UNITED STATES OF AMERICA

+ + + + +

DEPARTMENT OF ENERGY

+ + + + +

OFFICE OF CODES AND STANDARDS

+ + + + +

WORKSHOP ON STANDARDS FOR WATER HEATERS

MONDAY, NOVEMBER 9, 1998

+ + + + +

The workshop was held in Room 1E245, 1000

Independence avenue, S.W., Washington, D.C., at 9:00

a.m., Terry Logee, presiding.

PRESENT:

TERRY LOGEE, DOE

DOUG BROOKMAN, Facilitator

MICHAEL McCABE, DOE

SANDY BEALL, DOE

BRYAN BERRINGER, DOE

QONNIE LAUGHLIN, DOE

CARL ADAMS, DOE

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PRESENT (Continued):

CYRUS NASSERI, DOE

JIM RABA, DOE

BRENDA EDWARDS-JONES, DOE

MIKE RIVEST, A.D. Little

JIM McMAHON, Lawrence Berkeley National

Laboratory

EUGENE MARGOLIS, DOE/GC

FRANCINE PINTO, DOE/GC

JIM LUTZ, Lawrence Berkeley National

Laboratory

TIM SHELLENBERGER, American Water Heater

Group

ROBERT HEMPHILL, Gas Research Institute

WILBUR HAAG, A.O. Smith Water Products

KELLY TRONCALLI, Rheem Manufacturing

Company

STEVE ROSENSTOCK, Edison Electric

Institute

STEVE NADEL, American Counsel for an

Energy Efficient Economy

MARK TAYLOR, Bradford White Corporation

GREG NAGY, Beckett Air

OTTO VAGO, State Industries, Inc.

DAVID GOLDSTEIN, Natural Resources Defense

Council

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PRESENT (Continued):

JAMES VAUGHAN, Vaughan Manufacturing

Corporation

CHARLES STEPHENS, Oregon Department of

Energy

JAMES RANFONE, American Gas Association

FRANK STANONIK, Gas Appliances

Manufacturers Association, Inc.

JOSEPH MATTINGLY, Gas Appliance

Manufacturers Association, Inc.

GEORGE KUSTERER, Bock Water Heaters

CARL HILLER, Electric Power Research

Institute

DAVID WINIARSKI, Pacific Northwest

National Laboratory

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C-O-N-T-E-N-T-S

PAGE

Review of Agenda 10

Overview of the Water Heater Rulemaking Schedule 14

Engineering Analysis Methodology and Results,

Ed Barbour 71

Discussion of Preliminary Engineering Analysis,

Jim Lutz 92

Discussion of Oil Fire Water Heater Analysis,

David Winiarski 162

Comparison of Payback Between Gas and Electric

Water Heaters, Jim McMahon 186

Discussion of Life Cycle Costs, Jim McMahon

and Jim Lutz 188

Discussion of Marginal Energy Rates, Jim

McMahon 282

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

2 (9:02 a.m.)

3 MR. BROOKMAN: Good morning and welcome.

4 My name is Doug Brookman. I'll be

5 facilitating the meeting today.

6 I've met many of you previously. It's

7 good to see you. Thank you so much for being on time

8 and allowing us to get started here punctually. We

9 have a full day ahead of us.

10 This is the workshop on standards for

11 water heaters, and with no further ado, let me

12 introduce Terry Logee from the Department of Codes and

13 Standards.

14 MR. LOGEE: Good morning. I presume all

15 of you can hear me.

16 As Doug mentioned, I'm Terry Logee. I'm

17 the team leader at DOE for the water heater energy

18 efficiency standards rulemaking, and we'll go around

19 the room shortly to introduce all of the other key

20 players on our team and to have you introduce

21 yourselves as well.

22 Again, let me re-echo what Doug just said.

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1 Welcome to this workshop. We certainly appreciate

2 your taking your time and energy to get here. We're

3 hoping for a very interactive workshop with your

4 comments. We're here certainly to listen to what you

5 have to say.

6 We will be bringing up our concerns as we

7 go throughout this workshop and hope that you will

8 provide us with lots of valuable feedback.

9 With that, I think we can begin the

10 introductions, and I'd like to start on the left side

11 here with Ed Barbour. Ed, why don't you just say your

12 name and your affiliation, and we'll just go around

13 the table and get to the back of the room.

14 MR. BARBOUR: Hi. I'm Ed Barbour. I'm

15 with Arthur D. Little.

16 MS. PINTO: I'm Francine Pinto with

17 General Counsel's Office.

18 MR. LUTZ: Jim Lutz from LBL.

19 MR. SHELLENBERGER: Tim Shellenberger,

20 American Water Heater Company.

21 MR. HAAG: Wilbur Haag, A.O. Smith Water

22 Products Company.

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1 MS. TRONCALLI: Kelly Troncalli, Rheem

2 Manufacturing Company.

3 MR. ROSENSTOCK: Steve Rosenstock, Edison

4 Electric Institute.

5 MR. TAYLOR: Mark Taylor, representing

6 (inaudible) Break Away Corporation.

7 MR. NAGY: Greg Nagy, Beckett Air,

8 Incorporated.

9 MR. VAGO: Otto Vago, State Industries.

10 MR. GOLDSTEIN: David Goldstein, NRDC.

11 MR. STEPHENS: Charlie Stephens, Oregon

12 Energy Office.

13 MR. RANFONE: Jim Ranfone, American Gas

14 Association.

15 MR. STANONIK: Frank Stanonik, GAMA.

16 MR. MATTINGLY: Joe Mattingly, Gas

17 Appliances Manufacturers Association.

18 MR. KUSTERER: George Kusterer, Bock Water

19 Heaters.

20 MR. HILLER: Carl Hiller of the Electric

21 Power Research Institute.

22 MR. WINIARSKI: David Winiarski, Pacific

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1 Northwest National Laboratory.

2 MR. McMAHON: Jim McMahon Lawrence

3 Berkeley National Laboratory.

4 MR. MARGOLIS: Eugene Margolis, Office of

5 General Counsel.

6 MS. BEALL: Sandy Beall, Office of Codes

7 and Standards.

8 MS. NADER: I'm Victoria Nader

9 (inaudible).

10 MS. EDWARDS-JONES: Brenda Edwards-Jones.

11 (Inaudible introduction.)

12 MR. BERRINGER: Bryan Berringer,

13 Department of Energy, Office of Codes and Standards.

14 MR. WETHJE: Larry Wethje with the Air

15 Conditioning and Refrigeration Institute.

16 MR. MORANTE: Peter Morante with Northeast

17 Utilities.

18 MS. LEWIS: Thedra Lewis, American Gas

19 Association

20 MR. KREBS: Mark Krebs, Laclede Gas.

21 MR. WILLIAMS: Ted Williams, American Gas

22 Association.

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1 MR. HOSLER: Daryl Hosler, Southern

2 California Gas Company.

3 MR. ECKMAN: Tom Eckman, Northwest Power

4 Planning Council.

5 MR. MINNIEAR: Max Minniear. I'm a

6 consultant with Lawrence Berkeley.

7 MR. LANGMEAD: Jack Langmead, consultant.

8 MR. McCABE: Michael McCabe, National

9 Institute of Standards and Technology.

10 MR. SOMASUNDARAM: Sriram Somasundaram,

11 Pacific Northwest National Laboratory.

12 MR. BRUNDAGE: Don Brundage, Southern

13 Company.

14 MS. WILKINS: Anne Wilkins, Natural

15 Resources Canada.

16 MR. GATLEY: Stu Gatley, FASCO Industries.

17 MR. RAVEST: Mike Ravest, Arthur D.

18 Little.

19 MR. McCABE: Michael McCabe, Department of

20 Energy.

21 MR. BANNEN: John Bannen, Teledyne Laars.

22 MR. WICHER: Allen Wicher, Thermodisc.

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1 MR. MILLER: Mike Miller, Thermodisc.

2 MS. MARTIN: Maria Martin, sitting in for

3 Michael Martin (inaudible) the ASHRE meeting,

4 California Electrical.

5 MR. LOGEE: And Steve Nadel, who just

6 walked in. Just raise your hand. Thank you, Steve.

7 Again, let's review the agenda at this

8 point, and Doug will do that for us.

9 One thing. We did review the agenda

10 recently, as recently as last week, and we did send it

11 out to some of those folks we had on the mailing list.

12 So please take a look at this. We found out that we

13 needed more time for our engineering and life cycle

14 cost analyses presentations and review. So we

15 increased the time on those and moved other things

16 around and reduced the time on a few things.

17 And we've reordered the first day a little

18 bit to put the marginal energy rate presentation right

19 at the end of the day, which we will do if we don't

20 run over too much. Otherwise we'll slide that to

21 tomorrow morning.

22 MR. BROOKMAN: It does seem like a very

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1 full agenda. If having moved some of these pieces

2 around conflicts with your travel plans or puts

3 anybody in a really bad way, please talk with me at

4 the break, and we'll see what we can do to reorient

5 the agenda, but we're going to have to move

6 consistently and quickly to get through all of this

7 today.

8 You can see the purpose of the workshop

9 listed at the top of your agenda, which is to discuss

10 the analyses and computer models that have been

11 derived, and the workshop outcomes are also listed.

12 This morning the first thing, we've

13 finished the introductions and we're doing the agenda

14 review. We'll have the kind of boilerplate opening

15 remarks by the department on, you know, where

16 everything's located and other details on the day.

17 We'll move from that directly into a

18 discussion on engineering analysis, methodology, and

19 results. The basic format for that will be a brief

20 presentation by the department and other supporting

21 contractors of the department, followed by question

22 and answer and discussion.

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1 We see that taking essentially the entire

2 morning. We'll take a break midmorning whenever the

3 group sags most, but we'll try and keep going as far

4 as we can before we do take a break. I'll just warn

5 you in advance.

6 And we will take a lunch break right about

7 12:15. You're on your own for lunch. We'll show you

8 and tell you where the cafeterias are. We do want you

9 to stay close. We don't want you to go too far

10 because we want you to get back in time for us to

11 commence immediately after lunch. So don't plan on

12 any extended luncheon dates, please.

13 Immediately after lunch, we'll begin

14 talking about life cycle costs and particularly the

15 spreadsheet model that has been put in place.

16 At the end of the day around about four

17 o'clock, we'll be talking about marginal energy rates,

18 and we'll do a summary at the end of the day on what

19 we've covered, what yet needs to be covered, and the

20 like.

21 The shape of November 10th might change

22 slightly, depending on how much we get done today, but

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1 I think the basic elements that you see there are

2 likely to be what we'll be doing tomorrow, especially

3 the first thing in the morning. At 8:30 we'll start.

4 We'll have a brief discussion surrounding issues and

5 gaps from today.

6 In the 8:45 time frame, manufacturer

7 impacts. The GRIM spreadsheet model will be

8 discussed.

9 We'll take a break midmorning. Around

10 about 10:15, national energy savings. The baseline

11 results will be presented and other items as you see

12 there.

13 A brief presentation in midmorning on the

14 consumer subgroup, and just prior to lunch,

15 environmental and utility impacts and also the

16 technical research findings, presentation on the NIST

17 result using water and HFC-245 agents.

18 And then into the lunch hour we're going

19 to work so that we can stop midday tomorrow. We'll

20 be, just before we adjourn, describing next steps, any

21 issues to be resolved, identification of any

22 additional data requirements, and the like.

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1 So that's the basic game plan, and I guess

2 the question now is -- and you don't need to answer

3 now. We can start with this after Terry finishes the

4 rest of his comments -- are there any major gaps in

5 the agenda. That's what we'd like to know before we

6 commence here this morning.

7 Any significant omissions? Any issues

8 that need to be raised that don't fit into these other

9 agenda items? We want to make certain there's a place

10 holder for everything that matters at this time and

11 place.

12 (No response.)

13 MR. BROOKMAN: Okay.

14 MR. LOGEE: Thank you, Doug.

15 And with that, we have our usual opening

16 statement. I will read that.

17 On behalf of the Department of Energy, I

18 would like to thank all of you for taking the time to

19 participate in this public workshop. The purpose of

20 the workshop is to discuss the analysis methodologies,

21 engineering, life cycle costs, manufacturing impacts,

22 national energy savings, consumer environmental

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1 impacts, and utility impacts for the residential water

2 heater rulemaking, and some preliminary results for

3 the engineering and life cycle cost analysis.

4 The department is seeking comments on the

5 analysis methodologies, the input data, and the

6 technological issues of venting, prevention of

7 flammable vapor ignition on gas water heaters,

8 phaseout of the HCFC-141(b) insulation blowing agent,

9 and any others that you wish to bring to DOE's

10 attention.

11 The department sent a letter on September

12 14th to organizations having an interest in today's

13 workshop, providing them the draft agenda and

14 indicating how to obtain the analysis reports and

15 methodologies.

16 A public notice of this workshop was

17 published in the Federal Register on September 25th.

18 Anyone attending today's workshop or submitting

19 written comments will be added to our list for future

20 mailings.

21 The comments received here today, along

22 with any other comments obtained as a result of

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1 today's workshop, will assist the department in

2 developing a notice of proposed rulemaking concerning

3 these products.

4 I am the presiding officer for the

5 workshop, and Mr. Brookman will facilitate today's

6 workshop. I will set the guidelines for conducting

7 the workshop and provide other pertinent information.

8 Copies of the engineering and life cycle

9 cost reports and the other methodology write-ups are

10 available at the table where you came in. Please see

11 Brenda if you didn't get these reports.

12 In approximately two weeks, a complete

13 copy of the transcript will be available for

14 inspection and copying at the Department of Energy's

15 Freedom of Information Reading Room located in Room

16 1E190. Anyone wishing to purchase a copy of the

17 transcript may make arrangements with the court

18 reporter to my right.

19 To provide the department with as much

20 pertinent information and as many views as can be

21 reasonably obtained and to enable interested persons

22 to express their views, the workshop will be conducted

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1 in accordance with the following procedures.

2 We have discussed the agenda and will

3 expand on any of the topics as necessary. Please note

4 that due to the amount of material to be presented in

5 the engineering and LCC reports, life cycle cost

6 reports, DOE has revised the draft agenda. We faxed

7 that revised agenda to some of you, and there is a

8 copy in your folder of workshop materials.

9 DOE contractors will present most of

10 analysis methodology information. Questions are

11 welcome throughout these presentations unless you are

12 advised otherwise. It may be necessary, however, to

13 cut off debate on some topics to remain on schedule,

14 although there may be time at the end of the workshop

15 for additional discussion of significant issues.

16 I encourage everyone present to

17 participate as much as possible so that the department

18 may get a full spectrum of opinions on these topics.

19 The workshop is scheduled to adjourn today

20 at 4:45 and at 12:30 tomorrow.

21 Topics which have not been completely

22 discussed by that time can be addressed in additional

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1 written comments which are due by December 11th, 1998.

2 All written comments and data submissions will be

3 available for public inspection at the DOE Freedom of

4 Information Reading Room. The phone number is area

5 code 202, 586-6020.

6 Written comments should be addressed to

7 Brenda Edwards-Jones at the Department of Energy.

8 Please refer to Docket No. EE-RM-97-900 when you

9 respond.

10 The comment period will close on December

11 11th, 1998. Instead of the usual ten copies of the

12 comments, the department prefers one signed copy and

13 an electronic copy of the comments or data using Word

14 Perfect 6.1 or Microsoft Excel. No faxed comments

15 will be accepted.

16 Please send ten copies of any additional

17 materials not included on the disk, like your back-up

18 materials.

19 Any person submitting information which he

20 or she believes to be confidential and exempt by law

21 from public disclosure should submit one complete

22 signed copy and a copy on a disk from which

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1 information claimed to be confidential has been

2 deleted.

3 In accordance with the procedures

4 established at 10 CFR 1004.11, the Department of

5 Energy will make its own determination as to whether

6 the information shall be exempt from public

7 disclosure.

8 Again, we appreciate the time and effort

9 you have taken in preparing for this workshop and are

10 pleased to receive your comments and opinions.

11 I would like to reiterate the purpose of

12 the workshop is to listen to your views.

13 Thank you all, and I believe now that we

14 can begin, and unfortunately, you'll have to listen to

15 me -- oh, you have one thing, Doug?

16 MR. BROOKMAN: Can I say one more thing?

17 MR. LOGEE: Sure. Go ahead.

18 MR. BROOKMAN: About two or so, more than

19 two years ago when we started process improvement, we

20 created ground rules for the conduct of these

21 workshops. Over time they have emerged as norms, and

22 I'm pleased to say that people have been willing and

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1 graciously accepted these as standards for these

2 workshops.

3 That is, I would request that you speak

4 one at a time; that you say your name and use the mic.

5 This is a recorded session, and there will be

6 transcripts made of this meeting.

7 Please be concise. Try to share the air

8 time. We want as much discussion and as much exchange

9 as possible during the course of the meeting today.

10 This really is the occasion to listen as an ally. I

11 find that the discussion, the follow-on discussion,

12 hinges on clarity and the quality of the listening.

13 So please try hard to listen.

14 And I use a format that's a little more

15 complex than some. I queue people to speak, but also

16 I allow for follow-on comments because I'm trying to

17 create as much discussion as possible. So please bear

18 with me and be patient. If I've got you in the queue

19 and drop you out or leave you, don't let me get away

20 with it. Acknowledge that I've done it, and we'll

21 bring you back in.

22 So this is what we're suggesting as ways

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1 that we can keep this as detailed and rich an exchange

2 as possible today.

3 Questions before we proceed? Yes, Steve.

4 MR. ROSENSTOCK: Just real quick one.

5 Steve Rosenstock, EEI.

6 Mr. Logee put a reference number that when

7 we sent in our comments, like a code number. I didn't

8 write it down quick enough. It was EE, dash.

9 MR. LOGEE: Let me repeat that, and, Doug,

10 you can write that on the top of the easel there as

11 soon as I can find it.

12 EE-RM-97-900.

13 MR. ROSENSTOCK: Thank you.

14 MR. LOGEE: And those are due December

15 11th, this year.

16 MR. BROOKMAN: And before we do proceed

17 with this, you will help me a lot if you take your

18 table tents and turn them so that they're visible to

19 me. Thanks very much.

20 Is there any major substantive area, any

21 content area that would not find its place in the

22 agenda as written?

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1 I think the department has done everything

2 it could to anticipate what the issues were for this

3 workshop. So I'm seeing nothing. There's nothing

4 that doesn't fall into what's here?

5 Okay. Then let's proceed.

6 MR. LOGEE: Thank you, Doug.

7 We're missing one. Well, let me just see

8 if it's here. We'll start again.

9 The first slide that I have, and I believe

10 that it's in your packet, is objectives. We want to

11 discuss the cost data, specifically manufacturing cost

12 data, but we want to also call to your attention the

13 retail data as well. We need to give equal time here.

14 We're going to be, as I said, presenting

15 a number of analysis methodologies. We're going to

16 lead you through those, and we expect and welcome your

17 comments and suggestions on those.

18 I want to emphasize that we're presenting

19 preliminary results for the engineering and life cycle

20 cost analysis, and I'll get into some details about

21 particularly why they're preliminary at this point in

22 time.

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1 The analyses, the eventual final analyses

2 and the revised results and the final results will be

3 used, of course, in a proposed rule, and above all, we

4 seek to understand your comments. So please bear with

5 us. If we ask from perhaps two or three of the

6 contractors the same question in a slightly different

7 way, it is important that we understand your comments

8 as completely as possible.

9 Now we can go to the first slide on the

10 machine.

11 The water heater status. We received new

12 or amended GAMA data on October 20th. This data is

13 not reflected in the analyses that are on the Internet

14 or in the packet of back-up material that we have here

15 today. So that is one of the areas we will have to

16 revise for.

17 We're presenting preliminary results

18 today, and I said we need to stress that because there

19 are a number of reasons for revisions. Another reason

20 is eventually in the springtime we expect to have

21 marginal energy rates for both gas and electric, and

22 we'll be incorporating those into our analyses.

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1 As we mentioned, I don't want to beat this

2 to death, but the comments are due by December 11th,

3 and we expect to revise these preliminary results to

4 additional preliminary results in perhaps a couple of

5 months.

6 I'm not going to make a promise there, but

7 some time in January I would expect to have some

8 revised reports with these results on the Web.

9 Our schedule at present, we're going to be

10 conducting manufacturers' interviews to get the

11 results of the manufacturing cash flow analysis for

12 the trial standard levels. We show here we'd like to

13 start those in February, and they'll run through

14 April, but I'd like to back up on that and say that we

15 may be able to start one or two of those in January.

16 We acknowledge that our schedule is very

17 aggressive and rather tight, and we're trying to move

18 it up as rapidly as we can.

19 The draft technical support document --

20 that's the TSD -- will be available in May of next

21 year, 1999, and a final technical support document

22 will be available in August. The draft document will

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1 have the complete analyses in it.

2 At this point we have results for only the

3 engineering and life cycle costs and a draft document,

4 a draft TSD, will have the national energy savings,

5 the manufacturing impacts, and all of those other

6 things.

7 And eventually, finally, in November of

8 1999, we expect to public the notice of proposed

9 rulemaking.

10 Our analysis approach, GAMA and the

11 manufacturers requested that we do a design option

12 approach. So we evaluate specific design changes and

13 the estimated energy efficiency improvements from them

14 with this approach. So this is not a five, ten, 15

15 percent energy efficiency improvement approach in our

16 analyses.

17 The engineering analysis, just the

18 engineering analysis now, is based on the DOE test

19 procedure and average costs. As you're aware, some of

20 you anyway, the DOE test procedure is a 64.3 gallons

21 per day per household kind of test procedure with 77

22 degrees temperature rise.

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1 We use that in the engineering analysis to

2 get a preliminary evaluation to get the energy

3 efficiency, since that is what the manufacturers

4 eventually will test to, and then to get a preliminary

5 estimate of paybacks.

6 When we get to the life cycle cost

7 analysis, we use a new methodology. There we can

8 account for data distributions, and we use

9 simulations, computer simulations and a couple of

10 other programs to determine the set point and the

11 amount of water use per day.

12 Are there any questions on any of these?

13 Okay.

14 MR. BROOKMAN: Steve Nadel.

15 MR. NADEL: Yes. A couple of questions

16 going back a few slides.

17 First, you mentioned that you have just

18 received some new data from GAMA, that you'll be

19 incorporating those later.

20 MR. LOGEE: That's correct.

21 MR. NADEL: Are those data going to be

22 presented here so others of us could also comment or

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1 review and potentially comment on that data?

2 MR. LOGEE: We have some of the average

3 numbers in one of the slides that Ed Barbour will

4 present shortly. We don't have the data itself to

5 present, but it is in that slide in an average way.

6 MR. NADEL: So we can look at it later and

7 say either this looks sufficient or request that you

8 provide additional data with GAMA's permission. Okay.

9 MR. LOGEE: That's right.

10 MR. NADEL: Okay.

11 MR. LOGEE: That's our approach. We're

12 not trying to hide anything, but events have somewhat

13 overtaken us in trying to get all of the materials

14 together for this workshop. So we had to cut off our

15 analyses and so forth actually before we got that

16 revised data.

17 We have been back to talk with GAMA, Frank

18 Stanonik, and we have alerted him to some of our

19 concerns about it, and I presume he's already begun to

20 talk with the manufacturers about that, but we will

21 get into that a little bit later.

22 MR. NADEL: Okay. My second question

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1 regarding the schedule, I know we just had a meeting

2 last week of the Appliance Standards Advisory

3 Committee, and at that meeting it was discussed that

4 in general, there was a real lumping of the schedules

5 between a lot of different rulemakings and that in

6 some cases there seemed to be some extra time.

7 And there was a commitment made at that

8 time to revise the schedules and potentially

9 accelerate some of the schedules. Is this schedule

10 you're presenting now basically the same schedule as

11 presented before, before that revision and revision is

12 taking place, or is this a quick revision on that?

13 I didn't bring those documents with me to

14 compare them.

15 MR. BROOKMAN: I see Michael McCabe has

16 stepped to the mic.

17 MR. McCABE: This is Michael McCabe, DOE.

18 This is essentially the same schedule.

19 The review Steve is referring to to go over the

20 schedule to look at opportunities is underway, and it

21 has not been completed, therefore, is not reflected in

22 here.

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1 MR. BROOKMAN: Joe Mattingly.

2 MR. MATTINGLY: Joe Mattingly of GAMA.

3 I think in the past when we were talking

4 about the new way of doing things that we had hoped

5 that the proposed rule would be a fairly clean

6 document, you know, sort of just fine tuning it for

7 that point with a public hearing.

8 But I would suggest that depending on how

9 things go in the draft TSD and the final TSD, if

10 there's still a lot of controversy, there might be

11 consideration for another, you know, call it a

12 workshop or whatever you want to call it, but before

13 we go to the real formal talking heads mode, which can

14 be the case after a proposed rule.

15 MR. LOGEE: Now, that's an excellent

16 suggestion, Joe. You did notice that we had back

17 perhaps a year ago or six months or so -- were

18 considering an extra workshop after the manufacturing

19 impact analysis and before the proposed rule.

20 In the interest of trying to expedite our

21 schedules, we've cut that out. We don't mean to cut

22 out your involvement or your comments, however. We

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1 will put these notices, these reports or the TSD, as

2 it were, on the Web, and we will ask for your comments

3 based on that.

4 And we will, as much as possible, try to

5 alert you either through GAMA and your other

6 organizations, alerting them that it's on the Web and

7 where it can be found, and individually through the

8 mailing list probably by E-mail where that's

9 practical.

10 So, Joe, you're right. If we get a lot of

11 comments and there's some sticky issues there, we'll

12 have to consider how we'll handle that.

13 MR. BROOKMAN: Additional questions?

14 (No response.)

15 MR. BROOKMAN: Let's proceed, Terry.

16 MR. LOGEE: Okay.

17 MR. BROOKMAN: One more from Steve

18 Rosenstock.

19 MR. ROSENSTOCK: It's not really a

20 question. It's a comment. Steve Rosenstock.

21 It sounds like the speakers are kind of

22 coming in fuzzy a little bit.

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1 MR. BROOKMAN: Are you picking this up on

2 the mic? Yes?

3 THE REPORTER: Yes.

4 MR. BROOKMAN: Go ahead, Steve.

5 MR. ROSENSTOCK: That was it. It just

6 sounded like when people were making presentations in

7 the mic, it just sounded a little fuzzy or "staticky."

8 MR. BROOKMAN: Thank you.

9 MR. LOGEE: All right. The next

10 presentation, and I promise I'll try to step down and

11 let someone else take the mic after this, is really

12 the introduction to the engineering analysis. You

13 have that package or should have that package in your

14 packet as well.

15 And I'd like to discuss just briefly the

16 design option screening requirements. We publish

17 those in a couple of places, and we published our

18 supplemental screening analysis last January.

19 There's a requirement to, of course, make

20 sure that they're technically feasible. We want to

21 make sure there are practical to manufacture and

22 service. We want to try to avoid adverse impacts on

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1 product utility, and we also obviously avoid adverse

2 impacts on health and safety.

3 We are going to revisit all of these

4 screening issues before the NOPR, before the notice of

5 proposed rulemaking, to make sure that our reasons are

6 fully documented. At this point in time I don't know

7 just how we're going to provide that information to

8 you folks. It perhaps will be contained in the

9 revision of the engineering report, much like we've

10 added a screening section at this point in time.

11 We've selected these design options, and

12 I'm not going to try to read them, except to note that

13 with the increased jacket insulation, there are two

14 sizes, nominally a two inch thickness and a two and

15 a half inch thickness.

16 We did not go to a three inch thickness

17 for the obvious reasons. They get rather bulky to get

18 through doorways. So we stayed at two and a half

19 inches.

20 And you'll note that the plastic tank on

21 the gas water heater is only used with the side arm

22 heater option.

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1 We've eliminated some of the design

2 options that we thought we had previously stated in

3 the screening document we were going to consider. We

4 found out that the air atomized oil burner wasn't

5 practical to manufacture yet. They're just beginning

6 to try to get a prototype together for regular oil

7 furnaces. They don't have them; they haven't even

8 thought about using them on gas fired water heaters or

9 oil fired water heaters.

10 Power vented gas water heaters were

11 eliminated because they require special venting

12 systems, and the increased heat exchanger for gas

13 water heaters was really considered to be more costly,

14 and the preferred design was the improved flue baffle,

15 and we found out that we could get the same efficiency

16 improvement with the improved flue baffle. So we've

17 gone to that single design option.

18 And heat pump water heaters, we have an

19 expanded discussion on the next page. We found some

20 more documentation in addition to the numerous

21 comments that we received from the 1994 notice of

22 proposed rulemaking on cost, noise, space, reliability

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1 and electric rate increases.

2 There's a federal technology alert which

3 has shown that theses designs are only cost effective

4 in a few select regions.

5 Yes?

6 MR. BROOKMAN: Jerry, it seems like there

7 is a question on the preceding slide.

8 MR. LOGEE: Oh, good. You've got to stop

9 me. You've got to shout.

10 MR. STANONIK: Well, I was being polite

11 and waiting. It's still early. It's Monday.

12 MR. BROOKMAN: Frank Stanonik, GAMA.

13 MR. STANONIK: Terry, the increased

14 heating danger surface area, in the previous

15 screening, is that the submerged combustion chamber

16 option?

17 MR. LOGEE: I think that's one of them.

18 I don't remember.

19 Jim Lutz, do you recall what else that

20 might --

21 MR. LUTZ: The other thing that we were --

22 MR. BROOKMAN: Please use the mic, Jim.

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MR. LUTZ: The other thing we were

2 considering was the internal bends on the flue like

3 the Boch water heater.

4 MR. STANONIK: Oh, okay. All right. So

5 it's really a combination of those two or not --

6 MR. LUTZ: Anything you can do to increase

7 the recovery efficiency was what -- any technologies

8 that we were aware of that we were looking at.

9 MR. STANONIK: Okay, all right.

10 MR. LUTZ: What we saw was the flue baffle

11 seemed to do the job and seemed to do it most cost

12 effectively.

13 MR. LOGEE: Okay. Back to heat pump water

14 heaters.

15 MR. BROOKMAN: We have additional

16 questions. Please use the mic and say your name.

17 MR. GATLEY: Stu Gatley, FASCO Industries.

18 Just a comment on the eliminated power

19 venting for water heaters. You said they were

20 eliminated because of special vent considerations, and

21 I assume you mean below like 83 percent where you're

22 pulling in dilution air, so everybody presently can

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1 use PVC pipe.

2 Well, that wouldn't be a requirement. You

3 could still use the same venting if you didn't pull

4 dilution air in. Just a comment.

5 MR. BROOKMAN: Thank you. thank you for

6 that.

7 Okay, Terry.

8 MR. LOGEE: Let me respond to that a

9 little bit. We had made a determination among the

10 contractors and the department that that PVC piping

11 and venting, although it was being used frequently in

12 new homes, was not necessarily applicable in all

13 situations in replacement use.

14 So that's pretty much what I refer to when

15 I say a special venting system. I mean, it is

16 different and unique, and it's not perhaps that

17 expensive and certainly works in many applications.

18 But to consider any of these designs for

19 a minimum standard, that means a broad national

20 application across the entire spectrum of consumers.

21 MR. BROOKMAN: One more comment. A

22 follow-on.

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1 MR. GATLEY: Well, what I was referring to

2 is in the replacement market, that you wouldn't have

3 to change your venting at all with water heaters now

4 if you didn't pull dilution air in. In other words,

5 you're still going to send that hot gas up the flue,

6 and it's still going to be the same temperature.

7 MR. LOGEE: Okay. That's useful, yes.

8 Thank you.

9 Let's see. Back to heat pump water

10 heaters, as I mentioned, there's a very small or

11 almost nonexistent sales and service infrastructure

12 since heat pump water heaters generally cross the

13 boundaries of several technician technologies,

14 requiring the HVAC type folks to connect them up in

15 some cases or at least to service them and plumbers,

16 the usual plumbers and electricians.

17 And we've been told in many ways and many

18 times that that infrastructure doesn't exist and to

19 try to gear up to develop an infrastructure for

20 roughly four million water heater sales, sales of

21 water heaters a year would be extremely difficult and

22 take a lot of time.

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1 And we have a couple of surveys from some

2 utilities where roughly 50 percent of the respondents

3 reported that their existing utility closet was too

4 small.

5 Yes, Jim.

6 MR. RANFONE: Yeah, Jim Ranfone, the

7 American Gas Association.

8 On the deletion of the heat pump water

9 heater design option, a couple of questions. First,

10 you stated that you will reviewing the screening out

11 of these design options.

12 MR. LOGEE: Yes.

13 MR. RANFONE: And you also said we want to

14 make sure that they are fully documented as to why you

15 screened them out.

16 MR. LOGEE: That's correct.

17 MR. RANFONE: Are you indicating that

18 there may be a possibility of making some adjustments

19 in these design options and including them?

20 MR. LOGEE: That is a possible outcome.

21 It's not one that we're anticipating. We believe we

22 have the full documentation necessary to continue with

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1 the design options we've chosen, but we need to

2 assemble all of that and review that.

3 MR. RANFONE: Well, that's an important

4 question because, I mean, if you aren't sure that

5 you're fully documented, it appears that you are going

6 to be taking another look at these design options,

7 that you're not comfortable with the way you've

8 approached it at this point because that's the way you

9 stated it.

10 I'm just trying to get a clarification.

11 MR. LOGEE: I wouldn't characterize it as

12 not comfortable; just realizing that we didn't explain

13 carefully enough in the current two documents on

14 screening that are out there, and we need to revisit

15 it and do that.

16 MR. RANFONE: Okay. The second question

17 is the federal technology alert that you say is cost

18 effective only in select regions, how does that differ

19 -- and, you know, I'm not familiar with that

20 particular document. Who developed it, and how does

21 that differ from the documentation that DOE used in

22 the original notice of proposed rulemaking from 1994

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1 on heat pump water heaters?

2 MR. LOGEE: Well, this document comes from

3 the Federal Energy Management Program, and I see Dave

4 Winiarski has more familiarity with that. So I'll let

5 him address that.

6 Go ahead, Dave.

7 MR. WINIARSKI: Jim, that document was

8 developed for a federal building typically. It was a

9 review of existing use of heat pump water heaters in

10 federal buildings, as well as looking at cost

11 effectiveness based on models that were on the market,

12 and the study was done about three years ago.

13 MR. RANFONE: Okay. So that study is

14 available.

15 MR. WINIARSKI: Yeah. It's a very limited

16 study in that -- I see that there's a copy of it

17 right back there. Would you like one?

18 MR. RANFONE: Okay. Yeah, I'd like to

19 have a copy of it, but the point is that it is a

20 limited study, and what is the difference between that

21 and the technical analysis that was done and the

22 economic analysis that was done in 1994?

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1 MR. LOGEE: We regard that the analysis

2 that was done in 1994 is not very accurate anymore,

3 and I don't know otherwise what the difference was.

4 I believe that this is probably based on actual site

5 data rather than estimated data.

6 MR. RANFONE: Okay. The last three

7 bullets that you have here, comments to the 1994 NOPR,

8 cost, noise, space, reliability, and electric rate

9 increases?

10 MR. LOGEE: That's right. That's what some

11 comments were.

12 MR. RANFONE: Okay. So --

13 MR. LOGEE: They're afraid that their

14 electric rates would increase. I don't know how.

15 they didn't elaborate, but that's what the comment

16 was.

17 MR. RANFONE: So you accept these as the

18 reason, all three of these as reasons, for not

19 pursuing heat pump water heaters as a design option

20 then?

21 MR. LOGEE: These are part of our

22 rationale.

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1 MR. RANFONE: Yeah, well, that's my point.

2 You're accepting these three bullets on no service and

3 sale -- sales and service infrastructure, and a survey

4 from some utility customers as rationale for not

5 including heat pump water heaters as a design option.

6 MR. LOGEE: Well, I think that that is

7 where we're at right now, and this is why we expect

8 and we know that we have to revisit this issue.

9 MR. RANFONE: Okay. So you are going to

10 revisit the issue. That is the point I wanted.

11 MR. LOGEE: That is correct.

12 MR. RANFONE: Thank you.

13 MR. LOGEE: If you notice, I just asked

14 Doug to make sure that we put that on our easel as an

15 issue and a topic that we need to address.

16 MR. RANFONE: Well, as you're aware, we

17 believe that it should be a design option, and we have

18 provided comments to that effect.

19 MR. LOGEE: That's right.

20 MR. RANFONE: And we just want to make

21 sure when you go through the documentation that it

22 includes more than these four bullets.

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1 MR. LOGEE: Right. We have received your

2 comments, and we're well aware of them.

3 MR. BROOKMAN: Francine.

4 MS. PINTO: Francine Pinto.

5 What I wanted to say is that whenever

6 we're putting together a NOPR, we always look at all

7 of the --

8 MR. BROOKMAN: Francine, closer to the

9 mic.

10 MS. PINTO: Okay. Thank you.

11 Whenever we're putting together a NOPR, we

12 always look at all of the aspects of what we've done,

13 but if and only if we consider that we have a problem

14 would we take action. So Terry's comments are not

15 meant to say that there is a problem at the current

16 time, but obviously the review process, when we go

17 toward conclusion, we always look at everything.

18 MR. RANFONE: Yeah, Jim Ranfone.

19 I just want to make sure that I am clear

20 that this design option can be reconsidered during

21 this time period.

22 MR. BROOKMAN: I saw Joe Mattingly and

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1 then Joel.

2 MR. MATTINGLY: Joe Mattingly from GAMA.

3 I just want to remind you that we

4 submitted extensive information in response to the

5 1994 proposed rule showing that the heat pump water

6 heater proposal was not viable, and we believe that

7 would have been supported in a court action if it had

8 come to that.

9 MR. BROOKMAN: Mark Krebs.

10 MR. KREBS: Go ahead and let the sitting

11 committee here answer first. I'll be happy to wait.

12 MR. BROOKMAN: Go ahead, Steve. Steve

13 Rosenstock.

14 MR. ROSENSTOCK: Steve Rosenstock, Edison

15 Electric Institute.

16 I remember there was a workshop where a

17 lot of the design options were basically put on the

18 board, and I think there were like 25 or 30 of them,

19 and everyone got a chance to comment on them, and

20 there were a lot of design options that were at that

21 point discussed and basically to, say, eliminated from

22 further consideration, and basically from my

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1 understanding, it's that you have these nine or ten

2 that are remaining to go forward in the process.

3 I thought as a result of one of the

4 previous workshops that basically this was the

5 discussion time and that these are the nine design

6 options that are left.

7 But to revisit, I mean, there are like 20

8 or 30 other design options that were left out. To

9 revisit them would just delay the process a lot more.

10 MR. BROOKMAN: Mark, Mark Krebs.

11 MR. KREBS: Mark Krebs, Laclede Gas.

12 I'd like to comment briefly and ask some

13 questions on all the bullet points shown on this

14 slide.

15 MR. LOGEE: Mike, would you speak up? I

16 can't hear you down here. Maybe I'll stand forward of

17 the microphone.

18 MR. KREBS: Can you hear me?

19 MR. LOGEE: Yes. That's better.

20 MR. KREBS: I'd like to comment on all the

21 bullet points on this slide and ask a couple of

22 questions as well.

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1 First is a question on the first bullet

2 point. It says "cost effective only in select

3 regions." To the best of my knowledge, DOE has never

4 defined cost effectiveness. Does that mean something

5 which would be reasonable to your average consumer,

6 like a three-year payback, or does that mean anything

7 that pays for itself within the lifetime of the

8 appliance, or exactly what is it?

9 And maybe this is a question for DOE's

10 legal counsel

11 MR. LOGEE: We'll review that in that

12 technology document, but I'm not going to respond to

13 that here.

14 MR. KREBS: Well, does anyone else here

15 apparently?

16 MR. LOGEE: I'm not going to give the

17 definition here either.

18 MR. KREBS: Well, can I get a legal

19 definition at some point in time?

20 MR. LOGEE: If that's necessary in the

21 document, what has to be presented at the screening,

22 yes, we'll include it in that.

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1 MR. KREBS: Oh, after it's all said and

2 done. Thank you.

3 Okay. Moving on to the next bullet point,

4 comments in the 1994 NOPR, cost, noise, space,

5 reliability, and electric rate increases. You know,

6 I can see how rebates for heat pump technologies no

7 matter what they are can cause electric rate

8 increases, but you know, was that what you meant by

9 that particular part, electric rate increases? Do you

10 know what they were referring to?

11 Okay. You'd rather not.

12 MR. LOGEE: I don't know precisely what

13 they related to. We have a comment summary, and that

14 was on the summary, and I'd like to -- I don't want to

15 avoid these issues, but I want to get your comments on

16 them.

17 MR. KREBS: I'm trying to give my comments

18 on them. Weren't all of those comments, as I recall,

19 weren't they all from electric utilities?

20 MR. LOGEE: I believe those particular

21 comments were from electric utility customers. Okay?

22 Not all of the comments were from electric utilities.

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1 MR. KREBS: Well, on that. Okay. On

2 space reliability and electric rate increases, those

3 were from customers?

4 MR. LOGEE: I think many of them were, but

5 not all of them. I think the report addresses that as

6 well.

7 MR. KREBS: I see some people shaking

8 their heads.

9 MR. BROOKMAN: I don't know if we're

10 procedurally on target here. It seems like we're

11 revisiting stuff, and Terry's presentation was meant

12 to generally characterize and not get into the depth

13 and definition issues here.

14 MR. KREBS: Oh, okay. Let me move on real

15 quickly then.

16 The third bullet point, no sales and

17 services infrastructure. Yeah, that might be true

18 when you're talking about plumbers, but there's

19 another group of technicians called HVAC technicians

20 who would probably love to take on that business.

21 There's no shortage of them.

22 And then finally, the last bullet point,

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1 50 percent of some utility customers reported space

2 too small, I assume that's in a retrofit situation and

3 not new construction. Fair enough?

4 MR. LOGEE: I believe that's true.

5 MR. KREBS: Thank you.

6 MR. BROOKMAN: Okay. Several people

7 wanted to comment. I saw Carl. I also saw Charlie,

8 and I saw perhaps David.

9 Carl.

10 MR. HILLER: Carl Hiller from EPRI.

11 In fairness to DOE, this is a very

12 shortened summary of the kinds of comments and

13 considerations. We should note that for the record.

14 There were many, many pages of written

15 comments submitted and many pages of oral comments

16 submitted. We shouldn't be hammering this to death.

17 There are literally hundreds of pages of documentation

18 for this position.

19 MR. BROOKMAN: Which are available.

20 MR. HILLER: Which are available.

21 Charlie Stephens.

22 MR. STEPHENS: Yeah, Charlie Stephens.

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1 I'll just be really quick. We are one of

2 the parties who commented in '94 extensively on all of

3 these, in part, because we probably have more

4 experience as a region with heat pump water heaters

5 than any other region of the country and have had for

6 a number of hears now.

7 And I believe that the elimination of this

8 is probably very consistent with the comments that

9 were received during the reinvention of this process

10 about eliminating or screening out design options as

11 early as possible and expending as much time and

12 trouble on them later when it's appropriate.

13 And from our perspective, it was

14 appropriate to screen this one out.

15 MR. BROOKMAN: Final comments before we

16 move on? Yes, George.

17 MR. KUSTERER: George Kusterer, Boch Water

18 Heaters.

19 Having been involved in the 1994 NOPR

20 discussions, this is now 1998 going into 1999.

21 Nothing here has changed. There's still no sales or

22 service infrastructure as far as the manufacturers.

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1 We're not talking about HVAC people, which are highly

2 competent. Unfortunately there are no sales

3 structures. There's no service infrastructure from

4 the manufacture of these products.

5 And as Steve Rosenstock said, hey, let's

6 get on with the program.

7 MR. WINIARSKI: The only comment that I

8 was going to make is for anyone who is interested in

9 that federal technology alert, make the request of

10 Terry and I'll see that there's a copy we'll send out

11 to folks, and if anyone has further questions on the

12 report, I can pretty much talk with them, you know,

13 in the next month or so.

14 MR. BROOKMAN: That was Dave Winiarski.

15 Okay. Let's proceed.

16 MR. LOGEE: All right. I'm already there.

17 Oops. I flipped my pages the wrong way.

18 We have, as I mentioned earlier, three

19 technological issues: new blowing agents, the

20 prevention of ignition of flammable vapors for gas

21 water heaters, and venting of high efficiency gas

22 water heaters.

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1 On the new blowing agents, HCFC-141(b) is

2 being phased out by the Montreal protocol and EPA

3 requirements by 2003. Since our rule, assuming that

4 we stay on schedule, it would be effective some time

5 late in 2003. We realize we have to have an

6 alternative.

7 We've chosen HFC-245fa. We believe it's

8 a good alternative. The refrigerator industry is

9 contemplating using this. So we feel that there will

10 be adequate availability of this material.

11 It does show a three percent increase in

12 conductivity based on tests that Bayer and another

13 company had made, and it's more costly, $4 a pound, I

14 believe, as an estimate from Allied Signal, the

15 company provides it, rather than the dollar or pound

16 or so that HCFC-141(b) now costs.

17 We've tested the materials at NIST, all

18 three of these, including water, CO2 foams, and Hunter

19 Fanning will be here tomorrow to discuss those results

20 in detail.

21 Let me just say we tested them both as

22 flat sheets of insulation in a guarded hot plate, and

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1 we also ran water heater tests with electric water

2 heaters foamed with these agents. We replicated the

3 tests on four different water heaters.

4 The results in a preliminary way are very

5 similar with the HFC-245 to HCFC-141(b). Those are

6 kind of tongue twisters.

7 Moving forward to preventing ignition of

8 flammable vapors, the Water Heater Consortium, CPSC,

9 the Consumer Product Safety Commission, and the gas

10 research industry is currently working on this

11 problem. This is something that has come up in the

12 last couple of years.

13 The Consumer Product Safety Commission is

14 concerned about it and is either ready to put out a

15 rule on it or is certainly considering that.

16 The water heater manufacturers, to their

17 credit, have developed, put together this consortium

18 to address these issues, and there are two issues

19 there, both test method, which is being circulated for

20 comment now by ANSI, and the designs.

21 I saw a demonstration of a prototype

22 design last April. It was very effective, but there

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1 are no exact costs. This was, I guess, a very early

2 prototype. It worked. It does not mean that it would

3 be manufacturable, but the design itself worked.

4 It seems like this problem will be

5 technically possible to fix, but we don't have an

6 exact estimate of the cost. We talked with the

7 consortium and came up with an eyeball cost of $35 for

8 the baseline design, and we were informed that there

9 would be little or no impact or essentially no impact

10 on the efficiency.

11 As they proceed with these designs and we

12 have more information, we will certainly incorporate

13 that into our analyses. We will try to make that --

14 get away from the estimate and more into the real

15 world with those numbers.

16 Yes, Carl.

17 MR. HILLER: Carl Hiller from EPRI.

18 I'd like to know how I can get more in

19 touch with this process and get the information coming

20 out of it. You know, I hear words that you just said.

21 I hear bits and pieces, but you know, we're in the

22 business of developing new water heating equipment at

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1 EPRI or through EPRI, and I need to know what these

2 developing standards look like before they're

3 promulgated.

4 How do I get into this process?

5 MR. LOGEE: Darrel Hosteller, of course,

6 I believe is conducting the ANSI comment process, and

7 he can provide that information.

8 The other part of the Water Heater

9 Consortium, I believe that's a closed consortium, and

10 only the members are privy to what's happening there

11 and possibly the Consumer Product Safety Commission.

12 So I don't believe there's -- I don't think there's

13 any information that they've made public about that at

14 this point in time.

15 Darrel.

16 MR. HOSTELLER: Excuse me. Darrel

17 Hosteller, representing Southern California Gas

18 Company and the Z-2183 Committee.

19 Carl, I'm sure that you're aware that you

20 can contact Mr. Al Callaghan, Secretary for the Z-2183

21 standards process and let him know that you're

22 interested in getting the review and comment text on

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1 water heaters and the schedule of meetings for the gas

2 water heater subcommittees, and you can attend, and

3 you'll have as much information as everyone else has,

4 other than the manufacturers.

5 MR. LOGEE: Thank you, Darrel.

6 Okay. Venting issues. When we went

7 around the country last fall and talked with

8 manufacturers, we soon learned that there were some

9 concerns with venting systems, particularly

10 replacement situations where there are masonry

11 chimneys or older vent systems or the situation that

12 occurs when someone has replaced an older gas furnace

13 with a newer gas furnace and caused the water heater

14 to be orphaned, to be left alone venting into the

15 existing vent system.

16 And we had PN&L do some research on this

17 looking into what already had been done by in this

18 case the Gas Research Institute and determined that if

19 the flue loss efficiency is greater than 83 percent,

20 there is a safety concern on replacement systems if

21 they're not relined or in some other way adequately

22 protected.

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* 1 We also discovered there's no

2 technological barrier to high efficiency water

3 heaters, but our design options are less than 78 and

4 a half percent recovery efficiency, and we believe

5 that this gives an adequate margin, somewhat below the

6 83 percent flue loss efficiency to reduce the safety

7 concerns there.

8 However, to be on the safe side and to be

9 conservative, we've included the cost of a Type B vent

10 connector in those replacement installations.

11 Yes, sir.

12 MR. BROOKMAN: State your name, please.

13 MR. GATLEY: Stu Gatley, FASCO Industries.

14 We manufacture draft inducers. So we do

15 have a vested interest here, and I just wanted to ask

16 one question. You had mentioned that venting of high

17 efficiency water heaters. What do you consider high

18 efficiency, 80 percent?

19 MR. LOGEE: I don't have an exact comment

20 on that. I suspect that that's probably a good ball

21 park number.

22 MR. GATLEY: Yes. Well, when it comes to

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1 venting, the way I see it, there's basically three

2 things you can do. One, which is the most costly way,

3 is the present methods that all of these water heater

4 manufacturers are using today. When you pull in

5 dilution air, for example, if you need 20 CFM for

6 combustion, you're going to need two more times that

7 air flow. So you need 60 CFM now out of a blower to

8 provide combustion and to cool those gas temperatures

9 down.

10 So in order to make a long story short

11 here, you could replace everything you have out there

12 with a draft inducer below 83 percent efficiency

13 without changing the venting at all on an existing

14 water heater.

15 The second statement is that the reason

16 why PVC pipe is desired now, that works real good for

17 new installations and things because you can also

18 horizontal that with PVC pipe, which you can't do with

19 the sheetmetal pipe, including B vent.

20 The third thing is are we not by

21 eliminating draft inducers eliminating the future need

22 for, say, a 90 percent efficient water heater because

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1 a 90 percent efficient water heater is actually less

2 costly for the draft inducer people to manufacture

3 than is the present way today.

4 So I wonder if that's being considered in

5 the cost.

6 Thank you.

7 MR. LOGEE: At this point we're not

8 considering those water heaters with efficiencies

9 greater than the 78 and a half percent recovery

10 efficiency we've stated here for safety concerns. I

11 would be interested, however, Steve, in information or

12 data that you could provide to the department, you

13 know, that would help to substantiate some of your

14 comments.

15 MR. GATLEY: Okay.

16 MR. LOGEE: We certainly would like to

17 review that and consider it.

18 I would like to also note that because we

19 have eliminated certain design options in our analysis

20 doesn't mean that they won't be on the market. They

21 just won't be considered for a minimum standard in

22 this rulemaking.

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1 You know, anything that the market can

2 support above and beyond the minimum efficiency will

3 certainly still be there.

4 MR. GATLEY: Okay. Thank you.

5 MR. BROOKMAN: Additional -- Steve Nadel.

6 Go ahead. Carl Hiller.

7 MR. HILLER: Carl Hiller, EPRI.

8 Just wanted to ask a couple of clarifying

9 questions here. Question No. 1, does the 78.5 percent

10 recovery efficiency, 83 percent flue loss

11 efficiency -- are those meant to be equivalent

12 statements? Do you mean both of those simultaneously?

13 In other words, you're saying that the

14 difference between flue loss efficiency and recovery

15 efficiency is the difference in those two numbers?

16 MR. LOGEE: No, not exactly. Right now

17 the GRI venting report uses about a three percent

18 efficiency. It's somewhat of a rule of thumb, and so

19 what I meant here is that, to be on the safe side, we

20 don't know. GRI has done a substantial amount of

21 research on this, but we don't know for sure.

22 We had a meeting with them some time last

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1 summer, late last summer, and they had found some new

2 information that they claimed would show an increase

3 of up to perhaps six percent difference between flue

4 loss and recovery efficiency.

5 However, when we asked them for

6 substantiation, they could not provide it or they did

7 not provide it, at any rate. That's still on the

8 books. We're still open to that.

9 There were very few -- it's a small study

10 with that extra substantiation of the six percent

11 difference, maybe six to eight or nine units. So

12 we're going with the published report that we have

13 from GRI on this venting efficiency discussion at this

14 point in time and the algorithm that they include in

15 the tank water heater simulation model.

16 MR. HILLER: Okay. The next question then

17 is exactly what do you mean by flue loss efficiency.

18 For example, is that the same as saying the input

19 efficiency from gas that actually gets into the water?

20 MR. LOGEE: I'm going to either let Darrel

21 respond to that or one of my contractor folks because

22 I don't want to get tied up in knots on that issue.

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1 MR. PAUL: Darrel Paul, Battelle.

2 We conducted a lot of initial research for

3 GRI concerning venting of gas water heaters, and

4 through our work, we base things on flue loss

5 efficiency, which is the efficiency of the water

6 heater based on the amount of heat that actually gets

7 into the flue.

8 And so if you look at recovery efficiency

9 and flue loss efficiency, they vary depending on the

10 water heater design. Some water heaters which have a

11 lot of insulation, very few heat losses, the flue loss

12 efficiency and recovery efficiency will be very close.

13 Others, they vary, can vary quite a bit, and we found

14 variations that ranged from around two percent on the

15 low side to upwards of six percent on the high side.

16 All of the venting tables in the national

17 fuel gas code are based on flue loss efficiencies

18 because that's actually what goes into the vent. That

19 essentially determines the amount of heat or energy

20 that you have to provide buoyancy for natural draft

21 systems. And, therefore, when we generate venting

22 tables, we base it on flue loss efficiencies.

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1 The current tables in the national fuel

2 gas code for gas appliances' natural draft are based

3 on roughly a 78 percent flue loss efficiency, and so

4 if the efficiency of gas water heaters increases

5 substantially above that, someone needs to go back and

6 look at those venting tables and potentially revise

7 them accordingly.

8 MR. BROOKMAN: Darrel, are you able to

9 provide the specifics of this information to Carl and

10 others that wish to have it?

11 MR. PAUL: Yeah, absolutely. I've got

12 Carl's information back in the office. I can have

13 it --

14 MR. BROOKMAN: Okay. So those of you that

15 have other specific questions like this can get to

16 Darrel or somebody else designated.

17 Steve Nadel.

18 MR. NADEL: Was Carl finished, first? He

19 had several question.

20 MR. HILLER: Just one more. What I was

21 trying to get at is, for example, recovery efficiency,

22 the way I'm used to thinking of it, would be the heat

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1 input efficiency minus losses during the recovery

2 test. In other words, heat loss off the tank would be

3 the difference as I think about it.

4 I'm trying to make sure that I'm not

5 missing some other loss mechanism here.

6 MR. BROOKMAN: George, do you wish to

7 follow on, or maybe someone could respond to this?

8 MR. KUSTERER: George Kusterer with Boch

9 Water Heaters.

10 Flue loss efficiency is somewhat of an

11 oxymoron. I mean, how can you have a loss and still

12 be efficient?

13 I think what they're trying to say is

14 that's combustion efficiency, and again, the

15 combustion efficiency of the equipment deducted from

16 100.

17 MR. BROOKMAN: George, are you suggesting

18 that Carl's sense of the definition is consistent with

19 what's being said here?

20 MR. KUSTERER: Yeah, but it's kind of

21 misleading because we're talking about flue loss

22 efficiencies. There's no efficiency with flue loss,

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1 and again, that would be noted as combustion

2 efficiency. They might want to change that, although

3 I could be wrong.

4 MR. BROOKMAN: Okay.

5 MR. LOGEE: Let me just make a note here

6 that flue loss efficiency is what GRI and Darrel

7 Paul's group referred to in their reports, and DOE

8 refers and uses in their analysis and in the test

9 procedure -- uses recovery efficiency, and there are

10 slight differences pretty much as Carl Hiller just

11 pointed out.

12 The recovery efficiency generally includes

13 those heat losses that go up the chimney or up the

14 flue and the heat losses from fittings and the jacket

15 and so forth and the convection into the water pipes.

16 MR. BROOKMAN: Steve Nadel.

17 MR. NADEL: Okay. Steve Nadel, ACEEE.

18 I'm also trying to understand some things.

19 You have a lot of information you've condensed into a

20 few simple bullets.

21 MR. BROOKMAN: And I think these

22 definitional issues are important, and just keep going

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1 with it and get on to the other specifics.

2 MR. NADEL: Okay. First, I must be

3 missing something. What I hear you saying is that

4 you're trying to have a flue loss efficiency of less

5 than 83 percent. I understand there's not an exact

6 mathematical correlation, but you said the most

7 commonly used rule of thumb that you tried to use is

8 to subtract three percent.

9 So if you have 83 percent minus three, how

10 do you get 78.5? What am I missing?

11 MR. HILLER: That's exactly what I was

12 getting at.

13 MR. LOGEE: What you're missing is that

14 anything less than 83 percent does not require a

15 relining of the venting system, and correct me if I'm

16 wrong, Dave or Jim Lutz, Ed Barbour, and our design

17 options that we're currently assessing only go as high

18 as 78.5 percent recovery efficiency.

19 I wasn't trying to imply that this was

20 necessarily a five and a half or four and a half

21 percent difference or rule of thumb. What the GRI

22 reports come up with is an average of three percent,

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1 but as you heard Darrel Paul say, that depends on the

2 type of design.

3 MR. NADEL: Okay. If I understood

4 correctly, you're saying the 83 percent is not exactly

5 related to the 78.5 percent. Where does the 78.5

6 percent come from? Did DOE pick it out of the air?

7 Did it come from --

8 MR. LOGEE: No, that came from our --

9 we'll get into that eventually in more detail, but

10 that came from the design simulations that we ran

11 using the tank water heater simulation model.

12 MR. BROOKMAN: So while they're included

13 in the same phrase or frame here on this bullet, there

14 is no explicit linkage --

15 MR. LOGEE: That is correct.

16 MR. BROOKMAN: -- between these two.

17 MR. NADEL: So you are saying -- I mean,

18 it sounds like we'll get to it later -- but you were

19 saying that the 78.5 percent came from some tank runs

20 and once you get beyond 78.5 percent you ran into

21 certain problems and we'll discuss that later?

22 MR. LOGEE: We chose design options that

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^*^ 1 in this instance we had screened out other design

2 options, and the ones that we ended up with did not go

3 beyond 78.5 percent.

4 MR. NADEL: I think we're talking past

5 each other a little bit. The key question I'm asking

6 is how did we come up with 78.5 because I can suggest

7 there are --

8 MR. LOGEE: Well, let me --

9 MR. NADEL: -- design options at 79, 79.5,

10 et cetera.

11 MR. LOGEE: Let me -- that's not the

12 important issue at this point in time. I would like

13 to let Jim Lutz address that a little later in the

14 engineering analysis.

15 MR. NADEL: So we will come back?

16 MR. LOGEE: We will get to that. We don't

17 mean to leave that out.

18 MR. BROOKMAN: Let's make a note.

19 MR. LOGEE: Right now we're talking about

20 venting, and I think we've clarified that there's no

21 connection between the two numbers, two percentage

22 numbers that I used on the slide. I'm sorry I put the

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1 83 percent there. I thought it was going to clarify

2 things.

3 MR. NADEL: Okay. One other clarifying

4 question. On your last bullet you said "include the

5 cost of Type B vent connectors and replacement

6 installations." Is that included in all replacement

7 installations or is there some criteria based on flue

8 loss efficiency or recovery efficiency where you

9 included it in some and not others?

10 MR. LOGEE: No, we went through and

11 applied it. We actually used an average cost, but we

12 took the 53 percent or so of houses that presently

13 don't have any kind of new venting system, and we used

14 that essentially to -- we averaged it over the whole

15 group of houses, but it's 53 percent that don't have

16 or that have the old fashioned venting system.

17 MR. NADEL: But that applies both to the

18 base case as well as the various different design

19 options, if I understood correctly.

20 MR. LOGEE: It applies to just the design

21 options.

22 MR. NADEL: So any design option, no

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1 matter -- so the --

2 MR. LOGEE: Well, it applies to certain

3 design options that have these higher efficiency --

4 higher recovery efficiencies.

5 MR. NADEL: Are we going to get into that

6 later, too?

7 MR. LOGEE: Yes, we will.

8 MR. NADEL: Okay.

9 MR. BROOKMAN: I think we are getting into

10 specifics that we will cover later.

11 Carl.

12 MR. HILLER: Carl Hiller, EPRI.

13 I'd like to summarize what I think I heard

14 Terry say so that we're all clear.

15 MR. BROOKMAN: Un-huh.

16 MR. HILLER: He didn't do anything with

17 flue loss efficiency. The limitation is purely on

18 recovery efficiency; is that correct?

19 MR. LOGEE: That's correct.

20 MR. BROOKMAN: Thanks for clarifying that.

21 Okay.

22 MR. LOGEE: Okay. We can move on now to

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1 Ed Barbour.

2 MR. BROOKMAN: By the way, these are all

3 in your packets, all of these slides.

4 MR. BARBOUR: Hi. My name is Ed Barbour.

5 I'm with Arthur D. Little.

6 Has everybody found this in the back, left

7 side?

8 PARTICIPANT: Oh, you're starting from the

9 back? Oh, man.

10 MR. BARBOUR: Not only did we try to hide

11 it. We also tried to hide it up here, too, so that

B* ~ 12 way you can't really tell.

13 I'm going to provide a little bit of lead14 in into the engineering analysis that will be

15 presented by LB&L and sort of a tie-in to Terry. What

16 I want to talk about today is -- we have Bill's built

17 in. Hold on -- talk a little bit about how we

18 received data from GAMA. I want to talk about the

19 data collection methodology. Then we'll talk about

20 how we used those manufacturing cost submittals to

21 come up with a distribution; how we handled the

22 uncertainty and variability; and then I'm going to

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1 present both the previous GAMA data, as well as the

2 latest, which I believe addresses Steve Nadel's

3 question. I'm going to present the point averages of

4 both data submittals.

5 The department approached GAMA to provide

6 data or approached the manufacturers to provide data

7 for three different models for different fuel types.

8 We asked data on 50 gallon electric with an EF of .86;

9 40 gall gas with an EF of .54; and 32 gallon oil with

10 an EF of .53.

11 Besides that, we provided very detailed

12 engineering definitions of what those units were to

13 represent to each of the manufacturers in the data

14 request.

15 In turn, the manufacturers then provided

16 the cost data back to GAMA, who then compiled the data

17 for DOE.

18 The data was presented or submitted by the

19 manufacturers as a range of costs associated with each

20 design option that we've already discussed previously,

21 and what we did then is we developed a spread sheet

22 that aggregates the manufacturers' costs at each

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1 design option using ranges that the manufacturers

2 provided themselves, and the ranges were

3 representative with triangular distributions that show

4 a minimum, a most likely, and a maximum cost.

5 In the data request, the department asked

6 for those costs associated with full production costs.

7 Essentially we're looking at this part of the business

8 unit, and so we basically asked for direct labor,

9 direct material, and overhead, and by overhead we

10 meant indirect labor, indirect material, maintenance,

11 depreciation, taxes, and insurance to related assets.

12 Additionally, we also asked for capital

13 cost conversions for different design options, as well

14 as product design costs.

15 Okay. After the manufacturers submitted

16 their data to GAMA, this is basically what you would

17 have before we run the spreadsheet. Essentially this

18 is 401 design option. Manufacturer A, B, and C would

19 provide costs, and these represent the minimum, the

20 most likely, and the maximum, and as you can see,

21 there's a certain amount of variability we would

22 expect.

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1 Any questions? Please feel free to stop

2 me as I go through if there are any questions.

3 MR. BROOKMAN: We'll get into the depth of

4 it here. So if you do have questions, let me know.

5 MR. BARBOUR: The samples were meant to

6 characterize both uncertainty and variability

7 associated with the manufacturing costs.

8 We basically used the spreadsheet to draw

9 out from each one of the manufacturers individual

10 distributions to create an industry distribution for

11 each design option. The results were reported as

12 distributions when we received them from GAMA. They

13 were reported by percentile levels, zero to ten

14 percent, 20 percent, 30 percent, and they also

15 reported a simple average of the most likely costs as

16 a point value of incremental cost.

17 To give you an idea how the spreadsheet

18 produces a distribution, this shows two manufacturers'

19 data, and this assumes that they both have equal

20 market shares. And what we would do is then sample.

21 The spreadsheet would then sample from each

22 manufacturer to create sort of a combined

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1 distribution, and this is what's presented or given to

2 DOE.

3 The distribution here will be used in the

4 life cycle cost analysis. For the engineering

5 analysis, we use point values, which I'm actually

6 going to present in just one second.

7 Here's the actual data, and this, I think,

8 addresses Steve Nadel's question previously. What I

9 have up here is the material, labor, overhead,

10 transportation, capital cost, and product design cost

11 as reported by the manufacturers to GAMA.

12 The data in parentheses are the latest

13 update from GAMA that was submitted on October 21st

14 1998. The other data is what you're going to see in

15 almost all of the analyses presented today, and that

16 was what was used in both the engineering and life

17 cycle cost.

18 GAMA provided data on a baseline unit,

19 that unit currently manufactured, the heat trap design

20 option, and increased insulation for the electric

21 water heaters.

22 Similarly for gas fired water heaters they

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1 provided data for the baseline, heat traps, increased

2 insulation, improved flue baffle, improved combustion

3 chamber, and flue damper and IID, and again, the data

4 in the parentheses is the latest update submitted by

5 GAMA on October 21st.

6 MR. BROOKMAN: I'm going to give you just

7 a second to look at this data. Ed's going pretty

8 fast. So if you want him to back up, let me know.

9 Charlie.

10 MR. STEPHENS: Charlie Stephens.

11 One quick question, Ed. Improved

12 combustion chamber, your slide here is the only place

13 I've seen that. Can you explain?

14 MR. BARBOUR: Right. It actually was

15 eliminated, but it just so happened when we did the

16 data submittal back in the fall of last year, it was

17 still on the list, and we actually got data for it.

18 So I thought I'd present that.

19 MR. BROOKMAN: Yes.

20 MR. GATLEY: Stu Gatley, FASCO.

21 Is the improved combustion chamber -- is

22 that draft inducer? What's your definition on that?

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1 MR. BARBOUR: I honestly don't remember

2 what the definition is it's been so long since I've

3 looked at it.

4 MR. BROOKMAN: I've heard you say that is

5 an option that's been eliminated?

6 MR. GATLEY: Yes.

7 MR. BROOKMAN: Okay. You just want the

8 definition?

9 MR. GATLEY: Right.

10 MR. BROOKMAN: Can someone provide that to

11 Stu? Who has that information?

12 Frank? Or maybe we could take this

13 discussion off line.

14 MR. STANONIK: Quickly, Frank Stanonik

15 with GAMA.

16 It was basically from my response, was a

17 combination of submerged combustion chamber, which we

18 would argue is, in fact, a dying technology, and just

19 other ways to, in fact, increase the surface area of

20 the combustion chamber. It's got nothing to do with

21 draft inducers or anything else.

22 MR. GATLEY: Okay.

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1 MR. BROOKMAN: Glenn Schleede.

2 MR. SCHLEEDE: Glenn Schleede, consumer,

3 taxpayer.

4 In one previously workshop, and I'm not

5 sure which one it was, some time back, a person

6 describing these estimates like this, but for other

7 products, indicated that what manufacturers were

8 providing were purely guesses, not -- they were based

9 on theoretical designs, not anything that they

10 happened to be working on.

11 Could I ask in connection with these

12 estimates: are these estimates based on designs that

13 the manufacturers are actually working on or are they

14 designs that are handed to an engineer and said, "If

15 we were to do something like this, here's what it

16 might cost"?

17 I'm looking for some indication of how

18 good these estimates are that are being provided by

19 GAMA here.

20 MR. BARBOUR: What we provided them in the

21 data submittal was basically very detailed engineering

22 for their baseline unit. Now, in that case, I mean,

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1 Frank may be better off to answer it because he

2 actually got to see the data and talk to the

3 manufacturers about this, but we provided design

4 option descriptions, but not detailed sort of cut

5 sheets or engineering specifications to provide data.

6 MR. BROOKMAN: Frank, do you would to

7 comment?

8 Frank Stanonik.

9 MR. STANONIK: Frank Stanonik with GAMA.

10 Do you give me the choice?

11 (Laughter.)

12 MR. BROOKMAN: Will you please comment?

13 MR. STANONIK: Well, first of all, it's

14 the best data available, but in fact, certainly could

15 go through the first three on the list: heat traps,

16 increased insulation, improved flue baffles. Those

17 features are included in what might be categorized as

18 the better or best water heaters out there.

19 Improved combustion chamber, as I

20 mentioned, really is reflective of what the industry

21 learned at least from some companies who dabbled with

22 the submerged combustion chamber.

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1 And the flue dampers and IID, while right

2 now I guess there are probably a handful of

3 residential models that have IIDs on them, flue damper

4 information could probably be obtained from the fact

5 that manufacturers do build commercial models with

6 flue dampers. So they do have some knowledge, but I

7 don't think there's a residential product out there

8 that hand that feature.

9 MR. BROOKMAN: Does that answer your

10 question, Glenn?

11 MR. SCHLEEDE: Maybe.

12 MR. BROOKMAN: Okay. George, you had a

13 comment as well.

14 MR. KUSTERER: I'm a little confused, and

15 maybe there's a misprint. This IID, can you explain

16 that a little bit further for some people who may not

17 know what it is?

18 MR. BARBOUR: It's intermittent ignition

19 device.

20 MR. KUSTERER: Thank you.

21 MR. BROOKMAN: Okay. Thank you.

22 Okay. Other comments on this slide before

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1 we move on?

2 (No response.)

3 MR. BARBOUR: And the final slide, for the

4 remaining design options -- and Jim Lutz is going to

5 talk a little bit about this -- in the engineering

6 analysis we went to industry consultants in order to

7 provide data for oil fired designs; HFC-245

8 insulation, which Terry has talked about a little

9 earlier; the plastic tank design option, as well as

10 the side arm heater design option.

11 And at this point I'd like to wrap up.

12 Any other questions concerning this? If not, I'm

13 going to hand it over to Jim Lutz.

14 MR. BROOKMAN: I saw Steve Nadel. I saw

15 Tim Shellenberger first.

16 MR. SHELLENBERGER: Ed, just a quick

17 question.

18 MR. BARBOUR: Sure.

19 MR. SHELLENBERGER: On transportation

20 costs, how did you arrive at those? Did you use some

21 cubing software or --

22 MR. BARBOUR: We asked the manufacturers

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1 to provide transportation software.

2 A little bit of background. When we went

3 out and visited all of the manufacturers last fall to

4 talk about that, one of the issues that came up was

5 the difference in transportation costs associated with

6 different design options, and so one of their requests

7 was to add in transportation cost.

8 So that was actually put on the data

9 submittal after we had actually given it to them.

10 MR. SHELLENBERGER: Well, I agree it's

11 important. One of the things that I noted in the heat

12 trap, transportation cost is identical to the

13 baseline, and depending on what heat trap you pick,

14 the carton could get taller.

15 And so is the carton cost included and has

16 the transportation been considered appropriately?

17 MR. BARBOUR: I honestly don't -- one of

18 the advantages of this was that it maintained

19 proprietary information for the manufacturers. So

20 nobody in the department actually saw the raw data

21 that's submitted to GAMA. So what we got are the

22 outputs.

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1 So I really can't answer that question.

2 MR. BROOKMAN: Frank, are you in a

3 position to respond to that question?

4 MR. STANONIK: I didn't hear the last part

5 of the question.

6 MR. BROOKMAN: Use the mic, Tim.

7 MR. SHELLENBERGER: Depending on the heat

8 trap design that's chosen, the carton could get

9 taller, and I was wondering if the material costs

10 reflect that and if the transportation costs reflect

11 that.

12 The transportation costs are identical.

13 So I don't think that it has.

14 MR. STANONIK: I can tell you -- well, I

15 mean, Tim, to the extent I could I tried to identify,

16 you know, what the transportation costs -- what was to

17 go in that column, and the responses that we got back,

18 I guess, would indicate that the assumption was that

19 most of the heat traps will not -- well, two things.

20 Most of the heat traps will not add to the height of

21 the water heater, and I guess the other thought is

22 that the way things are right now, you can always just

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1 throw the heat traps in the box so that that would be

2 the other way to avoid that extra one inch or two that

3 all of a sudden screws up your shipments.

4 MR. BROOKMAN: I believe I also saw Steve

5 Nadel.

6 MR. NADEL: Yes, two things. One, going

7 back to the sheet with the gas fired water heater

8 option, I'll ask you the question, Ed, but it may be

9 a question for Frank.

10 I noticed in the --

11 MR. BROOKMAN: Referring to the large

12 matrix on page 9.

13 MR. NADEL: Right. I noticed in going

14 through the stuff that was posted on the Web that

15 there are two different improved flue baffle measures

16 used, one that just results in a very modest increase

17 in our recovery efficiency, another a much more

18 substantial increase in recovery efficiency combined

19 with induced draft, but they were both at different

20 points called improved flue baffle.

21 My question here where we have these costs

22 for improved flue baffle: is that clearly one measure

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1 or the other measure or maybe do the two measures

2 somewhat get confused and mixed?

3 The reason I ask it is that the capital

4 costs and prior design costs seem quite substantial

5 and imply maybe that those might have been the more

6 efficient, the much more efficient induced draft unit

7 rather than just a simple piece of metal in the flue.

8 MR. BROOKMAN: Frank Stanonik.

9 MR. STANONIK: Frank Stanonik with GAMA.

10 Steve, it is the basic -- let's say it's

11 the more convoluted flue baffle. So it is the simple,

12 as you describe it, a simple sheetmetal in altering

13 it.

14 MR. NADEL: Yeah.

15 MR. STANONIK: But I think what some of

16 those capital product design costs reflect is that,

17 you know, the current one is if you can envision kind

18 of a flexible piece of metal and you just twist it so

19 that it looks like a helix.

20 MR. NADEL: Yeah.

21 MR. STANONIK: But when you start getting

22 into, in fact, doing a little more so that you have

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1 little tabs and stuff like that, in fact, that becomes

2 a -- well, it seems like a minor change, but it

3 becomes a little more difficult because one of the

4 concerns would be in terms of where you place those

5 tabs and where they are. You, in fact, may be asking

6 for some combustion problems, i.e., a little more CO

7 production than you would want to have or would be

8 allowed to have.

9 Those kind of things creep in there, and

10 I suspect some of it is, in fact, the issue of

11 realizing -- well, I will be careful with this one

12 because I'm not sure about this one. We're dealing

13 with a baseline product, but in terms of manufacture,

14 if you're looking at improved flue baffles, he has

15 baseline. Then he has short and, you know, in16 betweens and stuff in different volumes, and some of

17 that just may be the fact of -- may increase some --

18 what would be the right word here? I don't want to

19 say variability in his production, but may increase

20 what he has to handle.

21 I mean, again, think of the long ribbon

22 one you just twist. Okay. Well, if you've got a

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1 short model, maybe you twist a little more, but you

2 can cut it off. It's fairly straightforward.

3 But if you essentially have a strategic

4 placement of tabs and fins and stuff, all right, and

5 you've designed it around a certain length and now you

6 have to look at other things, it's just not a question

7 of, well, I just take what used to be -- I don't know

8 -- 30 inches long and cut it off and make it 26. It

9 doesn't quite fit that way.

10 It becomes a little more -- I don't know

11 how to put it -- it becomes a little more of a

12 science. It becomes a little more of a fine science

13 to come up with that flue baffle that you can still

14 make fairly easily, that still gets you where you want

15 to go.

16 MR. NADEL: We can talk maybe off the

17 record a little bit more.

18 MR. STANONIK: Okay.

19 MR. BROOKMAN: Did you have another

20 question, Steve?

21 MR. NADEL: Yeah. The other question is

22 your earlier material talked about the percentage, the

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1 distribution as various percentiles. Is that

2 information available that would be useful to help in

3 reviewing this latest set of information?

4 MR. BARBOUR: Yeah, that information is

5 available.

6 MR. NADEL: Is that on the Web page or is

7 that something you send us? How do we get it?

8 MR. BARBOUR: Terry Logee. Microphone.

9 MR. LOGEE: It just got posted to the Web

10 page.

11 MR. NADEL: Okay.

12 MR. LOGEE: It's in a spreadsheet. If you

13 go and look at the spreadsheet that's now on the Web

14 page, it's in -- yeah, there's one for gas and there's

15 one for electric, and those distributions are in both

16 of them.

17 MR. NADEL: Okay. If sometime in this

18 workshop -- there's lots of stuff on the Web page --

19 if you can give us the names of those particular files

20 at some point in the next two days, I'd appreciate it.

21 MR. LOGEE: I can probably do that for you

22 tomorrow, possibly over lunch, but tomorrow for sure.

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^&~1 ~MR. NADEL: Okay. Thanks.

2 MR. LOGEE: Just a note here. Those Web

3 pages are going to be -- there will be revisions and

4 changes on those Web pages fairly frequently, and so

5 you'll have to bear with the department. We will try

6 to keep them current and updated, and we'll try to

7 indicate, you know, what the most current one is.

8 We'll normally pull the old one off, but

9 I'm not sure that we're fully -- we haven't been able

10 to keep up with the number of changes that have

11 occurred in the last couple of weeks.

12 MR. BROOKMAN: Additional questions? In

13 a little bit we're going to try and go to break here.

14 Mark Krebs.

15 MR. KREBS: Mark Krebs, Laclede Gas.

16 A request for DOE. I would assume most

17 everybody here has an E-mail address. It would be

18 very simple to make an E-mail group and sent out a

19 notification when something is changed or something is

20 new on DOE's Web site.

21 MR. BROOKMAN: Thank you, Mark.

22 Additional questions following Ed

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1 Barbour's presentation?

2 You were able to finish your presentation?

3 MR. BARBOUR: Yeah.

4 MR. BROOKMAN: Yes. Additional questions

5 at this point on his presentation?

6 Those of you that have very specific

7 questions, I'm sure you can approach Ed at the break.

8 Let's take a break now. It's almost

9 10:35. Let's commence at 10:50. We'll start at that

10 point.

11 Thanks. We have a good start on the

12 morning. We'll see you at 10:50 when we will start

13 then.

14 (Whereupon, the foregoing matter went off

15 the record at 10:34 a.m. and went back on

16 the record at 10:54 a.m.)

17 MR. BROOKMAN: First and foremost, how

18 many of you have laptop computers with you?

19 Those of you who have laptop computers, in

20 order to leave the building today with those laptop

21 computers in your possession, you need to obtain a

22 pass from Brenda. Otherwise, security will be

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s n1 wondering where you got that laptop.

2 So Brenda is over here. I saw a few

3 hands. Only three or four of you have your laptops

4 with you? Lucky you.

5 PARTICIPANT: May I keep my pen?

6 (Laughter.)

7 MR. BROOKMAN: And then the other issue --

8 so, please, if you have a laptop, see Brenda and get

9 the ticket out of here at the end of the day.

10 And then secondly, if you haven't yet

11 handed your business card to Brenda, the department

~* ~ 12 has found that's the most efficient way to make a list

13 of attendees with all of the information on there. So

14 please hand a business card to Brenda.

15 And then finally, we jiggered with the

16 microphones a little bit at the break, and hopefully

17 they'll be a little closer to audio fidelity as we

18 proceed with the morning.

19 Okay. So Jim Lutz is queued up from

20 Lawrence Berkeley National Laboratory. Jim, it's

21 yours. Take it away.

22 Questions, comments before we get into the

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1 next segment of the morning following on from earlier

2 this morning?

3 (No response.)

4 MR. BROOKMAN: I see none.

5 Okay, Jim. It's yours.

6 MR. LUTZ: Okay. I want to go through the

7 engineering analysis, give you how we did this

8 preliminary analysis, the details, but not too much

9 details because I've got to get done and let Dave have

10 room to talk about oil fired.

11 We started with an existing baseline

12 electric water heater rated at 50 gallons, an energy

13 factor of .858, four and a half kilowatt input. We

14 went to one and a half inches of insulation to meet

15 the NAECA minimum, and we modeled the fitting losses.

16 We'll get to this later. We used WATSIM. We added a

17 little bit of insulation, reduced conductivity and

18 convection so that we could match the fitting losses

19 the tank had so that we would be consistent between

20 our models.

21 On the gas fired water heaters --

22 MR. BROOKMAN: I see a question at this

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1 point. Please say your name.

2 MR. VAUGHAN: Jim Vaughan of Vaughan

3 Manufacturing

4 Jim, just clear up one thing for me, would

5 you? The base electric water heater --

6 MR. LUTZ: Yes.

7 MR. VAUGHAN: -- in the Web site data it

8 described it as being from the manufacturers as an

9 inch of insulation, but then in order to meet the .86

10 energy factor --

11 MR. LUTZ: With the modeling, with the

12 simulation model we were using with the fitting losses

13 and everything we were getting, we had to get it up to

14 one and a half inches of insulation to meet that

15 minimum energy factor.

16 MR. VAUGHAN: So the water heater had an

17 inch. The base water heater had an inch of

18 insulation, but in order to get it up to a .86, you

19 gave it an inch and a half of insulation; is that

20 right?

21 MR. LUTZ: Yes.

22 MR. VAUGHAN: Okay.

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1 MR. BROOKMAN: The one and a half is

2 additional.

3 MR. LUTZ: No, it's the baseline. That's

4 what we started with.

5 MR. BROOKMAN: That's what I wanted to

6 clarify.

7 MR. VAUGHAN: But it's a half an inch over

8 and above what the actual water heater was.

9 MR. LUTZ: I'll let Carl answer that one.

10 MR. HILLER: Carl Hiller from EPRI and one

11 of the WATSIM developers.

12 For example, I have minimum energy factor

13 tanks in my test lab, and in some of my test sites

14 they have an inch and a half of insulation on them,

15 not an inch. So I'm not sure where the inch is coming

16 from, to start with.

17 MR. BROOKMAN: So what's in this slide?

18 An inch and a half insulation?

19 MR. LUTZ: On the electric we used an inch

20 and a half of insulation. A glass lined steel tank

21 with inch and a half of 141(b) blown insulation for

22 our existing baseline.

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1 MR. BROOKMAN: Okay.

2 MR. VAUGHAN: And that's consistent with

3 WATSIM in terms of coming up with a .86?

4 MR. LUTZ: Yeah.

5 MR. VAUGHAN: Okay.

6 MR. LUTZ: On the gas fired water heater,

7 we started with 40 gallon rated volume, energy factor

8 of .55, .5446, a recovery efficiency of 75.5, 50,000

9 BTU per hour input, 400 BTU per hour pilot light, used

10 the same .981 inch insulation. This is a default

11 value from GRI workshop, technical advisory group

12 workshop on this topic. I guess it was in December.

13 We used the same conductivity on our gas

14 and electric water heaters even though they are two

15 different models and the way they treat the water

16 heaters is different.

17 After the existing baseline, we need to

18 move to what we call an analytic baseline to account

19 for the change in the blowing agent, which is going to

20 increase the conductivity slightly, but the water

21 heaters still have to meet the current minimum.

22 So to do that, we change the insulation

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1 thickness on the electric, increased it a little bit,

2 and increased it a little bit on the gas fired as

3 well.

4 There were no other changes on this. We

5 assumed that the flammable favor ignition resistant

6 designs had no effect on efficiency.

7 MR. BROOKMAN: Let's stop. Yes, Jim

8 Vaughan.

9 MR. VAUGHAN: Jim, just another quick

10 question for you, and that is on the new insulation.

11 Are we going to get into that further with the NIST

12 studies?

13 MR. LUTZ: Yeah, that's tomorrow

14 afternoon.

15 What we did was took published reports

16 from Bayer and one other company that said it looks

17 like it has a three percent increase in conductivity.

18 MR. VAUGHAN: So you mean you used the

19 manufacturer's data?

20 MR. LUTZ: We used the manufacturers of

21 the blowing agent's data from test they had done on

22 water heaters.

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1 MR. VAUGHAN: You can't trust those guys.

2 (Laughter.)

3 MR. LUTZ: Jim, Jim, if you have better

4 data, we want it.

5 MR. BROOKMAN: No, that's a good comment.

6 MR. VAUGHAN: Strike that comment.

7 MR. BROOKMAN: I was worried about what

8 would follow on from that.

9 PARTICIPANT: Just like his father.

10 (Laughter.)

11 MR. BROOKMAN: I want to make sure that we

12 get the questions answered for these first two or

13 three pages. Are there additional questions in these?

14 Jim covered a lot of stuff there.

15 MR. LUTZ: I was told to go fast.

16 MR. BROOKMAN: We do have a lot to cover.

17 We want to be efficient.

18 Anything else?

19 (No response.)

20 MR. BROOKMAN: Okay. I'm not seeing too

21 many confused looks as I cast my eyes around the room.

22 Okay. Keep going, Jim.

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1 MR. LUTZ: Okay. The simulation modeling.

2 We used two different simulation model tools. We used

3 Watson, developed by EPRI for electric water heaters,

4 and for the gas fired water heaters, we used TANK. It

5 was developed by Battelle for GRI.

6 And if you have really detailed technical

7 questions on them, I'll direct you to the people in

8 this room who can answer those questions better.

9 For the engineering analysis, we used the

10 DOE test procedures, specific temperatures, draw

11 volumes, draw patterns. We developed a post processor

12 for watts and output to actually go through the DOE

13 test procedure calculations, and TANK has those built

14 in.

15 In the engineering analysis, we used the

16 national average energy prices.

17 The data sources for manufacturer cost, Ed

18 talked about the cost from GAMA. We also had a couple

19 of consultants. I don't know if he wants to be

20 pointed out, but one of them is here, to give us costs

21 for sheetmetal, foam insulation, plastic tank, side

22 arm heater, and the oil fired water heaters.

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1 From Dave Williams as Allied Signal, we

2 got projected foam component costs, including the

3 blowing agents, and from Ian Gilchrist at Perfection

4 we got cost of heat traps.

5 These are the main components of the foam

6 insulation used in water heaters. The two top blowing

7 agents, the top one is the current one. It's got a

8 cost of $1.50 a pound. The projected cost of the HFC9 245fa is $4.00 a pound.

10 The bottom line, we used as a cost of the

11 total foam $1.00 a pound for the current foam and

12 $1.32 a pound for the projected foam, for the foam

13 that we're projecting will be used in 2003.

14 This is for electric water heaters. The

15 existing baseline, the cost for the insulation jacket,

16 and then the cost for the new blowing agent. The

17 thickness of the baseline has been increased slightly

18 because of the increase in conductivity, and the costs

19 go up.

20 This cost includes not just the foam and

21 the sheetmetal for the jacket, but also any dams or

22 controls that the manufacturers use to make sure the

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1 foam doesn't come out the wrong holes and go the wrong

2 places.

3 This is the cost of the design options

4 that we used in the engineering analysis. The first

5 two are total costs. The following ones are

6 incremental costs.

7 We have two different types of heat traps.

8 We are calling them metal and plastic. The metal ones

9 are the ones that are added on top of the water

10 heater. The plastic ones are the ones that are

11 inserted more into the water heater. And we are

12 looking for comments on these costs if anyone has

13 them.

14 To get the mark-up to go from the

15 manufacturer cost to the retail price, we called

16 around about 80 different suppliers, retail stores,

17 and distributors to get the cost of the water heaters

18 they are currently selling.

19 We took from those, for the electrics we

20 took 50 gallon water heaters, five year warranty, no

21 extra features, no extra insulation, no heat traps,

22 and with the average sales tax of 5.2 percent, we get

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1 an average cost of $188.18. The manufacturer cost, Ed

2 talked about the average we're using for the existing

3 baseline 125.56. This gives a mark-up of almost one

4 and a half.

5 When we were calling around these water --

6 MR. BROOKMAN: Frank Stanonik.

7 MR. STANONIK: Frank Stanonik, GAMA.

8 Jim, having been involved in spitting out

9 the information based on the data that I had and the

10 percentiles that we did, I'm just curious. In terms

11 of the data you collected on cost, and maybe I missed

12 it in one of the reports that was on the Web site, but

13 have you done any analysis in terms of distribution of

14 those?

15 In other words, I know we've got an

16 average value here, but I mean --

17 MR. LUTZ: Yeah, in the engineering

18 analysis we're using straight averages.

19 MR. STANONIK: Right.

20 MR. LUTZ: Point values. The

21 distribution, the effects of distributions is shown in

22 the LCC which will be --

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1 MR. STANONIK: It is? Okay.

2 MR. LUTZ: -- after lunch. So, yes, we

3 did use that. We didn't make you collect it for no

4 reason. We did use it.

5 MR. STANONIK: All right.

6 MR. BROOKMAN: Jim Vaughan.

7 MR. VAUGHAN: Sorry, Jim. I'm a little

8 thick today. Going back, can you go back to the

9 insulation cost just real quickly? You say that the

10 cost of the material, the component cost was --

11 MR. BROOKMAN: On page 7, right?

12 MR. VAUGHAN: On page 7, yes.

13 -- was $1.50 a pound.

14 MR. LUTZ: That's for the blowing agent,

15 for the current blowing agents. That's what we were

16 given as a rough estimate, as an estimate.

17 MR. VAUGHAN: Okay, but the total

18 insulation then you show as being $1.00 a pound.

19 MR. LUTZ: Yeah.

20 MR. VAUGHAN: Okay.

21 MR. LUTZ: There's the other components,

22 the isocyanurates, the polyols, the catalysts. The

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1 weighted average comes up to that.

2 MR. VAUGHAN: Okay. Thank you.

3 MR. BROOKMAN: Yes, George.

4 MR. KUSTERER: George Kusterer, Boch Water

5 Heaters.

6 With the cost of design options, it shows

7 that the baseline is 125.56.

8 MR. BROOKMAN: Which page is that, George?

9 MR. KUSTERER: Page 9.

10 MR. BROOKMAN: Okay. Thank you.

11 MR. KUSTERER: And on page 10 you're

12 showing a manufacturer's cost of 125. Was there a

13 chart done for the design options, costs, and so forth

14 and so on?

15 MR. LUTZ: When they're all added

16 together?

17 MR. KUSTERER: Yeah.

18 MR. LUTZ: The total costs? Yeah, that's

19 coming.

20 MR. KUSTERER: Okay.

21 MR. LUTZ: Let me finish.

22 MR. KUSTERER: Well, you know, I figured

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1 maybe it would be easier just to put it alongside of

2 it so we could make a comparison rather than ruffle

3 pages.

4 MR. BROOKMAN: Charlie, do you want to ask

5 a question at this point?

6 MR. STEPHENS: Yeah, Charlie Stephens.

7 I just had one question, Jim. Given that

8 there are water heaters out there that reach the

9 energy factor levels that all of these design options

10 add up to at some point, did you also do some pricing

11 of what's on the market out there in the same markets

12 you got the prices for the baseline models for?

13 MR. LUTZ: We did. When we called the

14 distributors, we asked them for the prices of all the

15 water heaters they had for sale at the time. So, yes,

16 we do have those.

17 MR. STEPHENS: So we don't have any

18 results in terms of cross-checking what you arrive at

19 by building it up from costs compared to what's actual

20 retail out there?

21 MR. LUTZ: Not yet. We haven't done that.

22 MR. STEPHENS: Okay, okay.

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1 MR. LUTZ: We haven't done that.

2 MR. BROOKMAN: Okay. Jim.

3 MR. LUTZ: On installation cost, when we

4 were calling around to these almost 80 different

5 distributors, retail stores, from the ones that

6 offered an installation price, we got that from them.

7 It's about $160. This includes delivery, removal,

8 permit fees where those are included.

9 And for electric water heaters, it's the

10 same installation costs for all design options.

11 PARTICIPANT: Can you say that again?

12 Explain the installation costs again.

13 MR. LUTZ: When we called to like Home

14 Depot, Lowes, distributors, we would ask them for

15 prices of their water heaters, and if they installed

16 it, how much they charged for a typical installation,

17 and depending on the location, some places that

18 includes just the installation. Other places it

19 includes delivery and removal fees, permit fees if

20 those are added in. The average for that was $160.

21 PARTICIPANT: This is nationwide?

22 MR. LUTZ: Yes. And for electric water

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1 heaters, for the design options we're considering,

2 there isn't any differences.

3 MR. HILLER: And this is in a retrofit,

4 changing out an existing water heater?

5 MR. LUTZ: Yeah.

6 MR. HILLER: Carl Hiller from EPRI.

7 This is a retrofit costing, not a new

8 construction costing.

9 MR. LUTZ: I would assume so because when

10 we asked them, most water heaters go to retrofits. So

11 that would be it.

12 This is basically the result, the cost

13 efficiency table for electric water heaters, the

14 design options, the energy factors that we got by

15 building up, adding the design options one by one onto

16 the baseline model in the simulation program, the

17 total manufacturer cost -- George, there's your answer

18 -- and the total installed cost, which includes the

19 retail mark-up from the design option costs that we

20 got from GAMA and the consultants, and the

21 installation cost.

22 The annual operation cost is from the DOE

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1 test procedure. That's the 64.3 gallons per day, at

2 a national average an electricity price of 7.87 cents

3 per kilowatt hour.

4 Going through the same thing for gas fired

5 water heaters --

6 MR. BROOKMAN: Steve Nadel.

7 MR. NADEL: I'm going to ask a question,

8 Jim, and you can tell me whether you want to get into

9 it now, if you can go back to the previous slide, or

10 whether we want to discuss this in another portion of

11 the workshop.

12 I look at all your options, and basically

13 what this says, if I understood correctly, is that the

14 maximum tech. feasible is an energy factor of .908.

15 That's the highest option.

16 On the other hand, I look at the GAMA

17 directory, and I see hundreds, if not thousands, of

18 models that are .91, .92, .93, .94, even .95. How do

19 you equate those two things?

20 And first, do you want to get into that

21 now or is there another portion of the workshop to get

22 into that?

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1 MR. LUTZ: This is it. Terry is nodding

2 his head saying this is it.

3 (Laughter.)

4 MR. LUTZ: Two answers to that or maybe I

5 can let Terry.

6 MR. LUTZ: Well, this is Terry Logee from

7 DOE.

8 That's a very good question, and I don't

9 think that we have all of the answers, but when we

10 started to do this, we went to the manufacturers, and

11 we talked with them about their efficiencies of both

12 electric and gas, and we told them we were going to

13 use these -- were thinking of using the simulation

14 models.

15 In order to be able to build up design

16 options that perhaps weren't tested or we didn't have

17 test results for, we said, well, we had to use these

18 models, and so we've used the outputs, the energy

19 factors outputs of those models as estimates of the

20 energy factors.

21 And the models in the GAMA directory may

22 have other features or may have some things that might

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1 be proprietary; they may be just ways of putting it

2 together that we're not aware of, and so we're not

3 really able to verify whether, indeed, they're just

4 like what we have here or not.

5 So at this point we're sort of into that

6 mode of using the model output. I don't think that we

7 can claim that the model output is necessarily the

8 exact result, but Carl Hiller is probably going to

9 jump in and say that it's been tested a lot.

10 MR. BROOKMAN: Carl Hiller first and then

11 to Charlie Stephens.

12 MR. HILLER: Carl Hiller from EPRI.

13 I think the best way to understand that

14 apparent dichotomy is recognizing they're starting

15 from a standard glass lined steel tank as their

16 baseline, and they're doing things to that tank to

17 make it better.

18 When you look at the .92, .93, .95 tanks

19 listed in the GAMA directory, they're not like that.

20 They're not that kind of tank. They're a completely

21 different kind of tank. It might be a concrete lined

22 tank. They might be an all plastic tank. Their

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1 bottoms are substantially different. For example,

2 where the cold water comes in is different.

3 The Vaughan Manufacturing tank, for

4 example, the cold water comes in at the bottom of the

5 tank, not the top.

6 So to get to those higher levels, there

7 are significantly different construction details than

8 standard glass lined steel tanks.

9 MR. BROOKMAN: Charlie Stephens.

10 MR. STEPHENS: I might note also most of

11 the tanks that we have at .93 that all of our

12 utilities have been putting in for years now are

13 standard tanks. Every manufacturer has got one, and

14 I suspect they do look a lot like these, but I noted

15 in the outputs of the models, on page 68 for anybody

16 that has the document that was on the Web site at the

17 end of last week, you can look at the recovery

18 efficiencies that were derived out of the models, and

19 they all are at least one percent, if not more than

20 one percent, lower than the .98 that's assumed in the

21 DOE test procedure, and I suspect that at least some

22 of the difference is coming out of that.

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1 But if you take and adjust the model

2 without adjusting the recovery efficiency to .98, I

3 think they made other adjustments to the water heater

4 in the model rather than adjusting the recovery

5 efficiency. You're going to get a different answer

6 and a whole different, kind of an offset set of

7 results.

8 And I'm just trying to make sure that when

9 I look at what's out there in the marketplace -- I

10 think the .93 tanks that we're looking at in the

11 marketplace are probably the equivalent of design

12 option number five in terms of performance anyway. I

13 know they can achieve a .93, and if you adjust that

14 for recovery efficiency, they're probably about .917.

15 MR. BROOKMAN: So that's the adjustment.

16 That's what explains the dichotomy as Carl described

17 it.

18 MR. STEPHENS: Part of it anyway.

19 PARTICIPANT: No.

20 MR. BROOKMAN: No?

21 MR. STEPHENS: Maybe not. I mean, I don't

22 know where it's coming from. That's just one thing

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1 that I've seen.

2 MR. BROOKMAN: Jim.

3 MR. LUTZ: The recovery efficiency is an

4 output from the model. It's not an input. So you

5 can't adjust the recovery efficiency in the model.

6 We did not get model water heaters, take

7 them to the lab, test them very carefully, measure the

8 thickness of the insulation, measure heat flows in and

9 out of them, and then model that directly in the

10 simulation program. So I'm not sure where the

11 difference is coming from.

12 Part of it may be tolerances allowed in

13 the test procedure that the manufacturers report.

14 Some of it may be errors in the way we modeled the

15 program. Some of it may be things, bad assumptions we

16 made in the inputs we made to that program.

17 So we are looking for comments on this and

18 particularly hard, solid data that we can look at.

19 MR. BROOKMAN: Thanks for that

20 clarification.

21 Carl and to Mark.

22 MR. HILLER: Carl Hiller from EPRI again.

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1 Using your analogy, the .93 tanks that you

2 see in the GAMA directory are options six and seven on

3 that table, noting that the options listed only go up

4 to number five. They're not on that table.

5 MR. BROOKMAN: And the distinguishing

6 characteristics that would cause them to be six or

7 seven? You already mentioned some of them.

8 MR. HILLER: Yeah. For example, it might

9 be a plastic tank plus a special bottom, plus maybe

10 even more than two and a half inches of insulation to

11 get that energy factor.

12 MR. BROOKMAN: Charlie.

13 MR. HILLER: Or it might be a different

14 fitting like Vaughan uses.

15 MR. BROOKMAN: Charlie.

16 MR. STEPHENS: Charlie Stephens.

17 No, the tanks that are going in there are

18 pretty much just -- they're well insulated tanks.

19 That's about what it amounts to, with heat traps.

20 There's nothing special about those tanks that are out

21 there as tested. They're very similar to the tanks

22 we've got described here.

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1 It's just I think the difference must come

2 in simply between the DOE test procedure as tested by

3 somebody like ITS and what the model puts out. So

4 there's a difference between the real testing data

5 that comes out of the ITS testing to meet DOE test

6 requirements and what we're getting out of the model.

7 I really think that the tanks probably do look like

8 option number five.

9 If you were to take that exact tank and

10 run it through the model, you probably wouldn't get

11 .93. That's what you get by running the DOE test.

12 MR. BROOKMAN: Mark, can we finish on

13 this?

14 Frank Stanonik, and then I'll go to Mark.

15 MR. STANONIK: Frank Stanonik from GAMA.

16 Jim, you mentioned that the information in

17 here on recovery efficiency is an output of the

18 program?

19 MR. LUTZ: Yeah.

20 MR. STANONIK: All right. So it's saying

21 that, as an example, a unit or model with design

22 number three, design option number three, has an

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1 estimated energy factor of .901, and that unit would

2 have a recovery efficiency of 97.27. That's what the

3 simulation tells you.

4 PARTICIPANT: Where do you see the 97?

5 MR. STANONIK: I'm looking at what was

6 available on the Web site, "Results and Methodology,

7 Engineering Analysis, October 1998." April 24, yes.

8 MR. BROOKMAN: And we should probably also

9 note that design option three listed in the table on

10 page 12 says one, which is plus 2.5 inch jacket

11 insulation.

12 MR. LUTZ: So they add together.

13 MR. STANONIK: So. So that number is --

14 that simulation says this is the recovery efficiency

15 that gets you to that point.

16 MR. LUTZ: The features we modeled on that

17 tank give you that recovery efficiency and this energy

18 factor.

19 MR. STANONIK: Right, right. Okay. So

20 if, in fact, the actual recovery efficiency, let's

21 say, was something -- well, the default value is 98,

22 but if it was closer to 99, then, in fact, it would

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1 drive your energy factor up.

2 MR. BROOKMAN: Mark. Mark Krebs.

3 MR. KREBS: Mark Krebs.

4 Going back two comments ago of Carl

5 Hiller's, he asked if you knew if this was for

6 retrofits or new construction, and you said you

7 assumed it was for retrofits, I maintain that there's

8 an absolutely critical difference between the two

9 markets with significant implications, and you should

10 or perhaps must differentiate between those two.

11 In order to maintain some expediency here,

12 I can comment in detail in writing rather than right

13 now if you prefer.

14 MR. BROOKMAN: Thank you.

15 And the thrust of your comment, Jim, was

16 that because the sources that give you the cost

17 data --

18 MR. LUTZ: Would be supplying mostly the

19 retrofit market. So the installation costs would be

20 retrofit costs.

21 MR. BROOKMAN: That's the assumption.

22 Okay. So your comments would be welcome on that.

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1 Glenn Schleede and then Steve Nadel.

2 MR. SCHLEEDE: I've got a question. I

3 wanted to back up to the price data, but I can hold

4 off until you get through and then go back if

5 that's --

6 MR. BROOKMAN: Okay. Thank you. Thank

7 you.

8 Steve Nadel. Okay. Steve Nadel.

9 MR. NADEL: As I see it, listening to this

10 conversation, we've got an unexplained difference of

11 about .2, .02 energy factor points. I agree with

12 Charlie when I've looked at the data. I think Carl's

13 comment does apply to the .94s and the .95s, you know,

14 made by people like Vaughan and the Sheer Survivor,

15 and so on.

16 But as best as I can tell from all of the

17 manufacturers' catalogs, most of the major

18 manufacturers have your standard glass lined tank at

19 the .93 level. So we have a discrepancy of about .02

20 energy factor.

21 My question is: what is DOE proposing to

22 do to better understand that? And basically I'd like

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1 to hear what you propose and then maybe the rest of us

2 should chime in about other things that we can think

3 to investigate.

4 This is a very significant difference,

5 which is, I think, one of the fundamental issues

6 that's going to be affecting this rulemaking.

7 MR. LOGEE: Steve, I appreciate your --

8 MR. BROOKMAN: Terry Logee.

9 MR. LOGEE: -- bringing that up. I think

10 that this is exactly what this workshop is designed to

11 do, is to raise these kind of issues. I don't have an

12 answer for you right now other than to say, you know,

13 we've heard your comment. We acknowledge that there's

14 a difference, and we're going to look into it.

15 And as soon as we have it resolved, among

16 these other things that we're going to try to resolve,

17 then we'll revise these analyses or we'll at least

18 inform you of what our resolution is on it.

19 MR. BROOKMAN: And I'm sure the department

20 would welcome your comment or other comment that would

21 help to explain these differences.

22 Steve Nadel.

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1 MR. NADEL: I was going to suggest it may

2 be useful to put this item on the agenda for later in

3 the workshop. Specifically, I think it would be

4 useful over lunch to have various people talk about

5 various ways, possible theories, and possible things

6 that DOE or someone else could do.

7 You know, yeah, we can check whether, gee,

8 all of the .93s are plastic or cement. We can do up

9 a whole list of things to check, and we can advance

10 this process along by having people talk over lunch

11 and then getting back either this afternoon or

12 tomorrow with a list of things to check out.

13 MR. STANONIK: Jim, I just wanted to point

14 out the fact that I think part of this exercise was to

15 look at the incremental increase of the various

16 options here and to note that you were starting,

17 whether it's right or wrong, you were starting with a

18 theoretical .86, and if you added these factors, then

19 you would increase that by, you know, whatever levels

20 you see here.

21 There are certainly .86 water heaters out

22 there, but seeing as that's the minimum, there

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1 probably aren't a lot of them that are right at that

2 point. So a lot of the other numbers you're seeing in

3 the GAMA directory may be by virtue of the fact that

4 the baseline number, if you will, is probably in

5 reality -- a lot of the water heaters are actually

6 higher than that.

7 MR. BROOKMAN: Carl Hiller.

8 I thinking in a little bit we should be

9 moving on with this.

10 MR. HILLER: Carl Hiller from EPRI.

11 A question for the manufacturers, GAMA or

12 whoever here. Just to refresh my memory, what's the

13 allowed tolerance on your claimed versus tested energy

14 factor?

15 PARTICIPANT: Zero.

16 (Laughter.)

17 MR. BROOKMAN: I heard some anonymous

18 source say zero for the record.

19 MR. STANONIK: Three and a half percent.

20 MR. HILLER: So one could claim a .93 and

21 actually have a .908; is that correct?

22 MR. STANONIK: What were your numbers?

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1 MR. HILLER: Point, nine, oh, eight is

2 what they're getting here. That could be listed as a

3 .93 tank; is that correct?

4 MR. STANONIK: Without working that math

5 backwards, the numbers probably are close, but I would

6 characterize it a little differently. I mean, the way

7 we're running our program is to say if we get a result

8 within that range we think that that's indicative that

9 if we tested, you know, the appropriate population and

10 all of that, we would substantiate the claim, yes.

11 MR. BROOKMAN: Thank you for that

12 clarification.

13 Charlie.

14 MR. STEPHENS: Just one more though. I

15 mean we're going to have to resolve this issue one way

16 or another because what you're starting with here, if

17 the same three percent tolerance applies to the .858

18 up here, you know, then maybe that's a .828.

19 But the test procedure outputs, the energy

20 factors as delivered by the test procedure are the

21 things I believe that the standard is enforced by, and

22 I'm not sure how you can set a standard in accordance

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1 with this set of numbers and then test to a whole

2 different procedure that delivers a different scale of

3 results because what you've got here in the outputs of

4 the model is a rise in energy factor of .05, and in

5 theory, if you test the same water heaters to the same

6 procedures they're testing to now and list them in the

7 GAMA directory, you're going to get a .07, in theory.

8 That's the way it reads, and I don't know

9 how you -- if you're going to set the standard in

10 accordance with these numbers, then it seems to me

11 you're going to have to adjust the test procedure to

12 also deliver this same scale of numbers.

13 MR. BROOKMAN: We've noted already here

14 that we need to find someplace to address this issue,

15 but I'd like for us to move on pretty quick.

16 Larry, do you have something additional?

17 Larry Wethje.

18 MR. WETHJE: I was just wondering. One of

19 the things that might contribute to the discrepancy is

20 is there still a credit given for heat traps.

21 MR. STANONIK: No, that was not used.

22 MR. WETHJE: It's an actual test. Okay.

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1 MR. STANONIK: It's not that.

2 MR. BROOKMAN: Carl, a final comment and

3 then we're moving on.

4 MR. HILLER: Carl Hiller from EPRI.

5 I'd just like to point out, you know,

6 we're hitting on an issue here that we should keep in

7 the back of our minds that as you make a tank closer

8 and closer to 100 efficient, it's more and more

9 difficult in the test procedure to determine that

10 efficiency because you're talking about smaller and

11 smaller differences between tank levels.

12 And the same thing happens in the

13 modeling. The better the tank, the higher the overall

14 efficiency, the more and more difficult it gets to get

15 the last couple of percent accurately.

16 MR. BROOKMAN: Okay. Thank you for that

17 comment.

18 We're moving on to the next slide.

19 MR. LUTZ: Okay. We did the same

20 procedure for gas fired water heaters. These are the

21 costs of the insulation, the jacket, any of the foam

22 dams. On the left it's for the existing baseline. On

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1 the right it's what we call the analytic baseline

2 using HFC-245fa.

3 MR. BROOKMAN: Let me note that I heard

4 Jim say at the outset that he was interested in

5 comments on these cost figures, and I haven't heard

6 much, aside from the differentiation between the

7 presumed new market and the retrofit markets so far.

8 Keep going, Jim.

9 MR. LUTZ: These are different costs than

10 for electric water heaters. The tank is a different

11 size. There's a different geometry. You can't put

12 foam around the combustion chamber. That's why these

13 costs are different.

14 The next slide is cost of design options.

15 Again, the first two are the total costs. The

16 remaining ones are the incremental costs of the design

17 options. These are manufacturer costs.

18 You'll notice on the analytic baseline

19 we've added in the $35 estimate for the flammable

20 vapor ignition resistant design.

21 MR. BROOKMAN: Yes, James Ranfone. Please

22 say your name.

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1 MR. RANFONE: Jim Ranfone.

2 Just a question on the side arm heater

3 cost. Does that --

4 MR. LUTZ: That was provided by our

5 consultant.

6 MR. RANFONE: Okay. Does that have

7 electrical supply to it though?

8 MR. LUTZ: Yes, it does.

9 MR. RANFONE: Thank you.

10 Does that change your installation cost?

11 MR. LUTZ: Yes, it does.

12 MR. BROOKMAN: Yes, Frank Stanonik.

13 MR. STANONIK: Frank Stanonik with GAMA.

14 Since Jim mentioned it, it gives me the

15 opportunity. I just want to make sure everybody's

16 aware of it, that the one company that was out in the

17 market with a product that could be considered a side

18 arm heater has indicated back in probably early this

19 summer that, in fact, they were dropping that product

20 line.

21 So in case somebody says it's out there,

22 well, it is, but it isn't.

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1 MR. BROOKMAN: Jim Vaughan.

2 MR. STANONIK: Or won't be.

3 MR. VAUGHAN: Jim, can you answer why the

4 heat trap costs for the gas fired water heater are

5 lower than for the electric?

6 MR. LUTZ: I'll have to direct you to

7 Frank on that one. That was the data we got from the

8 manufacturers.

9 MR. STANONIK: I'm just a number cruncher.

10 (Laughter.)

11 MR. LUTZ: We used the data from --

12 MR. BROOKMAN: Don't shoot the messenger.

13 MR. STANONIK: Yeah, right.

14 MR. VAUGHAN: Just for what it's worth,

15 that's not logical. this does not compute. It's the

16 same fitting.

17 MR. BROOKMAN: Thanks for noting that. So

18 the data needs to be checked.

19 Any additional comments on this slide?

20 (No response.)

21 MR. LUTZ: Okay. Moving on to mark-up,

22 this is to go from the manufacturer cost to the retail

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1 price, did the same thing we did on electric, called

2 around to about 80 different suppliers of water

3 heaters, took a 40 gallon gas fired water heater, five

4 year warranty, no extra features, come up with 157.74.

5 Manufacturer cost from GAMA for the

6 existing baseline water heater, 137.61. That's the

7 average cost.

8 MR. BROOKMAN: I see George.

9 George.

10 MR. KUSTERER: I'm definitely in the wrong

11 business. George Kusterer of Boch Water Heaters.

12 (Laughter.)

13 MR. KUSTERER: On the electric cost, it

14 costs the manufacturer $125.56 to make. That's page

15 10.

16 MR. BROOKMAN: Thank you for giving us the

17 page number.

18 MR. KUSTERER: Retail is $188.18. Mark-up

19 is 1.5. Installation is $160.

20 Here you have a totally different product,

21 a gas water heater which should cost more for the

22 manufacturer to make, $137.61. However, retail is

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1 only $157. I think there's something wrong with that

2 number as the mark-up is only 1.15.

3 And as far as the installation costs,

4 since they have to deal with vent piping and so forth

5 and so on, the cost is lower than installing an

6 electric water heater. I think there's some problems

7 with these numbers.

8 MR. BROOKMAN: George, can you give us a

9 sense of what you think the numbers should be more

10 like?

11 MR. KUSTERER: Well, if you keep the same

12 mark-up of 1.15, why should we -- you know, why should

13 there be less of a mark-up for the manufacturer? It

14 costs us more to make.

15 As far as the installation costs, it's

16 probably off by about $25. So you know, I mean,

17 you're not looking at fair numbers here. These

18 numbers are way off.

19 MR. LUTZ: We had a big question about

20 these numbers. This is from calling around to stores

21 that sell gas fired water heaters, and this is what

22 the average price was reported.

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1 MR. KUSTERER: All right. I heard you

2 mention earlier calling around to stores who install

3 water heaters. In many states, Sears, Home Depot, and

4 those particular outlets cannot install gas fired

5 water heaters or oil fired water heaters because they

6 are not licensed.

7 Now, this may work well for the State of

8 California, but here in the mid-Atlantic from Florida

9 to Maine, it doesn't compute. It doesn't fly.

10 You're looking at HVAC people who are

11 installing gas fired and oil fired units.

12 So I don't know who you're calling or

13 where you're calling, but you're not calling the right

14 places for the right numbers.

15 MR. LUTZ: In the engineering report,

16 George, there's a listing of the cities that we

17 contacted retailers in for both the retail price and

18 the installation costs.

19 MR. KUSTERER: But how many of them are

20 HVAC people? Are they Sears, Home Depot?

21 MR. LUTZ: Yeah, they were typically those

22 stores that sell water heaters.

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1 MR. KUSTERER: Well, that's fine, and

2 selling them and installing them are two different

3 things. Again, we need to look at HVAC people. We

4 need to look at those type of people because here in

5 the East Coast, this is virtually what is installing

6 this equipment. It's not the Home Depots and so forth

7 and so on.

8 As far as your installation costs go, it's

9 just way out of --

10 MR. BROOKMAN: Are you suggesting with

11 those calls to those water heater suppliers that they

12 were actually doing the installation as well?

13 MR. LUTZ: That's what they said they

14 would do.

15 MR. BROOKMAN: That's what they said.

16 Okay.

17 I saw Terry Logee, and then, Len, I don't

18 want to lose you, and then to Charlie.

19 MR. LOGEE: Just a very quick follow-up.

20 George, could you clarify the $25? Did you mean $25

21 higher than what we had plus 25?

22 MR. KUSTERER: Yes, sir.

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1 MR. LOGEE: Okay. Thank you.

2 MR. BROOKMAN: And, George, since you're

3 talking of figure, do you have a figure for retail

4 price, what that's more like?

5 MR. KUSTERER: Typically it's got to be at

6 least, again, using the mark-up of 1.5, I would use

7 the mark-up of 1.5.

8 MR. BROOKMAN: Instead of 1.1?

9 MR. KUSTERER: Instead of 1.1. I don't

10 know where that figure came from.

11 MR. LUTZ: This was backed out the other

12 way around. We called the retail stores, asked them

13 what they sell them for. We asked the manufacturers

14 what it cost to make them. We divide the two numbers

15 and we get the 1.14.

16 MR. KUSTERER: Well, I guarantee you I

17 have a partnership in Home Depot, so my checking

18 account says, on a monthly basis. However, I have

19 not --

20 (Laughter.)

21 MR. KUSTERER: -- I haven't got a

22 certificate of ownership or partnership yet, but I can

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1 tell you where I come from, which is a small, little

2 farming community, and I go to Home Depot on a regular

3 basis, and I can tell you that when I have to buy a

4 gas fired water heater, the installation cost is at

5 least 20 percent. The purchase and installation cost

6 is 20 percent higher than that of electric.

7 So I'm not sure.

8 MR. LUTZ: The other thing I want to point

9 out about this is these are averages. We did see a

10 very, very wide range of both costs and installation

11 prices.

12 MR. BROOKMAN: So that's coming later,

13 that distribution?

14 MR. LUTZ: Yeah.

15 MR. BROOKMAN: Right. Okay.

16 Glenn Schleede and then Charlie Stephens.

17 MR. SCHLEEDE: Glenn Schleede.

18 That's the exact question. What I'm

19 looking for is can we get access to the raw data, not

20 necessarily identifying the retail stores, but where

21 it came from, and can we see the actual raw data on

22 both the gas and electric, on the retail costs, and on

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1 installation costs?

2 MR. LUTZ: Most of that is in the

3 engineering report that's available on the Web. If

4 you look in there, both the installation costs and the

5 retail prices that we used to get these average

6 numbers --

7 MR. SCHLEEDE: The raw data or the --

8 MR. LUTZ: -- are reported for about the

9 50 or 40 or 60 that we used. The actual numbers are

10 there.

11 MR. SCHLEEDE: Okay. Thank you.

12 MR. BROOKMAN: Charlie Stephens and then

13 back to George.

14 MR. STEPHENS: Yeah, I just wanted to

15 comment. Out where we are the installation by a lot

16 of these outfits is somewhat new, but they are

17 contracting with plumbers, plumbers, not HVAC people,

18 but plumbers to do all the work, and I can't attest to

19 the accuracy of the data, though looking at the

20 northwest data, the limited amount that I see there,

21 we're in the high end of the range, and I find that

22 our prices that are listed are pretty consistent with

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1 what I see.

2 I can't attest to other areas though.

3 MR. BROOKMAN: With what you see that's

4 listed here in this data?

5 MR. STEPHENS: Right.

6 MR. BROOKMAN: Okay. Thank you.

7 George.

8 MR. KUSTERER: I just calculated it out

9 using a mark-up of 1.5. You're coming up with 206,

10 $207 as opposed to 157, which I think is more

11 realistic.

12 MR. BROOKMAN: But we'll get to the actual

13 distribution a little bit later on.

14 Jim McMahon, a comment?

15 MR. McMAHON: I think there's a

16 misunderstanding here.

17 Jim McMahon at LBL.

18 I just want to make sure there's not a

19 misunderstanding. We did not generate retail price by

20 taking manufacturer cost times mark-up. That's not

21 what we did.

22 What we did was do a survey of what retail

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1 prices are.

2 MR. KUSTERER: Well, I can comment I have

3 never ever seen a 40 gallon gas water heater in Home

4 Depot anywhere, and I travel extensively, 50 states

5 plus Canada, for $157.

6 MR. BROOKMAN: That's helpful.

7 Michael McCabe, do you have a comment?

8 MR. McCABE: Michael McCabe with DOE.

9 George, your comments are well taken. One

10 of the reasons why this slide was put together or

11 these slides were put together in this fashion is that

12 we were very concerned and have significant questions

13 regarding these numbers. They do not make sense to

14 us, the difference in mark-ups, and your comments as

15 far as a suggestion as to the limitations in the data

16 that we received, I think, were well taken because it

17 will help us guide to develop a price figure that

18 would seem to be more reasonable.

19 This is one area that we have some

20 substantial questions about, and a discussion from the

21 parties here in response to Jim's presentation as to

22 how to get the price information, if there are other

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1 approaches to gather from the marketplace or maybe

2 from a completely different approach, we would

3 appreciate hearing that info.

4 MR. BROOKMAN: Additional comments before

5 -- Mark Krebs.

6 MR. KREBS: The first question you should

7 have asked is who's installing water heaters. To

8 think that the Home Depots of the world are installing

9 the bulk of the water heaters is probably a fairly

10 large assumption.

11 You know, I would think mainly when a

12 water heater goes out, the homeowner frantically calls

13 their local plumber, an independent plumber, or in the

14 case of new construction, it's the builders. So you

15 should at least be augmenting this information with

16 similar information for independent plumbers and

17 builders.

18 MR. BROOKMAN: Thank you.

19 Additional comments on these slides before

20 we keep going? Yes, Jim Vaughan.

21 MR. VAUGHAN: Just a quick comment. These

22 prices, Jim, these do include permits

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1 MR. LUTZ: That's in the installation

2 cost.

3 MR. VAUGHAN: That's in the installation

4 fee?

5 MR. LUTZ: Where the suppliers reported

6 that permits were required, we asked what they were.

7 MR. VAUGHAN: Because I think typically a

8 lot of times, again, the Home Depots of the world,

9 considering the source, there's been some real

10 discussion about whether or not they're actually

11 pulling permits in places, and I know that just from

12 here, I asked the gentleman from Oregon. Their

13 typical permit cost is $25. That can range as high as

14 $60 in the northeast.

15 And of the installation cost of $160, I

16 know that, for example, in the Boston area you can pay

17 60 bucks for a permit fee. So, you know, that's a

18 wide variable. That's all.

19 MR. BROOKMAN: Frank Stanonik.

20 But before you comment, Frank, Brenda

21 handed me a note that there are a few copies of the

22 engineering report and the life cycle cost analysis

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1 available here, and Charlie is showing some of the

2 data that is in that detailed report.

3 Frank.

4 MR. STANONIK: Well, first of all, being

5 one of those parties who's always kind of said in the

6 past rulemakings, "Well, just go out and ask people

7 what the price is rather than trying to guess," I

8 applaud the effort.

9 (Laughter.)

10 MR. STANONIK: For two reasons. I mean it

11 does take a lot of effort, and, in fact, it shows you

12 one end of, if you will, this business. You know, we

13 try and think of things analytically, technically,

14 logically, and then you find out some places logic

15 doesn't work or doesn't appear to work, but anyhow, I

16 applaud the effort.

17 But here comes the other foot.

18 (Laughter.)

19 MR. STANONIK: Or the other shoe maybe.

20 MR. LUTZ: Should I duck?

21 MR. STANONIK: Jim, in my going through

22 the engineering analysis, and I'm not sure if many

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1 people saw this, but there wasn't a single Bradford2 White model listed. Okay? Now, Bradford-White -- Rod

3 can verify this -- exclusively deals through the

4 plumbing trades. All right?

5 And on top of that, there's only a very

6 few Smith models. Now, Smith does a lot through the

7 plumbing trade, although not exclusively anymore.

8 Maybe. I don't know. I can't keep track all the

9 time.

10 But anyhow, so I think that there's a

11 possibility that the data you've collected to date is

12 a little leaning towards the -- what do you want to

13 call it? -- the mass merchandiser, the places that

14 would normally be called the do-it-yourselfers,

15 although now they probably push the installation by a

16 professional.

17 And so I've got a little concern because,

18 for the sake of discussion, let's just say that 50

19 percent of the water heaters being sold and installed

20 were going through these mass merchandisers or

21 whatever you want to call them and the other 50

22 percent were being handled through plumbers, and I

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1 don't know that those are real numbers. I have no

2 idea. Okay?

3 But right now the data you've got seems to

4 be weighed more just on the one aspect of it, and if

5 you've got the time and the resources -- and I realize

6 those are big "ifs" -- it might be worthwhile to

7 specifically aim some calls. You'd probably have to

8 go through Yellow Pages or whatever, but aim some

9 calls a plumbers who would specifically carry, for

10 instance, the Bradford-White line or specialize in

11 Smith line or whatever.

12 But I think, again, I'm glad you did this

13 because it tells you what's going on out there. I

14 mean, that's what the prices are, and you know, we all

15 get the Sunday inserts that show the Home Depots and

16 in this area the Hechingers and what they are charging

17 for water heaters, but I'm a little concerned we have

18 a slightly distorted picture because they're

19 significant, yes. They do sell a lot of water

20 heaters. They do install a lot of water heaters, but

21 so do the plumbers.

22 MR. BROOKMAN: George, you had a follow-up

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s c1 comment?

2 MR. KUSTERER: Yes. I agree with Frank,

3 and thank you very much for -- I'm a little brain dead

4 today. Why should today be any different than any

5 other day?

6 (Laughter.)

7 MR. KUSTERER: It's just that I'm

8 celebrating my ninth grandchild. So I'm very thrilled

9 about that.

10 But it's true. Many of us who manufacture

11 water heaters do not sell to the Home Depots. Like

12 the Bradford-White, we sell directly to wholesalers.

13 So we don't have an opportunity to sell to Home

14 Depots. Our particular products may cost a little bit

15 more than someone else's. So therefore, the numbers

16 are going to be skewed.

17 If you ant some raw data, I'm sure that

18 PHCC, who is a nationally, internationally recognized

19 plumbing, heating and cooling contractors association,

20 could give you some realistic numbers with regard to

21 the installation and mark-up and so forth and so on.

22 MR. BROOKMAN: Do they have a published

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1 price list or no?

2 MR. KUSTERER: PHCC is just an

3 organization. I can put you in touch with or I can

4 put Jim Lutz in touch with them, get that information

5 to him, but you can survey contractors throughout the

6 United States and Canada --

7 MR. BROOKMAN: Okay.

8 MR. KUSTERER: -- to try to get some

9 realistic numbers.

10 MR. BROOKMAN: Thanks, George. I'm sure

11 they'd welcome you putting them in touch.

12 And I've noted on the list of items or

13 issues that are emerging here to revisit the price

14 data from survey sources.

15 Let's keep going on with the slides.

16 MR. LUTZ: Okay. We've pretty much

17 covered the installation cost. I do want to note that

18 the installation costs that we got were essentially

19 the same for gas and electric.

20 There were some design options that we had

21 extra installation costs for on gas fired water

22 heaters. Where we increased the recovery efficiency

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1 above 76 percent, we went up to 78 percent. We

2 limited it to 78 and a half. About 51 percent of the

3 households will need to install Type B vent connector.

4 the cost for that, the weighted average cost of that

5 installation was $54.

6 For the design options that require adding

7 electricity, the side arm with an intermittent

8 ignition, the flue damper, those ones, about a third

9 of the households will require a new circuit because

10 they don't have an outlet near the water heater, and

11 the weighted average cost of that was $34.

12 This cost data was from a GRI report done

13 for the earlier proposed rulemaking.

14 MR. LOGEE: Jim, wasn't that cost data

15 corrected to '98 by the CPI?

16 MR. LUTZ: Yes, it was.

17 MR. BROOKMAN: That's Terry Logee.

18 Okay. James.

19 MR. RANFONE: Yeah, Jim Ranfone, GA.

20 You say the 33.90 is the average cost for

21 installing an electrical outlet is from a GRI report?

22 MR. LUTZ: I see Darrel trying to stand

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1 up. I want to point to him.

2 MR. PAUL: Yeah, I believe that number

3 came from our --

4 MR. BROOKMAN: Darrel, your name.

5 MR. PAUL: -- report, and that work was

6 done back around 1990. We recently updated the cost

7 of adding an electrical outlet as part of the range

8 rulemaking, and we submitted some comments, some

9 updated costs for that, and I believe the new figures

10 came out to be some -- and I don't have them right off

11 the top of my head -- but the new average value was

12 somewhere between 150 and $200.

13 So that number is going to be at least 50

14 percent higher.

15 MR. BROOKMAN: That last comment was from

16 Darrel Paul.

17 MR. PAUL: Darrel Paul, Battelle.

18 MR. BROOKMAN: Thank you.

19 Joe Mattingly.

20 MR. MATTINGLY: Joe Mattingly from GAMA.

21 I never understand why you average a cost

22 in a situation like that. Either you need it or you

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1 don't need it. Averaging just comes out to be kind of

2 an irrelevant number, a weighted average, doesn't it?

3 MR. LUTZ: Let me repeat that for the

4 engineering analysis, we were using average point

5 values to order the selection of design options and

6 the grouping of design options. This is not to try to

7 show the full range of costs or reasons, you know, and

8 which situations they might be higher or lower. This

9 is just to get an average cost.

10 MR. LOGEE: Just let me point out --

11 MR. BROOKMAN: Terry Logee.

12 MR. LOGEE: This is Terry Logee from DOE.

13 -- that average costs are easier for

14 people to see and understand. When we get to the

15 distributions and the life cycle costs, it's very

16 difficult to connect one from another and figure out

17 where you end up.

18 And so I think these -- we recognize

19 there's limitations with these, and we're weighting

20 them, but we did, indeed, use the full cost to add

21 electricity to any particular installation that

22 required it in this specific case.

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1 |1 So I think there's value in looking at the

2 averages.

3 MR. BROOKMAN: Kelly. Kelly Troncalli.

4 MS. TRONCALLI: Yeah, Kelly Troncalli with

5 Rheem.

6 Are you assuming that the plumber is going

7 to be doing the electricity or would you require a

8 licensed electrician to come out and do that? That

9 just seems low for an electrician to come out and do

10 it.

11 MR. BROOKMAN: Who can comment on that?

12 MR. LUTZ: We took this data from the GRI

13 report. I'm not sure whether that was assuming a

14 plumber or an electrician.

15 MR. BROOKMAN: Charlie Stephens.

16 MR. STEPHENS: Charlie Stephens.

17 I could speak for a lot of jurisdictions.

18 Most plumbers have a limited electrical license to do

19 that work, and most electricians have a limited

20 plumbing license, depending on what kind of thing

21 they're installing.

22 So in most states limited licenses for the

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1 purpose of installing these things that have at least

2 some minor appurtenance of the other fuel, if you

3 will, they show up and they have all of the licenses

4 they need.

5 So you don't call out two people. You

6 just -- the guy who comes has a limited license for

7 the other thing.

8 MS. TRONCALLI: I just know typically

9 where I'm from you have to have an electrician come

10 out and do one thing, and a plumber comes and does the

11 other.

12 MR. LUTZ: That's pretty backward compared

13 to the rest of the country.

14 (Laughter.)

15 MS. TRONCALLI: Alabama. It must be

16 Alabama.

17 (Laughter.)

18 MR. BROOKMAN: We'll excise that state

19 name for the record, not to be pejorative in any

20 respect in these.

21 Additional -- yes. Please say your name.

22 MR. HOSTELLER: Darrel Hosteller, Southern

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1 California Gas Company.

2 It's kind of an interesting discussion on

3 cost, but just to throw something else into the fire

4 here, so to speak, this morning on CNN they had a

5 discussion on home warranty companies, and I've seen

6 this happen before. The homeowner mentioned that

7 because she had purchased a home warranty, when their

8 water heater died a couple of days after moving in,

9 that they saved themselves $800, which was the cost

10 that was quoted to them for a new water heater under

11 the home warranty program.

12 And so there's a connection between people

13 under warranty issues and there's an impact in that,

14 I see, because typically those numbers are quite a bit

15 higher, and they get charged back and forth.

16 So how credible CNN is I'm not going to

17 comment on.

18 MR. BROOKMAN: Okay. Steve Nadel, and

19 then we're moving on with the rest of the slides.

20 MR. NADEL: Yes. Jim, you have this

21 comment here about installing a Type B vent connector.

22 Basically whenever the recovery efficiency exceeds

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1 effectively 76 or exceeds the base case, what's the

2 rationale and support for that?

3 MR. LUTZ: That in an existing venting

4 system, you need the flue products to have a high

5 enough temperature to get out of the chimney and to

6 keep the chimney dry, and in some installations a

7 single wall vent connector won't work, and so you need

8 to keep the combustion products, the flue products hot

9 enough.

10 MR. HOSTELLER: My question more is what's

11 the rationale for why 76 percent or 78 percent or 80

12 percent. How was the number chosen because this

13 number is even lower than the number you were talking

14 about before of 78 and a half percent?

15 MR. LUTZ: These numbers were from GRI

16 reports on recommended venting installation

17 situations, what the limits should be. We certainly

18 welcome and are looking for information to support or

19 change that data.

20 MR. BROOKMAN: Frank -- I'm sorry.

21 MR. LUTZ: That was the best that we could

22 find at the time on what venting installations should

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1 be at and what they should be, what technologies

2 should be used, what installation procedures should be

3 used for what levels of recovery efficiencies or flue

4 loss efficiencies.

5 MR. BROOKMAN: Frank Stanonik.

6 MR. STANONIK: Frank Stanonik with GAMA.

7 This is at least one example, and again,

8 I'm going to applaud the approach here because it

9 seems to me there certainly is some recognition of the

10 need for a margin of safety as opposed to driving

11 products to operate on the margin of safety, and I

12 think that this is a very reasonable thing.

13 You know, yeah, we all like to save

14 energy, but I think more importantly we don't want

15 anybody to get injured or worse, and I think that this

16 is a reasonable assumption.

17 MR. BROOKMAN: Thank you.

18 I want to make sure that we try to get the

19 presentation on oil fired in before lunch as well. So

20 I want to keep us moving along here.

21 George, did you have a comment?

22 MR. KUSTERER: George Kusterer, Boch Water

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1 Heaters.

2 Just one quick comment. Rather than using

3 efficiency as a criteria of 76 to 78, since you are

4 concerned with condensation and condensating

5 deteriorating the breaching, my suggestion would be to

6 go to temperature because you can have pieces of

7 equipment that are going to operate at 80, 82, 83

8 percent combustion efficiency and still have a high

9 enough stack temperature where you're not going to get

10 a condensating problem.

11 My suggestion would be to go to

12 temperature. Efficiency really has very little to do

13 with it.

14 MR. BROOKMAN: Thank you.

15 Final comments before we finish with these

16 slides?

17 Keep going, Jim.

18 MR. LUTZ: Okay. The next page shows how

19 we selected design options and which ones were left

20 out of the engineering analysis. The ones on the left

21 were selected. The ones on the right were left out.

22 We ordered them in order of payback. If a design

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* 1 option couldn't be applied or had too high of a

2 payback, it wasn't used.

3 This is the final table for the final cost

4 efficiency table for gas fired water heaters,

5 essentially the same as the electric, but with the

6 numbers and design options for gas fired water

7 heaters.

8 MR. BROOKMAN: David Goldstein.

9 MR. GOLDSTEIN: Yeah, David Goldstein,

10 NRDC.

11 I wanted to bring up a similar comment to

12 the one that we had on electric regarding the

13 correspondence between what's in the table for listed

14 energy factors and what's on the market.

15 I think it's somewhat of a problem that

16 there's a gap between about .59 and .66 on the table

17 here, given the fact that in California in the new

18 construction market, .60, .61, somewhere in that

19 neighborhood, is the standard issue water heater. In

20 other words, the builders find it's far more cost

21 effective as a way of meeting the building standards

22 to go to that level than to do anything else with the

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* s c1 structure of the building.

2 So we need to figure out what technologies

3 correspond to those energy factors and make sure that

4 those are represented in the analysis, as well, and

5 that goes back to the normalization question, to make

6 sure that the energy factors that show up here

7 correspond to what a product with that technology

8 would score running through the DOE test procedure as

9 opposed perhaps to what the real energy use would be

10 in the field.

11 MR. BROOKMAN: George.

12 MR. KUSTERER: I'm sorry for the

13 monopolization. George Kusterer, Boch Water Heaters.

14 If you look at the cost efficiency table

15 of gas fired water heaters and compare it to roughly

16 the electric water heaters, your annual operating

17 costs on the gas are about $200 lower than on

18 electric, but yet your payback is almost twice as

19 high. It just doesn't work out in numbers.

20 MR. BROOKMAN: Thank you.

21 Additional comments?

22 The next slide.

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1 MR. LUTZ: I want to finish with a request

2 for stakeholder comments.

3 MR. BROOKMAN: We've been getting some of

4 these as we've been going, but you can see the ones

5 that the department specifically noted there listed.

6 Frank Stanonik.

7 MR. LUTZ: More costs, more prices, more

8 installation costs, maintenance costs, and design

9 options, and they need them.

10 MR. STANONIK: Frank Stanonik with GAMA.

11 Jim, when we submitted the data, we did

12 also include an average data point as what the

13 manufacturer estimated or whatever the projections

14 were as to what kind of energy factor you would get

15 with the measure. Those numbers don't always track

16 with what you've got here.

17 So am I correct to assume that these

18 energy factors were derived from either the tank or

19 the WATSIM, depending on the fuel?

20 MR. LUTZ: Yes, yes.

21 MR. STANONIK: Okay.

22 MR. LUTZ: Part of it is -- there's two

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1 reasons. One is this normalization question. The

2 other is the design options from the manufacturers

3 were applied singly.

4 MR. STANONIK: Right.

5 MR. LUTZ: Not use of combinations.

6 MR. RANFONE: Jim Ranfone, American Gas

7 Association.

8 Just a question on the inclusion of the

9 electrical consumption in the annual operating cost

10 for the gas water heater. We used the options four

11 and five. I note that you do have the electricity

12 price down there. Did you also include that cost?

13 MR. LUTZ: Yes, we did. Thank you.

14 MR. BROOKMAN: Additional comments?

15 MR. KUSTERER: George Kusterer, Boch Water

16 Heaters.

17 Just, again, with the retail pricing on

18 the gas installation costs are way off.

19 Also, what I neglected to mention with

20 regard to installation costs, electric water heater is

21 basically very cut and dry. There is no testing

22 required. With regard to the installation of gas

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1 fired equipment, as well as oil, it is significant to

2 mention that most competent HVAC installers will now

3 do combustion efficiency tests. They will have to

4 test their gas pressure to make sure that the unit is

5 firing properly, that it is not over firing, and most

6 important, they will have to do a CO2 test. As we

7 know, CO2 has become increasingly a concern for just

8 about everyone living on this planet.

9 So, therefore, the installation costs

10 would also have to reflect that. You know, if the

11 Home Depots and people like that, the Sears who are

12 installing these things themselves, and a number of

13 these companies are hiring their own installers;

14 they're not performing these tests. This, again,

15 would add 25 to $50 to the installation cost.

16 As far as the mark-up on the gas, I think

17 you're way off. If you're going to compare apples to

18 apples, let's put the same mark-up on it, and

19 maintenance costs, obviously there is very little

20 maintenance cost with regard to electric. However,

21 with gas fired units, like any fossil fuel type

22 burning equipment, should be tested and checked on an

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1 annual basis, again, for safety, for monoxide, and so

2 forth and so on.

3 MR. BROOKMAN: Additional comments related

4 to the final slide for this segment, requests for

5 stakeholder comments?

6 Frank Stanonik?

7 MR. STANONIK: I apologize. It's like the

8 George and Frank show here.

9 And I'm trying, I guess to get a grasp for

10 the analysis. If we can go back to the cost

11 efficiency table for electric water heaters on page

12 12, and admittedly I'm going to look at this a little

13 different way, but I guess I want to understand why

14 that's either the wrong way to look at it or where the

15 problem is.

16 We look at three and four. All right.

17 Three is a standard tank with two and a half inches of

18 insulation, and then number four is number three,

19 except you switch to a plastic tank.

20 The difference in the energy factor there

21 is, let's say, nominally one point, 100 -- you know,

22 .01 in energy factor points, and the difference in the

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1 manufacture cost there is $27 roughly. All right?

2 So, on the one hand, I get barely a point

3 improvement. The cost to manufacture is 27 -- let me

4 do round numbers -- $30. Okay. I realize I'm

5 stretching a little bit.

6 And the change in annual operating cost,

7 I've save $2, and yet my payback only went up less

8 than two years? Something doesn't track there because

9 I keep reading that, and I'm saying I'm basically

10 getting minimal benefit. I've thrown another roughly

11 $30 cost into the product, and the payback is I've

12 saved $2 more. Why has my payback only increased by

13 a little under two years?

14 MR. LUTZ: I'm not going to try to do the

15 math up here in front of everybody, but I do want to

16 point out that the payback is relative to the analytic

17 baseline.

18 MR. STANONIK: All right, all right.

19 Okay. So all right.

20 MR. LUTZ: It's not between design

21 options. It's --

22 MR. WINIARSKI: I think the answer is it's

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1 not incremental.

2 MR. STANONIK: All right, okay, all right.

3 MR. WINIARSKI: It's all compared to the

4 same --

5 MR. STANONIK: Okay. The light came on.

6 Okay.

7 MR. BROOKMAN: Additional comments on this

8 segment?

9 Carl Hiller and David, come on up here and

10 get ready to do oil fired.

11 MR. HILLER: Carl Hiller from EPRI.

12 I'd just like to offer an observation

13 here. On the fossil fired or the gas options, there's

14 the analytic baseline which has the $35 assumed

15 incremental cost to meet the flammable vapor ignition

16 requirement, and right now none of us are being told

17 what that really is that meets that requirement.

18 I can envision that if whatever turns out

19 to work ends up, you know, requiring electricity, for

20 example, then the $35 probably isn't the right

21 analytical baseline increase. It could be something

22 more.

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1 If, for example, you had to have

2 electricity to solve the flammable vapor ignition

3 problem with some sort of an electronic sensor or

4 whatever, then that would have a strong impact on the

5 relative cost increase of some of the other options.

6 And I think we need to be aware of that.

7 It sounds to me like some of the other options and

8 their cost effectiveness are fairly dependent on the

9 flammable vapor ignition solution.

10 MR. LOGEE: This is Terry Logee from DOE.

11 Let me address that briefly. One of the

12 criteria that the Water Heater Consortium has in their

13 design prototypes is that they won't require

14 electricity to these designs, and the ball park or the

15 eyeball number of $35 they gave us take that into

16 consideration.

17 And as I say, as more information becomes

18 available, you know, we will make adjustments in our

19 analyses, but at this point in time, we're proceeding

20 with that assumption, that there's no electricity

21 going to be required for meeting the flammable

22 ignition test.

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1 MR. BROOKMAN: Comment?

2 MR. ECKMAN: Tom Eckman, Northwest Power

3 Planning Council.

4 I just want to ask the analysts up here,

5 Jim and Jim, I guess. It's my view that the

6 incremental cost is what's important here, and so the

7 differential, it's only important if there's a

8 differential in the installed cost, installation cost,

9 if the measure that you're installing compared to the

10 prior measure has a different installation cost.

11 Like you've got to have electricity in the

12 case of the electronic ignition or what have you to

13 the energy consumption; is that right?

14 MR. McMAHON: Yeah, that's correct.

15 MR. BROOKMAN: Jim McMahon. That's

16 correct.

17 Are we ready to go?

18 MR. WINIARSKI: I guess so. How much time

19 have I got here?

20 MR. BROOKMAN: You have about ten minutes.

21 MR. WINIARSKI: Okay. I'll be brief here.

22 MR. BROOKMAN: Now, we'll take as much

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1 time as we need.

2 MR. WINIARSKI: Sure.

3 MR. BROOKMAN: But once it gets to be

4 about 12:30, people start getting grouchy, I find.

5 MR. WINIARSKI: My name is David

6 Winiarski from Pacific Northwest National Laboratory.

7 I'll try and go over the oil fired water

8 heater analysis that you've got before you and is in

9 the engineering document.

10 Some key notes to discuss with the

11 analysis, the oil fired water heaters are a much

12 smaller market, by at least an order of magnitude than

13 either gas or electric water heaters. It's also a

14 more expensive product. That's possibly due to the

15 smaller market and also due to some of the particular

16 design components that are in an oil fired water

17 heater.

18 There was no readily available oil fired

19 simulation model. Oil fired water heaters require a

20 powered combustion, and none of the existing models

21 deal with that.

22 The design option performance for each of

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1 the given design options is basically based on some

2 engineering calculations for energy loss, some

3 assumptions about what would be the achievable

4 performance either in terms of reduction in standby

5 losses or an increase in recovery efficiency, and then

6 feeding those two numbers into a water heater analysis

7 model that consists of an equation based on the DOE

8 test procedure that converts essentially a UA or a

9 heat loss coefficient that's measured in the test

10 procedure and the recovery efficiency that's also

11 registered in the test procedure into an energy use

12 figure for that test procedure.

13 The cost data that's represented in this

14 analysis is based on some data from industry

15 consultants. My understanding is that not enough data

16 was presented to GAMA for them to pass it on to DOE

17 for this particular market, and some limited phone

18 surveys that we did in order to get first costs for

19 the baseline models.

20 The analytical model assumptions. Again,

21 there's both a baseline model and analytical model.

22 The baseline model assumed foam, and because of the

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1 change in the foaming agent to HFC, we provided an

2 analytical model along the same procedure that was

3 used for the gas fired units.

4 Basic model assumptions are shown here, a

5 32 gallon unit, 90,000 BTUs per hour fuel input rate,

6 282 watts electric consumption. Most of that is for

7 the powered blower. It's a foam insulation used for

8 the baseline model.

9 The energy factor and recovery efficiency

10 are those minimums or the energy factor is the minimum

11 required by DOE. The recovery efficiency is believed

12 to be what is typical for a model that would perform

13 at that energy factor.

14 From that a standby heat loss coefficient

15 is calculated using the WHAM model.

16 MR. BROOKMAN: Steve Rosenstock.

17 MR. ROSENSTOCK: Yes, Steve Rosenstock,

18 Edison Electric Institute.

19 I looked in the engineering analysis. It

20 said for the electrical consumption that the

21 assumption was a one-eighth horsepower motor for the

22 blower and pump.

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1 MR. WINIARSKI: The actual assumption is

2 not a one-eighth horsepower motor. It's the 282 watts

3 which appears to be typical. A one-eighth horsepower

4 motor is what is typical of what appears to be in

5 those blowers. It may vary slightly between blower

6 manufacturer.

7 MR. ROSENSTOCK: Well, okay, because the

8 reason I was saying that is for a one-eighth

9 horsepower motor, 282 watts seems awfully high, by

10 like a factor of two.

11 MR. WINIARSKI: A one-eighth horsepower

12 motor may be rather inefficient. It's a small motor.

13 MR. ROSENSTOCK: I know, but even with the

14 inefficiency, then there's also the load on the motor

15 as well that's going to make a difference, as well as

16 any sort of power factor consideration.

17 So, again, I just wanted to -- my comment

18 is that seems high for a one-eighth horsepower motor.

19 MR. BROOKMAN: Okay, Steve.

20 Let's let George comment and then we'll

21 keep moving on.

22 MR. KUSTERER: The Frank and George show.

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1 That number may be high for a one-eighth

2 motor, but you also have to take into consideration

3 that you have an ignition transformer. You also have

4 a controller, an operating control. So that could

5 probably account. It looks like it's a reasonable

6 number.

7 MR. BROOKMAN: Thank you.

8 MR. ROSENSTOCK: Thanks.

9 MR. WINIARSKI: I'm going to go on here.

10 The design modifications that were

11 considered for oil fired units were the addition of

12 heat traps to that baseline or analytic model,

13 increasing the jacket of insulation from one inches of

14 foam to two inches of foam, improving the flue

15 baffling inside the water heater, and gaining some

16 recovery efficiency improvement that way.

17 Increasing the heat exchanger surface

18 area, that to some extent is a catch-all an example of

19 which is the Boch turbo flu water heaters that

20 basically use an internally finned flue system to

21 capture more heat from the exhaust catcher.

22 And also the use of interrupted ignition.

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1 Typically these units on the baseline model would be

2 intermittent ignition. Interrupted ignition is a

3 system that's used on commercial applications, and

4 it's tending to find its way into residential

5 applications.

6 I'll skip over that. That's the WHAM

7 equation. It's described in the report a little bit,

8 and if we need to discuss it, we can discuss it later.

9 The modeling techniques were, again,

10 fairly simple. The analytical model would have the

11 same performance as described for the baseline model.

12 There is an increase in cost between a baseline and

13 analytical model due to the new foaming agents.

14 The analytical model plus the use of heat

15 traps, what we did is took the reduction in overall

16 heat transfer coefficient, UA, from the tank

17 simulations that were performed for gas fired water

18 heaters.

19 The design option two up there, the

20 addition of two inches of insulation, what we did is

21 break out the losses for that water heater into a

22 continuous loss and losses for when the flue is

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1 firing, losses from the flue when it's off. We

2 reduced the continuous loss of space upon some

3 engineering calculations, and again, that loss is only

4 for covering the tank, not the combustion chamber. We

5 did not model anything to do with the combustion

6 chamber for these units.

7 Design option three, we simply looked at

8 recovery efficiency being raised to 0.78 by the use of

9 the improved baffle.

10 Design option four, we looked at recovery

11 efficiency rates to 0.82. That's a number that

12 appears to be the high end for some of the turbo flue

13 models.

14 For the interruptible ignition design

15 options which were applied to both design options

16 three and four, the assumption is that the igniter for

17 the combustion is only on for 20 seconds in an

18 interrupted system each time the unit fires. That

19 compares to the intermittent ignition where the

20 ignition circuitry is running the entire time the unit

21 is firing.

22 From each of these design options we

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1 calculated an EF and an RE, and using the WHAM or --

2 pardon me -- using a UA and RE calculated the EF by

3 using the WHAM equation. Those values are shown here,

4 and any comments that we can get from manufacturers as

5 to if they're reasonable or not would be appreciated.

6 The cost impact is --

7 MR. BROOKMAN: Let's pause and see if

8 those figures do seem reasonable, if manufacturers

9 wish to comment on that. The EF is the energy factor.

10 The RE is the?

11 MR. WINIARSKI: Recovery --

12 MR. BROOKMAN: Thank you. And UA is?

13 MR. WINIARSKI: Overall heat loss

14 coefficient.

15 MR. BROOKMAN: Thank you.

16 Comments on these number?

17 (No response.)

18 MR. BROOKMAN: Okay. The cost data,

19 again, was obtained mostly from consultants who are

20 familiar with the gas fired water heater industry and

21 were examining the oil fired water heater industry to

22 try and develop these costs.

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1 The design options, again, is shown there.

2 The manufacturing cost for each design option is,

3 again, from consultants. The retail price for the

4 existing model was based on a limited survey of oil

5 fired equipment dealers.

6 The way that these units are installed is

7 not a home project. So you basically go to typically

8 an oil fired equipment dealer who would also sell you

9 the oil. We basically asked them for their full

10 installation costs and retail prices for the units on

11 the baseline model, and then using the mark-up that we

12 calculated between the retail price and the estimated

13 manufacturing costs, a mark-up of 3.2, we applied that

14 to all of the design options to come up with a total

15 retail price.

16 The annual energy cost was calculated

17 using WHAM and an energy consumption equivalent to

18 that provided by the DOE test method.

19 And what you show here is the simple

20 payback in years for that particular design option.

21 Again, these are comparable to the baseline model.

22 They're not marginal or incremental paybacks for each

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1 design option.

2 MR. BROOKMAN: Jim.

3 MR. RANFONE: Jim Ranfone.

4 What was the cost of oil that was used?

5 I don't see it here.

6 MR. WINIARSKI: It's in the report. I

7 don't have it here, Jim.

8 MR. RANFONE: The average cost.

9 PARTICIPANT: Seven dollars and fifty-two

10 cents per million BTUs.

11 MR. RANFONE: Thank you.

B ~ 12 MR. WINIARSKI: Again, the analysis was

13 fairly limited, and some of the particular concerns

14 that we have, the first one is the use of additional

15 insulation with existing burners. I know this has

16 been brought up before.

17 The assumption that we used here is that

18 in order to provide the additional insulation, one

19 would have to modify the burner itself. That would be

20 done by changing the length of the blast tube and the

21 oil nozzle that delivers oil to the combustion

22 chamber.

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1 There's a cost for that reflected in the

2 earlier slide for that design option and for all

3 subsequent design options for which you've got that

4 extra inch of insulation.

5 The baseline manufacturing cost and

6 manufacture to retail market assumed. I don't know if

7 we're going to get anymore information. It would be

8 helpful if we did on that baseline cost and then

9 calculate the mark-up accordingly.

10 You notice the mark-up for the oil fired

11 units was 3.2, considerably more than for either

12 electric or gas, and that affects the cost

13 effectiveness of all of the design options.

14 MR. BROOKMAN: Carl Hiller.

15 MR. HILLER: Carl Hiller from EPRI.

16 I note that the incremental cost of adding

17 heat traps appears to be about $15. How does that

18 compare with what was assumed for gas and electric?

19 I'm not sure. This is without

20 installation or with installation or what is this

21 number and how does that compare to gas and --

22 MR. WINIARSKI: Oh, I see what you're

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1 saying. What you've got there is the relative -- the

2 cost on a per -- the manufacturer cost of the heat

3 trap is something on the order of $4, but you've got

4 this 3.2 mark-up applied to it. I guess compared to

5 the mark-ups for -- probably twice as much in terms of

6 comparing the retail price on those to the retail

7 price for gas and electric.

8 MR. HILLER: What you're telling me is we

9 shouldn't put heat traps on oil fired water heaters.

10 We should give them away because it's far cheaper to

11 go buy one somewhere else than to buy it through the

12 oil fired water heater manufacturer.

13 MR. WINIARSKI: That could possibly be,

14 and that's part of the reason why I would like as much

15 input as possible on the cost data for this.

16 MR. HILLER: Just to clarify my position,

17 I mean, applying that mark-up across the board, you

18 know, appears to be creating some differences in

19 behavior, and I'm not sure that's a real effect. They

20 might really be able to get a 3.1 mark-up, you know,

21 320 percent mark-up on heat traps versus 15 percent

22 for the gas guys, but are we kidding ourselves here?

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1 MR. WINIARSKI: It's possible that we are

2 in terms of the fact that even at that rate they

3 appear to be cost effective. I'm not sure that that

4 matters, and in fact, in terms of the entire analysis,

5 if we do not get better cost data since this is what

6 we will proceed with, one may want to look at the

7 implications in terms of the efficiency improvement

8 that we're getting in terms of the final number

9 instead of the particular design options.

10 One of the problems with the oil fired

11 industry is that most of the existing manufacturers,

12 I believe, produce products well above the baseline.

13 MR. LOGEE: This is Terry Logee from DOE.

14 Carl raises an interesting issue with

15 mark-ups. I don't want to get into it now, but I

16 think I would like to revisit it perhaps later today,

17 especially if we have time.

18 There are alternative approaches to using

19 them. There's the question of should they be applied

20 at the same rate across all of the design options, and

21 so forth, and it would be worthwhile for the

22 department to hear this body's views on some of those

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1 approaches, those concerns.

2 MR. KUSTERER: George Kusterer with Boch

3 Water Heaters.

4 Again, I respect Carl Hiller and obviously

5 all of my colleagues here today, but let's compare

6 applies to apples. I mean if there's one million

7 electric water heaters out there and there's 750,000

8 gas fired water heaters out there and there's 5,000

9 oil fired water heaters out there, obviously the mark10 ups are going to be different.

11 I mean I don't want to put the electric

12 guys out of business, but anybody that wants to buy

13 windmills, I'll sell them to them.

14 I think we're entitled to a fair mark-up.

15 I mean if we sold as many gas fired water heaters as

16 everybody else, our mark-ups would be less.

17 MR. BROOKMAN: I thought also though the

18 thrust of Carl's comment was just questioning the

19 mark-up, I mean, questioning whether that ripple

20 should apply to something like heat traps.

21 MR. KUSTERER: Well, that's fine, but it

22 just seems like somebody's looking into my pocket, and

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1 I don't particularly appreciate it.

2 MR. BROOKMAN: Okay.

3 MR. KUSTERER: And I don't think this is

4 the forum for it.

5 MR. BROOKMAN: That's for putting a

6 limitation on the discussion.

7 (Laughter.)

8 MR. WINIARSKI: Anyway, I think that

9 covers it.

10 MR. BROOKMAN: Yes.

11 MR. WINIARSKI: If there's anymore

12 questions.

13 MR. BROOKMAN: Is that the end of your

14 slides?

15 Additional comments then on these slides

16 or on the previous. We've noted several things if we

17 have a chance to get back to them to take up after

18 lunch or tomorrow. We've noted to revisit screening.

19 We've talked about 78.5 is the recovery efficiency

20 number. There's a note about trying to notify people

21 in this room and others about changes, revisions, and

22 updates to the Web page.

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1 We've also noted the energy factor

2 discrepancies that we had a discussion on earlier both

3 for gas and for electric, and that prompted a

4 discussion about the tolerances that are built into

5 the GAMA numbers.

6 And also revisit price data from the

7 survey, and then the other thing we just noted was the

8 mark-up on oil fired to see if that's a discussion

9 that requires additional discussion.

10 Terry?

11 MR. LOGEE: It's not mark-up on oil fired.

12 It's mark-up approaches in general.

13 MR. BROOKMAN: Thank you.

14 MR. LOGEE: This is Terry Logee from DOE.

15 I wanted to correct the easel there. It's

16 not really mark-ups on oil fired. It's there are two

17 parts to the mark-up discussion, the overall approach

18 of using the manufacturer's cost and a retail price to

19 determine the mark-up or some alternative, and whether

20 the mark-up should be applied at the same rate or

21 level across all of the design options.

22 MR. BROOKMAN: I saw someone else. I saw

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1 Charlie and then Steve Rosenstock.

2 MR. STEPHENS: Yeah, Charlie Stephens.

3 I think my concerns can be characterized

4 with all of that as just trying to true up the

5 analysis methods that you've done on all three types

6 of water heaters with what's actually in the

7 marketplace today, both in terms of its performance in

8 accordance with DOE tests and its pricing because I

9 think in every case here, at least for the bottom two10 thirds of the measure list, we're talking about

11 product that exists. It's out there in the

12 marketplace now performing at those levels.

13 You can price it today, and it's probably

14 an upper limit on the price, given volume adjustments

15 that you'd have to make if it were the standard at

16 that level.

17 But I think DOE somehow needs to plan to

18 check the marketplace and the existing performance and

19 prices of those things performing at that level to

20 make sure that these two approaches somehow deliver

21 the same answer.

22 MR. BROOKMAN: Okay. Steve Rosenstock.

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1 MR. ROSENSTOCK: Yeah, just a quick one.

2 In terms of some of the design options, I notice there

3 were reductions in the electric usage in the oil fired

4 water heater, and there is a pump, the motor for the

5 blower and pump, as well as the igniter, as well as

6 the transformer, as well as the controls that double

7 check to make sure that in all of the design options

8 it came off of the 282 watts. Some of the savings

9 might not be coming off of the total 282 watts.

10 Again, I just wanted to make sure the

11 design option was going for the electrical components

12 of actually having impact rather than all of the

13 electrical components when not all of them are being

14 affected by the design upgrades.

15 MR. WINIARSKI: Yeah. If I understand

16 your question, basically the calculations for the

17 energy impact of changing the igniter test are

18 subtracted from the 282 watts. The 282 watts is

19 essentially the blower.

20 The 282 watts was the on cycle power use

21 of the blower, not necessarily just the fan.

22 MR. ROSENSTOCK: Okay. so --

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1 MR. WINIARSKI: So that each of those

2 calculations where you're calculating energy savings

3 for changing the -- to interrupt your ignition is

4 calculated independently of that, the blower itself.

5 MR. ROSENSTOCK: Okay. But you're saying

6 that one-eighth horsepower motor -- we'll talk later.

7 MR. WINIARSKI: We'll just talk later.

8 MR. BROOKMAN: Additional comments?

9 Stephen Nadel.

10 MR. NADEL: Dave, in response to someone's

11 previous comment, I took out my GAMA directory, and I

12 was just curious. How does all of your models relate

13 to products that are being produced? If I look at the

14 current version, I think the least efficient model now

15 being sold in the 32 gallon size is a .54. There is

16 nothing at your baseline, and basically just about all

17 of the models being sold are of efficiencies

18 significantly above here.

19 So is this more of a theoretical analysis?

20 MR. WINIARSKI: It's almost more of a

21 theoretical analysis. There's been no comparison back

22 to the performance, and I think that's predominantly

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1 a function of not having a terribly good baseline

2 model for these units.

3 I think that in terms of why the baseline

4 or why you're not getting the performances that you're

5 seeing in the field, you probably have different

6 losses from the combustion chamber and stuff that are

7 not accounted for in this type of analysis.

8 Again, we only looked at some minor

9 changes, for instance, changing the insulation around

10 the tank itself, not around the combustion chamber.

11 I think that has an effect.

12 The mass of the combustion chamber itself

13 has an effect on these numbers, but you're right.

14 There has been no back calculation for existing models

15 and comparing them and their features to what we've

16 assumed here.

17 MR. BROOKMAN: Additional and perhaps

18 final comments before we go to lunch.

19 David Goldstein.

20 MR. GOLDSTEIN: Yeah, just to clarify, it

21 would be our recommendation that that be done because

22 in states, they have often set efficiency standards

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1 without even knowing anything about the engineering

2 analysis, just looking at costs and efficiency levels

3 in the marketplace because that's the worst you can do

4 since there's no returns to scale of the more

5 efficient products, and they're probably marked up

6 ridiculously.

7 So anything that's cost effective there is

8 going to be cost effective under a standard scenario,

9 and just see what results you get out of that. Do it

10 both ways.

11 MR. WINIARSKI: Yeah. Part of the issue

12 is that to a large extent I think some of the more

13 efficient models that are out there are by

14 manufacturers that have a large fraction of the market

15 share.

16 There's also a number of very small

17 manufacturers for oil fired water heaters that are not

18 listed in the GAMA directory.

19 MR. BROOKMAN: Additional comments on this

20 presentation, this series of slides?

21 (No response.)

22 MR. BROOKMAN: I see none. It's now

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1 12:30. We're going to go to lunch.

2 MR. KUSTERER: Excuse me.

3 MR. BROOKMAN: Oh, yes, George.

4 MR. KUSTERER: We've got one page to --

5 MR. WINIARSKI: I showed it very briefly,

6 yeah.

7 MR. BROOKMAN: Do you wish to comment on

8 that, George?

9 MR. KUSTERER: Well, other than the fact

10 that the use of additional insulation with existing

11 burners, it's not applicable. Insulation and burners

12 have nothing to do with one another.

13 MR. BROOKMAN: George, take us to the page

14 number, please.

15 MR. KUSTERER: It's the last page.

16 PARTICIPANT: No number.

17 MR. KUSTERER: No number. Use of

18 additional insulation with existing burners. Oil

19 fired water heaters -- oil fired burners just there's

20 no insulation involved.

21 MR. BROOKMAN: Okay.

22 MR. KUSTERER: Other than that, everything

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1 seems to -- as far as where DOE would like additional

2 comments, I don't know. If you want to do that, we

3 can do that at a later date with the written comments.

4 MR. BROOKMAN: Thank you very much.

5 MR. KUSTERER: To facilitate the time.

6 MR. BROOKMAN: For those of you who wish

7 to have it, there is the attendee list that's

8 available over here at Brenda's table, and it's now

9 12:30. Let's start, that is, start at 1:30.

10 (Whereupon, at 12:30 p.m., the workshop

11 was recessed for lunch, to reconvene at 1:30 p.m., the

12 same day.)

13

14

15

16

17

18

19

20

21

22

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1 A-F-T-E-R-N-O-O-N S-E-S-S-I-O-N

2 (1:38 p.m.)

3 MR. BROOKMAN: So we have the attendee

4 list and the life cycle cost document over there at

5 Brenda's desk.

6 During the morning session we had a few

7 sidebar conversations going on in the back.

8 If you're going to have a protracted

9 conversation, please take it outside. We want to keep

10 it as much focused on the work here internally as

11 possible.

12 So are we ready to go? Who is presenting

13 now? Jim McMahon?

14 So we had gotten into a lot of ground this

15 morning, covered a lot, and so if we can keep on with

16 it this afternoon, I think we're going to be in good

17 shake.

18 Our first presenter is Terry Logee,

19 followed by Jim McMahon.

20 MR. LOGEE: Actually I'm mostly going to

21 introduce Jim McMahon, whom probably most of you know,

22 and my purpose is we need to return just briefly to

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1 the payback question and issue between the difference

2 between the payback on gas and electric water heaters,

3 and Jim McMahon is going to hopefully clarify that for

4 us.

5 MR. McMAHON: Thank you, Terry.

6 There was a question raised this morning

7 about the validity of the paybacks, and I think there

8 were two issues that may have been confusing, and I

9 want to very quickly address those two things and see

10 if we can clear it up.

11 These numbers are correct for the numbers

12 that are in there. I understand the issue is about

13 possibly getting better data for some of the inputs.

14 That's fine.

15 What I have up here is page 12 of the

16 handout you got this morning, the electric water

17 heater cost efficiency table.

18 Two things. Number one is the payback is

19 calculated always compared to the analytic baseline.

20 These are not the incremental paybacks compared to the

21 previous design option. They're always compared to

22 the analytic baseline, and that's one question that

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1 came up. So that's how you get the numbers on the

2 right.

3 The second thing is there was a question

4 about why it was that the paybacks were lower for

5 electric water heaters even though electricity has a

6 higher operating cost than gas, and that is correct.

7 A simple example. If you go from the

8 analytic baseline to the heat traps, your total

9 installed cost increase is about $6. It goes from

10 $352 up to 358. The operating cost savings are about

11 $7. So you get approximately a one year payback.

12 That's right.

13 When you go to gas, since the operating

14 costs are much lower -- they're roughly half of what

15 they are for electricity -- your $6 increased cost is

16 divided by a $3 savings in operating costs because gas

17 is cheaper. Therefore, your payback is twice as

18 large, two years instead of one year.

19 MR. BROOKMAN: Questions following on

20 Jim's brief explanation?

21 (No response.)

22 MR. BROOKMAN: Okay. I don't see any.

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1 MR. KUSTERER: George Kusterer with Boch.

2 I'll reserve my comments in written

3 documentation. It would take too long to explain.

4 MR. BROOKMAN: Thank you. Thank you.

5 Other questions?

6 (No response.)

7 MR. BROOKMAN: Okay. So then here we go.

8 MR. McMAHON: Okay. We're going to move

9 into the agenda item life cycle cost analysis. I'm

10 going to go through the first few slides, and then

11 turn it over to Jim Lutz for the details.

12 The role of life cycle cost analysis in

13 the process is to help estimate the economic impact of

14 new standards on consumers. The major inputs are the

15 engineering analysis, in particular the GAMA data, as

16 well as the additional work that's done to get the

17 costs and the retail prices all the way up to

18 installed costs for consumers as a function of the

19 different design options.

20 The other input that's listed here is the

21 LB&L water heater database, which was used to get the

22 retail prices for the baseline unit.

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1 MR. BROOKMAN: Let me -- pardon me, Jim,

2 for interrupting.

3 MR. McMAHON: Certainly.

4 MR. BROOKMAN: The sheets, the slides that

5 Jim is working off of are entitled "Residential Water

6 Heater Efficiency Standards." They list Jim Lutz's

7 name on the front. It's the life cycle cost analysis.

8 There, that one. Thank you. I wanted to make sure

9 everyone had that.

10 MR. McMAHON: Okay. Page 2 of that sheet,

11 I've gone through the inputs. What we get out of it

12 is information that's useful to the department in

13 selecting trial standard levels. There's often a lot

14 of attention to the minimum life cycle cost design

15 option.

16 Some of the outputs are useful the

17 manufacturer impact analysis, in particular, the

18 relationship of the costs to the efficiencies.

19 And finally, the retail price as a

20 function of efficiency is an important input to

21 calculate the national energy savings.

22 On the next page, methodology. We're

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1 doing everything on spreadsheets now. There are

2 different spreadsheets for the different fuel types.

3 There's one for electric and one for gas available

4 from the DOE Web page.

5 Within the spreadsheets, there are five

6 major modules and supporting data sheets, and we'll go

7 into those in detail shortly.

8 The other important feature of this

9 analysis compared to previous years is the exhaustive

10 treatment of variability of uncertainty, and we'll go

11 into that.

12 The next page --

13 MR. BROOKMAN: Steve Rosenstock.

14 MR. ROSENSTOCK: This is Steve Rosenstock.

15 Yeah, have those spreadsheets been posted

16 on the Web site? I couldn't find them last Friday.

17 MR. LOGEE: Terry Logee.

18 Steve, I got your phone call this morning.

19 I think I had left. You just didn't catch me on

20 Friday. I believe we posted them, but it was, I

21 think, later Friday, but I could be wrong. I didn't

22 have time to check this morning.

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1 MR. ROSENSTOCK: Neither did I.

2 MR. LOGEE: They're supposed to be up

3 there or will be posted today.

4 MR. ROSENSTOCK: Thank you.

5 MR. McMAHON: Okay. In terms of

6 implementing the life cycle costs, we're using Excel

7 spreadsheets with a commercial add-in that's called

8 Crystal Ball. It's a product you can buy.

9 What Crystal Ball gives us is the ability

10 in each cell of the spreadsheet to put a distribution

11 instead of a single value.

12 All of the inputs are probability

13 distributions, and instead of conducting a life cycle

14 cost for the average consumer in the country, we

15 typically do 10,000 calculations.

16 The reason, 10,000 is more or less an

17 arbitrary number. We want to have a large enough

18 number that we're capturing all of the variability and

19 all of the uncertainty in the different distributions,

20 but something that's computationally trackable and

21 doesn't take too long.

22 In each calculation the values are

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1 selected from each of the input distributions. So if

2 we have two variables that have distributions on them,

3 for example, the manufacturer cost and the number of

4 gallons of hot water that are used, in each sample we

5 will draw from that population one from the

6 manufacturer cost and one from the gallons of hot

7 water. So we're doing all of the possible

8 combinations that make sense.

9 Therefore, the results are not a single

10 result. You don't get a single life cycle cost number

11 in dollars. What you get is a distribution of results

12 that reflect the 10,000 different conditions that

13 we've examined, and you'll see an example of that.

14 Again, different tank sizes, household

15 sizes, temperatures, and everything else are all

16 captured in those distributions.

17 Page 5, variability and uncertainty. I

18 just wanted to find very quickly the difference

19 between those two. This is the way that I think about

20 them.

21 Variability is when the value depends upon

22 something else. It's not that it's unknowable. For

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1 example, you can do a survey and find out what the

2 distribution looks like, but it just means that things

3 vary from house to house.

4 An example, here is the average amount of

5 hot water use daily. It depends upon the number of

6 people in the household. If you go out and take a

7 survey and count people, you can find out how many

8 people there are in the households, but you have to

9 account for the fact that it's different from house to

10 house.

11 Uncertainty is different. Uncertainty is

12 incomplete information, and an example there is the

13 thermostat set points. There is not a good survey or

14 measurement been taken of what the set points are on

15 water heaters in each of the households. We know that

16 it varies a lot from some limited surveys that have

17 been done, and it's not well characterized.

18 So what we do is put in the best

19 assumption that we can make for what that range looks

20 like, and we're happy to have additional input if

21 there's additional information to have to refine that.

22 Page 6, I'm not going to belabor this, but

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1 Crystal Ball is very flexible. We can use any kind of

2 distribution that the data supports, and I'm not going

3 to go through and define all of these, but these are

4 some of the ones that we use.

5 The triangular was mentioned by Ed Barbour

6 this morning in the context of the manufacturer costs.

7 I guess I want to make sure that you understand we are

8 not arbitrarily assuming some academic functional form

9 and applying it to everything. We're being driven by

10 the data and using whatever distribution makes sense

11 from that particular set of data.

12 I'm going to turn this over to Jim Lutz

13 now, who's going to talk about the details unless

14 there are other questions now.

15 MR. LUTZ: These are the five major

16 modules that we use in the -- I'll use this instead.

17 It always helps to turn the on switch.

18 Use five major modules in the spreadsheet.

19 Start with hot water use down at the bottom, which

20 depends on the household. You select households from

21 the RECS '93 data set. From there we calculate the

22 energy use. From the energy use we calculate the

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1 operating cost. The equipment costs are brought in,

2 and then we calculate the life cycle cost payback.

3 Now, for the hot water use, it depends on

4 the number and age of people in the household, the air

5 and water temperatures, tank size, appliance, if

6 anybody's home during the day.

7 This is from a study done by Gilbert

8 Associates for EPRI, 1985, 1980, something like that.

9 MR. HILLER: It's pretty old data now.

10 MR. LUTZ: They covered about 110

11 households from ten utilities spread throughout the

12 country. At LB&L we extended it to cover households

13 that did not have clothes washers or dishwashers and

14 a couple of other minor cases.

15 For the households we use RECS, which is

16 residential energy consumption study done by the

17 Energy Information Administration. We're using the

18 1993 data.

19 Take actual households. We only used

20 households that had their own individual water heater

21 of one of the gas, electric, or oil.

22 The reason we did this was we wanted to

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1 get real households. So we had a real mix of people,

2 climate, fuel type, energy price. If you just do

3 random distributions, you can get things like

4 preschoolers living by themselves, things like that

5 that don't make sense.

6 For temperatures, we took the air

7 temperature from NOAA, and the inlet temperature we

8 calculated on an annual basis as the annual air

9 temperature plus two degrees Fahrenheit.

10 From the inlet water temperature down at

11 the bottom, we calculate the hot water temperature.

12 This is some survey data from the California Energy

13 Commission study, and you'll see there's a very wide

14 spread on it. So we add an air factor of plus or

15 minus 13 degrees to what we calculate to try to get

16 the range of distribution.

17 The result of this --

18 MR. BROOKMAN: Carl Hiller.

19 MR. HILLER: Carl Hiller from EPRI.

20 I understand, I think, how you got these

21 temperatures, but why and what are you going to do

22 with that?

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1 MR. LUTZ: Okay. There's two reasons.

2 The amount of hot water a household uses depends to

3 some degree on how hot the water is and how cold the

4 cold water is. So we're trying to capture that

5 effect.

6 You're looking lost.

7 MR. HILLER: Does this mean that in the

8 WATSIM code you're changing the set point

9 temperature --

10 MR. LUTZ: No.

11 MR. HILLER: -- with the time of year or

12 what?

13 MR. LUTZ: No. Let me step back. We did

14 not use WATSIM for the life cycle cost. We felt that

15 would be too difficult, and there's too many inputs

16 that we didn't have well characterized. So we used

17 the WHAM equation, which is essentially WAT simple

18 that Dave talked about, because we can implement it in

19 a spreadsheet.

20 MR. BROOKMAN: And, Jim, say it again.

21 Why do you show -- what is the benefit of showing the

22 water temperature range that is shown here?

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1 MR. LUTZ: Both the amount of hot water

2 and the energy used to heat the water will vary

3 depending on both the cold water inlet temperature and

4 the hot water temperature.

5 So we're trying to capture that

6 variability.

7 MR. HILLER: Is this suggesting, for

8 example, that you're changing your set point from

9 summer to winter as your temperature changes?

10 MR. LUTZ: No, no. We're taking an

11 average. We're doing all of the calculations on an

12 annual basis, but the average annual inlet temperature

13 in Miami is very different than the average inlet

14 temperature in North Dakota.

15 MR. BROOKMAN: That's what you'd apply to

16 the distribution, that average temperature. Yes?

17 MR. LUTZ: No.

18 MR. BROOKMAN: No.

19 MR. LUTZ: That gives us an average inlet

20 temperature, the cold water temperature on the chart.

21 There's this equation that says as the cold water gets

22 colder, for every degree the cold water gets colder,

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1 the hot water average is a half degree warmer. People

2 set it warmer.

3 But then there's this plus or minus 13

4 degrees which tries to capture the random spread in

5 temperatures.

6 MR. HILLER: So, for example, if you were

7 doing an analysis in Florida versus one in Alaska, you

8 would use an average hot water set point off of this

9 curve for the average entering cold water in Florida,

10 and then you would --

11 MR. LUTZ: Calculate the hot water

12 temperature.

13 MR. HILLER: The temperature rise would be

14 that temperature minus the average entering cold water

15 temperature.

16 MR. LUTZ: Right, and then there would be

17 this distribution because any survey you do of hot

18 water temperatures shows that people use -- even

19 though the tanks are set at 120 from the factory, you

20 get out in the field and plumbers, homeowners,

21 everybody changes them around. There's a very wide

22 spread. We're trying to capture that spread in

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1 addition to regional differences.

2 MR. BROOKMAN: Okay. So that's the

3 difference in the set point that accounts for the

4 majority of that error figure. Yes? Yes.

5 Okay. Frank Stanonik.

6 MR. STANONIK: Well, Jim said something

7 that triggered a question here. What's the vintage of

8 this data?

9 MR. LUTZ: This is '84 to -- houses built

10 in '84 to '88, and unfortunately it's limited to

11 California households. We are looking for better data

y* 12 sources.

13 MR. STANONIK: All right. So I guess just

14 recognizing that it is data from ten years ago, I'd

15 just suggest some caution as to any kind of general

16 statements to what extent people are tinkering with

17 their thermostats that are being set at 120.

18 I don't doubt it happens sometimes, but I

19 would disagree with you as to what degree that

20 happens.

21 MR. BROOKMAN: Terry Logee.

22 MR. LOGEE: Terry Logee from DOE.

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1 Frank, could I ask you to clarify your

2 statement? You mentioned set point at 120, and I

3 think that's important for the record here.

4 MR. STANONIK: Well, the electric water

5 heaters leave the factory; most of the electric water

6 heaters, residential, leave the factory today with the

7 thermostat set at 120, and admittedly I don't have a

8 good sense of how many of those get subsequently

9 adjusted in the field, but I have a good sense that a

10 lot of them don't, whatever a lot is.

11 And likewise with gas water heaters,

12 granted the final setting in a sense becomes part of

13 the installation process, but there's a lot of

14 information on that gas water heater that suggests

15 setting the water heater at 120, and there's a lot of

16 those installations that will be adequately serviced

17 with gas water heaters set at 120.

18 You know, you're just kind of saying that

19 a lot of them get changed.

20 MR. BROOKMAN: A lot of people wish to

21 comment. Let's set Jim McMahon from LBL follow on

22 first, and then I saw Charlie and George and Carl.

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1 MR. McMAHON; Frank, we'd be very

2 interested in any data that you have or even a

3 suggestion. If you think this ought to be 120 with no

4 uncertainty, that's fine, or if you think it ought to

5 be 120 with only a high side uncertainty, any comment

6 you can provide will be helpful.

7 MR. STANONIK: We'll try and help you with

8 that.

9 MR. BROOKMAN: Charlie.

10 MR. STANONIK: Because I recognize there's

11 not a lot of hard data.

12 MR. STEPHENS: Charlie Stephens.

13 We have some, and the range that typically

14 has been seen in all of the evaluations we've done in

15 the last three years is 132 to 136. That's the actual

16 hot water temperature coming out of the water heater.

17 MR. LUTZ: Charlie, is that the average of

18 your study or the range?

19 MR. STEPHENS: That is I would say 70

20 percent -- I mean, this is coming off the top of my

21 head here -- but about 70 percent, a little more than

22 two thirds of them were in that 132 to 136 range.

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1 There were some on either side of it. Mine was 146,

2 you know, when I checked mine, but that's not the set

3 point per se. That's the temperature of the water

4 coming out of the water heater, and it didn't

5 correlate always very well with whatever was set on

6 the thing.

7 And the other thing is that gas water

8 heaters don't have a temperature on them, most of

9 them. They just have a valve, you know, up-down, up10 down, and there's no real numbers on there in a lot of

11 cases.

12 MR. STANONIK: Well, yes, it's true

13 there's no numbers, but there are certain defined

14 identified points that correspond to a number. That's

15 required by the standard.

16 MR. BROOKMAN: That was Frank Stanonik.

17 George, I saw you first, and then Carl.

18 MR. KUSTERER: I'm sorry, Carl. George

19 Kusterer, Boch Water Heaters.

20 I remember a number of discussions that

21 we've held right here in this room in previous

22 workshops dating back to as far back as I can

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1 remember, and at that point we wanted to be very

2 cautious with regard to the set points, again,

3 promoting 120 degree water simply because of the

4 number of scalding issues that have arisen in the last

5 several years.

6 Also, many of the manufacturers -- I can't

7 speak for my colleagues, but I know for a fact many of

8 the manufacturers have requested redesigned accustats

9 or devices which limit the water temperature to 120,

10 130 degrees. Many manufacturers will have them set

11 leaving the factory, and they can't be adjusted,

12 supposedly can't be adjusted in the field.

13 I'm also concerned about the average inlet

14 water temperature. Anything north of Virginia, you're

15 looking at 50, 55 degrees. Yet I'm seeing numbers

16 here at 75 degrees, and unless you guys are piped into

17 a geyser, I don't really see that kind of a number.

18 I would be very cautious with this

19 particular chart, especially with the high set point.

20 Again, on an average, you will see gas fired water

21 heaters, oil fired water heaters producing anywhere

22 from 120, 125. Anything over 130, you are looking at

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1 a liability problem.

2 I'm seriously concerned about that number,

3 and going back to 1994, there was a tremendous amount

4 of discussion right here in this room for a number of

5 hours dealing with the set point, that it should be

6 lowered and should be reduced, and I believe we were

7 all in agreement.

8 MR. BROOKMAN: Carl Hiller.

9 MR. HILLER: Carl Hiller from EPRI.

10 I would suggest that what this kind of

11 scattered data really reflects, rather than some

12 slightly sloping curve as a function of -- you know,

13 set point temperature as a function of water

14 temperature is really probably a variation of what

15 your installers are doing when they put the thing in.

16 It may be a little bit of setting the turn on

17 temperature because of the dead band issue on the

18 thermostat. I doubt that there's very much of an

19 effect of a conscious decision to set a temperature to

20 something. It's just what the installers do so that

21 they insure themselves they're not being called back

22 to readjust it.

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1 MR. BROOKMAN: Frank Stanonik.

2 MR. STANONIK: Just one last thing.

3 Charlie was very clear that the data they had is they

4 were measuring the outlet water temperature and didn't

5 necessarily look or check what the set point was.

6 MR. STEPHENS: We did check.

7 MR. STANONIK: Oh, you did check? Okay.

8 MR. STEPHENS: Oh, yeah, we knew, and

9 there wasn't any correlation.

10 MR. STANONIK: Okay.

11 (Laughter.)

12 MR. STANONIK: That raises --

13 MR. BROOKMAN: Charlie says there was no

14 correlation. Use the mic, Frank.

15 MR. STANONIK: Okay, but what that does is

16 I just want to confirm that the data in your table

17 here -- are we, in fact, talking -- on the Y axis

18 where you have hot water temperature, are we actually

19 talking about the set point or what was measured

20 coming out of the outlet?

21 MR. LUTZ: What was measured coming out of

22 the outlet.

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1 MR. STANONIK: Okay. So it's --

2 MR. LUTZ: Because what we've --

3 MR. STANONIK: So it's not necessarily set

4 point.

5 MR. LUTZ: No. What we're trying to

6 capture in this whole analysis, and if I'm getting

7 this much discussion on the first slide, I'm sort of

8 worried about the rest of them.

9 MR. BROOKMAN: Let's keep moving here.

10 MR. LUTZ: But what we're trying to

11 capture here is the variability, and where we don't

12 know, try to represent the range of how people really

13 use hot water.

14 MR. BROOKMAN: Let's move on to the second

15 slide and see what happens.

16 Terry Logee.

17 MR. LOGEE: Just one final comment. The

18 department would really like to set this to rest and

19 would really like to reiterate what Jim McMahon

20 offered. Should we use one fixed set point

21 temperature with perhaps some variability about that

22 set point, or should we continue to use this curve?

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1 And I think we'd like to have, you know,

2 specific comments to that effect in your written

3 comments.

4 Thank you.

5 MR. BROOKMAN: Francine, would you like to

6 make a comment?

7 MS. PINTO: No, I just want to get put on

8 the list.

9 MR. BROOKMAN: Okay. Yes, I will. All

10 right. Back to the list.

11 George?

12 MR. KUSTERER: George Kusterer with Boch.

13 Just one correction then. Then the set

14 point should be eliminated, taken out and put actual

15 temperature measured, not the set point of the

16 accustat or the controlling device.

17 MR. LUTZ: Okay. From the RECS data that

18 we used, the sample of 10,000 households that reflect

19 real households according to NEIA survey, the number

20 of people using the EPRI equation on hot water use in

21 each of those households, we calculate average daily

22 hot water use as gallons per day. For households with

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1 electric water heaters, it's 44.3. For households

2 with gas fired water heaters, it's 48.9.

3 Most of this difference is coming from the

4 difference in the size of households, the number of

5 people that live in the households, with gas fired

6 water heaters compared to the size of households with

7 electric water heaters, and the other features are --

8 other possible sources of this are the distribution in

9 the country of where the saturations of households

10 with gas fired water heaters and households with

11 electric water heaters.

12 You tend to get households with gas fired

13 water heaters, higher concentrations of them farther

14 north in the country. So this is not to say that

15 people with the same household with an electric water

16 heater would use less hot water than the same

17 household with a gas fired water heater. It's due to

18 differences in the households.

19 MR. BROOKMAN: Steve Rosenstock.

20 MR. ROSENSTOCK: I'm sorry to put you back

21 on the other slide, Jim, but in terms of the equation

22 on the hot water use and the T tank equation, I'll say

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1 that grgression line or the line there that's shown,

2 that does include the impact of the one that's showing

3 180 degrees. There's one that's showing 180 degrees

4 that in the book is showing at 100 degrees, which

5 might be considered -- I would almost consider those

6 outliers.

7 MR. LUTZ: That does include those.

8 MR. ROSENSTOCK: It does. Okay. Thanks.

9 MR. BROOKMAN: Carl, a comment, hopefully

10 on the next slide?

11 MR. HILLER: Carl Hiller from EPRI.

12 Jim, you said from the EPRI equation. Did

13 you mean to say the ASHRE TC 6.6 Subcommittee

14 equation?

15 MR. LUTZ: No, from the 4003, the Gilbert

16 Associates study.

17 MR. HILLER: Okay. It's interesting that

18 they come out about the same way as the new ASHRE

19 equation that we looked at.

20 MR. LUTZ: Yeah.

21 MR. BROOKMAN: Additional comments on this

22 latest slide, page 11?

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1 MR. GOLDSTEIN: David Goldstein.

2 MR. BROOKMAN: David.

3 MR. GOLDSTEIN: A quick question. I would

4 expect some small price elasticity effect that would

5 say that the same household would use slightly less

6 water with an electric just because it costs more.

7 Did you see that?

8 MR. LUTZ: We have no way of checking

9 that. I would love to have data that would let us

10 check that, but we haven't found it. If you know of

11 any, please let us find it. Please pass it on.

12 MR. KUSTERER: George Kusterer with Boch.

13 Jim, what was the house -- it just says

14 household. Two, three, four and a half, five,

15 what's --

16 MR. LUTZ: It was a random selection from

17 the Energy Information Administration's residential

18 energy consumption survey. They take about seven or

19 8,000 households and do a detailed interview with the

20 homeowner, and then they collect the utility bills.

21 So we know the number of people in that

22 household, roughly where it's located, the appliances,

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1 whether they have a basement or not, things like that.

2 MR. KUSTERER: I'm sorry. Maybe you

3 misunderstood my question. How many people in a

4 household?

5 MR. LUTZ: It ranges from one to eight.

6 We're not doing averages. We're trying to -- I think

7 the average, if I remember correctly, for an electric

8 was 2.2, 2.5 and for gas it was 2.8.

9 MR. BROOKMAN: Jim McMahon.

10 Maybe you have some additional thoughts on

11 the data.

12 MR. McMAHON: Yeah, this is Jim McMahon.

13 George, I thought your first question was

14 how many households were in the survey.

15 MR. KUSTERER: No, no. What was the

16 average household.

17 MR. McMAHON: What did the average

18 household look like?

19 MR. BROOKMAN: How many people?

20 MR. McMAHON: Each of these averages

21 represents about 3,000 -- more than 3,000 households.

22 MR. KUSTERER: No, no, no. How many

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1 people living in the house?

2 MR. McMAHON: It depends upon which house

3 you look at.

4 MR. KUSTERER: Okay. So I'm looking at a

5 house. There's eight people in there. You're telling

6 me they're using 44 gallons of water a day.

7 MR. McMAHON: No, no.

8 MR. KUSTERER: That's what you're telling

9 me.

10 MR. McMAHON: No, no.

11 MR. LUTZ: This is average of all of the

12 houses.

13 MR. KUSTERER: What was the average people

14 living in the house?

15 MR. LUTZ: For electric water heaters, it

16 was 2.56, and for gas fired water heaters, households

17 with gas fired water heaters it was 2.87.

18 MR. BROOKMAN: Are those on subsequent

19 slides?

20 MR. LUTZ: They're in a different set.

21 MR. BROOKMAN: Okay.

22 MR. LUTZ: I don't know if it got handed

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1 out or not.

2 MR. BROOKMAN: Okay. Carl, a brief

3 comment before we keep moving on?

4 MR. HILLER: Carl Hiller from EPRI.

5 I'd just point out for the record here

6 that there was an ASHRE TC 6.6, which is the service

7 water heating technical committee. A subcommittee was

8 formed to develop a new ASHRE equation for gallons per

9 day versus household size, and that equation has been

10 developed as a function of the number of people, with

11 a secondary correlation correlating number of people

12 to housing type, i.e., single family detached versus

13 multi-family.

14 That equation has in it provisions for

15 with and without dishwasher, with and without washing

16 machine, with and without spot tub, and those

17 equations are going to be promulgated in the new ASHRE

18 90.2 standard.

19 And the average people per household is

20 2.7 and all that sort of thing, and it gives numbers

21 very similar to this.

22 MR. BROOKMAN: Okay. Thank you.

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1 Keep going.

2 MR. LUTZ: The next slide, page 12, is a

3 different representation of the same data shown as

4 distributions so that you can see the shape of the

5 curve both as a frequency chart and a cumulative

6 chart.

7 Going on to the energy use module, this is

8 the equation we used to calculate average energy use

9 or calculate average energy use for each household.

10 The volume, VOL, is from the hot water use

11 module. The recovery efficiency, the UA, and the

12 rated P-on or the rated input are from the simulation

13 models. So we take those from the simulation models.

14 The temperatures, T-in, is the average

15 outdoor air temperature plus two degrees Fahrenheit to

16 give the inlet water temperature.

17 T-tank is thermostats at point

18 temperature, and T-ambient is the ambient air

19 temperature around the water heater.

20 The ambient air temperature around the

21 water heater depends on its location. From calls to

22 installers, we found that if there is a basement, the

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1 water heater is usually installed in the basement. If

2 there's no basement, but there's an attached garage,

3 it's put in the garage. If there's no basement or

4 garage, then it's put inside the house.

5 And from the RECS data, these are the

6 percentages of houses with those characteristics, and

7 then the air temperature that we assumed around the

8 water heater.

9 PARTICIPANT: (Inaudible.)

10 MR. LUTZ: Rated input? Nominal rated

11 input of the water heater.

12 MR. BROOKMAN: Steve Rosenstock.

13 MR. ROSENSTOCK: Steve Rosenstock, EEI.

14 So that 72 degrees was considered for the

15 heated basement in the house constant throughout the

16 year?

17 MR. LUTZ: Yes.

18 MR. BROOKMAN: And I guess the comment on

19 these two slides, 13 and 14, would be about whether

20 these values seem to make sense.

21 Frank Stanonik.

22 MR. STANONIK: Frank Stanonik, GAMA.

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1 Jim, if you -- I'm going to point out a

2 discrepancy, and then we can figure out which one is

3 right.

4 If you look at the formula that was given

5 on page 20 of the results of methodology, the stuff

6 that was on the Web site --

7 MR. LUTZ: That's the detailed

8 methodology.

9 MR. STANONIK: Right.

10 MR. LUTZ: Yes.

11 MR. STANONIK: All right. The term that's

12 in brackets, the one minus UA, okay, at least in the

13 handout here, you're taking T-tank minus T-in, right?

14 MR. LUTZ: Yeah.

15 MR. STANONIK: In the document or the

16 detailed preliminary report, it's T-tank minus T-am,

17 T-ambient. I think it's T-tank minus T-ambient.

18 MR. LUTZ: On the first equation, the

19 first parentheses?

20 MR. STANONIK: The second one.

21 MR. LUTZ: The second one. You're

22 probably right.

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1 MR. STANONIK: Do you want me to show you?

2 MR. LUTZ: I think you're right, Frank.

3 I think you're right.

4 MR. BROOKMAN: Thanks for pointing that

5 out, Frank.

6 Additional comments on the equation and on

7 the values shown on 14? Yes, Jim.

8 MR. VAUGHAN: Jim, you're calculating the

9 temperature. That's the incoming cold water

10 temperature?

11 MR. LUTZ: Yeah.

12 MR. VAUGHAN: And you're calculating that

13 by an average outdoor temperature plus two degrees?

14 MR. LUTZ: Yes, yeah.

15 MR. BROOKMAN: Jim Vaughan.

16 No additional comments? Steve Rosenstock.

17 MR. ROSENSTOCK: Steve Rosenstock, EEI.

18 So with the outdoor temperatures, are you

19 using like hourly weather data, like typical

20 meteorological year for various areas?

21 MR. LUTZ: We got the NOAA averages, the

22 30 year NOAA averages for 43, 44 different cities

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1 around the country.

2 Okay. Energy use for electric water

3 heaters using the design options that came out of the

4 engineering analysis. You get this as the average and

5 the energy savings.

6 MR. BROOKMAN: Steve Nadel.

7 MR. NADEL: Yes, these energy figures, are

8 they based on a formula from the energy factor or are

9 they a direct output from WATSIM?

10 MR. LUTZ: They're from this equation

11 that's shown on page 13 where the recovery efficiency,

12 the UA, and the rated input are outputs from WATSIM at

13 test procedure conditions for those water heaters with

14 those design options.

15 MR. NADEL: Okay.

16 MR. LUTZ: Because the calculations are

17 being done at different conditions, depending on the

18 household.

19 MR. LOGEE: Just to clarify for the

20 record, the error that Frank Stanonik pointed out is

21 only in the slide. We presume and hope that the

22 equation was correct in our spreadsheets, and I expect

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1 that you folks will all look at that and let us know

2 if there's anything to the contrary.

3 MR. BROOKMAN: Steve Rosenstock.

4 MR. ROSENSTOCK: Steve Rosenstock.

5 Yeah, in the long report, October '98,

6 life cycle cost analysis, Table 5.5.7, page 77, it

7 shows the Antarctic baseline. It just says in the

8 report 34.84 versus 35.03. Was it a different run or

9 I'm just kind of curious. You know, I don't know if

10 it's the same as the gas one.

11 MR. LOGEE: Steve, which report do you

12 have? What's the date on that report?

13 MR. ROSENSTOCK: Well, this is just life

14 cycle cost report, the October '98, and I know the

15 engineering analysis -- because we're on the life

16 cycle cost cost side of it.

17 MR. LOGEE: I believe we updated the life

18 cycle cost report on Friday on the Web, and this one,

19 I think, is the latest one. The slides, I believe,

20 were made from an earlier report, and there were some

21 slight changes in the numbers.

22 I guess I should apologize for the

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1 department. Those numbers are changing somewhat as we

2 go along, and they will continue to change as we get

3 new information and as we find that, like anybody,

4 we've made a few errors in some of our analyses, and

5 that's the reason for the most recent changes. There

6 were some errors there.

7 So there are going to be some slight

8 differences.

9 MR. NADEL: I didn't have a chance to

10 check the incremental. So I just wondered.

11 MR. LOGEE: Right. Well, that's why I'm

12 trying to point that out. It's certainly a good

13 question, and we needed to point that out.

14 MR. BROOKMAN: Carl Hiller.

15 MR. HILLER: Just for clarification, Jim,

16 you use this simplified methodology, I'll call it, for

17 calculating the annual energy use even thought WATSIM

18 could have done it in a much more sophisticated manner

19 primarily because the tank model and the oil model

20 didn't have comparable sophistication. Is that the

21 reason why?

22 MR. LUTZ: That wasn't the only reason.

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1 the major reason was we could include this simplified

2 equation into the spreadsheets and let people see it.

3 It's there.

4 It's also much easier. There are much

5 fewer inputs to use. It's characterized by the

6 recovery efficiency, the standby loss, and the rated

7 input of the water heater.

8 MR. BROOKMAN: Jim.

9 MR. RANFONE: Yeah, Jim Ranfone, AGA.

10 Just for the record, what was your

11 conversion factor to go from kilowatt hours per year

12 to BTUs per day?

13 MR. LUTZ: I believe it's 34.12 to get

14 from BTUs per hour or BTUs to kilowatt hours.

15 MR. RANFONE: So it's all site based?

16 MR. LUTZ: It's all site based.

17 MR. RANFONE: Okay. Now, also on your

18 number four in the gas fired, your 23 kilowatts per

19 hour, is that site based, too? The electric

20 consumption?

21 MR. LUTZ: Yes.

22 MR. RANFONE: Okay.

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1 MR. LUTZ: Okay. Jim was referring to

2 this slide, which is the equivalent slide for gas

3 fired water heaters, and design option four does use

4 electricity.

5 MR. BROOKMAN: Are we ready to move on?

6 Let's go. Operating costs.

7 MR. LUTZ: Operating cost, we used this

8 basic equation: annual energy use times future energy

9 price, plus a maintenance cost.

10 Future energy price is the current energy

11 prices times an energy increase ratio. We used the

12 scenario provided by the AEO, the Annual Energy

13 Outlook.

14 The next slide, 18, shows their

15 projections for future electricity prices and natural

16 gas prices.

17 Also shown on the slides and available in

18 the spreadsheets are GRI's projections for those.

19 So that gives you the following annual

20 operating costs. These are averages. I want to

21 stress again that there's a whole range of these, that

22 this is the average of the range of 10,000 samples,

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1 calculations done, and the average savings by design

2 option.

3 The next page is for gas fired on page 21.

4 MR. LOGEE: This is Terry Logee.

5 I think you should note that these are

6 average annual savings, not over the lifetime, just

7 each year with no discounting.

8 MR. HILLER: This is based on 64.3

9 gallons?

10 MR. LUTZ: No, this is based on the range

11 of prices, the range of hot water uses that we

12 reported from the hot water use module. So each

13 household has a different --

14 MR. BROOKMAN: Carl, use the microphone.

15 MR. HILLER: It sounds like you should

16 explain that module again then. Exactly what

17 assumptions are going into producing these numbers if

18 it's not 64.3? I don't think you explained that

19 earlier, did you?

20 MR. LUTZ: Back on page 7, we are doing

21 this in modules. The spreadsheet has five major

22 modules. Each module or the whole spreadsheet does

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1 10,000 calculations, does the calculation 10,000 times

2 for a different house, different energy price,

3 different number of people in the house.

4 That's reflected based on samples from the

5 RECS data.

6 After the hot water use is calculated,

7 it's passed to the energy use module, which again for

8 10,000 households calculates the energy use and then

9 on to the operating cost. Each household has

10 different energy prices. So the operating cost is

11 going to -- and different energy use from their

12 different hot water use. So the operating costs are

13 reported as a range also, and this is the average of

14 those ranges for each design option.

15 MR. HILLER: Carl Hiller again.

16 Does that mean that somehow you selected

17 these 10,000 houses on some population weighted

18 geographic locations or something?

19 MR. LUTZ: Yeah.

20 MR. HILLER: How did you do that?

21 MR. LUTZ: We used the Energy Information

22 Administration's residential energy consumption

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1 survey. We used the raw data from that, and that

2 survey has about 8,000 some households in it.

3 For the gas one, we pulled out the gas

4 households with gas fired water heaters. For the

5 electric, we pulled out the households with electric

6 water heaters.

7 The EIA puts a weighting on each

8 household. We did a random sampling from that

9 selection based on the weighting that EIA assigned

10 each house. So some houses may have been sampled four

11 or five times, others once or twice, maybe some not at

12 all, and the weighting reflects the population of

13 that, the number of that type of household that's

14 around.

15 MR. BROOKMAN: Ten thousand separate

16 combinations.

17 MR. HILLER: But did it reflect the

18 geographic dispersion of the population as part of

19 that?

20 MR. LUTZ: Yeah.

21 MR. HILLER: The fact that there's more

22 people south than --

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1 MR. LUTZ: Right, right. It does.

2 MR. BROOKMAN: Terry Logee.

3 MR. LOGEE: Just for additional

4 clarification, if most of you have this back-up

5 material on life cycle cost analysis back-up

6 materials, in there we show the distributions, and if

7 you turn to page 8, there's all of the distributions

8 for the different design options, for the change in

9 operating costs on electric water heaters.

10 So what we're reporting in the slides that

11 Jim has on the screen are the averages. This page 8

12 shows you the distributions and that output which

13 result from these differences in houses and so forth.

14 MR. LUTZ: Moving on to the gas module,

15 Jim?

16 MR. VAUGHAN: Yeah, I'm sorry. I just

17 have to go back to that slide, the last one on the gas

18 water heater.

19 MR. BROOKMAN: Twenty-one?

20 MR. VAUGHAN: Yeah.

21 MR. LUTZ: Operating costs?

22 MR. VAUGHAN: Yeah, the operating costs.

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1 I see on the baseline it's 159.36. Yet when you did,

2 I guess, the engineering cost efficiency tables for

3 gas it was 160-something. I don't have it in front of

4 me.

5 But on the electric, because of --

6 apparently because of the usage, on the engineering

7 analysis it was 390 for electric existing baseline,

8 but when you used your assumptions for this table, it

9 comes out to 292. There's a $100 difference on the

10 electric side and about a $6 different on the gas, and

11 that's all because of usage?

12 MR. LUTZ: The usage and the variation in

13 prices also because we're trying to reflect as best we

14 can the distribution of hot water uses, temperatures,

15 energy prices, and the locations and how those are

16 divided up across the country.

17 MR. VAUGHAN: But the usage difference

18 wasn't very substantial if I remember correctly. It

19 was, based on what you said, two what? What was the

20 difference between the gas and the electric? Ten

21 percent?

22 MR. LUTZ: About ten percent, yeah.

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*0 1 MR. VAUGHAN: Yeah, I think we need to

2 take a look at that.

3 MR. BROOKMAN: Thank you.

4 MR. LUTZ: Okay. Equipment costs. This

5 is manufacture cost times a mark-up times one plus the

6 sales tax plus the total installed cost, and in this

7 module the manufacture cost, all of these things

8 actually are treated as distributions so that the

9 prices for the manufacture costs are sampled from the

10 survey that we did for the baseline, and then with the

11 added distributions provided by the manufacturers.

y* 12 This is where we got the manufacturer

13 costs, again, as distributions, as ranges. The

14 baseline model costs came from GAMA for 40 gallon gas

15 fired, 50 gallon electric, and were based on the

16 current blowing agent.

17 Design option costs that came from GAMA

18 were for heat traps, two inches of insulation,

19 insulated tank bottom for electric water heaters, IID

20 improved flue baffle for gas fired water heaters.

21 These costs, the range, they provided us

22 a distribution of costs. We scaled that for the cost

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1 of the new blowing agent. We scaled it for different

2 size tanks. We had a total of five typical size

3 tanks, tank sizes for electric and four typical sizes

4 for gas units.

5 We scaled the two and a half inch jacket

6 insulation costs up from the two inch jacket

7 insulation costs that GAMA provided us, and the

8 plastic tank and side arm heaters we got from

9 consultants.

10 For the baseline prices, this was from our

11 water heater database. We contacted nearly 80

12 wholesale and retail distributors nationwide, got the

13 retail prices for all of the models they sold,

14 installation, delivery, removal permits, parts, costs,

15 where they provided them, and the sales tax for them.

16 We also got from manufacturers product

17 literature, dimensions and features for each of the

18 water heaters, and from the GAMA directory we got the

19 efficiency and the ratings.

20 This is sort of the schematic of the

21 results we got. You'll notice that there's a fairly

22 wide range on retail prices for 50 gallon electric.

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1 It ranged from 128 to 297, and that especially the

2 larger tank sizes the range is much higher. That

3 total value is much higher.

4 MR. BROOKMAN: Steve Rosenstock.

5 MR. ROSENSTOCK: Steve Rosenstock.

6 Yeah, for these bars, the values in the

7 middle, those are the averages and not the medians,

8 right? Those are the averages?

9 MR. LUTZ: I believe so.

10 MR. BROOKMAN: That is the hatch mark?

11 MR. ROSENSTOCK: The hatch mark, yes, like

12 for the 50 gallon electric, 179 is the little hatch

13 mark there.

14 MR. BROOKMAN: Right.

15 MR. ROSENSTOCK: Again, it might be of

16 interest to some just because we're not sure what the

17 distribution pattern is just to show the median values

18 because we don't know what the distribution is.

19 MR. LUTZ: I was corrected. It is the

20 median.

21 MR. ROSENSTOCK: Oh, it is median. Oh,

22 thank you. Okay.

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1 MR. BROOKMAN: Oh, Mark. Sorry. Mark

2 Krebs.

3 MR. KREBS: A quick question here. Can I

4 assume, therefore, that LBL has developed a rather

5 complete database on hot water heater models and

6 performance specifications?

7 MR. LUTZ: Yes.

8 MR. KREBS: Thank you.

9 MR. LUTZ: To get the mark-up, we took the

10 retail price divided by the manufacturer costs. Both

11 the retail price and the manufacturer costs are

12 distributions, and they both vary by size. We got the

13 retail price for models with five year warranties and

14 no extra features, and the manufacturer cost was for

15 the existing baseline.

16 The installation costs we got from the

17 same sources. Again, the distributions are shown.

18 MR. HILLER: Carl Hiller.

19 In looking at these installation cost

20 numbers and noting that for both gas and electric it's

21 cheaper to install a bigger tank than a smaller tank,

22 which seems counterintuitive, I'm wondering how you

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1 explain that.

2 MR. LUTZ: On the very large tanks, there

3 were not as many data points because there are not as

4 many of them sold. So you may be seeing some

5 variations due to a small sample size.

6 I don't explain it. This is what we got.

7 MR. BROOKMAN: Steve Rosenstock.

8 MR. ROSENSTOCK: And again, those are

9 median values in those?

10 MR. LUTZ: Yes.

11 MR. ROSENSTOCK: Those are the median, not

12 the mean. Okay.

13 MR. LUTZ: For some of the gas fired

14 technology design options we had extra installation

15 costs, electricity for the side arm heater and the

16 Type B vent connector for improved flue baffle. These

17 are also put in as distributions and applied only to

18 the fraction of the households that would need them or

19 reported to need them.

20 So for the electric water heater equipment

21 costs, this is the average manufacturer cost and

22 average total installed cost.

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1 MR. BROOKMAN: Mark Krebs.

2 MR. KREBS: Thank you.

3 As per your previous presentation --

4 MR. LUTZ: Slide?

5 MR. KREBS: No, your previous

6 presentation, again, are we dealing with retrofits and

7 not new construction in these numbers?

8 MR. LUTZ: Yes. This would be -- when we

9 called the installers, we didn't ask for a different

10 installation cost for new construction and retrofit.

11 MR. KREBS: Thank you.

12 MR. BROOKMAN: David Goldstein.

13 MR. GOLDSTEIN: Yeah, let me follow up on

14 that. I think in this case, since you have the

15 capability of doing the details, you should, in fact,

16 stratify for new construction being different than

17 retrofit, and the reason is that you may come up with

18 a different technically justified standard level for

19 new construction.

20 And this is relevant because of the

21 different preemptive effective that NAECA standards

22 have on building codes compared to national minimum

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1 efficiencies. It would be very useful to know that

2 the optimum, however you define it, energy factor for

3 new construction is some number which may be different

4 from what is economically justified for a retrofit

5 standard.

6 MR. BROOKMAN: Steve Nadel.

7 MR. NADEL: And the other reason to do it

8 is that new construction is a significant portion of

9 the market, and to ignore that in calculating the

10 overall effects and looking in your sampling, you

11 know, risks having errors. So there's two reasons, I

12 think, to look at new construction separately from

13 existing installations.

14 MR. LUTZ: Okay. This is equipment costs

15 for gas fired water heaters. I want to note that

16 we're starting with the analytic baseline. So that

17 includes the assumed $35 cost for the flammable vapor

18 ignition resistant devices.

19 MR. BROOKMAN: David Goldstein.

20 MR. GOLDSTEIN: Yeah, a similar kind of

21 comment. This one may be harder to do, but what

22 you're doing here is you're going through and saying

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1 I know what the design measures are. Now let's figure

2 out what the installed costs are.

3 So I'm saying if I put in, say, the side

4 arm water heater, I'm going to average whether or not

5 there's an electric cord there and whether or not I've

6 got to do something to the flue.

7 MR. LUTZ: No, we didn't average it after

8 -- we didn't average it before. We said in a third of

9 the houses we won't need to put in or a third of the

10 houses we will need to put in electricity at that

11 house. That price is going to range from I think we

12 used about 100 to $200 to put in the extra circuit.

13 For the other two thirds of the houses

14 there will be no cost.

15 MR. GOLDSTEIN: Okay. I'm not saying

16 you're doing it wrong. I'm saying there's another

17 analysis that might be equally or more interesting,

18 which is to say for the houses where you don't have

19 electric service, you might meet an energy factor

20 standard at a certain level using different measures.

21 In other words, the measure of side arm

22 heater would make more sense if you have the electric

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1 cord available than if you don't. So if the energy

2 factor standard was .66, maybe you'd get the .66 using

3 a different measure if you didn't have the electric

4 cord. It would be cheaper to put more money into the

5 heater than it would be to bring the cord into the

6 house.

7 MR. BROOKMAN: Jim McMahon.

8 MR. McMAHON: David, I have a follow-up

9 question to that. I'm not sure how that would be

10 helpful. The standard applies nationwide, and what we

11 would report, as you will see, is distributions of the

12 life cycle cost impact. So those people who already

13 have an electric cord are in that distribution. I'm

14 not sure I understand why it's necessary to separate

15 them out.

16 MR. GOLDSTEIN: I think you'll get a

17 different answer from doing it a different way

18 because, in other words, this analysis implicitly

19 assumes that all manufacturers use the same

20 technologies regardless of customer characteristics to

21 meet the standard. What I'm saying is given the

22 different characteristics of a customer who either

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1 does or does not need to modify his flue to get a 78

2 percent recovery efficiency, who either does or does

3 not have electric service, the optimum set of

4 engineering design measures may be different, and so

5 if the market is functioning properly, you'll have one

6 set of measures that's intended to be sold to one kind

7 of household and a different set of measures with the

8 same energy factor resulting that's intended to be

9 sold to a different household that would more closely

10 optimize the cost.

11 MR. McMAHON: You're asking for a

12 different question, which is what is the optimum

13 design option for a particular household, and we're

14 answering a different question, which is what is the

15 distribution of impacts for a design option across

16 households.

17 MR. GOLDSTEIN: We agree that we're asking

18 different questions. I'm suggesting that the question

19 I'm asking, if it is capable of being analyzed with

20 your model, would give some interesting answers.

21 MR. BROOKMAN: Thank you.

22 Yes, please say your name.

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1 MR. BRUNDAGE: Don Brundage, Southern

2 Company.

3 I'm not clear on this previous discussion

4 from Mr. Nadel and Mr. Goldstein whether they're

5 talking about a separate standard for new construction

6 from retrofit or whether because of the differences in

7 economic characteristics it just needs to be grouped

8 differently in the analysis.

9 Is there really a mechanism under NAECA to

10 have a separate standard for new as opposed to

11 retrofit construction?

12 Thank you.

13 MR. BROOKMAN: So can one of the two of

14 you --

15 MR. GOLDSTEIN: I'll give it a first shot

16 and Steve can add on.

17 There isn't --

18 MR. BROOKMAN: Steve Goldstein.

19 MR. GOLDSTEIN: Thank you.

20 I haven't looked to see if there's a

21 mechanism under NAECA for separate standards for new

22 construction compare to retrofit. Offhand I don't

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1 think there is.

2 However, the conditions under which states

3 can set standards in their building codes are

4 different than the conditions and less restrictive

5 than the conditions under which they can set separate

6 equipment efficiency standards that apply to the whole

7 sales.

8 And if there were a different optimum for

9 new construction, it would sure be nice to know even

10 though you might not use it in this proceeding because

11 you might use it in a proceeding relating to building

12 codes, and there might be some advantage that if there

13 is an optimum level for building codes, that it be

14 recommended in a form that can be the same number for

15 all building codes rather than having each state go at

16 it separately.

17 MR. BROOKMAN: George, let's let Steve

18 follow on. Maybe he has something additional to add,

19 and then we'll go back to George.

20 MR. NADEL: Okay. I have something

21 additional. I had my hand up before for another

22 question, but I'll let George answer this one, and

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1 I'll get back later.

2 MR. BROOKMAN: You're on a different

3 subject?

4 MR. NADEL: Right. The other answer

5 though is in addition, I think it would give a more

6 accurate answer for what is the optimum standard

7 because it would better -- if we're going to all of

8 this trouble to look at one family versus two families

9 versus three families and these different

10 temperatures, we should also look at the fact that

11 costs, installation costs, do vary between new

12 construction and retrofit, and by assuming that

13 they're all retrofit we may be biasing the analysis in

14 certain ways because there's a significant portion of

15 the market that is new construction.

16 MR. BROOKMAN: George and then Mark Krebs

17 and then to Otto.

18 George.

19 MR. KUSTERER: George Kusterer with Boch

20 Water Heaters.

21 I'm totally confused, but that's nothing

22 new, being a dumb farmer from Pennsylvania. As a

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1 manufacturer, when my product or any of my other

2 colleagues' product leaves the factory, we don't know

3 if it's going to be used in new construction or

4 retrofit. So what has that got to do with setting a

5 standard for efficiencies?

6 MR. BROOKMAN: Mark?

7 MR. KUSTERER: It just -- it just -- I

8 don't know. Nobody reports back to me and says,

9 "Well, we're going to use this in new construction."

10 I have no way of following that up.

11 What has that got -- I mean, we're

12 spinning our wheels and spending a lot of time and

13 effort to --

14 MR. BROOKMAN: Mark Krebs, you have --

15 MR. KUSTERER: I'm just confused.

16 MR. BROOKMAN: -- some comments on this?

17 MR. KREBS: Well, hopefully I can help

18 answer that question. I think it's widely agreed that

19 implementing energy conservation is normally cheaper

20 in new construction than going back in and having to

21 retrofit things, you know, especially if it's some new

22 kind of flue system or something like that.

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1 And, you know, new construction is a

2 significant part of the market, and it's therefore a

3 large assumption, you know, when you base numbers and

4 rulemaking on the assumption that it's all going to

5 retrofit. You know, it's a completely different

6 market niche, and it desperately needs to be analyzed.

7 MR. BROOKMAN: Okay. Otto was next and

8 then Terry.

9 MR. VAGO: Otto Vago, State Industries.

10 More than 90 percent of the water heater

11 business is replacement market. So two different

12 standards for after market and new construction just

13 doesn't make sense to me at all.

14 MR. BROOKMAN: Terry Logee.

15 MR. LOGEE: Terry Logee from Department of

16 Energy.

17 Typically in the past we have only

18 implemented one minimum energy efficiency standard,

19 and I can't speak for the department, but I don't

20 think we're going to change that procedure.

21 What we can do though is I have heard your

22 concern about the installation costs.

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1 MR. BROOKMAN: Terry. Terry, I apologize

2 for interrupting.

3 MR. LOGEE: Okay. Go ahead.

4 MR. McCABE: Michael McCabe, Department of

5 Energy.

6 The NAECA amendments to EPCA stipulate

7 this is --

8 MR. BROOKMAN: Do you want to spell all of

9 that out, Michael?

10 MR. McCABE: N-A-E-C-A amendments to the

11 EPCA, the Energy Policy and Conservation Act,

12 establish that the standard is to be a manufacturing

13 standard, a national standard that would preempt state

14 and local standards.

15 We are looking at a single standard.

16 Throughout the history of this rulemaking, this

17 program, we have tried to capture the range of

18 impacts.

19 In the early '80s we were looking at

20 average life cycle costs, average electricity prices,

21 the average impacts. When we looked at the life cycle

22 costs at a particular efficiency level, we were

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1 getting averages in order to capture some range. We

2 were looking at sensitivity cases and trying to

3 determine what was the range in electricity price or

4 the range in discount rates in order to get some

5 estimate, but basically we were able to say that half

6 of the consumers had their impacts that were below

7 this and their life cycle cost savings, for example,

8 would be less than the value reported. Half of them

9 would have greater life cycle cost savings.

10 A whole host of individuals, organizations

11 have strongly encouraged the department to look and

12 try to better estimate what the range of impacts are

13 in order to make a more informed decision. It's been

14 widely agreed that the size of household, for example,

15 will affect the amount of water used; that the ground

16 water temperature will affect the energy used in that

17 water heater.

18 And what Jim Lutz and others are trying to

19 present are the range of variables that can be

20 evaluated in order to look at the impacts and

21 determine what is the economically justified level,

22 and through these studies we have found, for example,

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1 that it appears that water usage is greater with

2 households that have gas fired water heaters than

3 electric water heaters, as Jim had indicated, because

4 those households tend to be slightly larger.

5 And what we're trying to do is cut the

6 analysis into a number of pieces in order to more

7 completely estimate what the impacts are, and we're

8 looking to your guidance both with respect to data

9 that are used, but also whether or not we have missed

10 something or maybe we're going too far in trying to

11 capture too many variables.

12 MR. BROOKMAN: I saw several people who

13 wanted to comment. Terry, do you wish to follow on

14 briefly?

15 MR. LOGEE: Yes, just a brief follow-on.

16 Thank you, Michael. I appreciate your

17 longevity with the program certainly.

18 As far as the installation costs for new

19 housing, we will attempt to get some information and

20 data on that and factor it into our analysis. We

21 have, we think, included the changes or the extra

22 installation costs for those replacement situations

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1 where electric is or isn't there, and the venting

2 conditions in situations in replacement versus new

3 situations.

4 So we will though try to find out what the

5 installation cost is for new construction.

6 MR. BROOKMAN: Several people wanted to

7 speak. I saw them approximately in this order: Steve

8 Rosenstock, Carl, then Frank, then Charlie, then Steve

9 Nadel.

10 MR. ROSENSTOCK: Steve Rosenstock,

11 Edison --

12 MR. BROOKMAN: See if we can keep these

13 brief.

14 Go ahead.

15 MR. ROSENSTOCK: Steve Rosenstock, Edison

16 Electric Institute.

17 If you're talking about new construction,

18 then it's all costs to the builders, first, because

19 consumers aren't really paying for it until they

20 purchase the house.

21 And as far as the builder is concerned,

22 once the consumer has bought the house, it's been paid

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1 for. The economics are done. Their economic analysis

2 is how soon will they buy the house from me,

3 everything, including the water heater.

4 And then, you know, the consumer is paying

5 for it, but, you know, it's kind of a hidden cost. I

6 mean, you're throwing builders into this equation if

7 you really want to do that.

8 The second thing is what's the time lag

9 with some of these houses. I don't know how long new

10 housing sits there, but suppose a house sits there

11 with the water heater installed for like a year, a

12 year and a half. Well, what does that do to some of

13 these economics, and do you really want to try to take

14 that into account, as well?

15 Thanks.

16 MR. BROOKMAN: Carl.

17 MR. HILLER: Carl Hiller from EPRI.

18 I think the suggestion about looking at

19 new construction versus retrofit, et cetera, is

20 probably outside the scope of this national standard

21 process, but I think David and Steve have a very valid

22 point, and I would offer the following suggestion.

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1 There's an awfully lot of really good work

2 going on here, and we're almost there on a couple of

3 these issues, and it would probably be worthwhile to

4 try and team some of this effort with maybe some input

5 and funding from ASHRE and some of the, you know,

6 National Association of Home Builders, state

7 regulatory commissions, et cetera, to complete that

8 part of the equation because it's useful information.

9 MR. BROOKMAN: Thank you.

10 Frank.

11 MR. STANONIK: Well, it's a slight

12 variation of what Steve Rosenstock said. If we're

13 going to look at new construction, you know, we

14 already have as a primary question trying to figure

15 out what the mark-up numbers that came out of the

16 analysis tell us. What kind of mark-up number are we

17 going to use when, in fact, the person that buys the

18 home pays X dollars for the home, and Lord knows what

19 the builder mark-up for whatever he paid for the water

20 heater. It's probably not 1.5.

21 MR. BROOKMAN: Charlie Stephens.

22 MR. STEPHENS: Charlie Stephens.

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1 Actually we know what the builder's

2 general mark-up is in some cases, and applying that to

3 the whole house, including the water heater, might not

4 be too far off the mark.

5 PARTICIPANT: What kind of number?

6 MR. STEPHENS: It ranges between about 15

7 and 21 percent where we are.

8 But that's added onto the wholesale mark9 up that he bought it for. So, you know, there's some

10 other mark-up there, but I mean, I just wanted to

11 reiterate what Michael McCabe said, and that is that

12 if for some of the households the incremental cost of

13 a power outlet for power vented models is essentially

14 zero, which it arguably is in new construction in most

15 cases, given the electric code for where and how you

16 have to put 115 duplex receptacles these days, then

17 that's a fairly good size chunk of households that

18 probably could nicely be reflected in the way LB&L

19 does the analysis.

20 It samples. You'll sample those new

21 construction households as nine percent of the water

22 heater sales or whatever, and you'll come up with a

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1 zero incremental cost most of the time for some

2 measures, and I don't think there's anything wrong

3 with having that reflected in the analysis as long as

4 we're busy sampling from the entire range of

5 everything out there.

6 MR. BROOKMAN: Steve Nadel, thank you for

7 your patience.

8 MR. NADEL: I actually wanted to switch

9 the topic a little bit. A while ago I was about to

10 ask a question when we got down --

11 MR. BROOKMAN: Well, thank you for your

12 patience.

13 MR. NADEL: Jim, on that chart that is up

14 now, the very last line, I'm trying to understand how

15 we came up with the average total installed cost for

16 the improved flue baffle. On the one hand, it says

17 it's a manufacturing cost of about $7. There's some

18 mark-ups. You know, call it 14 percent. Call it 200

19 percent. That's by and large immaterial.

20 I believe you mentioned before that there

21 were average costs for a Type B vent connector of

22 about 50-some odd dollars, but all of those things

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1 don't quite explain to me how we come up with an

2 average incremental cost of $120.

3 If I take $7 times a 150 percent mark-up

4 plus $60, I don't get anything close to 120.

5 MR. LUTZ: I don't want to do the math up

6 here in front of everybody, but the quick answer is

7 that the Type B vent connectors are only applied in

8 the households, the fraction of households that should

9 have them, and for those households it's a fairly high

10 expense, and then for the households that don't need

11 it, it's not included.

12 MR. NADEL: But previously you said the

13 weighted average was 50-some odd dollars per

14 household. So this implies a weighted average of more

15 than $100 per household. Which one is correct, or is

16 there some inconsistency?

17 MR. LUTZ: I'll to get back to you on that

18 one.

19 MR. NADEL: Thank you.

20 MR. BROOKMAN: I'm trying to assess where

21 we are. It seems that we have eight or ten slides at

22 least left before we're finished with this

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1 presentation. I believe that we should shortly go

2 take a break. I'm starting to lose people as I look

3 around the room.

4 So why don't we do a few more, see how far

5 we can get in the next five minutes here.

6 MR. LUTZ: Actually right now would be a

7 good time to break.

8 MR. BROOKMAN: Shall we? Let's do that.

9 MR. LUTZ: Because it shifts over to a

10 different calculation after that.

11 MR. BROOKMAN: Let's do take a break at

12 this point. Let's try and -- can we do this in more

13 like ten minutes than 15 minutes? Otherwise we're

14 going to be here at eight o'clock in the morning, and

15 we won't get done at 12:30 tomorrow afternoon.

16 So let's start up at five minutes after

17 three, and thanks for hanging with us here.

18 (Whereupon, the foregoing matter went off

19 the record at 2:55 p.m. and went back on

20 the record at 3:05 p.m.)

21 MR. BROOKMAN: Housekeeping matters.

22 Please, if you leave here today and you want to take

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1 these slides with you and review them tonight or

2 whatever you wish to do with them, bring them back

3 tomorrow. We don't want to have to provide an extra

4 set tomorrow, and we won't. The department will not

5 provide an extra set tomorrow. So bring back these

6 slides and this material.

7 PARTICIPANT: Where do we get the free

8 laptops?

9 (Laughter.)

10 MR. BROOKMAN: The question was where do

11 we get the free laptops.

12 Also, we need to keep plugging ahead this

13 afternoon because if we don't get as far as we expect,

14 we're going to have to make a plan for tomorrow to get

15 through this, whether that means showing up at 7:30 in

16 the morning or going later on in the afternoon or

17 what. So just so you'll know, we need to really keep

18 on point for the rest of the afternoon.

19 Are there additional housekeeping items we

20 need to take up?

21 (No response.)

22 MR. BROOKMAN: Okay. Let's proceed.

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1 MR. LUTZ: Okay. This is Slide 33 on the

2 handout.

3 MR. BROOKMAN: Thirty-two.

4 MR. LUTZ: Well, 33 is the pretty version

5 of it.

6 MR. BROOKMAN: Oh, okay.

7 MR. LUTZ: This is the equation for life

8 cycle cost. It's the equipment cost. It varies by

9 option. The equipment cost is the total installed

10 equipment cost plus the operating cost for that option

11 for a particular year discounted back to the present.

12 The operating cost varies by year because

13 the energy prices vary by year, and then the same

14 equation for pay-back.

15 I want to point out that as with most of

16 the other variables in this analysis, discount rate

17 varies as a distribution. We represent the consumers'

18 discount rate coming from three different sources,

19 that they get the money to buy the water heater from

20 three different sources: cash and savings, mortgage

21 if they buy it in new construction, or credit cards,

22 and the overlap between cash and savings and mortgage

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1 is actually where they overlap. So it's just those

2 two added together.

3 MR. BROOKMAN: Steve Rosenstock.

4 MR. ROSENSTOCK: Just a quick question on

5 this slide. Steve Rosenstock, EEI.

6 On the slide under relative probability,

7 there are hatch marks on the Y axis there. Each one

8 is five percent or what's the scale?

9 MR. LUTZ: It's a relative scale. I don't

10 know that the numbers actually mean anything.

11 MR. ROSENSTOCK: Okay, okay.

12 MR. LUTZ: It's just that, you know,

13 you're going to get a higher probability of the ones

14 that are higher up.

15 Again, this is in the spreadsheet, this

16 distribution. So you can go look and see how it does.

17 MR. BROOKMAN: So the scale of the

18 vertical bars, is that a representation also?

19 MR. McMAHON: This is Jim McMahon.

20 There is a scale. We can give you the

21 numerical answer for that.

22 MR. BROOKMAN: Okay. Thank you.

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1 MR. LUTZ: Lifetime is also represented as

2 a distribution. This is for electric water heaters.

3 We got this from Appliance Magazine. There's a

4 similar but slightly shorter one for gas fired water

5 heaters.

6 And plugging in the numbers for all the

7 previous calculations gives the life cycle cost and

8 payback for the various design options.

9 MR. BROOKMAN: Steve Rosenstock.

10 MR. ROSENSTOCK: Steve Rosenstock, EEI.

11 In the report, I guess the previous

12 version of the report, Mr. Logee, but there are some

13 slightly different numbers showing for the different

14 design options in terms of, for example, option five

15 in this October report is 54.1 percent versus in your

16 overheads 59.3 percent.

17 So I just -- you know. It's significant

18 enough of a difference. I just wanted to double check

19 on that. I guess after further analysis. Is that the

20 latest analysis?

21 MR. LUTZ: Yeah, the slides should reflect

22 the latest report.

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1 MR. ROSENSTOCK: Okay.

2 MR. LUTZ: These are preliminary results,

3 and we are catching some of the mistakes as we go

4 along.

5 MR. BROOKMAN: Frank Stanonik and then to

6 Glenn Schleede.

7 MR. STANONIK: The column heading

8 "fraction of population benefitting," what do you mean

9 there?

10 MR. LUTZ: This whole analysis is done for

11 each of the 10,000 households sampled. So it's done

12 separately for each household. So each household has

13 a different amount of hot water use, a different

14 amount of energy consumption, a different energy

15 price, a different equipment cost.

16 And so when we get up to calculating the

17 life cycle cost, there are different life cycle costs

18 for each household. The ones with the reduced life

19 cycle costs are going to benefit. The ones with an

20 increase are going to suffer.

21 MR. STANONIK: All right. So like Line 1,

22 heat traps. Are you saying that roughly 95 percent of

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1 the existing households would benefit from this

2 measure?

3 MR. LUTZ: Yes.

4 MR. STANONIK: In other words, they don't

5 have a water heater currently with heat traps? Is

6 that another way to look at it?

7 MR. LUTZ: We're basing it all on

8 comparing -- this is relative to the baseline.

9 MR. STANONIK: Right.

10 MR. LUTZ: If they bought a water heater

11 with a heat trap, 95 percent of them would benefit

12 compared to buying a baseline water heater.

13 MR. BROOKMAN: But it would be prospective

14 purchases.

15 MR. STANONIK: Oh, okay, okay.

16 MR. BROOKMAN: Prospective.

17 MR. STANONIK: Okay, all right.

18 MR. BROOKMAN: Terry Logee.

19 MR. LOGEE: Just let me ask that you look

20 at the back-up slides again. Page 2 for electric

21 water heaters has the change in life cycle costs.

22 These distributions, now, this is on the back-up

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1 section of the slides.

2 And all of these benefits, you can get

3 somewhat of an idea. If you chop off the cumulative

4 curve at zero, anything that's above zero is a

5 negative payback, a negative life cycle cost, and so

6 that's where you get these percentages of benefit to

7 people.

8 And the numbers on the slide are the exact

9 precise numbers, and those are in the spreadsheet as

10 well. There's a table in the spreadsheet, especially

11 if you run the analysis with Crystal Ball.

12 MR. BROOKMAN: Jim, McMahon.

13 MR. McMAHON: Terry, we show a lot of

14 results in this kind of format, and I'm wondering if

15 it would be useful to walk through one of these graphs

16 and explain what it says. I'd be happy to do that.

17 MR. BROOKMAN: Do you want to do that now?

18 MR. LUTZ: Yes.

19 MR. BROOKMAN: Let's refer to a specific

20 page.

21 MR. McMAHON: Okay.

22 MR. BROOKMAN: This, once again, is in the

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1 back-up.

2 MR. McMAHON: The back-up materials, page

3 2, the one that Terry just referred to, change in life

4 cycle cost, electric water heaters.

5 MR. BROOKMAN: Let's give everybody a

6 second to find it.

7 MR. McMAHON: Yeah.

8 MR. LOGEE: Yeah, it says life cycle cost

9 analysis back-up materials.

10 Jim, can you put it up on the slides?

11 MR. LUTZ: It's on my laptop that doesn't

12 have it.

13 MR. McMAHON: Okay. Let me try and walk

14 you through. I'll just take the top left one. Delta

15 life cycle cost of heat trap compared to analytic

16 baseline in 1998 dollars, and it says at the top 95

17 percent benefit, five percent disadvantage. Let me

18 explain what you're seeing here.

19 The vertical axis has got two scales. On

20 the left it says frequency. You remember that we

21 sampled 10,000 houses. So the height of any of the

22 bars on there, the bar chart, is the number of houses

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1 that fall in that range. Okay?

2 So I'm going to give you a specific

3 example. If you look right in the middle on the

4 horizontal axis where the zero is, this axis is the

5 change in life cycle cost. Zero means the life cycle

6 cost is the same for buying a water heater with a heat

7 trap as not. In other words, the extra cost is

8 balanced out by operating cost savings exactly.

9 That bar is the shorter one just to the

10 right of the tallest one in the middle, and it looks

11 like about 2,000 households fall there. Okay? So the

12 bars represent the frequency.

13 The right vertical axis is a percentage,

14 and that goes with the other line, the one that's got

15 filled in squares on it. So if we start at the left,

16 it says minus 250. That means there is a house, one

17 or more houses, that save $250. Their life cycle cost

18 is $250 lower in the heat trap case than in the

19 baseline case.

20 As you move to the right, you get less and

21 less savings until you get to zero, and the ones on

22 the right, the greater than zero, are ones where the

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1 life cycle cost increases when you go from baseline to

2 heat trap. Okay?

3 So that top line that starts at the left,

4 angles up, and then comes up to the top axis goes with

5 the right side, which is a percent. We're

6 accumulating, adding up the bars as we go across, and

7 that's another way of looking at it that gets you to

8 the 95 percent number.

9 If you go to the zero and go straight up,

10 you'll hit a filled in square that's not quite at the

11 top of the graph. It's just slightly below. It's

12 five percent below. So you've got 95 percent that

13 have a savings in life cycle costs.

14 And all the other graphs are interpreted

15 the same way. So the distribution shows you the

16 10,000 houses and where they fall, and the filled in

17 squares show you how that accumulates across the

18 population.

19 MR. BROOKMAN: And on that same page, that

20 bottom right-hand graph perhaps makes it more

21 graphically easy to understand how they stack and

22 accumulate.

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1 Joe Mattingly.

2 MR. MATTINGLY: Joe Mattingly from GAMA.

3 On the chart that's on the screen, I just

4 want to be sure I understand something here. Suppose

5 you did nothing but number five. You just insulated

6 the tank bottom. Forget the three plus. If you did

7 only that, would that pay back in 6.79 years or is it

8 dependent somehow on --

9 MR. LUTZ: The payback is to the baseline,

10 and it includes all of the design options. So number

11 five is insulated tank bottom plus three, and three is

12 two and a half inch jacket insulation plus one, and

13 one is heat traps.

14 So number five has heat traps, two and a

15 half inch jacket insulation, and insulated tank

16 bottom, and the payback is relative to the baseline

17 model.

18 MR. MATTINGLY: And so that would be the

19 whole package has that payback?

20 MR. LUTZ: Yes.

21 MR. MATTINGLY: Okay.

22 MR. LUTZ: Yes.

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1 MR. BROOKMAN: Before we get too far

2 afield, Glenn, you're next, but let me make sure. Jim

3 just laid out this graphic. I want to make sure there

4 are no questions on the graphic. I thought it was a

5 good explanation.

6 Carl and then to Glenn Schleede next.

7 MR. HILLER: Carl Hiller.

8 I have a question. I'm looking down here

9 at the plastic tanks. Did you assume the same life

10 for the plastic tanks as for all other tanks?

11 MR. LUTZ: Yes, we did.

12 MR. BROOKMAN: Glenn Schleede.

13 MR. SCHLEEDE: I'd just like to observe

14 one of my favorite comments that DOE likes to ignore,

15 and that's the lifetimes assumes that the customer

16 buying this water heater is going to be using that

17 water heater for the time period shown here, and

18 census data tell you that people move much more often

19 than this, and this is not a real time period for

20 anyone calculating life cycle cost because people just

21 move too often, don't live in the same home for the

22 lifetime of the water heater.

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1 MR. BROOKMAN: Thank you.

2 Jim McMahon.

3 MR. McMAHON: If I can respond to that,

4 if, in fact, a household purchases a water heater and

5 then those people move out, leaving the water heater

6 there for the next occupant, the second occupant has

7 basically no cost for that water heater unless there's

8 some salvage value, and they do receive the operating

9 cost benefits compared to having purchased a house

10 with a less efficient water heater.

11 So you're correct that we don't break

12 that, but those savings are still there. It's just a

13 matter of a different person living in the house.

14 MR. SCHLEEDE: I thought you always

15 explained to me, Jim, that it's the focus on the

16 person who's making the purchase decision that you're

17 focusing the analysis, not on some societal basis.

18 MR. McMAHON: Well, we can do it that way,

19 Glenn, but then we have to add in -- we could do the

20 first occupant with a five year lifetime, and then we

21 would need to add in a second occupant who got the

22 rest of the life of the water heater.

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1 MR. SCHLEEDE: That's a different --

2 MR. McMAHON: I think you would find you

3 have the same results.

4 MR. SCHLEEDE: But, no, I don't think you

5 get -- you don't get the same decision for the

6 initial purchaser, and that's where the focus should

7 be.

8 MR. BROOKMAN: Okay. Thank you.

9 MR. LUTZ: The next slide, because of the

10 way we are doing this, we can do a sensitivity

11 analysis, which is a rank order correlation between

12 the inputs and the output of interest. This is the

13 sensitivity of the life cycle cost of two and a half

14 inch jacket insulation.

15 And you'll see that the bars higher up to

16 the top of the chart and that are wider have bigger

17 impact on the value, on the final value. So this

18 shows the discount rate is the most important

19 variable.

20 Then the results for gas fired water

21 heaters, the same columns, the fraction of the

22 population benefitting, the average life cycle cost

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1 savings, and the median payback.

2 MR. BROOKMAN: Steve?

3 MR. ROSENSTOCK: Steve Rosenstock, Edison

4 Electric Institute.

5 In the October '98 report on life cycle

6 cost analysis for the gas fired water heaters, design

7 option five was option two plus the improved flue

8 baffle. On this one it's showing option five being

9 number three plus the improved flue baffle.

10 Are you kind of mixing and matching more

11 of the design options or I'm just --

12 MR. LUTZ: I think you caught another

13 mistake.

14 MR. ROSENSTOCK: Oh, okay. Is it

15 typographical?

16 MR. BROOKMAN: That should be two side arm

17 -- four should be two plus side arm, and five should

18 be two plus improved flue baffle?

19 MR. ROSENSTOCK: Well, in the report here

20 it says -- in the October report, number four is three

21 plus side arm, and number five is two plus improved

22 flue baffle in the October report.

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1 And the reason it really strikes out is

2 that in the October report it shows like 87 percent of

3 the population benefitting from design option five

4 versus the overhead saying 21.6 percent.

5 MR. LUTZ: The change in the numbers is

6 not from the error that you pointed out. I believe

7 it's supposed to be two plus improved flue baffle.

8 We did catch a mistake in that we hadn't

9 been including -- in our efficiency calculations, we

10 had used the wrong design option on improved flue

11 baffle in that report, and so that correction. Those

12 numbers are wrong.

13 MR. ROSENSTOCK: Steve Rosenstock.

14 In the October 1990 --

15 MR. LUTZ: Right, and that was one of the

16 reasons we had an update.

17 MR. BROOKMAN: And just to clarify, on

18 that same page, on page 38, option four, then would

19 that be two instead of three plus side arm heater?

20 MR. LUTZ: No.

21 MR. BROOKMAN: That would be three?

22 MR. LUTZ: Three plus the side arm heater.

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1 MR. BROOKMAN: And then number five would

2 be two plus improved flue baffle.

3 Okay. Thanks for that clarification.

4 Charlie.

5 MR. STEPHENS: Yeah, Charlie Stephens.

6 I want to point out that for those who

7 tend to believe Mr. Schleede's earlier argument, you

8 would also have to argue for the removal of all rental

9 households from this analysis since they never buy a

10 water heater on their own.

11 MR. BROOKMAN: Frank Stanonik.

12 MR. STANONIK: It might be a good

13 suggestion because sometimes they get stuck with

14 paying the fuel bill if they're not buying the

15 product.

16 MR. STEPHENS: Sometimes?

17 MR. LUTZ: Okay. Page 39, slide 39 of

18 your report --

19 MR. BROOKMAN: Mark Krebs before we move

20 on.

21 MR. KREBS: Please. Similar to the

22 gentleman from Boch Water Heaters, you know, I suffer

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1 from attention deficit disorder, Alzheimer's, and just

2 dyslexia, but I am really confused on this one. It's

3 all -- I'm looking at the electric water heater.

4 Number one plus two inches jacket insulation. Okay.

5 You said, you know, electricity per BTU is twice as

6 expensive as gas and all of that.

7 So we're saving $52.93 in a 3.49 year

8 payback for the more expensive electric heat, and the

9 same water heater with a less expensive natural gas

10 energy source is saving more money in a 1.87 year

11 median payback. Help me out. What's going on here?

12 MR. BROOKMAN: We may need to dig for some

13 data here.

14 MR. KUSTERER: George Kusterer with Boch

15 Water Heaters.

16 That was a discussion that was held during

17 a break, and I'll answer that question to the

18 gentleman after the break.

19 MR. KREBS: Well, I need it on the record.

20 MR. KUSTERER: I don't think it belongs

21 here.

22 MR. KREBS: I want it on -- I'd like to

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1 have it on the record.

2 MR. BROOKMAN: Maybe LBL.

3 MR. KUSTERER: It was said off the record.

4 I'll discuss it off the record.

5 MR. BROOKMAN: Let's give LBL a chance to

6 look and see what they can do with that. Jim's

7 looking for it. Is he the one? Is that okay?

8 MR. LUTZ: He can look, but my answer is

9 that it --

10 MR. BROOKMAN: Do you have it? Okay.

11 MR. LUTZ: -- that it depends on the use

12 of those households, the energy prices of those

13 households and the cost, the installation cost in

14 those households.

15 And I'd have to dig to tell you more.

16 MR. KREBS: Well, maybe we need to follow

17 up on this afterwards.

18 PARTICIPANT: It's not the same gallons,

19 right?

20 MR. BROOKMAN: Jim McMahon, do you have

21 the information?

22 MR. McMAHON: Mark, give us a few minutes

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* too1 to look into that one.

2 MR. KREBS: Thanks.

3 MR. BROOKMAN: Okay. Charlie Stephens.

4 MR. STEPHENS: Charlie Stephens.

5 I might just -- those who are looking

6 might check the average versus median. I think you

7 may find that there's a number of electric households

8 that are in the wrong side of zero on their life cycle

9 cost savings, and when you start looking at median

10 versus averages, you may come up with the answer or

11 part of the answer anyway.

12 MR. BROOKMAN: Thank you.

13 I'm going to make a note about this issue

14 and maybe we'll get to some further clarification.

15 MR. LUTZ: The sensitivity analysis for

16 gas fired water heaters. This is on two inches of

17 jacket insulation showing the -- oops. Now I've done

18 it.

19 This analysis shows the rank order

20 correlation of lifetime discount rate, operating cost,

21 and total installed costs with the life cycle cost,

22 and then the final slide is just a request for

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1 stakeholder comments, lifetimes of water heaters,

2 manufacturing costs, retail prices, installation

3 costs, mark-ups for manufacture cost to retail price,

4 the insulation characteristics and costs that we used,

5 projected fuel prices, uncertainty on the energy

6 parameters, design options, temperatures, and models

7 to predict hot water use by household.

8 MR. BROOKMAN: Frank Stanonik.

9 MR. STANONIK: Jim, forgive me if this is

10 a wrong or dumb question, but in terms of the -- you

11 know, I understand the methodology of how you looked

12 at the design option, but if you had looked at design

13 option -- I'm talking about the gas fired one.

14 MR. LUTZ: Un-huh.

15 MR. STANONIK: If you look at the design

16 option of one plus improved flue baffle, all right --

17 MR. LUTZ: Would we have come up with

18 different answers?

19 MR. STANONIK: Would it give you a

20 different answer?

21 MR. LUTZ: It would, and the order and the

22 reasons and the order that we grouped the design

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1 options were selected in the engineering analysis. So

2 you have to go back to that one.

3 We did that to put them in a certain

4 order, put them in order of ascending payback,

5 starting at the lowest payback.

6 MR. STANONIK: Well, I guess, and I'm just

7 trying to figure this one out. I mean, if you

8 partition the consumption of the water heater between

9 the energy to actually heat water that's used as

10 opposed to energy that's just to maintain the water in

11 the tank, my seat of the pants guess is that it's

12 about -- it seems to me it's about three to one,

13 ratio-wise. I may be a little off on that one, but

14 about 25 percent of the energy -- maybe it's a little

15 more than that -- is attributable to let's call it

16 replacing standby losses, and the remaining is

17 actually energy to heat the water.

18 If I'm close there, it intuitively seems

19 to me that you get -- I shouldn't say -- more likely

20 payback if I pay attention to heating the water

21 better.

22 MR. LUTZ: The trouble -- and that does

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1 make sense, but when you become more efficient at

2 heating the water, increase the recovery efficiency,

3 you start getting into regions where you have venting

4 costs, additional venting costs.

5 MR. STANONIK: Well, okay. I understand

6 that, but recognizing that in this case the improved

7 flue baffle measure has been kept below the danger

8 zone, I'm just curious.

9 MR. LUTZ: It's been kept below the danger

10 zone, but it hasn't been kept below the zone where you

11 have to add in Type B vent connectors in a certain

12 percent of the houses. So to increase the recovery

13 efficiency above the 76 percent that it is now, we

14 assume that you would have to, according to the GRI

15 report, install Type B vent connectors in a certain

16 fraction of the houses, and that adds to the total

17 equipment cost.

18 MR. STANONIK: Okay.

19 MR. BROOKMAN: I saw Steve Rosenstock and

20 then Carl Hiller.

21 MR. ROSENSTOCK: Steve Rosenstock, Edison

22 Electric Institute.

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1 In response to Mr. Krebs' comments, in the

2 October '88 life cycle cost analysis, the back Tables

3 5.5.7 and 5.5.8, some of these numbers might have

4 changed by now, but it shows the impact of the various

5 measures, the design options on the annual average

6 electricity use and the average energy savings on a

7 BTU basis.

8 For the electric side, going to design

9 option two, which I believe is what Mr. Krebs was

10 talking about, heat traps plus a two inch jacket

11 insulation, it shows for the electric water heaters,

12 at least in the October version of the report, about

13 a four percent savings, and BTUs per day savings on

14 site, 1,318.

15 On the gas side, it shows about a 7.7

16 percent average energy savings annualized, and 4,841

17 BTUs per day savings.

18 That might explain some of those numbers.

19 MR. BROOKMAN: Thank you, Steve.

20 Carl and then to Steve Nadel.

21 MR. HILLER: Two issues. First, a quick

22 one. Water heater lifetime for gas water heaters,

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1 same as electrics.

2 MR. BROOKMAN: Yeah, referring then to the

3 -- oh, that's your question, and thank you for taking

4 us back to the --

5 MR. HILLER: You didn't show a plot for --

6 MR. LUTZ: I do have a similar plot. I

7 don't have it in the slide show. I was trying to keep

8 it short.

9 It's slightly shorter. It's in the

10 spreadsheet. I believe the maximum is 11 years. I'd

11 have to look it up.

12 MR. McMAHON: This is Jim McMahon.

13 The average on gas is nine years, and the

14 average on electric is 12. I don't remember the

15 minimums and maximums in there. It's like four to 14

16 for gas.

17 MR. HILLER: The other issue, and I've

18 been trying to figure out, waiting for an appropriate

19 point to raise it. I'm not sure if this is the time,

20 but I'll raise it anyway to make sure we get it on the

21 record.

22 All of this analysis so far has been done

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is* 1 on a 50 gallon water heater, 40 or whatever. My point

2 is it's fairly small diameter water heaters as opposed

3 to like an 80 gallon water heater.

4 MR. LUTZ: Now, we did, and I should have

5 made this clear, back when we were calculating energy

6 use, we did look at the RECS household. The RECS

7 survey asked whether they had a small, medium, or

8 large water heater. From that we assigned them a 30,

9 40, 50, 65. We assigned them one of the typical sizes

10 and then the associated UAs and recovery efficiencies

11 that would go with that.

y* 12 So we do reflect the market distribution

13 of different size tanks.

14 MR. HILLER: I understand. That's not the

15 point I'm going to make. The issue is your two and a

16 half inch insulation, for example, is one inch thicker

17 than your baseline, right? You start out with one and

18 a half inch and you added an inch. So that's two

19 inches bigger in diameter.

20 Now, you can do that on a 50 gallon tank.

21 You do that on an 80 gallon tank, and you may well end

22 up significantly impacting the usability of that tank

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1 for going through doorways.

2 MR. LUTZ: Okay.

3 MR. HILLER: So we can't lose that fact in

4 the analysis. Just because it may look cost

5 effective, don't ignore the fact that you may not be

6 able to get it into the house.

7 MR. BROOKMAN: Thank you.

8 Steve Nadel.

9 MR. NADEL: Yeah, I was just going to pick

10 up very briefly on your question about the flue

11 connector, and I was wondering if DOE could please

12 provide citations to those particular reports that

13 were used to reach that conclusion.

14 They're mentioned in the engineering

15 calculation, but only an author and a date. There's

16 no detailed citation. So it's very difficult to track

17 them down.

18 MR. BROOKMAN: Is that on the Web or

19 someplace?

20 MR. NADEL: The Web report just gives

21 author and date without any more detail.

22 MR. BROOKMAN: Okay. Additional

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1 questions?

2 This listing on page 40, we've covered a

3 lot of these. I want to make sure we've covered them

4 adequately. These are really many of the central

5 issues we've already gone over. If you could take a

6 quick peek to see if there's anything else the

7 department would benefit from your advice on on these

8 subjects.

9 Pretty much covered it?

10 MR. LOGEE: Terry Logee from DOE.

11 In particular, if we could find better

12 information on water heater lifetimes, you recall from

13 the chart on sensitivities that's a pretty important

14 variable in our analysis, and we thought just relying

15 on the appliance manufacturing magazine for those,

16 they change year to year and so forth. That's the

17 best we have, but if there's better data out there,

18 we'd certainly like to have access to it and to use

19 it.

20 MR. BROOKMAN: No additional comments at

21 this point?

22 I guess written comments on that subject

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1 would be welcome.

2 Okay. That's the end of that set of

3 presentations. What is the next set? Who presents

4 next? Jim McMahon.

5 We're doing good on time. We're making

6 good progress here.

7 Our next presenter is Jim McMahon.

8 MR. McMAHON: Well, now that we've gotten

9 all of the hard stuff out of the way, consumer

10 marginal energy rates, a very short presentation.

11 As most of you know, the advisory

12 committee to the department on appliance standards

13 recommended that the department move away from average

14 energy rates to marginal energy rates. The economic

15 justification indicates that two of the seven factors

16 in the legislation would be affected by this change,

17 the first being the economic impact on consumers, and

18 the second being the lifetime operating cost savings

19 compared to increased price or the life cycle cost.

20 So what is it that is supposed to change?

21 Previously consumer energy bill savings in this

22 analysis were estimated using average interview

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1 prices. Depending upon which product you look at and

2 which period of time, those were either national

3 averages or in the case of ballast in the last few

4 years, they were averages by utility.

5 The new approach is to estimate consumer

6 marginal energy rates to calculate energy bill savings

7 for individual households or buildings. In other

8 words, the energy savings are valued at the margin,

9 not at the average.

10 What this means is we're basically going

11 to calculate consumers' energy bills prior to the

* 12 standard and then with the new standard and see what

13 the effect is on their bill.

14 What's the method? We're going to obtain

15 a database of individual customers or buildings.

16 We've actually done that. We purchased a commercial

17 data set called MAISY available from Jackson

18 Associates. You can find them on the Web at

19 maisy.com, and I'm sure they'd be happy to sell you

20 the database also.

21 MR. KREBS: Spell MAISY.

22 MR. McMAHON: Sorry?

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1 MR. KREBS: Spell MAISY.

2 MR. McMAHON: M-A-I-S-Y, daisy but with an

3 M.

4 This is a database that was constructed

5 originally from the national samples that EIA does,

6 residential and commercial, and I'll talk a little bit

7 about it in a couple of slides back.

8 The next step is to design a nationally

9 representative sample of customers. Let me tell you

10 what I told the advisory committee, which is it will

11 not be possible to analyze each of the 100 million

12 households approximately in this country one by one

13 and tell you the answer house by house.

14 So what we need to do is work from a

15 sample set, and we want to make sure that that sample

16 set represents different energy suppliers, that is,

17 investor owned utilities, munis., world co-ops, as

18 well as some of the new suppliers, as well as

19 represents the consumers well, represents different

20 regions, different household characteristics, all of

21 the things that we've talked to you about earlier in

22 the context of the water heater analysis.

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1 The third step is to collect tariff

2 information. By that I mean the rate schedules from

3 the utilities or the energy suppliers, and there's a

4 great deal of data there.

5 The problem that we have is right now

6 there is no single data set that contains both the

7 tariff information, the rate schedule information, and

8 the characteristics of the houses and has them matched

9 up.

10 So the next step is to develop and test a

11 method for matching the tariffs with the customers.

12 Then we'll calculate the marginal rates for our sample

13 of buildings, and we'll use that sample to estimate

14 the marginal rates for the entire population.

15 Okay. How do we extract marginal rates?

16 Each building has energy use associated with it. The

17 data set that we have, just like the RECS and

18 CBECS data sets available from EIA, has a total energy

19 consumption for each building. These are gotten from

20 the utility bills, and for the purpose of the water

21 heater analysis, we have them by fuel type. So it's

22 electric, gas, and oil.

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1 We're going to calculate monthly energy

2 bills for each of the buildings in our sample. Why

3 monthly? We're doing monthly because for some

4 products, we're looking ahead to central air

5 conditioners, for example. The rates change with

6 seasons, as does the usage, and it's going to be very

7 important to capture that seasonal variation.

8 The third step is to calculate annual

9 energy savings due to standards, annual here, and then

10 distribute that across the year to months. So the

11 annual savings will be calculated by methods like you

12 have just seen for the life cycle costs. The new

13 information is to distribute that across the year into

14 the months of the year.

15 And then we can calculate monthly energy

16 bills for the sample. I've got a parenthetical there.

17 We know that some customers have time of use rates.

18 If we are going to capture those customers, we're

19 going to have to deal with hourly energy consumption.

20 That would probably involve simulation models which

21 exist for capturing hourly profiles.

22 That's a lot more work. So that's just

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1 there as we're aware of that concern. If time of use

2 rates capture a sufficient part of the population,

3 then we'll try and deal with that.

4 Finally, we'll use the marginal rates to

5 estimate national marginal rates, and we'll calculate

6 the bill savings.

7 The data. There are three sets of data.

8 The first is the buildings database, and we have

9 purchased MAISY, and it's installed at LBL. There's

10 about 90,000 commercial customers, not of interest to

11 this analysis, and 60,000 residential. That's almost

12 ten times as large as the RECS data sample.

13 The advantage of it being larger is that

14 it's stratified by state. The RECS data set that

15 we've talked about so far does not have detailed

16 geographic identifiers for the houses. You can't tell

17 where they are. The MAISY data set has done that for

18 us down to the state level.

19 It also provides lots of energy related

20 customer characteristics. I think it's a 600 megabyte

21 file.

22 It also has household load profiles. By

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1 that I mean it has the total household distribution of

2 loads across the year. It doesn't have the end uses.

3 Yes.

4 MR. STANONIK: Frank Stanonik, GAMA.

5 Jim, when you say stratified by state, I

6 guess are you saying that, in fact, the MAISY data

7 would have more households in California because there

8 are more people in California? I mean so there's some

9 correlation to how the population is dispersed across

10 the United States?

11 MR. McMAHON: Yes. What I'm saying is

12 each of the households, each of the buildings in the

13 sample is assigned to a state.

14 MR. STANONIK: So it's identified by

15 state.

16 MR. McMAHON: Right, right, and because

17 it's larger, we can take a sample that says here's

18 California. It will have roughly 6,000 households in

19 it. That's enough that we can say something

20 meaningful about California.

21 If you take the RECS set and you've got

22 7,000 houses to start and you say let's look at new

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1 construction in California or whatever, you start

2 getting down to such a small number of houses.

3 I remember looking at heat pumps. We

4 looked for new construction single family heat pumps

5 in New England because they have the census divisions,

6 and there's only one in the sample, and you really

7 don't want to do an analysis on that one house and say

8 this is what's going to happen to New England.

9 (Laughter.)

10 MR. McMAHON: Right? So that's why I'm

11 pointing that out.

12 MR. STANONIK: Okay.

13 MR. McMAHON: Okay. So that's the

14 buildings database. That's one large set of data that

15 we now have in place.

16 The second set of data that has to be

17 brought in and married to that is the tariffs. We've

18 looked at the Web sites for the major trade

19 associations for the utilities, APPA, the American

20 Public Power Association, representing the munis.;

21 Edison Electric Institute, represented here,

22 representing the investor owned utilities; and RECA

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1 for the rural co-ops. Each of those Web sites has a

2 list of their member utilities. It's typically

3 several hundred utilities each, and each of them has

4 live links from that list to the utility Web site.

5 So we were able to go through those and go

6 back to those individual utilities, look on the Web

7 and capture those tariffs that are already in place on

8 the Web.

9 It's not as wonderful as it sounds. A lot

10 of them do not have the tariff information publicly

11 available, but we can get probably I would guess

12 between ten and 20 percent, maybe a little more than

13 20 percent, of the utilities have tariff information

14 available that way. So we are gathering that

15 information.

16 There are also commercial vendors who sell

17 data sets of rate information, and we're exploring

18 what they have. They tend to be not as comprehensive

19 in their coverage. They tend to focus on large

20 utilities. Some of them are not nationally

21 representative, but in any case, there are other

22 sources.

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1 Public utility commissions have the rate

2 information if we can gather them from each of the

3 states, and in some cases we're contacting individual

4 utilities.

5 The third set of data is the part that

6 allows us to get from annual to monthly, and that is

7 monthly end use load profiles. There's a fair amount

8 of published literature, particularly in the 1970s up

9 through the middle of the 1980s. There are utility

10 studies.

11 Right now there's a great deal of research

12 going on by energy suppliers in the restructured

13 world. However, almost all of it is proprietary,

14 unlike the situation ten or 20 years ago where we had

15 good cooperation from energy suppliers to provide

16 information to this process. Most of them are now

17 competing for customers and don't want to share what

18 they know about their customers, but we're trying to

19 track that and see if there's anything we can gather

20 from recent data as well.

21 And that's it. Are there questions?

22 MR. BROOKMAN: Questions following on

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1 Jim's presentation.

2 Mark Krebs.

3 MR. KREBS: Mark Krebs.

4 Jim, going back to your presentation of

5 October 30th, basically all of this is admirable.

6 However, as I recall, it's in essence a moot point in

7 regards to this particular rulemaking because it won't

8 be in place in time to make a difference and to be

9 incorporated into this, or am I totally wrong on that?

10 MR. McMAHON: No, that's not the case.

11 Our intention is to include the marginal rates in the

12 next round of analysis.

13 MR. BROOKMAN: Terry Logee.

14 MR. LOGEE: Let me just clarify that

15 perhaps a little bit. We will definitely include it

16 in our final analysis. I'm not so sure that it will

17 be included in the next round because, as you've

18 heard, there are some errors. There are some concerns

19 that were aired here, and we probably will revise

20 these analyses prior to a final analysis to take

21 account of some of those, and we'll still be probably

22 using the average Annual Energy Outlook numbers at

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1 that point.

2 MR. McCABE: This is Michael McCabe.

3 Let me add to that. Since the use of the

4 word "final" can be interpreted to be in the final

5 rule as opposed to the proposed rule, based on the

6 information that we've received and some of the

7 discussion we had earlier today about the GAMA

8 submittal, we are going to be quickly revising an

9 updating this analysis.

10 So when Terry is talking about the revised

11 analysis, the next one, we will be completing the work

12 on electricity prices and other, which will be

13 reflected in the final, using the phrase that Terry

14 used, the final analysis that will go into the

15 proposed rule, the results that will be considered by

16 management in reaching the decision on the proposed

17 rule.

18 So this is intended to be in the technical

19 support document that will accompany the proposed

20 rule, though the next revision of the analysis, which

21 will be quickly done, again, as Terry said, will be

22 based on average electricity prices.

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1 MR. BROOKMAN: Steve Rosenstock.

2 Thank you for that clarification, Michael.

3 MR. ROSENSTOCK: Steve Rosenstock, Edison

4 Electric Institute.

5 For the life cycle cost spreadsheet that

6 was just posted on the Web site, what distribution of

7 electric prices and/or natural gas prices are being

8 shown as I'll say a place holder? You know, what

9 version are we talking about?

10 MR. McMAHON: Right. Everything you've

11 seen so far is using a national distribution from the

12 RECS data set. So it's energy prices reported for

13 each house, but they are average energy prices, not

14 marginal.

15 MR. ROSENSTOCK: Steve Rosenstock.

16 And they include fixed costs?

17 MR. McMAHON: They include fixed costs.

18 MR. ROSENSTOCK: Thank you.

19 MR. BROOKMAN: Glenn Schleede.

20 MR. SCHLEEDE: Jim, could you say a couple

21 more words about the MAISY database? First, what

22 does it cost, and second, without buying it, is there

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1 a description of the way it was constructed that's not

2 proprietary that you can make available?

3 MR. McMAHON: Yes. Actually, I gave the

4 Web site on purpose. There's quite a bit of

5 documentation on there. You can get a complete list

6 of all of the variables and some good description of

7 how they constructed it.

8 The cost for the residential data set was

9 approximately $25,000. We also bought the commercial

10 set to use with the ballast analysis.

11 MR. SCHLEEDE: How much is that?

12 MR. McMAHON: About the same.

13 MR. BROOKMAN: Additional questions for

14 Jim?

15 Thanks, Jim.

16 We're doing great on time. So, Steve

17 Nadel, I'm going to suggest we plug on through one

18 more agenda item that's scheduled for tomorrow, but,

19 Steve, do you have a question or comment before we

20 proceed?

21 MR. NADEL: It was a question, I guess,

22 for DOE. We're going to all be doing comments. What

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1 vrversion should we be commenting on? Should we be

2 commenting on the version that was on the Web last

3 week? Should we be commenting on the version that's

4 on the Web today? Should we be commenting on this

5 soon to be available new version?

6 Now, how would you like to proceed?

7 MR. LOGEE: Ouch.

8 (Laughter.)

9 MR. LOGEE: Don't listen to him. He's a

10 snake oil salesman. Not really.

11 I believe the version on the Web currently

12 is -- now, there may be two versions, but the later

13 version on the Web would be the one that I think we

14 would comment on.

15 As you realize, government doesn't really

16 move that quickly. So I don't think our revisions

17 will be available in time for the December 11th

18 comment period. So I would prefer that you make

19 comments to this workshop on the latest one. I

20 believe it's dated November, the November life cycle

21 costs.

22 Both the revised engineering report and

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1 the revised life cycle cost report have a brief

2 addenda section in it. So if you have the report with

3 the addenda section, those are the corrected reports.

4 Those are the ones to comment on, to use to base your

5 comments on.

6 MR. BROOKMAN: Joe.

7 MR. MATTINGLY: Joe Mattingly from GAMA.

8 We want to be as helpful as possible, as

9 always.

10 (Laughter.)

11 MR. MATTINGLY: And there's 'probably a

12 number of comments that we can make by the December

13 11th date, but suppose we have other comments or data

14 or whatever and we just can't do it by December 11th.

15 Can you still accept it after that point?

16 MR. LOGEE: Yes. Comments are always

17 welcome, and you know, you can send them in up until

18 the time we publish the NOPR. You know, of course,

19 there's some cutoff point at which we'll be doing

20 internal reviews and decision making, and they just

21 wouldn't probably be included at that point.

22 But certainly if you can get the bulk of

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1 your comment together for December 11th, we would

2 appreciate that, but if there are additional data or

3 other information, if you could let us know, for

4 instance, in your comment that you have some follow-on

5 information, we'll certainly await for it.

6 MR. MATTINGLY: Thank you.

7 MR. BROOKMAN: I guess in that case if

8 there was a significant bit of data that was going to

9 be late, you'd like to know something about it.

10 MR. LOGEE: Yes.

11 MR. BROOKMAN: Steve Rosenstock.

12 MR. ROSENSTOCK: Just a quick follow-on.

13 For the life cycle cost analysis, you're talking about

14 addenda or appendices. I know for the engineering

15 analysis there's like 60 pages of appendices in the

16 November version. For the life cycle cost analysis,

17 how much actual material is there, just out of

18 curiosity?

19 And are there a lot of numerical

20 differences between the October and November version?

21 MR. LOGEE: There are some numerical

22 differences. Jim Lutz already mentioned that there's

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1 difference in the improve flue baffle analysis because

2 of an error.

3 The November life cycle cost analysis has

4 three appendices on it, one for sensitivities, and if

5 I have the -- let's see.

6 MR. NADEL: I think one was --

7 MR. LOGEE: One for distributions of the

8 manufacturing costs, and the third one is the

9 uncertainty of the energy parameters, EFRE and UA and

10 P-on.

11 I don't know exactly how many pages that

12 adds, Steve. Probably about 25 pages.

13 Perhaps Steve is alluding to the fact that

14 if you go on to our Web site and you attempt to

15 download these, you have to have a fair amount of

16 space available, like one and a half to two megabytes

17 for either one of these reports. They're very large,

18 and probably some of the databases are also in that

19 same size range. The spreadsheets are for sure.

20 These things are not small anymore.

21 MR. BROOKMAN: Additional questions or

22 comments? Steve Nadel.

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1 MR. NADEL: I'm just trying to understand

2 the schedule for the rest of today and tomorrow. I

3 know we've made it through the official agenda for

4 today. We do have a list of issues that we said we'd

5 get back to. I'm not sure whether that's today or

6 tomorrow.

7 And then I know we have the presentations

8 for tomorrow. How does Doug or someone already

9 suggested that we proceed?

10 MR. BROOKMAN: Yeah, I was going to

11 suggest something, but I wanted everybody to stay with

12 me while I do the suggesting so we could make an

13 informed decision.

14 I was asking whether any of these issues

15 that are posted up here, if they could kind of easily

16 be addressed, if they were contained enough,

17 circumscribed enough that they could be discussed

18 effectively in this time frame, or whether the

19 department with support of contractors needs some more

20 time to kind of mull over it.

21 I know Jim's working on -- he's ready on

22 one.

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1 I was also going to suggest that there's

2 one, the consumer subgroup element, which is on for

3 tomorrow. I was going to see. That's another

4 short -- I should say a confined topic, kind of a

5 limited presentation followed probably by fairly

6 limited comment, that we could try to kind of squeeze

7 that in now as well, I think, productively.

8 I'd hate to have anybody show up tomorrow

9 expecting to hear that discussion and miss it because

10 we did it today. That would concern me.

11 But, Brenda, do you know of anybody that

12 was coming specifically that was concerned about

13 consumer subgroup issues? I'm wondering if anybody

14 else knows of anybody else that might be coming

15 tomorrow for that issue specifically. No?

16 Michael, you have a concern about this?

17 MR. McCABE: We've had approximate -- this

18 is Michael McCabe -- we've had approximately half a

19 dozen people who have left who had been attending up

20 until, say, the last hour or so, and I don't know what

21 their topics that they would be interested in are. As

22 a matter of fact, I don't know if anybody has notified

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1 us in advance as to specifically what their areas of

2 interest are.

3 So I'm concerned about those who have left

4 and any who may be intending just to come for

5 tomorrow.

6 MR. BROOKMAN: Okay. Then maybe as a way

7 of proceeding, Steve, let me suggest the following.

8 Maybe we could rely on Jim to lead off with what he's

9 come up with about the inconsistent data comparison

10 between gas and electric life cycle cost stuff, right?

11 Is that a fair description?

12 While he's doing that, Terry, can we put

13 you plus your other support folks from the contractor

14 team thinking about whether there's a way to address

15 these other issues and maybe begin that discussion?

16 And that way we'll hold the agenda for

17 tomorrow intact and no one that's planning on the

18 revised agenda -- okay, Terry. One additional thing?

19 MR. LOGEE: I have one announcement. The

20 ladies are busy handing out the information for

21 tomorrow. They have informed me that if you forget

22 it, if you don't bring it tomorrow, you're just out of

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1 luck or you'll have to look on with somebody. So do

2 not leave it in your hotel room if you can avoid that.

3 MR. BROOKMAN: They're getting tougher as

4 time passes. There's just no doubt about it.

5 Okay. So then I guess Joe Mattingly.

6 MR. MATTINGLY: Joe Mattingly from GAMA.

7 I don't know if we already covered this or

8 not. I was gabbing.

9 In the last workshop we did on the

10 commercial, you know, test procedures, et cetera, it

11 was very helpful when DOE sent out that list of issues

12 for which they wanted additional comment. Can you do

13 the same thing here? Can we review the transcript and

14 provide us a list of things you want comments on as

15 quickly as possible?

16 And that would really help us to focus and

17 get you what you want.

18 MR. BROOKMAN: And, Terry, did you

19 describe what Brenda and Sandy were handing out there

20 because I'm not sure if you did? Okay. Would you say

21 it again?

22 MR. LOGEE: The additional information are

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1 all of the slides for tomorrow's presentations. We

2 wanted you to have them so you could look at them

3 tonight if you choose rather than HBO. I'm sure this

4 is much more scintillating and interesting.

5 Please don't forget them and leave them at

6 your hotel room because you won't be able to get an

7 additional copy tomorrow.

8 MR. BROOKMAN: Thank you.

9 So Jim McMahon has been working his

10 calculator over here, and he's just about to give us

11 some information.

12 Yes, Jim Vaughan.

13 MR. VAUGHAN: A quick procedural question

14 about tomorrow. Is there any chance of -- oh, here's

15 a microphone -- is the schedule fairly fixed for

16 tomorrow? I have one suggestion, and that is the

17 technical research presentation by NIST is the last

18 thing on the agenda, and I know that's of particular

19 import to a number of people. Is there any chance of

20 getting it moved up in the agenda?

21 MR. LOGEE: I think so, but I'll have

22 to -- Hunter Fanney is not here right now. So I'll

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1 have to see if I can contact him, but I believe he's

2 planning on being present for most of the time

3 tomorrow.

4 MR. VAUGHAN: He's not doing anything

5 tomorrow anyway, is he?

6 (Laughter.)

7 MR. LOGEE: I don't know. I know he's

8 planning on being here for this particular

9 presentation.

10 MR. VAUGHAN: I just think that's going to

11 be a major part of tomorrow's meeting. I'd hate to

12 have it wind up at the end.

13 MR. BROOKMAN: Okay. Well, we're going to

14 try and move expeditiously through the entire morning

15 I can guarantee you.

16 So, Terry, if you'll be willing to call

17 Hunter. He's typically here in the morning when he's

18 a participant.

19 Are there other questions before we start

20 and hand this off to Jim McMahon?

21 (No response.)

22 MR. BROOKMAN: Jim.

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1 MR. McMAHON: Thank you.

2 The question had to do with the paybacks

3 that were reported, the median paybacks for gas and

4 electric, and I've traced them back. All of these

5 numbers --

6 MR. STANONIK: Jim, Jim, either turn on

7 those lights or move the thing under the light,

8 please. One or the other.

9 MR. McMAHON: I'll read them off. I know

10 they're a little hard to read.

11 I wasn't able with my hand calculator to

12 do all of the distributions. So I'm sorry. I just

13 did the average values. So these are all average

14 values.

15 The median results that were questioned

16 are down here on the bottom, 3.49 for electric and

17 1.87 for gas. The averages come out very similar. So

18 if you'll bear with me, we'll just work through the

19 averages.

20 The major reason they're different is we

21 have manufacturer costs. The increase in manufacturer

22 costs going from baseline to two inch jacket for

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1 electric is $27. For gas it's under $19, and that's

2 what's driving this thing.

3 It's amplified by the mark-ups. If you

4 recall, the electric mark-up is 1.5, rounding, and the

5 gas mark-up is 1.15. So that makes the retail

6 difference $40 for electric and $20 for gas.

7 And so when you then carry through, these

8 are the operating cost savings, approximately $12 in

9 each case, you get a much higher payback for electric

10 than you do for gas. That's where those numbers came

11 from.

12 I can tell you the page references if you

13 want to check my work. The LCC report, page 46, has

14 the equipment costs for electric. This is page 46,

15 and this is page 48, and page 61 and 63 have the

16 operating costs.

17 MR. BROOKMAN: Steve Nadel.

18 MR. NADEL: These underlying costs

19 differences, these come from the data submitted by the

20 manufacturers. So if there are questions about this

21 data, it should go to the manufacturers?

22 MR. McMAHON: These numbers, the

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1 manufacturer cost baseline, jacket and --

2 MR. NADEL: Yeah.

3 MR. McMAHON: We did the deltas. These

4 come from GAMA.

5 MR. NADEL: Okay.

6 MR. McMAHON: The mark-ups are derived as

7 we described earlier from a combination of a retail

8 price survey and GAMA data, but, yeah, that's where

9 those come from.

10 MR. BROOKMAN: David Goldstein.

11 MR. GOLDSTEIN: David Goldstein, NRDC.

12 I was kind of puzzled by these numbers,

13 too. So I flipped back into the charts to see if I

14 could come up with explanations, and in addition to

15 everything that Jim put up, which I didn't see, the

16 base insulation apparently on the gas model is worse.

17 So the operating cost savings are bigger because you

18 seem to be starting off at crummier insulation.

19 MR. McMAHON: That's right.

20 MR. GOLDSTEIN: -- one over relationship.

21 So it gets --

22 MR. McMAHON: It's approximately one and

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1 a half inch in the electric when you start and one

2 inch in the gas, round numbers.

3 MR. BROOKMAN: Additional cases relative

4 to this?

5 MR. KREBS: I'm going to defer. You know,

6 I think that, you know, I understand the difference in

7 insulation and the effect of the mark-up rate.

8 MR. BROOKMAN: Okay. Yeah.

9 MR. KREBS: Do you want me to start over?

10 MR. BROOKMAN: You can summarize.

11 MR. KREBS: I'm going to defer judgment.

12 I understand the difference in the insulation values

13 to start with, and I understand the difference in

14 mark-up rates, but you know, the literal person that

15 I am, you know, looking at this slide, it said two

16 inches in each case.

17 MR. BROOKMAN: Okay. Thank you.

18 Additional questions for Jim McMahon,

19 follow-on comments on this?

20 (No response.)

21 MR. BROOKMAN: Okay. Thanks, Jim. Real

22 time analysis.

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1 Steve Nadel.

2 MR. NADEL: Yeah. Since we seem to be at

3 a point of wondering what are we covering next, I know

4 there's one issue that was going to be presented. We

5 discussed earlier to say we'll defer that to a little

6 later. It was the explanation of how DOE came up with

7 78 percent recovery efficiency as the maximum that

8 they wanted to look at and some confusion about where

9 that came from.

10 Supposedly it came from some tank runs,

11 and it was said at the time, "Well, we'll get to that

12 later." So that may be something since it's more

13 informational so that we can understand where DOE is

14 coming from to just understand what was done.

15 MR. BROOKMAN: I should say at the outset

16 it's thrilling to be ahead in a situation like this.

17 Seize the initiative here if we can.

18 I was wondering what the department's

19 pleasure would be. Are you in a position to comment

20 on some of these things now or are they best deferred

21 till tomorrow?

22 We don't want to get involved in a

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1 discussion that's going to go so long that it's going

2 to -- right. We need it to be a fairly confined

3 discussion so that we honor our commitment to let

4 people out at 4:30 today.

5 Steve suggests that maybe the 78.5

6 recovery efficiency issue was one of the ones that

7 would be --

8 MR. LOGEE: Yes, Steve, we want to revisit

9 that, but I'm not prepared to revisit it right now

10 other than to say that an earlier comment, I think,

11 was by Charlie to look at the performance of water

12 heaters in the marketplace that have -- to true up our

13 analyses to the performance and the cost, prices of

14 water heaters in the marketplace that have similar

15 design options on them is one of the approaches that

16 we're going to be considering in revising these

17 analyses.

18 I don't know just how effective or how

19 easy that will be. It's obviously pretty difficult to

20 determine what is specifically on a model of a water

21 heater unless we get a lot of the specific information

22 on that, and when we make calls to get prices, it's

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1 difficult to get that kind of information over the

2 telephone.

3 But I'm not ready, at least for my part,

4 I'm not ready to discuss exactly why we stopped at 78

5 percent recovery efficiency on the gas water heaters.

6 MR. BROOKMAN: Yes, Jim. Jim Lutz.

7 MR. LUTZ: Most of the issues of venting

8 gas fired water heaters and what efficiency levels

9 require what venting technologies, what combination of

10 double walled vent connectors and relining masonry

11 chimneys, all of that, came from two GRI reports that

12 were done by Battelle. One is called "Gas Water

13 Heater Venting Issues and Alternatives," and the other

14 is "Categorization Criteria for Residential Draft Hood

15 with Gas Water Heaters."

16 PARTICIPANT: Page 98.

17 MR. LUTZ: I'm not sure if you have the

18 latest version. It's page 98, reference 21 of the

19 engineering analysis. Crissa Fuel E (phonetic),

20 that's the one, and the next one, D. Philips.

21 MR. NADEL: Okay, and so I'm just trying

22 to figure out where the figures came from as opposed

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1 to getting into the technical detail. Before when we

2 were asked, we were told that it was not these GRI

3 sources, that DOE did some tank runs, and that's how

4 they came up with it. I just want to understand where

5 this came from.

6 MR. LOGEE: They did come from the tank

7 runs. When we initially went through our design

8 options, we had screened out a number of them, and we

9 screened out the power vents for the safety concerns

10 and the fact that we didn't think the venting system

11 was applicable in all situations.

12 So that left us with these design options,

13 and we chose some improved level or a level of

14 improvement on the improved flue baffles, and that's

15 what we came out with.

16 I guess that we could go back and attempt

17 to revisit that, but, you know, for a higher level of

18 efficiency, but I don't recall just what we gave to

19 the manufacturers for their pricing, you know, what

20 they're basing their pricing on or whether we

21 indicated a 78 percent improvement or just what it

22 was.

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1 So we need to check that out before we,

2 you know, can proceed with additional runs.

3 MR. NADEL: All right. I mean, I guess at

4 this point I'm looking for just background, where it

5 came from. Are those specific numbers, 78 percent

6 recovery efficiency for the chimneys and 76 percent

7 recovery efficiency for the connector, from the GRI

8 reports or, if not, are they based on some DOE

9 calculation, and if so, how did DOE get those?

10 And I'll tell you what. We're getting

11 into too much detail here. Why don't you look into

12 that and you can report back tomorrow, just the answer

13 to the basic question: where did you get those

14 numbers from?

15 MR. LUTZ: We based the limits on the GRI

16 report, and then from there made sure that our models

17 did not exceed those limits.

18 MR. NADEL: So those 76 and 78 percent

19 recovery efficiency numbers come from GRI reports?

20 MR. LUTZ: Right.

21 MR. NADEL: Okay.

22 MR. BROOKMAN: Thank you. That's helpful.

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1 Those previous commenters, Jim Lutz and

2 Terry Logee both.

3 Charlie Stephens.

4 MR. STEPHENS: Sorry about this. One

5 further comment, Jim.

6 Did the GRI report -- how did it

7 characterize those limits? I mean, did it say that in

8 many cases this would cause a problem or one should

9 never exceed these limits?

10 MR. LUTZ: It was in many cases, and some

11 of them had geographic limitations, that this is okay

12 every place, but these regions, and this is okay

13 everywhere.

14 One of the people that worked on them is

15 back there.

16 MR. PAUL: Again, if anyone is interested

17 in the GRI report, leave me your business card, and

18 I'll make sure you get copies.

19 MR. BROOKMAN: Would you say your name for

20 the record again?

21 MR. PAUL: Darrel Paul, Battelle.

22 MR. BROOKMAN: Thank you, Darrel.

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1 So Darrel has got additional information.

2 Steve?

3 MR. NADEL: One other little -- just so I

4 can track this down, in the report, page 26 of the

5 engineering report, it refers to other publications,

6 Paul, et al., 1992, and Talbert, et al., 1995. Are

7 those now superfluous in the current version or are

8 those additional sources for this information?

9 MR. LUTZ: I don't know.

10 MR. NADEL: If you can check and get back

11 with us tomorrow, that would be great.

12 MR. LUTZ: Do you have the Appendix C,

13 Steve?

14 MR. NADEL: No, I do not.

15 MR. LUTZ: That's a summary of the

16 venting issues.

17 MR. NADEL: Okay.

18 MR. BROOKMAN: Okay. So Jim Lutz is

19 saying for the record that Appendix C is a summary of

20 the venting related issues.

21 MR. LUTZ: Appendix C of the engineering

22 report.

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1 MR. NADEL: I want that report.

2 MR. BROOKMAN: Terry Logee.

3 MR. LOGEE: I have one other comment. I

4 was just reminded by Ed that when we did our

5 manufacturing interviews last fall, we did discuss the

6 appropriate recovery efficiency limits with them, and

7 talking about 78 percent, and that was agreed that we

8 were still within the safety zone by them, and we felt

9 comfortable with staying with that in our tank runs.

10 So some of our rationale for going to only

11 78 percent was based on those interviews with the

12 manufacturers.

13 MR. BROOKMAN: One of the issues that was

14 raised earlier -- Terry, do you have another issue now

15 that you would like that we could raise?

16 MR. LOGEE: Yes.

17 MR. BROOKMAN: It's on our list over here

18 on issues that are pending.

19 MR. LOGEE: Now, this one isn't on the

20 list yet.

21 MR. BROOKMAN: Okay. "Yet," he says.

22 MR. LOGEE: Well, there is some concern

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1 from some of the participants here about our use of

2 the EIA data, specifically that there's a difference

3 in the average water use between the gas and electric

4 water heaters, and I was attempting to explain some of

5 the reasons why that might have occurred.

6 As Jim Lutz mentioned, there was a slight

7 difference in the average daily water use between

8 owners of gas and electric water heaters as reflected

9 in the EIA database, and you recall that that's a

10 database of 7,000 home. I guess approximately four to

11 5,000 of those homes are single family homes that have

12 water heaters.

13 And there's an additional factor in where

14 the various -- there are more gas water heaters, I

15 guess, located in the northern areas than in the

16 southern areas, and so forth, and those kinds of

17 differences begin to add up to a noticeable difference

18 in how much water is used.

19 And I wanted to try to make that clear to

20 people here, that we didn't dream this up out of thin

21 area. This is a publicly available database. It's

22 fairly recent. It's 1993 that it was published. It

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1 was data that came from 1992, and I believe there will

2 be an update by next year.

3 If it's available in time, we'll be using

4 that perhaps in our final analysis. It depends on how

5 soon it's available.

6 MR. BROOKMAN: George.

7 MR. KUSTERER: One quick comment. George

8 Kusterer, Boch Water Heaters.

9 And I can't quote verbatim, but I believe

10 the comment was made with regard to the gas water

11 heater calculation that the houses were bigger. I

12 kind of didn't want to say anything at that point. I

13 figured we'd --

14 PARTICIPANT: I thought it had more

15 people.

16 MR. KUSTERER: No, they said the houses

17 were bigger. That's what they said. The houses were

18 bigger, and I don't think they surveyed the size of

19 the house.

20 Probably the reason, the most logical

21 reason that they used more hot water is because there

22 was more hot water available.

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1 MR. BROOKMAN: Glenn Schleede.

2 MR. SCHLEEDE: A question concerning the

3 use of the RECS data. The sample for the RECS survey,

4 it was stratified to permit projecting from the 7,000-

5 plus homes to 90 million or whatever the number was

6 they projected to.

7 Now, has anyone talked with the EIA folks

8 who did the survey, and do they concur that use of

9 selected data from that sample in the way you are now

10 using it, that that's correct use of the sample? Is

11 it still legitimate use of that particular sample for

12 the uses you're making of it? And has someone from

13 EIA said, "Yes, that's a legitimate use"?

14 MR. LOGEE: That's a good comment, and we

15 haven't done that. It has been brought up before, but

16 we have not been able to get to that yet. We will

17 certainly do that. It is a concern.

18 MR. BROOKMAN: Terry.

19 Jim.

20 MR. McMAHON: Jim McMahon.

21 We have not explicitly checked with EIA,

22 and I'll be happy to do that this week. I don't know

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1 of any reason why this would create a problem. We are

2 using the statistical sample as it was defined by EIA.

3 MR. BROOKMAN: Thank you.

4 Yes. Your name?

5 MR. BRUNDAGE: Don Brundage, Southern

6 Company.

7 I'd like to support what LBL has said on

8 gas water heaters on average having higher uses than

9 electric. At Southern Company we have precious little

10 survey data of actual usage, but your usual variables

11 that you look at on number of persons per household,

12 apartments versus single family, there's a strong

13 correlation that you are more likely in a large single

14 family house with multiple -- with a large number of

15 people living there to have a gas water heater.

16 It's also correlated to since the heating

17 system tends to drive the -- the space heating system

18 tends to drive the water heating system,, you have a

19 higher correlation -- you have a higher percentage gas

20 homes and larger single family than you do in

21 apartments.

22 Plus you have factors such as outlying

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1 areas are less likely to have gas. Close in, urban

2 areas are more likely to be multi-family. There's a

3 whole host of reasons that you have more water use out

4 of gas water heaters than electric.

5 Thank you.

6 MR. BROOKMAN: Thank you.

7 Are there any other issues the department

8 wishes to raise at this point or should we reward

9 people for being so efficient?

10 This is an unusual situation, I should

11 say. When the department has these workshops, there's

12 always a lot on the agenda, as you can tell, and to

13 get through it as efficiently as we have today, it's

14 wonderful.

15 Terry, is there anything else, or should

16 we release them until in the morning?

17 Yes?

18 MR. STANONIK: This is really not a

19 question to the issues, but the baseline results and

20 methodology, this very small document -- and I got the

21 one that was, I guess, available in October -- it has

22 several very nice graphs, maps of the United States

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1 showing various number of people, draw per capita and

2 all of that stuff.

3 The problem is on my copy the gradients

4 that are -- in fact, the gradients between the various

5 ones I can just tell light and dark. I can't tell the

6 gradations from the others. Is there some way to get

7 a better copy of that?

8 MR. LOGEE: Zing. I've been complaining

9 to LB&L that we needed to have these copies that would

10 photocopy well. We've looked at that, but it's -- I

11 think we can probably improve on it, but at this

12 point, it's -- you know. We can bring it up.

13 MR. STANONIK: Charlie has a nice one.

14 The middle half of the United States --

15 (Laughter.)

16 MR. STEPHENS: That's what happens when

17 you try to get all of those nice gradations. It

18 overloads the printer, and we're talking about a big

19 printer here.

20 MR. STANONIK: I'm going to have to go to

21 Steve's office.

22 MR. STEPHENS: We'll charge you a very

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1 reasonable fee. Don't worry.

2 MR. BROOKMAN: Mark Krebs.

3 MR. KREBS: One answer, and I think one in

4 general for all of this information, you know, it's

5 all electronic at some point, and it could be put on

6 your all's Web site.

7 PARTICIPANTS: It is on the Web site.

8 MR. KREBS: Well, then you've got to be

9 able to tell there. When you print it is a function

10 of your printer, you know, how it's going to turn out,

11 but if it's there on the Web site, you know.

12 MR. BROOKMAN: Thank you.

13 Maybe there'll be some additional ideas on

14 this for tomorrow.

15 Terry, shall we? Yes. I'll turn it back

16 to Terry Logee for closing out comments.

17 Let me say before he does though that

18 we're going to start tomorrow at 8:30 sharp. Thanks

19 for being on time today, and I look forward to seeing

20 you tomorrow at 8:30.

21 And Hunter will be here also early in the

22 morning. So we can move up his presentation.

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1 MR. LOGEE: Okay. Just to go back to

2 Hunter, Hunter Fanney will present the NIST

3 information and will be here at about 9:00 a.m. So we

4 can get him in a little earlier in the program.

5 Yeah, we'll take care of the adjustment of

6 the agenda in the morning. So that shouldn't be as

7 much of a concern, and I just want to reiterate that

8 we're really pleased to have all of you folks here.

9 This has been an excellent suggestion.

10 Actually I'm operating on data overload

11 now, and I really need to go and crash, I think, and

12 so with that, let's get on home or get on about our

13 business.

14 Thank you.

15 (Whereupon, at 4:21 p.m., the workshop was

16 adjourned, to reconvene at 8:30 a.m., Tuesday,

17 November 10, 1998.)

18

19

20

21

22

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CERTIFICATE

This is to certify that the foregoing transcript in the

matter of: Workshop on Standards for Water Heaters

Before: Department of Energy

Office of Codes and Standards

Date: November 9, 1998

Place: Washington, DC

represents the full and complete proceedings of the

aforementioned matter, as reported and reduced to

typewriting.

1141^-

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