaller

14 burner in it. Therefore, the effective ratio of heat

15 exchange area goes up because the firing rate is less.

16 MR. STANONIK: On that basis, I would suggest

17 eliminating it. Since the dawn of efficiency regulations,

18 the first action manufacturers took was to derate, to create

19 a slow recovery water heater.

20 Since then, they've been trying to find ingenious

21 ways to in fact give the consumer what they want, which is a

22 water heater that has more input, that gives them more hot

23 water at an efficient operation, and this would be taking us

24 back to 1975 or whatever. I don't think it's a reasonable

25 option to consider. It's true it would be efficient, but

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1 it's efficient because you're not giving anybody a lot of

2 hot water.

3 MR. HILLER: It's really a subset of increased

4 heat exchange area.

5 MR. STANONIK: That's right. Flue damper, as Jim

6 and other people have mentioned, that one has been visited

7 already. I don't know whether you keep it there because the

8 work is already done or you move it because the work is

9 already done. I guess I would look for some comment from

10 other people. I'm not interested in redoing it. I think

11 the analysis has been done.

12 This flue damper, buoyancy operated, is in fact

13 what I had in mind when I raised the question about making

14 sure the thing complies with safety standards. This one

15 absolutely should be eliminated. Without a lot of

16 additional work and a lot of additional research, this has

17 potential major safety problems. You're talking about a

18 product that is going to rely on the buoyancy of the

19 product's combustion to open the flue damper.

20 Anybody in the gas industry is becoming more and

21 more aware of the concerns of depressurization in houses,

22 which, in fact, drives things the other way. So now, the

23 buoyancy when the appliance is operated is going to be

24 theoretically, in some houses that haven't been put together

25 right, lost, so that damper is going to close. It's nowhere

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1 near a marketable, practical idea.

2 MR. HILLER: It's an unvented water heater.

3 MR. STANONIK: That's right. We can make it an

4 unvented water heater. But I think it should go into the

5 eliminated list.

6 Indirect heating -- I guess I'll put it this way.

7 I think that one has also been examined, been analyzed. I

8 guess I have the same answer as the flue damper one. That

9 means you can leave it on the list because you've already

10 done the work or you could eliminate it. Again, I'm on the

11 fence on that one.

12 The two phase thermosyphon, as I understand it, is

13 what I'm going to call an advanced heat pipe design of

14 sorts. Maybe that's only how I can understand it. I don't

15 know much about that. I do know that many years ago, now, a

16 manufacturer tried to market a heat pipe water heater. It

17 didn't make it.

18 I think that it's going to have cost problems in

19 terms of being competitive, in terms of whatever benefits

20 efficiency-wise. Not knowing much about it, I would say

21 eliminate it, but again, I'm really talking about what I

22 don't know about in this case.

23 MR. HILLER: If I may, I know that the

24 manufacturer involved is probably not going to step forward

25 and tell you who they are, so I'll just tell you what I

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1 know. I've heard that there is at least one manufacturer

2 who's planning to reintroduce a product like this. I don't

3 know exactly what the timing or anything is.

4 It wouldn't have a central flue any more. It

5 would be an external combustion device with a heat pipe

6 transferring the heat into the water. I'm not so sure that

7 it's not going to be cost effective. It's going to be a new

8 product, so there are other issues associated with it, but

9 it has got some promise technologically, I think.

10 MR. KUSTERER: Just not to stop my colleague on a

11 roll, but since there is only apparently one prototype and

12 it's going to be years down the pike, I don't think it

13 should even be in consideration.

14 MR. LANGMEAD: We walked this path with heat pump

15 water heaters.

16 MR. KUSTERER: Yeah, we did. So let's just get

17 rid of it. I agree with Frank.

18 MR. LOGEE: But you don't have any rationale.

19 MR. KUSTERER: I don't have any rationale?

20 MR. LOGEE: Well, just because it was done before

21 doesn't mean that it's --

22 MR. KUSTERER: I didn't say it was done before. I

23 said there's one prototype out there. Nobody knows anything

24 about it. How can you consider it?

25 MR. LOGEE: But you're saying availability.

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1 MR. KUSTERER: There's no availability. It's not

2 there.

3 MR. STEPHENS: Are we talking about design to meet

4 the CPSC requirements?

5 MR. STANONIK: The next one, flue gas dilution --

6 and again, I missed what that one is supposed to be, so I

7 would like to skip that one for now, because I don't know

8 what they're talking about.

9 Electronic ignition has been analyzed. The work

10 has been done, so I would put that in the same category as

11 the flue damper and the indirect heating. I don't know what

12 you want to do with that.

13 Interrupted ignition, it seems to me that's the

14 same thing as electronic ignition. I'm not sure about that

15 one because I'm not sure what the difference is.

16 MR. VAGO: Let me try to differentiate between hot

17 surface ignition and spark ignition. I'm guessing, but I

18 think that's what they are trying to do, differentiate

19 between spark ignition -- spark to pilot versus hot surface.

20 MR. RABA: Remember our norms, one at a time

21 speaking. Thank you. Go ahead, Otto.

22 MR. VAGO: I'm guessing.

23 MR. STANONIK: I just read it, and all they're

24 talking about is a specific form of electronic ignition. So

25 again, my opinion, I can't see it's worth a separate

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1 listing. It's just the fact that the ignition source shuts

2 off once the burner is established, rather than being on the

3 entire burner operation period.

4 MR. KUSTERER: Basically, it only applies to oil.

5 MR. STANONIK: Well, it could apply to gas.

6 They're applying it to oil, I guess, but --

7 MR. KUSTERER: Primarily, it's oil, interrupted

8 ignition.

9 MR. HILLER: I think the bottom line here, in

10 addition to the oil issue, is if you're talking conventional

11 center flue type of water heaters, you don't buy anything,

12 because you're offsetting one loss for another. But they

13 might make sense with some of the other options. I'm not

14 saying you should consider or not consider, just point out

15 that if you're going to consider, it only makes sense with

16 something that's not a central flue water heater.

17 MR. KUSTERER: And basically, interrupted duty

18 ignition has absolutely nothing to do with the efficiency of

19 the product. Absolutely nothing to do with it.

20 MR. RABA: What was I hearing? Was that just a

21 yes or no? No?

22 MR. LEWIS: Well, as long as there isn't any

23 efficiency benefit.

24 MR. KUSTERER: There is no benefit.

25 MR. HILLER: There might be. Let me give you an

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1 example. If you have a side arm heater and you put a pilot

2 light on it, it's going to be less efficient than if you

3 have an electronic ignition device.

4 MR. LEWIS: Can you name any product that exists

5 in the marketplace today where that is applied?

6 MR. HILLER: There are some that have side arm

7 heaters that are using pilot lights.

8 MR. LEWIS: You know, it gets back to the argument

9 that I think was presented earlier this morning, and that

10 is, unless a product has some clear commercial position as

11 far as representing some segment of the marketplace, it's

12 difficult to consider how an application of this sort should

13 valance out on what the efficiency of a water heater should

14 be. I would like to see this list simplified wherever it

.B 15 can be, because I think it's going to help the process move

16 better.

17 MR. RABA: Next comment, please.

18 MR. STANONIK: The next two, condensed flue gases

19 and pulse combustion -- pulse combustion is just a

20 specialized way of condensing flue gases. Based on a

21 previous discussion that we've had, I think those should be

22 eliminated. I think it's fairly straightforward that that

23 product for residential uses, practical uses, we see in the

24 field it's not going to be cost effective. In some ways,

25 some limited ways, it presents problems similar to the heat

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1 pump water heater as far as installation applicability, and

2 in some cases the replacement situations would present some

3 difficulties. The bottom line is, I think they should be

4 added to the eliminated list.

5 MR. RABA: One comment, please, before you go on,

6 Frank.

7 MR. STANONIK: Yes.

8 MR. HEISS: My question was regarding timer

9 controls, what did you mean? What entails timer controls?

10 It's a program that's very, very important to my company,

11 something we've invested a lot of money in, and I would like

12 to see it if it were properly done. So I wanted to know the

13 definition of timer controls. What were you thinking when

14 you wrote that down, Bryan?

15 MR. RABA: This is for interrupted ignition?

16 MR. HEISS: No, timer controls, after pulse

17 combustion.

18 MR. RABA: Thank you.

19 MR. BERRINGER: I would say it's like the

20 utilities. They're interested in demand.

21 MR. HEISS: Well, it's a demand avoidance

22 strategy. It seemed to be here without any details. It's

23 very important to me, and I just wanted to ask this

24 question.

25 MR. RIVEST: Bryan, I can shed some light on some

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1 of the issues here. I was party to a conversation at one

2 point, and it was explained to me as being sort of a setback

3 on the water temperature so there would be fewer losses. So

4 there is some saving benefit. I don't know if they're

5 important or not.

6 MR. HILLER: Please, if I may, let me -- there's

7 really two kind of issues associated with this, and there

8 are two common types of practices out in the field. One are

9 devices that turn the water heater off at night when you

10 don't need hot water. The fact of the matter is, those

11 don't save energy.

12 Turning the water heater off or turning its

13 thermostats down when the thing is already hot doesn't buy

14 you much. What you gain from is turning the water heater

15 off or turning the thermostat down when a significant

16 portion of the tank is cold and therefore can't incur heat

17 loss, i.e., off-peak water heater control in the utility

18 industry.

19 So turning the water heater off at night, it buys

20 you very little. Turning the water heater off in the

21 daytime can get some not insignificant energy savings.

22 My concern, however, is that, if you're going to

23 keep the customers happy, you probably ought to give them a

24 bigger tank. So I'm not sure I want to see that mandated by

25 federal law that everybody has got to start using bigger

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1 water heaters, even though there may be some efficiency

2 benefits. It's a significant first cost impact.

3 MR. STANONIK: The timer control issue much more

4 is an issue of cost savings to the consumer because the

5 utility gives them an incentive to use this technology to,

6 in fact, consume electricity off peak so they can sell it to

7 them cheaper. It really doesn't add much to the efficiency

8 side of that. On that basis, I would take it out as a

9 design option.

10 MR. HEISS: I would agree. Take it out if it's

11 going to be on that basis.

12 MR. STANONIK: And by no means am I intending to

13 discourage the whole idea, but it is really driven towards

14 getting people to use their electricity at a different time,

15 but still to use it.

16 MR. HILLER: How this really originally got on the

17 list was, in the testing and rating procedures part of it

18 there's currently no method to recognize the benefits of

19 turning the water heater off during the daytime. So it

20 would be nice to see something that recognizes the benefit

21 of that. But that's a separate issue from requiring that.

22 MR. RABA: So I hear you saying let's take it off?

23 MR. HILLER: That's correct.

24 MR. RABA: Thank you.

25 MR. STANONIK: The next three -- solar pre-heat,

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1 drain water heat recovery system, tempering tank -- to me,

2 all of those are not water heater design issues. If someone

3 -- DOE or whoever -- is interested in using these techniques

4 to achieve efficiency savings, then let's talk about doing

5 them in the house.

6 All of these you could do at the time of

7 installation. They have nothing to do with what the water

8 heater looks like or how it's designed or any of that, but

9 they're all features anyone could choose to build into their

10 installation to, in fact, lower their water heating bill.

11 Anybody can put a solar pre-heater on their house

12 or in the installation. Anybody can, assuming they have the

13 space, hook up one of these drain water heater recovery

14 systems. Well, I take that back. If DOE wants to say that

15 every installation shall have two tanks, at least from

16 GAMA's perspective, I think we would support that.

17 [Laughter.]

18 But all of those are not things that the

19 manufacturer is going to do to the design of the water

20 heater. Those are things that can be applied at the

21 installation, and as long as we're talking about design

22 options, then I think they should be eliminated because

23 they're not design options. There's no fancy design

24 involved in developing a tempering a tank and likewise with

25 the solar pre-heater. I mean everybody knows how to do

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1 that.

2 And sediment removal features --

3 MR. MOFFROID: For that issue, can I address

4 something? Am I totally out of line to speak here, as far

5 as speaking for the technology that I referred to this

6 morning, tankless energy?

7 MR. RABA: Please go ahead.

8 MR. MOFFROID: To contradict over here -- I mean

9 I'm representing a company that makes close to a million

10 water heaters. The name is Robert Bosch of Germany.

11 Our water heaters address exactly that issue as a

12 booster to solar heat, in the sense that our water heater is

13 either made with a thermostat sensor that will modulate the

14 gas valve down to nothing if the solar water heating comes

15 in at the regular temperature that you can use,

16 automatically checked by the thermostat. So my water heater

17 is exactly designed for that application.

18 Now, granted, for the storage tank it's a whole

19 different issue.

20 MR. STANONIK: I think you're misunderstanding.

21 The design option they're talking about is using solar

22 collectors as pre-heaters for your supply water going to

23 your water heater.

24 MR. MOFFROID: If that's the case, then I

25 misunderstood.

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1 MR. STANONIK: That's what they're talking about.

2 MR. MOFFROID: Okay.

3 MR. BRUNDAGE: Additional notes for the gentleman

4 from GAMA. When you start talking about items like the

5 solar pre-heater, the drain water heat recovery system, when

6 you start talking about something applicable to all

7 equipment and all applications, you'll have scenarios where

8 it's not applicable, where you may have a water heater

9 installed in the building very far from any place you could

10 get solar. It may be impractical to run it back past the

11 drain.

12 Some of these options are not really appropriate

13 for -- while they may have very good energy characteristics,

14 you run into some of the same problems you do with heat pump

15 water heaters or other things, where there'll be times where

16 they're just impossible to use.

17 MR. RABA: Thank you.

18 MR. STANONIK: Sediment removal features. DOE's

19 description of this is on there only because of the

20 potential benefits of maintaining a certain level of

21 efficiency over the life of the product.

22 That's not discussed or even that question raised

23 anywhere else in any of the analyses. I just don't consider

24 that it's really a design feature relative to meeting a

25 minimum efficiency requirement of a product as it's

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1 manufactured and sold to the consumer, and I think it should

2 be eliminated.

3 MR. HILLER: Just to reinforce Frank's point,

4 number one, these swirl-type diffusers don't affect

5 efficiency of electric resistance water heaters at all. It

6 doesn't matter if you bury the elements or not, they're

7 still 100 percent efficient because it's run hotter to do

8 that.

9 In terms of the fossil-fired water heaters, yeah,

10 they might help keep the efficiency up. None of the test

11 procedures reflect that, so there's no way you can enforce

12 mandate on it.

13 MR. RABA: Thank you. Now, we have a list that we

14 can make some comments about screen in or screen out.

15 Terry?

16 MR. LOGEE: There's one that wasn't covered

17 because, I guess -- flue gas dilution.

18 MR. STANONIK: Right. Flue gas dilution -- and

19 now that I've read the description, as it's described here,

20 we're talking about gas water heaters that are actually

21 mechanical venting means on top of the water heater and, in

22 the process of venting it, they draw in additional excess

23 air to cool down the parts for combustion so you can use

24 plastic piping for venting. That is not an efficiency

25 design option.

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1 What drove the market for horizontal venting and

2 plastic pipe venting or whatever you want to call it for gas

3 water heaters was the issue of installation convenience or

4 getting water heaters in areas where, maybe, you couldn't

5 install it before -- gas water heaters. So, on the basis

6 that it really isn't an efficiency option, I would say it

7 should be eliminated.

8 MR. RABA: Right below that, also, I note

9 electronic ignition. I have no plus or minus with that,

10 also. Is there further discussion on electronic ignition?

11 MR. NORTON: I thought you might have mistaken me

12 for Michael Martin earlier. I'm not that CEC.

13 [Laughter.]

14 There are a number of items on the list which

O 15 we've been discussing. There's some question in my mind how

16 this works. As I asked earlier, we're eliminating options

17 or putting options in that affect the design of electric and

18 gas storage tank water heaters.

19 David alluded earlier to the question of

20 condensing burners as something that should be kept in for

21 new installations, and the technology that we represent --

22 condensing burners, electronic ignition -- all make

23 significant impacts on the efficiency, unlike some of the

24 comments earlier about storage tank where an electronic

25 ignition doesn't affect efficiency. Well, it certainly does

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1 on an instantaneous water heater.

2 I guess what I'm concerned about is eliminating it

3 from this list does not recognize -- somebody made an

4 allusion earlier to recognizing the benefit of having this

5 as an option carried forward for design. So this is

6 partially a question. If these are eliminated from the

7 list, what does that mean for this technology?

8 And then I believe there are on the market storage

9 tank water heaters which are seal combustion, and I believe

10 that a seal combustion water heater could work with a

11 condensing flue without any problems, so I'm not sure why

12 that would be removed from this design unless there's a

13 concern that it's driving the whole design of the industry.

14 So I guess that's a larger question about how this

. 15 list relates to what we do as manufacturers in the future.

16 MR. RABA: Thank you. David.

17 MR. GOLDSTEIN: We do not agree with GAMA on most

18 of these positions. The basis at this point for

19 disagreement, I first note that the industry talking here in

20 front of DOE today seems to accept as inevitable that you

21 might totally redesign water heaters at a big cost increase

22 to satisfy CPSC and save up to 20 lives a year, and then

23 it's telling DOE that we shouldn't consider totally

24 redesigning water heaters for energy efficiency, which might

25 save even more than 20 lives a year.

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1 We haven't done the analysis yet, so we don't know

2 the number, but I think the same amount of respect is due

3 both federal agencies as far as what's doable, what makes

4 sense, and the trade-off between the cost issues, whatever

5 they are, and the health and safety and environmental

6 issues.

7 There may be some favorable interactions at this

8 point that we wouldn't want to rule out. It may turn out,

9 for example -- just to pick one possible solution -- you

10 would totally eliminate the possibility of vapors combusting

11 if the water heater could draw nothing but outside air and

12 exhaust only to the outside.

13 If you had to do that anyway, it might turn out

14 that condensing or some of the other high efficiency options

. 15 that don't make as much sense in the abstract would make a

16 lot of sense if that's the specific path that we're going

17 down.

18 So those are examples of the reasons why I

19 wouldn't accept most of the screen-out recommendations that

20 GAMA has made at this point.

21 I would agree with screening out slow recovery,

22 because I think that essentially amounts to just down-sizing

23 the tank, and if you have a more efficient tank and people

24 go up 10 gallons to get the same first hour output, that's

25 not really helping anybody.

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1 I would probably accept the GAMA recommendation on

2 buoyancy operated flue damper. I'm not an expert on the

3 safety issue, but if their technology discussion is right,

4 then I would agree with them there.

5 Timer controls, I would also agree, because I

6 don't believe that's reflected in the test procedure, and

7 similar reasons, I would agree with them on the sediment

8 removal features, that it may be a good idea, but they're

9 not going to get credit in the test procedure for it, so you

10 can't really require it in the standard.

11 MR. RABA: Which is that, David, please?

12 MR. GOLDSTEIN: Sediment removal feature.

13 MR. RABA: Okay. Thank you. Do you have other

14 ones?

15 MR. GOLDSTEIN: No. Those are the one, two,

16 three, four that we agree with them on, and the rest we

17 would not accept at this stage.

18 MR. RABA: I have three. You said four?

19 MR. GOLDSTEIN: Slow recovery, buoyancy operated

20 flue damper, timer control, and sediment removal feature.

21 MR. RABA: Thank you. I have a hand over here on

22 the left.

23 MR. RANFONE: Just a question for David on the

24 screening process, which you commented that you didn't want

25 to screen out condensing water heaters. Is anybody making a

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1 residential condensing water heater? Is that product

2 available on the market?

3 MR. NADEL: Yes.

4 MR. RANFONE: Storage type? So the question is,

5 then, you agree in the screening process to eliminate the

6 heat pump as an option because of the problems outlined in

7 this document, which says lack of product availability. To

8 my knowledge, there isn't a residential storage water

9 heater, full condensing, that just provides water heater,

10 not domestic hot water, yet you don't want to rule that one

11 out. Is that correct?

12 MR. GOLDSTEIN: It's not completely correct

13 because I would want more elaboration of the

14 non-availability explanation, which I think exists, for me

15 to be comfortable with that as the reason.

16 The refrigerator standards that were recently

17 adopted by DOE with unanimous support from all manufacturers

18 rely in the engineering analysis on compressors that you

19 cannot buy today, and that's because the industry was

20 comfortable that they would become available in time to meet

21 the standard and the technologies that would be used by

22 those manufacturers are considered reliable.

23 For the heat pump water heater, I don't believe

24 there is a consensus in the technical community that the

25 technologies that you need would exist and would be

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1 available and maintainable and serviceable within the time

2 period.

3 So it's not just these don't exist on the market,

4 but that even though some people may think that they could

5 exist were there a standard, that doesn't look like a

6 position to me that's going to prevail in a rulemaking

7 process.

8 As far as the gas condensing water heater, I have

9 a gas condensing water heater in my building. It's a

10 nine-unit building, so it's stunningly cost-effective. If

11 you divided the energy savings by nine, it would not be

12 cost-effective. So there's no question in my mind that you

13 can build it and make it reliable simply by scaling down a

14 technology that I've lived with for the past two years.

15 The question is, is it cost-effective? Does it

16 have other safety or installation problems or costs? I

17 believe that further analysis on that would be useful.

18 I suspect that that analysis will not lead to the

19 recommendation for a standard, either because of the

20 cost-effectiveness or even if it passes cost-effectiveness

21 because of fuel switching issues, but I'm not sure that's

22 right because, again, the Consumer Product Safety Commission

23 interaction may conceivably change that result or other

24 elements in the analysis.

25 If it turns out that the economically justified

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1 standard for electric water heaters has a comparably high

2 first cost increase to gas, and so there's no fuel switching

3 impact, conceivably it might make sense. So there are

4 enough possibilities I would like to see the analysis go

5 forward, although I think the result is not going to be a

6 condensing water heater standard for gas.

7 MR. RANFONE: And I agree with that, and that's

8 our position. Look at all the design options and don't

9 eliminate them up front as what's being done now. We don't

10 have any problem with that.

11 I guess I was still not clear on your position

12 and, also, ACEEE's on a technology that has been touted,

13 that has been marketed, that's in the field, that's being

14 sold, as not being available. That's okay. We don't have

15 to take a look at that option. And our concern isn't just

16 condensing water heaters being mandated. There is a lot of

17 interim steps to get to condensing. That also would impact.

18 MR. GOLDSTEIN: That's right. And those may --

19 MR. RANFONE: And we don't mind going through

20 that.

21 MR. GOLDSTEIN: Those may disappear later on or

22 they may not. I am not recommending for NRDC that heat

23 pumps be screened out of the analysis. I am simply not

24 objecting to a DOE tentative decision that they should be.

25 MR. BATEY: With regard to the air atomizing

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1 burners, this is an area that Brookhaven National Lab has

2 been looking at for a number of years. There was a model

3 about 15 years ago, the Babbington burner, that was never

4 commercialized. There were opportunities to do that.

5 Currently they're working on an air atomizing

6 burner that's a prototype. There's no commercially

7 available product right now from an oil burner manufacturer

8 that's air atomizing. I think what we're looking at is at

9 least 10 years down the road before something like that

10 would be available.

11 So, on that basis, I recommend that that be

12 deleted from the list. It just isn't a viable product right

13 now.

14 MR. RABA: Thank you.

15 MR. HILLER: I certainly understand the concerns

16 that my colleague from the gas industry has mentioned. Let

17 me see if I can kind of paraphrase my feeling on this. Heat

18 loss is one of the things we've got to go after somehow, and

19 there are certain options with which to do that. There are

20 probably more options in a typical fossil-fired water heater

21 than an electric water heater currently.

22 Should we consider all options? Probably not.

23 But there are certain options, in my mind, that it's not so

24 obvious to me that they're so out of the ballpark when done

25 on a residential scale. I think I know the answer to most

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1 of them. They probably wouldn't pass all the tests and

2 would be dropped. But I don't know that for sure.

3 I don't know where I feel comfortable that

4 something's obviously too much. I don't know enough. For

5 example, I know that there are condensing residential water

6 heaters out there now. I know they cost $3,000, but that's

7 because they're also a space heater, and they're way bigger

8 than they need to be to just be a water heater.

9 I don't know what that thing is going to cost if

10 it's just done for water heating. There are other people,

11 other expertise that probably has a better feel for that

12 than I do. If I knew that the residential size that was

13 just for water heating was going to cost $3,000, I would say

14 "Yeah, don't consider it." But I don't know. I'm not as

15 comfortable.

16 I think we all probably agree we know what's going

17 to pass the ultimate test and what's not, I don't know

18 exactly where the line is for where it's a no-brainer or

19 not.

20 MR. RANFONE: You are comfortable eliminating the

21 heat pump water heater as an option?

22 MR. HILLER: As much as I hate to do that, yes. I

23 mean I'm working like mad to get rid of some of those

24 barriers.

25 MR. RANFONE: Well, again, a lot of the

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1 information that was provided to DOE for the technical

2 support document came out of EPRI documents.

3 MR. HILLER: Oh, I know.

4 MR. RANFONE: Okay.

5 MR. HILLER: It pains me to no end to have to say

6 that. Trust me.

7 MR. RANFONE: So the analysis that was done was

8 flawed, but it was based on your information, so -- you

9 don't want to go back and revisit that as a design option?

10 MR. HILLER: I'm not giving up on heat pump water

11 heaters by any means. We're going to continue to develop

12 them until we get rid of some of the problems.

13 MR. RABA: Steve Nadel.

14 MR. NADEL: Yeah. I'll throw in my two cents here

15 and also try to move towards resolution on some of these.

16 It sounds like the most contentious issues are what to do

17 about the heat pump water heater and the condensing water

18 heater. There are some people who feel very strongly that

19 those should be included.

20 One option is to basically limit the number of

21 options we have for each of those to one. We don't need to

22 look at three or four versions of a condensing water heater.

23 We don't need to look at three or four versions of a heat

24 pump water heater. Just pick one, analyze it, keep in mind

25 the limitations.

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1 The discussion around the table here says they're

2 probably going to eliminate it, but it's pretty easy. Just

3 include one option now. You pretty much have the data, and

4 we're all pretty sure it will get eliminated later.

5 In terms of the other options, which I think are

6 more seriously in play, I guess I would like to be working

7 on, understand exactly where we are and quickly review some

8 things and see if we can reach further agreement on a few of

9 them. I think everyone agrees that heat traps is a keeper.

10 Plastic tank, it's unclear whether that is or not.

11 I think the issue there -- my understanding that the energy

12 savings, if there are any, is due to the fact that you have

13 less heat loss associated around the fittings or something,

14 less metal to metal or something like that. My guess is the

15 savings are pretty minimal to justify the cost, but that

16 will probably -- we'll find that out from the analysis.

17 I think we already have the data on that one, so

18 it's just a question of whether to keep it in the analysis

19 or drop it. So it's not a big deal to me. I'm fine to keep

20 it. If people want to make a strong case to drop it, fine.

21 I think it will drop out later.

22 The insulation, as I understood, we're looking at

23 kind of more of a continuum of insulation. It's not just

24 two discrete steps, or maybe it's a couple of discrete

25 steps, particularly given questions about blowing agent.

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1 You know, maybe it's not. We need more steps or a continuum

2 than what we have here.

3 The next three, the insulation. I think what we

4 have with this rulemaking, unlike many other rulemakings --

5 because we're trying to coordinate with the vapor ignition

6 issue, and that's moving on a relatively rapid time schedule

7 -- we're probably not going to have the option of delaying

8 extra days or an extra three years to allow some new product

9 to reach market.

10 Those next three, I think, it's more the

11 refrigerating industry that would drive that. It doesn't

12 look like they're going to go to that for the 2001 standard.

13 I doubt the water heater industry will drive it, so I would

14 be comfortable dropping those next three.

15 Forced draft, let's keep; I agree. Improved flue

16 baffle, let's keep. I like the way DOE has it. There's a

17 couple of different steps before you get to condensing. For

18 the one where you get clear condensing, just include that.

19 If we include a condensing option, just include one. You

20 don't have to say how you get there.

21 I like Frank's suggestion about having increased

22 heat exchange area as a measure, and I like his suggestion

23 of keeping that to the point where you don't have to worry

24 about condensation problems, bringing it up to the point

25 where condensation is not an issue.

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1 MR. RABA: That's a keeper?

2 MR. NADEL: Keeper. Particularly right. It's

3 clearly non-condensing. Again, there may be gradations

4 there. I don't know whether it's one measure or it may wind

5 up breaking into two. I don't know where the costs lie, but

6 it strikes me it's a continuum. You probably don't want to

7 do a continuum, but is it one measure or two? I'm not

8 clear.

9 In general, a reason to eliminate something is not

10 because it's not commercialized now. What is a potential

11 way to eliminate it, going back to the screening document,

12 is item number -- I think it was on page B-8, item number 2,

13 practicality to manufacture, install and service -- whether

14 this is going to be practical to manufacture, install and

15 service within the time frame we're talking about for this

16 standard. It sounds like the air atomized burner doesn't

17 meet that.

18 Slow recovery, I think everyone agrees there's a

19 potential consumer utility issue there, so not to include

20 it. Likewise the buoyancy operated, eliminate -- safety

21 concerns -- but we will keep the electromechanical as an

22 option to analyze. We've done the analysis before. I would

23 be very surprised if it screens through, but we have the

24 data. Let's keep it in. Likewise indirect heating. Let's

25 keep it in. Again, it will probably drop out.

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1 The two phase thermosyphon, my sense is that is

2 probably too long-term to be practical to mass produce for

3 the entire industry by 2002, and I'm okay to eliminate it on

4 that basis.

5 Flue gas dilution is basically, as I understand

6 it, a variation on forced draft, and so we don't need the

7 second option.

8 Electronic ignition, let's keep it in as an

9 analysis. Interrupted ignition, my understanding is there's

10 no energy savings, so why keep it in? I can go either way

11 on condense flue gases, but if we do have condensing, let's

12 keep it to one option; let's not have multiple. So,

13 clearly, pulse should be eliminated.

14 Timer controlled, it doesn't sound like there's

15 much energy savings, so eliminate it. The various solar and

16 separate tanks, these are impractical, I think, to install

17 in all homes, and let's save out time. Likewise sediment

18 removal. It doesn't sound like there's much of any energy

19 savings. So that hopefully adopts most, but not all, of

20 Frank's things and may be a way to move forward. And then I

21 would say we do need to --

22 MR. RABA: Say it again, your insulation call,

23 Steve.

24 MR. NADEL: Insulation is going to be a continuum,

25 so it's not just R16, R25. It's either a continuum or

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1 multiple steps, more steps than you have there.

2 MR. RABA: Thank you.

3 MR. STANONIK: The issue is to find, if there is

4 some amount, how much is it?

5 MR. RABA: Very good. Others? Charlie.

6

7 MR. STEPHENS: Real quick, I would endorse Steve's

8 assessment of Frank's work. I feel a little bit stronger

9 about the condensing equipment, not because I feel that it

10 might not make it or it will, but rather, I just don't know

11 what the base case is yet. There's just too many design

12 issues having to do with safety raised today for me to

13 understand what the base case is yet.

14 I might be more comfortable with eliminating it

15 later, but I'll wait and see what the base case is beginning

16 to look like when we can find out.

17 MR. STANONIK: So that was a keep it?

18 MR. STEPHENS: That's a keep it for now because,

19 again, I don't know what the base case looks like. I would

20 like to have at least some notion of how different these

21 newer ones are going to be, compared to what we've already

22 analyzed.

23 MR. RABA: Others? George.

24 MR. KUSTERER: In my absence -- and I apologize

25 for that, although nature did call, and we didn't make our

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1 break as per schedule -- I do have to apologize. I misread

2 one item with regard to air atomization, and I'm glad that

3 my colleague from OHMA -- which is the Oil Heat

4 Manufacturer's Association -- brought it up, that that

5 technology is anywhere from five to 10 years away and should

6 not be considered.

7 So I would like to go on record as retracting the

8 air atomized burner. I think it should be eliminated.

9 MR. BATEY: Actually, there are three negatives

10 there. The one under AI should be AAB.

11 MR. RABA: This one here?

12 MR. BATEY: Eliminate one of those negatives and

13 put it down at AAB.

14 MR. STANONIK: The plus was actually -- we went on

15 George's word, and, so since he has retracted his word, you

16 ought to scratch out that plus.

17 MR. KUSTERER: Yeah, that's a minus. I apologize

18 to my colleagues from GAMA. I just misread that, and I was

19 thinking air atomization someplace else. The other thing

20 is, with the elimination of the condensing flue gases and

21 the pulse gases, I do agree. We had made a number of units,

22 and the failure rate has just been phenomenal, not with the

23 units, but with associated controls and venting. As far as

24 water heater goes, it's our professional opinion that that

25 should be scrapped.

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1 MR. RABA: Any other calls, screen in or screen

2 out? Considerably more Spartan ladies and gentlemen

3 participating here today who have made it through the break

4 unscathed. I'm sorry, I had to do that, George.

5 MR. KUSTERER: That's all right. I have broad

6 shoulders. I'm built like my cows. When they want to be

7 milked, you milk them.

8 [Laughter.]

9 MR. HAAG: I would like to support all the

10 recommendations that Frank Stanonik made nominees for

11 deletion. I would like also to suggest that the Department

12 correct the terminology regarding indirect water heaters.

13 On page B-14, you do mention, in parentheses, side arm after

14 you mention indirect heating, but in the industry, indirect

15 heating is heating your water with high temperature water or

16 steam. You typically have a heating boiler with a coil in

17 it that you call your indirect heater. So suffice it to

18 say, for the description you have there, it should just say

19 side arm heater. In ANSI's E-2110 terms, that would be

20 described as a circulating tank heater. Side arm has been

21 used.

22 MR. RABA: Thank you. Others, please? Other

23 notes or comments?

24 [No response.]

25 Now, since George had mentioned the break, does

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1 anybody want to take a quick break now or should we press on

2 to finishing up? We still have some other issues to cover

3 from our parking lot.

4 MR. HILLER: I think we ought to press on. Some

5 of us have to catch airplanes.

6 MR. RABA: Everybody like the idea of pressing on?

7 MR. HILLER: There was an issue of adding things

8 more to the list that I brought up earlier.

9 MR. RABA: Sure. Now, this was the other issues.

10 What Carl is bringing up -- and maybe this is appropriate --

11 it's okay? Since we're looking at screen in and screen out,

12 thoughts about the heat pump water heaters, resistance water

13 heaters.

14 MR. HILLER: The specific one I had in mind was

15 the use of outside air or not, and I wanted to ask a

16 question on that, among other things. What do we do now

17 with gas furnaces? Is there a requirement now for use of

18 outside air with gas furnaces?

19 MR. STANONIK: A requirement for what?

20 MR. HILLER: Is there currently a requirement to

21 use outside air in gas furnaces?

22 MR. STANONIK: No. They're tested using outside

23 air.

24 MR. RABA: Tested using outside air?

25 MR. HILLER: Somebody said that in furnaces

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1 they're using outside air in testing, but the standard

2 doesn't require the use of outside air. Frank has got a

3 good point in that it's probably not going to affect on an

4 energy factor test or whatever test we use to determine

5 efficiency. As long as we specify, the temperature outside

6 versus inside is irrelevant, but there are some issues

7 safety-wise, et cetera, that come into play there.

8 I don't really fully understand, under the energy

9 efficiency rule, if that's even the appropriate place to

10 have that or if it ought to be in a safety ruling separate

11 from this or what.

12 MR. LANGMEAD: Carl, what are you talking about?

13 MR. HILLER: Well, in terms of efficiency in

14 place, if you put any combustion appliance inside the

15 conditioned space that uses conditioned air, there's a loss

16 associated with that. But that's not under the current test

17 procedures. There is energy efficiency to be gained by what

18 you use.

19 MR. LANGMEAD: On the furnace test procedure,

20 you're assuming you use outside air, and it has only effect

21 on what goes up the vent stack.

22 MR. HILLER: Right.

23 MR. LANGMEAD: Nothing else. On the water heater,

24 you're assuming it takes inside air. You're measuring Btu's

25 into water. Your test procedure on your furnace and your

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1 test procedure on your water are quite different. One is

2 measuring Btu's into the heated space or -- excuse me, the

3 furnace one is 100 percent minus losses. The water heater

4 is determining Btu's into the heated water. Quite

5 different.

6 MR. HILLER: Right, but neither one of those

7 procedures currently account for the loss caused by the

8 infiltration to make up for that air that goes up the flue.

9 Should we? I don't know. I'm not saying we should or

10 shouldn't. I'm just saying they don't.

11 MR. KREBS: We could get into a dialogue about

12 site versus source if you really want to. Your choice.

13 MR. HILLER: I am observing the loss mechanisms.

14 MR. KREBS: So am I.

15 MR. HILLER: I'm not saying we would do it or

16 shouldn't do it. I'm raising it as an issue.

17 MR. VAGO: I say let's not do it.

18 MR. STEPHENS: There are codes, I think, in some

19 places that are beginning to deal with this in new

20 construction, if not retrofit, and I don't know that it is a

21 water heater product issue as much as it is an installation

22 issue that local codes are probably in the process of taking

23 care of as it is.

24 So I'm not sure that this is the right forum to

25 raise that, really.

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1 MR. KUSTERER: Don't want to go here.

2 MR. STEPHENS: Even though I think it would be

3 nice to eliminate the loss of indoor air.

4 MR. STANONIK: As George said, you really don't

5 want to go there. If we're going to go down that path, then

6 you need to embrace it whole hog, and then we can start

7 talking about standby losses not being losses but, in fact,

8 additions to heating the space in the heating season and all

9 that other stuff, and then we can get into what it does in

10 the cooling season and all that other crap.

11 It doesn't relate to the efficiency of the water

12 heater, and we shouldn't go down the road.

13 MR. KUSTERER: Right.

14 MR. BATEY: What we're talking about here doesn't

15 really impact efficiency that greatly.

16 MR. KUSTERER: It's more of a safety factor than

17 it is an efficiency factor.

18 MR. BATEY: But it's covered elsewhere.

19 MR. KUSTERER: Why go there?

20 MR. RABA: So I hear we would like to take this

21 out?

22 MR. KUSTERER: Throw it out.

23 MR. RABA: The other two were heat pump water

24 heaters and resistance water heaters.

25 MR. BERRINGER: I think we've answered that

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1 question as far as the screening out. We've discussed that.

2 I think it has already been discussed.

3 MR. RABA: Okay. One other item, too. Back to

4 you, Bryan. Go ahead. I was going to ask just one last

5 question here.

6 MR. BERRINGER: Okay. We haven't gone over the

7 schedule. I don't know if people want to look at that. I

8 mean there's a lot of questions that have come up today as

9 far as that goes. It's one of the things we said we would

10 come back to that George wanted to discuss.

11 MR. LEWIS: Prior to our getting into the

12 schedule, is there anything that you've heard today that

13 will speed or slow the schedule from what you would have

14 presented first thing this morning? Because I mean, before

15 we start looking at the schedule as far as a reality check,

16 it seems to me that you've received a lot of input through

17 the day. The schedule you're presenting here still will

18 stand?

19 MR. BERRINGER: Well, that's our goal, but we have

20 the big issue as far as how do we deal with the issue of

21 redesign as far as the CPSC, the flammable vapor issue, if

22 we move forward and use existing data -- and then, as was

23 suggested, go to existing data and come back and look later

24 and reassess that after we've gone through the analysis?

25 I think there's ways that we can probably move

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1 into doing the schedule that, later on, we can readjust or

2 do things. As we discussed, when we get into it, we might

3 be able to shorten things once we get down into the meat of

4 the process. But right now, a lot of it is still up for

5 your best guess or best estimate at this time.

6 MR. LEWIS: Maybe I'm being too pragmatic, but it

7 just seems to me that you've put together on paper your best

8 estimate on how you can proceed on the schedule. I'm sure

9 each and everyone around this table could adjust it in some

10 way. We've proven that even just by this last list we've

11 gone over.

12 There will be 39 different opinions, and unless

13 there's something really grotesque in your planning that

14 hasn't come to light so far, it seems like we're going to

15 have to start taking some steps down that path before we can

16 really adequately give you input as far as saying how are we

17 doing.

18 MR. MORRISON: Bryan, where do you see the next

19 point where the schedule could be adjusted?

20 MR. BERRINGER: Well, our next steps, if we just

21 want to look at -- what I addressed as far as next steps

22 here was engineering analysis, slide 23. I put on here,

23 "Data collection for revised engineering analysis, if

24 necessary." Can we use the existing data? Should we move

25 forward with the existing data? Can these be revised?

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1 We've screened out a lot of things. We've gone a

2 long way as far as doing that. So some of the reanalysis or

3 reengineering maybe isn't necessary for some products, since

4 they're screened out.

5 We talked about, in the schedule, doing plant

6 visits to try and collect data. The data collection would

7 be the next thing in the next couple of months, and try to

8 get with the manufacturers individually. That would be our

9 next step as far as reducing it.

10 If we need to update or revisit the engineering

11 analysis, send it out for peer reviewers from industry,

12 design engineers, as discussed. That would be our first

13 step as far as shortening the schedule. That's the first

14 step we have to get through to get through the process. .0 15 Manufacturing impacts, again, certain things we

16 can negotiate or agree upon, sort of like we did here at the

17 screening. Maybe we don't have to do detailed manufacturing

18 impact if industry advocates, everybody agrees that these

19 steps aren't necessary and we have some sort of agreement on

20 what's acceptable. Then a lot of detail and all of these

21 model issues would fall out, too, as far as using detailed

22 models or black boxes and so forth.

23 MR. MORRISON: The area that caught my attention

24 is the one that affects the gas products, gas storage

25 heaters. The flammable vapor issue may drive significant

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1 redesign in that product line. How do you anticipate

2 handling that problem?

3 MR. BERRINGER: Well, as was suggested today, if

4 we move forward with existing analysis, and then, as that

5 came up and the redesign came into play, then we could

6 reassess that data before we issued a final rule.

7 Again, we have no idea as far as schedule, as far

8 as when the prototypes would be available. I know there's

9 field testing that has to be done on those prototypes. As I

10 think David Goldstein suggested, we don't want to -- you

11 know, somehow we have to move forward. If CPSC is waiting

12 for us, and we're waiting for them, we may never get a

13 rulemaking done either one way or another. So I think

14 that's the way we would have to proceed.

15 MR. GOLDSTEIN: One comment on that. It's

16 important to remember NAECA requires a minimum three-year

17 lead time from DOE, and the process, even with the

18 improvements, requires at least another year between when

19 there's some idea of what standard levels DOE is considering

20 and when they can issue a final rule. That isn't going to

21 be shortened.

22 So if CPSC is on a shorter time frame, then the

23 goal of having one redesign cannot be achieved unless DOE

24 moves forward very quickly and simply keeps an open mind and

25 keeps communication with the officials in CPSC on a high

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1 enough level that problems can be seen and solved early in

2 advance.

3 I figure if DOE can work with EPA, they can

4 probably work with any other federal agency, given the

5 history that those two have had in the past. So I'm

6 confident that that can be worked.

7 From NRDC's point of view, what we view, what we

8 have been kind of offering as far as our predictions of how

9 this might come out is acceptance of a more modest standard

10 if the proceeding moves quickly.

11 The other side of it is, if this thing gets bogged

12 down, then we would be a lot less willing to accept the

13 weaker standard, in part because we just see technologies

14 developing.

15 While I would feel it was difficult for me to

16 prevail with the case on heat pump water heaters being

17 acceptable in a 1-1/2-year proceeding, I might be a lot more

18 confident that the technical information could be there if

19 the proceeding dragged out for three years. So there's a

20 definite trade-off going on here.

21 I'm saying I think it's in the best interests of

22 all stakeholders here that we try to keep this thing on

23 track and moving forward promptly towards a resolution for a

24 modest improvement in both electricity and gas on a fair

25 level between the two fuels.

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1 MR. MATTINGLY: I know, when I recall the process

2 of developing the interpretative rule and this whole new

3 approach, I think we thought that a proposed rule would be

4 pretty far along in the game, the issuance of a proposed

5 rule, and that, really, the only difference between a

6 proposed rule and a final rule would be some fine tuning,

7 that all the controversy would have come and have been dealt

8 with before the publication of a proposed rule. I think the

9 publication is the most significant event in the whole

10 thing.

11 I'm concerned that this morning you said we were

12 committed to a certain schedule and we're going to publish a

13 proposed rule, by God, in -- what is it? July '98 or

14 whatever that date was. I'm just concerned that that's

15 going to drive everything when we know we've got this big

16 problem right now of a lot going on, not knowing what the

17 products are going to be, especially on gas water heaters.

18 I don't think you should publish a proposed rule

19 until we've got the answers to those things, because the

20 proposed rule, according to the new plan, is not supposed to

21 be controversial.

22 MR. NADEL: I've heard it two different ways from

23 DOE. On the one hand, the idea was the proposed rule was

24 very far along, and to the extent there are disagreements,

25 there are just a couple of little refinements, and they can

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1 do it quickly.

2 On the other hand, though, I've heard them saying.

3 all their schedules say that they have to allow lots of time

4 for review, lots of time for reanalysis, and that it needs

5 to be a year. To the extent that second view holds, then

6 that contradicts the first view, and yes, they need to come

7 out with a proposed rule in July '98 in order to come out

8 with a final rule in July '99.

9 If DOE can find ways, working with OMB and others,

10 to shorten that cycle, lend it some more flexibility, but

11 when push comes to show, they haven't been able to find ways

12 to shorten that process between proposed rule and final

13 rule, which gets into the issues of, well, therefore the

14 proposed rule is not quite as far along as we all would have

O 15 liked.

16 MR. MATTINGLY: CPSC, watch out. You can hear it

17 coming right now. DOE is committed to a schedule and, by

18 God, they're going to have it. You ought to be watching

19 real carefully now. We're being driven by a schedule. I

20 don't think the priorities are right.

21 MR. GOLDSTEIN: Well, Joe, if you don't think the

22 priorities are right, what is your proposal for solving

23 them, other than the same thing that we've heard from trade

24 groups in the past when they're being recalcitrant, which

25 is, delay, delay, delay, delay, delay.

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1 MR. MATTINGLY: We're not being recalcitrant here.

2 MR. GOLDSTEIN: I didn't say you were. I'm saying

3 don't act like you are. What is your proposal? How do you

4 propose to solve the problem?

5 MR. MATTINGLY: I'm just saying I don't see how we

6 can publish a proposed rule when there's still the vapor

7 ignition issue still up in the air.

8 MR. RABA: This might be something to work out

9 between CPSC and DOE. I think we've already heard a lot of

10 good discussion on this. Otto, and then Steve.

11 MR. VAGO: Thank you for stating that. That's

12 exactly what I was going to suggest or comment, that that's

13 something DOE and CPSC would have to work on and work things

14 out.

15 MR. RABA: Steve.

16 MR. NADEL: As a practical matter, I think what we

17 need to figure out now is the next steps, and I think the

18 next steps are for DOE to make some final decisions on what

19 measures they're going to analyze and then do their site

20 visits, get any additional data that they want from

21 manufacturers to revise the existing analysis, and let's

22 plan on an engineering analysis circulated to the group in a

23 workshop in about October.

24 At that point, hopefully, we'll know a lot more

25 about what the schedule is for the vapor ignition, and that

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1 may be a better time. We can make more informed decisions

2 about how to proceed from there.

3 MR. KUSTERER: We also have the foam issue.

4 MR. LANGMEAD: I might point out, you've gone

5 through a whole bunch of design options. We went through to

6 include everything, and that's fine. We can start down that

7 process and include all those things. I think that tends to

8 drive a process in one direction.

9 It may not be in the direction that is where

10 you're going to be taken for other reasons, but which

11 complicates the devil out of the process, because we've got

12 one analysis going on over here. We've got another analysis

13 going on over there. In some places, they may mesh, but

14 some places they don't.

15 So we'll proceed. It's an insolvable problem at

16 this point in time, and I'm not going to suggest any

17 solutions. I would if I had one, but the issue has been

18 raised here enough that I would hope DOE would take

19 cognizance of that issue and you would look at and say,

20 "I've got to look back at my schedule, and I need to look at

21 not only what's in my schedule, but what my schedule says to

22 make it make sense around this issue."

23 Just to ignore the question doesn't solve it. I

24 don't say that is has to all be delayed. It needs to be

25 looked at in a way that is -- and we'll try to pull things

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1 together as soon as the information is there to pull it

22 together.

3 MR. RABA: Steve Nadel.

4 MR. NADEL: I don't mean to belittle the fact that

5 there are great difficulties. We're kind of in a Catch-22.

6 Which comes first, and how do you get these two to mesh? I

7 think we made good progress today by dramatically reducing

8 the number of design options, so that should make it a lot

9 easier.

10 I'm very mindful of the fact that this analysis

11 we're doing now is to see if we're in the ballpark to get a

12 lot of the stuff behind us, but that a lot of it will have

13 to be at least reviewed carefully and, at a minimum, tweaked

14 once the new baseline is established.

. ~15 I'm also mindful of the fact that George mentioned

16 about the foam. Before I would recommend that DOE plan on

17 doing some technical work to summarize what the state of

18 current knowledge and thinking is regarding condensation and

19 where you have to be careful about condensation, I would say

20 you should also be planning on doing some technical work to

21 get the best information you can on the likely performance

22 and costs of the different blowing agents.

23 We can anticipate that those are two issues that

24 may come down, there may be a lot of contention on. Let's

25 get all the information as soon as possible we can on the

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1 table. Hopefully, we can agree on most it and narrow it

2 down to the point the disagreements disappear.

3 MR. RABA: David.

4 MR. GOLDSTEIN: How do you get the two rulemaking

5 programs to mesh? It seemed to me that anyone who's

6 interested in constructively getting them to mesh would have

7 asked the following question, which I'm asking now, showing,

8 I hope, that I am interested in that. That is, what time

9 constraints is this Consumer Product Safety Commission

10 under? If they promulgate a proposed rule by a given date,

11 how long does it take them to finalize the rule? What are

12 their constraints on lead times? Okay. So that's the first

13 thing you need to know.

14 The second thing you need to know is what kind of

15 standard are they legally allowed to prescribe? Because the

16 DOE standard is an energy factor, and though it may be

17 derived assuming certain design options, that's not what

18 manufacturers usually wind up using when the standard is

19 actually something that has to be complied with.

20 How about the safety standard? Is it an

21 engineering design standard, or is it some kind of test

22 procedure for fire safety? Because that's going to make a

23 difference as far as does one standard preclude compliance

24 with another in a particular way, and it works both ways.

25 I hope that my confidence that the officials in

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1 both agencies can work together is validated, but I think

2 this is a solvable problem.

3 MR. STADNIK: I think it's a very solvable

4 problem, David, and we operate under, basically, the APA --

5 Administrative Procedures Act -- with a few caveats thrown

6 in under the Consumer Product Safety Act to how we have to

7 do our business.

8 With respect to how long we have to take in

9 between stages, there is no necessarily set mandate. A lot

10 depends on the comment periods that are asked for in the

11 early part of the process. Typically, you follow the

12 standard routine of publish, 60-day comment period, so much

13 for analyzing comments, and then publish, another 60-day

14 comment period, et cetera. Now I guess it's 75 days in some

15 cases for certain actions.

16 In terms of where we're at and what we want to do

17 with DOE, we understand where they're at with this changes

18 that has occurred, and we're committed to work closely with

19 them and keep them abreast of things as best as we can and

20 work with the consortium people in that.

21 MR. GOLDSTEIN: And about lead time, if you

22 promulgated a final rule tomorrow, are there any limits on

23 when it could take effect?

24 MR. STADNIK: In terms of when we set an effective

25 date for a regulation, in general, the agency looks at the

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1 cost benefit analyses and the terms of what the impact on

2 industry might be in terms of you've got to do the full

3 regulatory impact analysis, small business environmental

4 impact.

5 Those reviews get done by our economics group in

6 helping to formulate a proposed effective date. Typically,

7 we use 12 months to 18 months, sometimes longer.

8 MR. GOLDSTEIN: But that's very important

9 information for this process since DOE requires by law a

10 minimum of three years. It means that, to keep the schedule

11 going, you are probably going to wind up with the

12 possibility of DOE acting first, and in order to make that

13 work out, they have to act first in a way that doesn't

14 foreclose your agency from doing things that are reasonable

15 from a public health point of view and from the industry's

16 point of view.

17 MR. STADNIK: And the other thing is, right now,

18 our rulemaking process is in a hold mode because of the

19 commitment by the industry. Okay? If you're not aware of

20 that process, that's where we're at. But we have the

21 ability to go out and start that whole process again with an

22 ANPR -- or I guess ANOPR, as it's used in DOE-speak.

23 MR. RABA: Thank you. Good exchange. Any final

24 comments to wrap up? We are past the adjournment time. My

25 hat is off to you from your persistence in going through

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1 such a rigorous agenda. There has been a lot of issues on

2 the table.

3 You've seen what the process looks like. You've

4 seen how difficult it is to get through some of these areas,

5 and our hope that you will, in these next days and weeks,

6 send to DOE or talk to us about some of the areas of

7 consideration, what your thoughts are, and the whats and the

8 hows to get these things done.

9 Certainly very good questions have been raised,

10 and you've accomplished quite a bit, too. Again, I applaud

11 a lot of that and your persistence in going through such a

12 rigorous agenda, especially on the rulemaking framework and

13 the screening analysis, too, how that was taken care of.

14 We will certainly keep all these things in

15 consideration and safety versus efficiency, certainly a very

16 noteworthy topic that will certainly be foremost on two

17 rulemakings, not just one. So you got really double your

18 money for your trip today. We've got two processes that we

19 were able to examine, as well.

20 MR. GOLDSTEIN: You forgot EPA, what they might do

21 with the Clean Air Act.

22 MR. RABA: Does the DOE have any closing remarks

23 or comments?

24 MR. BERRINGER: No. I would just like to thank

25 everybody for coming today. I know there was a lot of good

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1 issues, a lot of things discussed today. I appreciate

2 everybody coming.

3 MR. GOLDSTEIN: Have you set a deadline for

4 comments?

5 MR. BERRINGER: I said earlier, comments due July

6 31, 1997, for this part of the process. Is that acceptable?

7 MR. RABA: Is July 31st for comments enough time?

8 You want shorter, perhaps. Is the 31st okay?

9 Thank you very much. You've been great. We've

10 accomplished a lot today, and we appreciate your inputs.

11 Right now, we're looking at July 31st for comments. Then we

12 can revise the screening and the framework accordingly.

13 Again, thank you very much. A good job, ladies

14 and gentlemen.

15 [Whereupon, at 4:10 p.m., the meeting was

16 concluded.]

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