U.S. DEPARTMENT OF ENERGY

OFFICE OF ENERGY EFFICIENCY AND RENEWABLE ENERGY

PUBLIC WORKSHOP ON A RULEMAKING TO CONSIDER ENERGY EFFICIENCY STANDARDS FOR COMMERCIAL UNITARY AIR CONDITIONERS AND HEAT PUMPS

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MONDAY, OCTOBER 1, 2001

The workshop was held in Room 1E-245, Forrestal Building, 1000 Independence Avenue, S.W., Washington, D.C., at 9:00 a.m. PRESENT: FRANCINE PINTO, DOE QANNIE LAUGHLIN, DOE EDWARD POLLOCK, DOE BRYAN BERRINGER, DOE JAMES RABA, DOE HARVEY SACKS, American Council for an Energy Efficient Economy JIM CRAWFORD, The Trane Company 

### NEALR.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

### u.s. DEPARTMENT OF ENERGY

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### OFFICE OF ENERGY EFFICIENCY AND RENEWABLE ENERGY

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### PUBLIC WORKSHOP ON ARULEMAKING TO CONSIDER ENERGY EFFICIENCY STANDARDS FOR COMMERCIAL UNITARY AIR CONDITIONERS AND HEAT PUMPS

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### MONDAY, OCTOBER 1, 2001

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### The workshop was held in Room 1E-245, Forrestal Building, 1000 Independence Avenue, S.W., Washington, D.C., at 9:00 a.m. PRESENT: FRANCINE PINTO, DOE QANNIE LAUGHLIN, DOE EDWARD POLLOCK, DOE BRYAN BERRINGER, DOE JAMES RABA, DOE HARVEY SACKS, American Council for an Energy Efficient Economy JIM CRAWFORD, The Trane Company

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com2 PRESENT (Continued): STEVE ROSENSTOCK, Edison Electric Institute CHARLIE STEPHENS, Oregon Office of Energy KARIM AMRANE, Air Conditioner and Refrigeration Institute MICHAEL MARTIN, California Energy Commission BILL PRINDLE, Alliance to Save Energy JIM MULLEN, Lennox International HUNG PHAM JIM WOLF, Trane Company TOM ECKMAN TED DOYLE, Mestek DON BRUNDAGE, Southern Company MARSHALL HUNT DAVID WINIARSKI MARK KENDALL JOHN STOOPS MARK FRIEDRICHS MIKE RAY NED RAYNOLDS



### NEALR.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 2 

### PRESENT (Continued): STEVE ROSENSTOCK, Edison Electric Institute CHARLIE STEPHENS, Oregon Office of Energy KARIMAMRANE, AirConditionerandRefrigeration Institute MICHAEL MARTIN, California Energy Commission BILL PRINDLE, Alliance to Save Energy JIM MULLEN, Lennox International HUNG PHAM JIM WOLF, Trane Company TOM ECKMAN TED DOYLE, Mestek DON BRUNDAGE, Southern Company MARSHALL HUNT DAVID WINIARSKI MARK KENDALL JOHN STOOPS MARK FRIEDRICHS 

### MIKE RAY NED RAYNOLDS

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com3 C-O-N-T-E-N-T-S PAGE Introductions . . . . . . . . . . . . . . . . . 4 Commercial Unitary Air Conditioners and Heat Pumps: Topics for Discussion Introduction, Bryan Berringer . . . . . . 16 Market and Technology Assessment, Mark Kendall . 62 Screening Analysis, David Winiarski .. .. . 99 Engineering Analysis: Equipment Efficiency and Cost Analysis, Mark Kendall . . . . . . . . . . . . .. 114 Building Energy Use and Electric Load Shape Characterization, David Winiarski . . . 152 Life-cycle Cost Analysis, John Stoops . 183 Consumer Subgroup Analysis John Stoops .206 National Energy Savings and Net Present Value Analysis, John Stoops ....... 217 Manufacturer Impact Analysis, Mark Kendall .. . ........... 228 Employment Impact Analysis, John Stoops 237 Utility Impact Analysis, John Stoops . . 242 Environmental Impact Analysis, John Stoops .. . ............ 248



### NEALR.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

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

Introductions Commercial UnitaryAir Conditioners and Heat Pumps: Topics for Discussion 3

4



### Introduction, Bryan Berringer 16 Market and TechnologyAssessment, Mark Kendall 62 ScreeningAnalysis, DavidWiniarski 99 EngineeringAnalysis: Equipment Efficiency and Cost Analysis, Kendall Mark 114 Building Energy Use and Electric Characterization, DavidWiniarski Load Shape 152 Life-cycle Cost Analysis, John Stoops 183 Consumer Subgroup Analysis John Stoops 206 National Energy Savings and Net Present Value Analysis, John Stoops 217 Manufacturer Impact Analysis, Mark Kendall 228 Employment Impact Analysis, John Stoops 237 

### Utility Impact Analysis, John Stoops 242 

### Environmental Impact Analysis, John Stoops

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### 248

www.nealrgross.com4 1 P-R-O-C-E-E-D-I-N-G-S *s 2 (9:10 a.m.) 3 MR. RABA: Shall we get started? 4 Well, welcome, and thank you for being 5 here today at the Department of Energy's workshop, 6 public workshop, to explore and listen to your views 7 on the issues and the processes involved with the 8 rulemaking for commercial unitary central air and heat 9 pumps. 10 If there's anybody who's not here for 11 that, it looks like you're all in the right place 12 then. Good morning. 13 Any newcomers? Show of hands. 14 (Show of hands.) 15 MR. RABA: A lot of veterans out there. 16 Good, good. 17 My name is Jim Raba. I work in the Office 18 of Building Research and Standards. I'll be your 19 facilitator today. 20 I have other programs that I do in the 21 office, but today I'll be facilitating your meeting, 22 and so I want you to help me out also to keep on 23 track. I'll be looking out for you as your 24 facilitator involved with the process, not the 25 substance so much, but the process, to be sure all NEAL R.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 4 1 

### P-R-O-C-E-E-D-I-N-G-S 2 (9:10 a.m.) 3 

### MR. RABA: 

### Shall we get started? 4 

### Well, welcome, and thank you for being 5 

### here today at the Department of Energy's workshop, 6 

### public workshop, to explore and listen to your views 7 

### on the issues and the processes involved with the 8 

### rulemakingforcommercialunitarycentralairandheat 9 

### pumps. 10 If there's anybody who's not here for 11 

### that, it looks like you're all in the right place 12 

### then. Good morning. 13 

### Any newcomers? Show of hands. 14 

### (Show of hands.) 15 

### MR. RABA: 

### A lot of veterans out there. 16 Good, good. 17 

### Myname isJimRaba. I work intheOffice 18 

### of Building Research and Standards. I'll be your 19 facilitator today. 20 

### I have other programs that I do in the 21 

### office, but today I'll be facilitating your meeting, 22 and so I want you to help me out also to keep on 23 

### track. I'll be looking out for you as your 24 

### facilitator involved with the process, not the 25 substance so much, but the process, to be sure all

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com5 1 views are heard, in a sense air your comments, and we 2 can move forward with that. 3 I'd also ask aswe do introductions around 4 the room if you'd all speak clearly into the 5 microphone so the court reporter can hear your name 6 and your organization, as well. 7 Let's do introductions. We'll go around 8 the table. First, please, we'll start on this side 9 here, then the back of the room, and the sides. Do 10 you want to do that? Please, proceed. 11 MR. SACKS: I'm Harvey Sacks, American 12 Council for an Energy Efficient Economy. 13 MR. CRAWFORD: Jim Crawford, the Trane 14 Company. 15 MR. ROSENSTOCK: Steve Rosenstock, Edison 16 Electric Institute. 17 MR. MULLEN: Jim Mullen, Lennox 18 International. 19 MR. STEPHENS: Charlie Stephens, Oregon 20 Office of Energy. 21 MR. ECKMAN: Tom Eckman, Northwest Power 22 Planning Council. 23 MR. PRINDLE: Bill Prindle, Alliance to 24 Save Energy. 25 MR. MARTIN: Michael Martin, California 

### NEALR.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323RHODE ISLANDAVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com**----------------------------------------~--------** - 5 1 

### Vlews are heard, ln a sense airyour comments, andwe 2 can move forward with that. 3 

### I'dalsoaskaswedointroductionsaround 4 the room if you'd all speak clearly into the 5 

### microphone so the court reporter can hear your name 6 

### and your organization, as well. 7 

### Let's do introductions. We'll go around 8 

### the table. First, please, we'll start on this side 9 

### here, then the back of the room, and the sides. Do 10 

### you want to do that? Please, proceed. 11 

### MR. SACKS: I'm Harvey Sacks, American 12 

### Council for an Energy Efficient Economy. 13 

### MR. CRAWFORD: Jim Crawford, the Trane 14 

### Company. 15 

### MR. ROSENSTOCK: SteveRosenstock, Edison 16 

### Electric Institute. 17 

### MR. MULLEN: Jim Mullen, Lennox 18 International. 19 

### MR. STEPHENS: Charlie Stephens, Oregon 20 Office of Energy. 21 

### MR. ECKMAN: Tom Eckman, Northwest Power 22 Planning Council. 23 

### 24 Save Energy. 25

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### MR. PRINDLE: Bill Prindle, Alliance to

MR. MARTIN: Michael Martin, California NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com6 1 Energy Commission. 2 MR. AMRANE: Karim Amrane, Air 3 Conditioning and Refrigeration Institute. 4 MR. BERRINGER: Bryan Berringer, 5 Department of Energy. 6 MR. POLLOCK: Ed Pollock, Department of 7 Energy. 8 MS. PINTO: Francine Pinto, Department of 9 Energy. 10 MR. RABA: In the back, please. And would 11 you use the microphones that are standing up? Thank 12 you. 13 MR. RAY: Mike Ray, Trane Company. 14 MR. DOYLE: Ted Doyle, Mestek Cooling 15 Products Business Unit. 16 MR. LINN: John Linn fromNortheast Energy 17 Efficiency Partnerships. 18 MR. GRAVES: Ron Graves, Mestek, 19 Incorporated. 20 MR. SIRAJ: Siraj Shaikh, GPU Energy. 21 MR. HOLT: John Holt, National Rural 22 Electric Cooperative Association. 23 MR. BRUNDAGE: Don Brundage, Southern 24 Company. 25 MR.ROSENQUIST: GregRosenquist, Lawrence 

### NEALR.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com6 1 

### Energy Commission. 2 MR. AMRANE: 

### Karim Amrane, Air 3 Conditioning and Refrigeration Institute. 4 

### MR. BERRINGER: Bryan Berringer, 5 

### Department of Energy. 6 

### MR. POLLOCK: Ed Pollock, Department of 7 

### Energy. 8 

### MS. PINTO: Francine Pinto, Department of 9 

### Energy. 10 

### MR. RABA: Intheback, please. Andwould 11 

### you use the microphones that are standing up? Thank 12 

### you. 13 

### MR. RAY: Mike Ray, Trane Company. 14 

### MR. DOYLE: Ted Doyle, Mestek Cooling 15 

### Products Business Unit. 16 

### MR. LINN: JohnLinnfromNortheastEnergy 17**Eff~ciency** 

### Partnerships. 18 

### MR. GRAVES: Ron Graves, Mestek, 19 Incorporated. 20 

### MR. SIRAJ: Siraj Shaikh, GPU Energy. 21 

### MR. HOLT: John Holt, National Rural 22 Electric Cooperative Association. 23 

### MR. BRUNDAGE: Don Brundage, Southern 24 Company. 25 MR. ROSENQUIST: GregRosenquist, Lawrence

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W WASHINGTON, D.C. 20005-3701 www.nealrgross.com7 1 Berkeley National Laboratory. 2 MR. BUSH: John Bush, Lawrence Berkeley 3 National Laboratory. 4 MR. McCABE: Mike McCabe, Department of 5 Energy. 6 MR. HOLLOMAN: Brad Holloman, Pacific 7 Northwest National Laboratory. 8 MR. RAYMOND: Mike Raymond, Department of 9 Energy. 10 MR. ADAMS: Carl Adams, Department of 11 Energy. 12 MR. GINSBERG: I'm Mark Ginsberg, 13 Department of Energy. 14 MS. MILLER: Becky Miller, ICF Consulting. 15 MR. STEINER: Richard Steiner, first 16 company. 17 MR. RABA: Up to the microphone, please. 18 (Laughter.) 19 MR. RABA: Sure, come on. Just for the 20 record. 21 MS. EDWARDS-JONES: Brenda Edwards-Jones, 22 Department of Energy. 23 MR. RABA: Thank you. Good job. 24 MS. FORD: Debbie Ford, temporary 25 Department of Energy. 

### NEALR.GROSS COURT REPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE.,N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com7 1 

### BerkeleyNational Laboratory. 2 

### MR. BUSH: John Bush, Lawrence Berkeley 3 National Laboratory. 4 

### MR. McCABE: Mike McCabe, Department of 5 

### Energy. 6 

### MR. HOLLOMAN: Brad Holloman, Pacific 7 

### Northwest National Laboratory. 8 

### MR. RAYMOND: MikeRaymond, Department of 9 

### Energy. 10 

### MR. ADAMS: Carl Adams, Department of 11 

### Energy. 12 

### MR. GINSBERG: I'm Mark Ginsberg, 13 

### Department of Energy. 14 

### MS. MILLER: BeckyMiller, ICFConsulting. 15 

### MR. STEINER: Richard Steiner, first 16 

### company. 17 

### MR. RABA: Up to the microphone, please. 18 

### (Laughter.) 19 

### MR. RABA: Sure, come on. Just for the 20 

### record. 21 

### MS. EDWARDS-JONES: BrendaEdwards-Jones, 22 

### Department of Energy. 23 

### MR. RABA: Thank you. Good job. 24 

### MS. FORD: Debbie Ford, temporary 25 Department of Energy.

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com8 1 MS. MURPHY: Sandy Beale, sitting down, 2 Department of Energy. Maureen Murphy, Department of 3 Energy. 4 MR. RIVEST: Mike Rivest, standing up, 5 Department of Energy. 6 (Laughter.) 7 MR. RABA: Arthur Deale. 8 (Laughter.) 9 MR. NISAIR: Saddis Nisair (phonetic), 10 Department of Energy. 11 MR. ROBINSON: Thomas Robinson, also with 12 DOE. 13 MR. RAYNOLDS: Ned Raynolds, Northeast 14 Energy Efficiency Partnerships. 15 MR. STOOPS: John Stoops, Lawrence 16 Berkeley National Lab. 17 MR. JARNAGIN: Ron Jarnagin, Pacific 18 Northwest National Laboratory. 19 MR. WINIARSKI: Dave Winiarski, Northwest 20 National Laboratory. 21 MR. ENDER: Mark Ender (phonetic), Arthur 22 D. Little. 23 MR. RABA: That was well done everybody. 24 Thank you very much. * 

### ~ 25 Does everybody have a copy of today's 

### NEALR.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323RHODE ISLANDAVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com8 1 

### MS. MURPHY: Sandy Beale, sitting down, 2 Department of Energy. Maureen Murphy, Department of 3 

### Energy. 4 

### MR. RIVEST: Mike Rivest, standing up, 5 

### Department of Energy. 6 

### (Laughter.) 7 

### MR. RABA: Arthur Deale. 8 

### (Laughter.) 9 

### MR. NISAIR: Saddis Nisair (phonetic), 10 

### Department of Energy. 11 

### MR. ROBINSON: ThomasRobinson, alsowith 12 

### DOE. 13 

### MR. RAYNOLDS: Ned Raynolds, Northeast 14 

### Energy Efficiency Partnerships. 15 

### MR. STOOPS: John Stoops, Lawrence 16 BerkeleyNational Lab. 17 

### MR. JARNAGIN: Ron Jarnagin, Pacific 18 Northwest National Laboratory. 19 

### MR. WINIARSKI: DaveWiniarski, Northwest 20 National Laboratory. 21 

### MR. ENDER: MarkEnder (phonetic), Arthur 22 D. Little. 23 MR. RABA: That was well done everybody. 24 Thank you verymuch. 25

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### Does everybody have a copy of today's NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com9 1 agenda and the handouts that are on the back table? 2 Did you all sign in, too, when you came in? Everybody 3 is prepared? Good, good, good. 4 A couple of things before we begin. Many 5 of you that are here have been here before so you kind 6 of know how things operate for these public workshops. 7 We've talked about ground rules. I've come to know as 8 norms of behavior to really make sure the process 9 moves forward for your benefit so that everybody is 10 heard. 11 Just some things to review. Bring 12 positives to the workshop, and we're going to move 13 towards solutions. In the process, discuss how that 14 operates. Listen as an ally. 15 We'll go around one by one. Certainly 16 there will be some comments to be made. So I would 17 like to recognize each one of you by show of hand, 18 recognize you, be sure you're in the queue, and that 19 way you get a chance to speak and be listened to. 20 One person speak at a time. Respect each 21 other, and we'll discuss the issues, the issues being, 22 again, the process of how to move forward with a rule 23 making process. Avoid side conversations, and be 24 concise. 25 Those are kind of standard ones. Bryan. 

### NEALR.GROSS COURT REPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com9 

### 1 agenda and the handouts that are on the back table? 2 Didyou all signin, too, whenyoucame in? Everybody 3 is prepared? Good, good, good. 4 

### Acouple of thingsbefore we begin. Many 5 ofyouthat arehere havebeenherebefore soyoukind 6 ofknowhowthingsoperateforthesepublicworkshops. 7 We've talkedaboutgroundrules. I'vecometoknowas 8 norms of behavior to really make sure the process 9 moves forward for your benefit so that everybody is 10 heard. 11 Just some things to review. Bring 12 positives to the workshop, and we're going to move 13 

### towards solutions. In the process, discuss how that 14 operates. Listen as an ally. 15 

### We'll go around one by one. Certainly 16 

### there will be some comments to be made. So I would 17 like to recognize each one of you by show of hand, 18 

### recognize you, be sure you're in the queue, and that 19 way you get a chance to speak and be listened to. 20 

### One person speakat a time. Respect each 21 other, andwe'lldiscusstheissues, theissuesbeing, 22 again, theprocess of how tomove forward with a rule 23 

### making process. Avoid side conversations, and be 24 concise. 25

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### Thoseare kind of standard ones. Bryan. NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005·3701 www.nealrgross.com10 1 MR. BERRINGER: Why don't we go -- 2 MR. RABA: Yes, indeed. I'm sorry. 3 Forgive me. 4 We also have some call-ins today. So to 5 invite those on the telephone, go ahead. Please 6 introduce yourself and your organization. 7 DR. GOLDSTEIN: David Goldstein, Natural 8 Resources Defense Council. 9 MS. POULIN: Beth Poulin, National Grid. 10 MR. PHAM: Hung Pham, Copeland 11 Corporation. 12 MR. RABA: Okay. Thank you. 13 We expect one other call-in. We'll just 14 wait until that person checks in. 15 Thank you very much for being with us 16 either in person or virtually. I'm sure we'll all 17 share in the discussion equally. 18 Today we're going to talk about the 19 framework document, and that describes how the 20 Department of Energy intends to work on the updated 21 energy efficiency standards for commercial unitaryair 22 conditioners and heat pumps, and this is about the 23 shape of the analysis. 24 And we particularly want your input as to 25 how to proceed, how to do it. So this is your chance, 

### NEALR.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323RHODE ISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

### 10 1 

### MR. BERRINGER: Why don't we go -- 2 

### MR. RABA: Yes, indeed. I'm sorry. 3 Forgive me. 4 

### We also have some call-ins today. So to 5 

### invite those on the telephone, go ahead. Please 6 

### introduce yourself and your organization. 7 

### DR. GOLDSTEIN: David Goldstein, Natural 8 

### Resources Defense Council. 9 

### MS. POULIN: Beth Poulin, National Grid. 10 MR. PHAM: Hung Pham, Copeland 11 Corporation. 12 MR. RABA: Okay. Thank you. 13 

### We expect one other call-in. We'll just 14 wait until that person checks in. 15 

### Thank you very much for being with us 16 

### either in person or virtually. I'm sure we'll all 17 share in the discussion equally. 18 

### Today we're going to talk about the 19 

### framework document, and that describes how the 20 Department of Energy intends to work on the updated 21 energyefficiencystandardsforcommercialunitaryair 22 conditioners and heat pumps, and this is about the 23 shape of the analysis. 24 Andwe particularlywant your input as to 25 how toproceed, how todo it. Sothis isyour chance,

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com11 1 your opportunity'to help shape and guide how the 2 Department of Energy does its business with your 3 interest in mind. 4 The general format will be that we have 5 experts to give presentations of their analyses and 6 how they intend to proceed. After each presentation, 7 there will be opportunity for comment and questions as 8 well. 9 I'm going to take a look at the agenda 10 quickly and do a quick review. If you have it with 11 you, you might want to follow through. 12 BryanBerringer, theprogrammanager,will 13 be giving you some more background, some of the 14 rulemakings, and some more substantive information for 15 you. 16 The market and technology assessment by 17 Mark Kendall of Arthur D. Little, and look at the 18 impact on the marketplace itself. 19 David Winiarski, Pacific Northwest 20 National Labs, will do the screening analysis 21 presentation, and this is to look at and possibly 22 eliminate efficiency options that might not be fully 23 developed or that might not be technologically 24 feasible. 25 The engineering analysis, Mark Kendall 

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### 11 1 your opportunity'to help shape and guide how the 2 Department of Energy does its business with your 3 interest in mind. 4 

### The general format will be that we have 5 experts to give presentations of their analyses and 6 how theyintendtoproceed. Aftereachpresentation, 7 therewillbeopportunityforcomment andquestionsas 8 well. 9 I'm going to take a look at the agenda 10 

### quickly and do a quick review. If you have it with 11 you, you might want to follow through. 12 BryanBerringer, theprogrammanager, will 13 be giving you some more background, some of the 14 rulemakings, andsomemoresubstantiveinformationfor 15 you. 16 The market and technology assessment by 17 Mark Kendall of Arthur D. Little, and look at the 18 impact on the marketplace itself. 19 

### David Winiarski, Pacific Northwest 20 

### National Labs, will do the screening analysis 21 presentation, and this lS 

### to look at and possibly 22 eliminate efficiency options that might not be fully 23 developed or that might not be technologically 24 feasible. 25

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### The engineering analysis, Mark Kendall NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com12 1 will be back up and look at the equipment as to the *. 

### ~ 2 tradeoffs of costs and efficiencies. 3 Then on.building energy use and electric 4 load shape characterization, David Winiarski from PNLL 5 will be back again to look at the peak demand savings 6 potential. 7 On the flip side, the life-cycle cost 8 analysis. 9 MR. STOOPS: John Stoops. 10 MR. RABA: John Stoops. Thank you very 11 much. I understand Jim is in Tahiti. 12 MR. STOOPS: Some disgusting place like 13 that, yes. 14 MR. RABA: Okay. Was he supposed to call 15 in today? 16 (Laughter.) 17 MR. RABA: The life-cycle cost analysis 18 will be looking at savings of operating costs of the 19 life of the product. 20 The consumer subgroup analysis, impact on 21 the consumers, a very important consideration. 22 The national energy savings and net 23 present value analysis, looking at a base case and 24 compare it with a standards case. 25 The manufacturer impact analysis, Mark 

### NEALR.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 12 

### 1 will be back up and look at the equipment as to the 2 

### tradeoffs of costs and efficiencies. 3 

### Then on building energy use and electric 4 

### loadshapecharacterization, DavidWiniarskifromPNLL 5 

### will be back again to look at thepeak demand savings 6 

### potential. 7 

### On the flip side, the life-cycle cost 8 

### analysis. 9 

### MR. STOOPS: John Stoops. 10 

### MR. RABA: John Stoops. Thank you very 11 

### much. I 

### understand Jim is in Tahiti. 12 

### MR. STOOPS: Some disgusting place like 13 

### that, yes. 14 

### MR. RABA: 

### Okay. Was he supposed to call 15 

### In today? 16 

### (Laughter.) 17 

### MR. RABA: The life-cycle cost analysis 18 will be looking at savings of operating costs of the 19 life of the product. 20 The consumersubgroupanalysis, impacton 21 the consumers, a very important consideration. 22 The national energy savings and net 23 present value analysis, looking at a base case and 24 compare it with a standards case. 25

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### The manufacturer impact analysis, Mark NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com13 1 Kendall, economic and competitive issues that would 2 affect manufacturers. 3 Employment impact, John, yes, Stoops will 4 be looking at that as to employment figures. 5 Utility impact analysis, John again, and 6 estimate the effects on the supplies of electricity 7 and energy as well. 8 And the environmental analysis finally, to 9 look at CO2 emissions, nitrous oxides, and sulfur 10 dioxide, too. 11 Somewhere in there in the morning, if 12 you'd like, we can break maybe around 10:30, depending 13 on the discussion, how we're proceeding along. Plan 14 on a break around noontime for lunch, thereabouts, and 15 perhaps in the afternoon, too. 16 It should be a very full day, but we can 17 proceed very efficiently throughout. 18 As I said earlier, the purpose here is to 19 have the process presented to you and to gather your 20 comments and views on how that process should be 21 guided and what you see as issues in that process, as 22 well. 23 Is there anything else that should be 24 included on today's agenda? Anybody have any other 25 things to add to today's agenda? 

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### 13 1 Kendall, economlC and competitive issues that would 2 affect manufacturers. 3 Employment impact, John, yes, Stoopswill 4 be looking at that as to employment figures. 5 Utility impact analysis, John again, and 6 estimate the effects on the supplies of electricity 7 and energy as well. 8 Andtheenvironmentalanalysisfinally, to 9 look at CO2 

### emissions, nitrous oxides, and sulfur 10 dioxide, too. 11 Somewhere in there in the morning, if 12 you'dlike, we canbreakmaybearound 10:30, depending 13 on the discussion, how we're proceeding along. plan 14 ona breakaroundnoontimefor lunch, thereabouts, and 15 perhaps in the afternoon, too. 16 It shouldbe a very full day, but we can 17 proceed very efficiently throughout. 18 As I saidearlier, the purpose here is to 19 have the process presented to you and to gather your 20 comments and views on how that process should be 21 guided andwhat yousee as issues in that process, as 22 well. 23 

### Is there anything else that should be 24 included on today's agenda? Anybody have any other 25 things to add to today's agenda?

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com14 1 (No response.) 2 MR. RABA: Seeing none, any on the phone, 3 the call-ins? 4 (No response.) 5 MR. RABA: Okay. Thank you. None heard. 6 A couple of housekeeping items, too, if 7 you would, please. This is kind of a rerun of what 8 was to happen a couple of weeks ago, and so we're all 9 very sensitive to safety and security issues. 10 If for any reason we have to leave the 11 room immediately, there are emergency exits. 12 Certainly the main exit, you came in through the 13 lobby, to the right out of the door to the main lobby, 14 and the are exits left and right, both. But also at 15 the end of the passageway as you go either left or 16 right directly at the far ends are other doors 17 available for emergency exit. 18 If you have cell phones or pagers, we 19 request you turn them off for the time being so that 20 we can focus on our meeting today. 21 Does everybody know where the coffee shop 22 is? There's a coffee shop directly downstairs on the 23 ground level. You can go down the elevators to get 24 there. 25 The cafeteria, since you've been here 

### NEALR.GROSS COURT REPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE.,N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

### 14 1 

### (No response.) 2 MR. RABA: Seeingnone, anyonthephone, 3 the call-ins? 4 

### (No response.) 5 

### MR. RABA: Okay. Thankyou. None heard. 6 

### A couple of housekeeping items, too, if 7 

### you would, please. This is kind of a rerun of what 8 was to happen a couple of weeks ago, and sowe're all 9 very sensitive to safety and security issues. 10 If for any reason we have to leave the 11 room immediately, there are emergency exits. 12 Certainly the main exit, you came in through the 13 lobby, to theright outof the doortothemain lobby, 14 and the are exits left and right, both. But also at 15 the end of the passageway as you go either left or 16 right directly at the far ends are other doors 17 available for emergency exit. 18 

### If you have cell phones or pagers, we 19 request you turn them off for the time being so that 20 we can focus on our meeting today. 21 Does everybodyknowwhere the coffee shop 22 is? There's a coffee shop directlydownstairs on the 23 

### ground level. You can go down the elevators to get 24 there. 25 

### The cafeteria, since you've been here

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE.,N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com15 1 before, you can leave -- the others who are here for 2 the,first time -- at the other building, the West 3 Building. Go downstairs to the ground level, proceed 4 through the tunnel about a block underground, and then 5 upstairs. Follow the signs and the escalators to the 6 cafeteria. 7 Restrooms, either end of the passageway. 8 The Freedom of Information Reading Room 9 for any of this material that supports the rulemaking 10 is just down the passageway to my right behind me here 11 where it's the second set of double glass doors on the 12 left. So you can pick up some of this information 13 later on. Stop by there and see what that has to 14 offer. 15 Public phones, besides cell phones, in the 16 lobby here by the elevators. 17 Some of you will have been carrying laptop 18 computers and other things into the building. You may 19 need -- well, you will need a property pass likely to 20 get them out of the building. So see myself or Brenda 21 Edwards-Jones at the end or during the break to get a 22 clearance pass for those machines. 23 One other note, too. There will be a 24 transcript available. Our court reporter will be 25 taking minutes of the meeting today. So it's 

### NEALR.GROSS COURTREPORTERS ANDTRANSCRIBERS 1323RHODE ISLANDAVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

### 15 1 before, you can leave

-- the others who are here for 2 the. first time

- - at the other building, the West 3 Building. Go downstairs to the ground level, proceed 4 throughthetunnelabouta blockunderground, andthen 5 upstairs. Follow the signs and the escalators to the 6 cafeteria. 7 Restrooms, either end of the passageway. 8 The Freedom of Information Reading Room 9 for anyof thismaterial that supports the rulemaking 10 isjustdownthepassagewaytomy rightbehindme here 11 where it'sthe second setofdoubleglassdoors onthe 12 left. So you can pick up some of this information 13 

### later on. Stop by there and see what that has to 14 offer. 15 Publicphones, besidescellphones, inthe 16 lobby here by the elevators. 17 Someofyouwillhavebeencarryinglaptop 18 computersandotherthings intothebuilding. Youmay 19 need

-- well, you will need a propertypass likelyto 20 get themoutof thebuilding. So seemyself orBrenda 21 Edwards-Jones at the end or during the break to get a 22 clearance pass for those machines. 23 24 25 

### One other note, too. There will be a transcript available. Our court reporter will be taking minutes of the meeting today.

(202)234-4433 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 

### So it's

www.nealrgross.com16 1 imperative that you speak clearly into the 2 microphones. Introduce yourself each time, and a 3 transcript will be available for purchase about two 4 weeks, about two weeks, and the court reporter can 5 give you details on that. 6 Any questions so far? 7 (Noresponse.) 8 MR. RABA: Should we invite people to 9 gather at the table or just wait a few more minutes? 10 Wait till the break? 11 Okay. We're going to hold these spaces 12 open now for the late comers, travel what it is, but 13 if these are not occupied, we'd invite you later on at 14 the break to have a seat at the table. 15 At this time Bryan Berringer, our program 16 manager, will take over and proceed with today's 17 public meeting. 18 MR. BERRINGER: Good morning. Thank you 19 all for being here. 20 Can everybody yearme okay? I'll use this 21 mic. Okay, great. 22 I just want to again welcome everybody 23 here this morning to the commercial unitary air 24 conditioning and heat pump workshop today. I 25 appreciate everybody that was able to make it here, 

### NEALR.GROSS COURTREPORTERS AND TRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 16 1 

### imperative that you speak clearly into the 2 

### microphones. Introduce yourself each time, and a 3 transcript will be available for purchase about two 4 

### weeks, about two weeks, and the court reporter can 5 

### give you details on that. 6 

### Any questions so far? 7 

### (No response.) 8 

### MR. RABA: Should we invite people to 9 gather at the table or just wait a few more minutes? 10 Wait till the break? 11 

### Okay. We're going to hold these spaces 12 open now for the late comers, travel what it is, but 13 ifthesearenotoccupied, we'dinviteyou lateronat 14 the break to have a seat at the table. 15 At this timeBryanBerringer, ourprogram 16 manager, will take over and proceed with today's 17 public meeting. 18 

### MR. BERRINGER: Good morning. Thank you 19 all for being here. 20 

### Caneverybodyyearme okay? I'llusethis 21 mic. Okay, great. 22 

### I just want to again welcome everybody 23 here this morning to the commercial unitary air 24 

### conditioning and heat pump workshop today. I 

### 25 appreciate everybody that was able to make it here,

(202)234-4433 

### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com17 1 especially from the West Coast and all of those *~ 2 traveling today. 3 I apologize for incidences that were 4 beyond our control with what happened on September 5 11th, but I appreciate everybody that's here today. 6 I just want to reiterate some of the 7 people that are on our team also from the Building 8 Research and Standards Office, and that is Maureen 9 Murphy is also on the team, who helped coordinate the 10 workshop today. 11 We have Francine Pinto from the General 12 Counsel Office. 13 Mark Friedrichs (phonetic) is not here, 14 but he's also from the Policy Office, and he'll 15 probably be in and out today. So we'll introduce you 16 to him when he comes. 17 There, again, I appreciate everybody 18 coming to this. This is really the kickoff workshop. 19 A number of you have been involved in the residential 20 central air conditioning workshops before. 21 Again, how many people -- Jim asked, but 22 how many people is this the first time they've been 23 involved in a DOE workshop of this caliber before? 24 (Show of hands.) 

# Q ~25 MR. BERRINGER: Okay. A couple of you. 

### NEALR.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 17 

### 1 especially from the West Coast and all of those 2 traveling today. 3 

### I apologize for incidences that were 4 beyond our control with what happened on September 5 11th, but I appreciate everybody that's here today. 6 

### I just want to reiterate some of the 7 people that are on our team also from the Building 8 Research and Standards Office, and that is Maureen 9 Murphy is alsoon the team, who helpedcoordinate the 10 workshop today. 11 We have Francine Pinto from the General 12 Counsel Office. 13 Mark Friedrichs (phonetic) is not here, 14 but he's also from the Policy Office, and he'll 15 probablybe In and out today. So we'll introduce you 16 to him when he comes. 17 

### There, I appreciate everybody 18 coming to this. This is reallythe kickoff workshop. 19 Anumberof youhavebeen involved inthe residential 20 central air conditioning workshops before. 21 Again, how manypeople

-- Jim asked, but 22**ho~** 

### many people is this the first time they've been 23 involved in a DOE workshop of this caliber before? 24 (Show of hands.) 25

(202)234-4433 

### MR. BERRINGER: Okay. A couple of you. NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com18 1 Okay, great. 2 Well, again, the purpose of the workshop 3 is to discuss and receive comments, issues that will 4 be addressed that will initiate data collection for 5 the commercial unitary air conditioning and heat pump 6 efficiency standards. The data collectedwill be used 7 either to adopt the ASHRAE standards, the 90.199, or 8 used to initiate amended efficiency standards for the 9 unitary commercial ACN heat pumps. 10 So we are looking for the input to see if 11 we need to proceed or not, what's the best route for 12 the department to take, the ASHRAE method that's 13 already been proposed or if there are more stringent 14 standards, we think that it would be actually 15 worthwhile to receive those. 16 So there's two things we're trying to look 17 at today. Again, the efforts are also based on the 18 May 2001 national energy policy report on the 19 appliance standards which supports the rulemaking 20 standards efforts that define technology that is 21 feasible and economically justified. 22 We also request if you don't fully discuss 23 your comments today, that you submit those in written 24 form. Those are in the Federal Register notice. You 25 can also see -- which are addressed to Brenda Edwards

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### 18 

### 1 Okay, great. 2 

### Well, again, the purpose of the workshop 3 lS 

### to discuss and receive comments, issues that will 4 be addressed that will initiate data collection for. 5 the commercialunitary airconditioningandheatpump 6 efficiencystandards. Thedatacollectedwillbeused 7 either to adopt the ASHRAE standards, the 90.199, 

### or 8 usedto initiate amendedefficiency standards for the 9 

### unitary commercial ACN heat pumps. 10 

### Sowe are looking for the input to see if 11 we need to proceed or not, what's the best route for 12 

### the department to take, the ASHRAE method that's 13 already beenproposed or if there are more stringent 14 standards, we think that it would be actually 15 worthwhile to receive those. 16 Sothere'stwothingswe'retryingtolook 17 

### at today. Again, the efforts are also based on the 18 May 2001 

### national energy policy report on the 19 

### appliance standards which supports the rulemaking 20 

### standards efforts that define technology that is 21 

### feasible and economicallyjustified. 22 

### We alsorequestifyoudon't fullydiscuss 23 your comments today, thatyou submit those inwritten 24 form. Those are in the Federal Registernotice. You 25 

### canalso see

(202)234-4433 

### 0hichareaddressedtoBrendaEdwardsNEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE,NW WASHINGTON, D.C. 20005-3701 www.nealrgross.com19 1 Jones. 2 Again, the other thing, to facilitate this 3 process we had the framework document which hopefully 4 everybody has seen. We do have some limited copies in 5 the back. It's been on our Web site. The general Web 6 site is posted on the board. You got to stakeholder 7 information, product specific. Go to commercial air 8 conditioning and heat pumps. You'll find the agenda, 9 all of the slides that we are presenting today are 10 posted on that Web site, the agenda so that if you 11 need to come back for further reference or just so you 12 have an electronic copy. 13 I know this is sideways. This is also one 14 of the slides in your package, but if everybody will 15 tilt their heads 90 degrees like that, you can very 16 well see the process. It's in your opening slides 17 also, if you want to. It's about the fifth slide in 18 there. 19 But the reason I put this up is just to go 20 through. If we do proceed with an efficiency 21 rulemaking standard, this would be the procedure that 22 we would follow basically, and this diagram sort of 23 outlines the whole workshop. This is outlining your 24 framework document, and we go step by step, what 25 analysis that we'll be performing. 

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### 1 Jones. 2 Again, theotherthing, tofacilitatethis 3 processwe hadthe framework document whichhopefully 4 everybodyhas seen. We dohave some limitedcopies in 5 theback. It'sbeenonourWeb site. The generalWeb 6 site is posted on the board. You got to stakeholder 7 information, product specific. Go to commercial air 8 conditioning andheat pumps. You'll find the agenda, 9 all of the slides that we are presenting today are 10 posted on that Web site, the agenda so that if you 11 needtocomebackfor furtherreferenceorjust soyou 12 have an electronic copy. 13 

### I knowthis is sideways. This isalsoone 14 of the slides in your package, but if everybody will 15 tilt their heads 90 degrees like that, you can very 16 

### well see the process. It's in your opening slides 17 

### also, if you want to. It's about the fifth slide in 18 

### there. 19 But'thereasonI put thisup isjusttogo 20 

### through. If**w~** 

### do proceed with an efficiency 21 rulemaking standard, thiswouldbe theprocedure that 22 we would follow basically, and this diagram sort of 23 outlines the whole workshop. This is outliningyour 24 framework document, and we go step by step, what 25 analysis that we'll be performing.

(202)234-4433 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com20 1 So it follows your agenda exactly. This 2 was the basis of the agenda today. Now, what we do is 3 the first step, for those who have not been involved. 4 The first step, the first break is the advanced notice 5 of proposed rulemaking. We haven't got to that. This 6 is sort of the stage we're at now where we're looking 7 at the screening analysis area, the market and 8 technology assessment, engineering analysis, your 9 life-cycle costs, and then your national impacts. 10 So we're trying to get as much under the 11 process improvement rule that we established in the 12 department to sort of get all of the information up 13 front, more of the analysis out to the stakeholders so 14 we can get their comments and their views. 15 So, again, this is a kickoff to sort of 16 outline that process. Again, these are also -- this 17 workshop was originally scheduled and noticed in the 18 August 17thFederal Register notice, then readvertised 19 September 27th. The framework document, again, is on 20 the Web. It's dated June 13th, 2000. It's been 21 posted. Again, the slides and so forth are on the Web 22 site also. 23 Anybody attending, the reason we need to 24 make sure we have your E-mail address, phone numbers 25 so that we can get you on the E-mail mailing list. 

### NEALR.GROSS COURT REPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

### 20 1 

### So it follows your agenda exactly. This 2 was thebasis of the agendatoday. Now, what we do is 3 the first step, for those who have not been involved. 4 Thefirst step, thefirstbreakisthe advancednotice' 5 ofproposedrulemaking. We haven'tgot tothat. This 6 

### is sort of the stage we're at nowwhere we're looking 7 at the screening analysis area, the market and 8 

### technology assessment, engineering analysis, your 9 life-cycle costs, and then your national impacts. 10 So we're trying to get as much under the 11 process improvement rule that we established in the 12 department to sort of get all of the information up 13 front, more oftheanalysisout tothe stakeholders so 14 we can get their comments and their views. 15 So, again, this is a kickoff to sort of 16 

### outline that process. Again, these are also

-- this 17 workshop was originally scheduled and noticed in the 18 August 17thFederalRegisternotice, thenreadvertised 19 September 27th. The framework document, again, ison 20 the Web. It's dated June 13th, 2000. It's been 21 posted. Again, the slides andso forthareontheWeb 22 site also. 23 Anybody attending, the reason we need to 24 make sure we have your E-mail address, phone numbers 25 so that we can get you on the E-mail mailing list.

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., NW WASHINGTON, D.C. 20005-3701 www.nealrgross.com21 1 This is the first really commercial air conditioning Istw 2 workshop and heat pump workshop. So we want to make 3 sure that we keep you people informed of what's going 4 on up to date and if there's any changes in meetings 5 and so forth. So it's very important to make sure you 6 have signed in and we have your E-mail address and 7 it's up to date. 8 Basically the comments we received today 9 and those submitted in writing will be used for the 10 department developing a position to either accept the 11 ASHRAE or proceed with an advanced notice of proposed 12 rulemaking, would be the first step. If we continue 13 on that route, the next step in the slide talks about 14 the notice of proposed rulemaking where the analysis 15 is refined, again. 16 Then we look at consumer impacts, 17 manufacturing impacts, and then we look at the 18 utility, the employment, and the environmental, and 19 those would all be to the NOPR stage. 20 That's pretty much final. We would 21 propose a certain level, efficiency level. So that 22 would be up front, and then so we try and get buyer 23 and stakeholder input to that. 24 Then we would proceed to final rule. So 25 hopefully the final rule is a truncated time schedule, 

### NEALR.GROSS COURT REPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 21 

### 1 This is the first really commercial air conditioning 2 

### workshop and heat pump workshop. So we want to make 3 

### sure that we keepyoupeople informedof what's going 4 

### on up to date and if there's any changes in meetings 5 

### and soforth. So it'sveryimportant tomake sureyou 6 

### have signed in and we have your E-mail address and 7 

### it's up to date. 8 

### Basically the comments we received today 9 

### and those submitted in writing will be used for the 10 

### department developing a positionto eitheraccept the 11 

### ASHRAE orproceedwithan advancednotice ofproposed 12 

### rulemaking, would be the first step. If we continue 13 

### on that route, the next step in the slide talks about 14 

### the notice of proposed rulemaking where the analysis 15 

### is refined, again. 16 

### Then we look at consumer impacts, 17 

### manufacturing impacts, and then we look at the 18 

### utility, the employment, and the environmental, and 19 

### those would all be to the NOPR 

### stage. 20 

### That's pretty much final. We would 21 

### propose a certain level, efficiency level. So that 22 

### would be up front, and then so we try and get buyer 23 

### and stakeholder input to that. 24 

### Then we would proceed to final rule. So 25 hopefullythe finalrule isa truncatedtime schedule, NEAL

### R.GROSS (202)234-4433 COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com22 1 and hopefully there's no major issues by the time the 2 NOPR is published so that we could go to a final rule. 3 Again, I'm the presiding officer today 4 over the workshop. Jim Raba is our facilitator. He's 5 already gone through the agenda review and the 6 guidelines. 7 The transcript should be available in 8 about two weeks. You can see the court reporter if 9 you'd like to purchase that. Also, information will 10 be available in the Freedom of Information Room down 11 the hall in Room 1E-190, as Jim had mentioned. 12 Okay. Again, we like to hear as many 13 views as possible. So we have Jim here to facilitate, 14 to make sure -- we want tomake sure everybody's views 15 are heard. We have specific questions that we put in 16 the framework document that we want to get your 17 response to, how you think we should proceed. So we 18 want tomake sure everybody gets a chance to speak and 19 be heard. 20 Okay. Again, we'regoing to be looking at 21 the analytical tools in the process today that we used 22 in the rulemaking process. 23 Again, Ithink Jimhas gone through all of 24 the items as far as the housekeeping. 25 Again, the meeting is scheduled to go 

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### 1 andhopefullythere's nomajor issues bythe time the 2 NOPR ispublishedsothatwe couldgoto a final rule. 3 

### Again, I'm the presiding officer today 4 

### overtheworkshop. JimRaba isourfacilitator. He's 5 

### already gone through the agenda review and the 6 

### guidelines. 7 

### The transcript should be available in 8 

### about two weeks. You can see the court reporter if 9 

### you'd like to purchase that. Also, information will 10 be available in the Freedom of Information Room down 11 the hall in Room 1E-190, as Jim had mentioned. 12 

### Okay. Again, we like to hear as many 13 

### views aspossible. Sowe haveJimhereto facilitate, 14 

### tomake sure -- we want tomake sureeverybody'sviews 15 

### are heard. We have specific questions that we put in 16 

### the framework document that we want to get your 17 

### response to, how you think we should proceed. So we 18 

### want tomake sureeverybodygetsa chanceto speakand 19 be heard. 20 

### Okay. Again, we'regoingtobelookingat 21 

### theanalyticaltools intheprocesstodaythatwe used 22 in the rulemaking process. 23 Again, I thinkJimhasgonethroughallof 24 the items as far as the housekeeping. 25

(202)234-4433 

### Again, the meeting is scheduled to go NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com23 1 until five o'clock. We may finish earlier than that, 2 and if for any reason you don't have a chance to 3 present your views, you will have an opportunity to do 4 that in writing. 5 MR. RABA: Yes, go ahead, please. 6 MR. SACKS: Please just remind us of the 7 deadline -- Harvey Sacks -- please remind us of the 8 deadline for written comments. 9 MR. BERRINGER: Yeah, I think it's 30 days 10 after the workshop. I have it at my -- I think it was 11 in the original notice, but we'll see if I have that 12 here. 13 MR. ROSENSTOCK: Steve Rosenstock, EEI. 14 In your handouts, page 8, it says the 15 comments are due October 12th. 16 MR. BERRINGER: Okay. Yeah, so it would 17 be 30 days after this. If we look at the calendar we 18 can -- 19 PARTICIPANT: November 1st. 20 MR. BERRINGER: November 1st? Okay, all 21 right. November 1st. Thank you. 22 MR. RABA: Did all of you get the deadline 23 for written comments is November 1st? 24 MR. BERRINGER: If for any reason you need 25 to call the Freedom of Information Room, the number is 

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### 23 1 until five o'clock. We may finish earlierthan that, 2 and if for any reason you don't have a chance to 3 presentyourviews, youwillhaveanopportunitytodo 4 that in writing. 5 

### MR. RABA: Yes, go ahead, please. 6 

### MR. SACKS: Please just remind us of the 7 

### deadline Harvey Sacks

-- please remind us of the 8 

### deadline for written comments. 9 

### MR. BERRINGER: Yeah, I thinkit's30days 10 afterthe workshop. I have it atmy -- I think itwas 11 in the original notice, but we'll see if I have that 12 here. 13 MR. ROSENSTOCK: Steve Rosenstock, EEl. 14 

### In your handouts, page 8, 

### it says the 15 comments are due October 12th. 16 

### MR. BERRINGER: Okay. Yeah, so it would 17 be 30 days after this. If we look at the calendarwe 18 

### can -- 19 

### PARTICIPANT: November 1st. 20 MR. BERRINGER: November 1st? Okay, all 21 right. November 1st. Thank you. 22 MR. RABA: Didallofyouget thedeadline 23 for written comments is November 1st? 24 

### MR. BERRINGER: Ifforanyreasonyouneed 25 tocalltheFreedomof InformationRoom, thenumberis

(202)234-4433 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com24 1 (202) 586-6020. 2 What we ask is if you have written 3 comments, that you submit ten copies of that, the 4 copies, the original signed . If you have it 5 electronically, that would be great. If you have it 6 in Word Perfect, we can read Word. So we just ask 7 that no faxed copies be sent in. 8 You can send the comments electronically 9 to Brenda Edwards-Jones. Her address is in the 10 Federal Register notice. What we ask is if you submit 11 electronic copies or comments that you provide a hard 12 copy signed so that we know that it originated from 13 you and that we can have that for our records. 14 The other thing is that we talk about in 15 accordance with 10 CFR 1004.11, is if you have 16 confidential information, the department will review 17 that to make a determination whether the information 18 should be accepted for public disclosure. 19 What you should do is if you think 20 something is confidential, you send an original to us, 21 and any information you think is confidential to the 22 public, you basically mark out, and that information 23 then could be place in the Freedom of Information 24 Room. So if you have any questions about that, you 25 can see Francine. 

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### 24 1 

### (202) 586-6020. 2 what we ask is if you have written 3 comments, that you submit ten copies of that, the 4 

### copies, the original signed If you have it 5 

### electronically, that would be great. If you have it 6 

### in Word Perfect, we can read Word. So we just ask 7 that no'faxed copies be sent in. 8 

### You can send the comments electronically 9 

### to Brenda Edwards-Jones. Her address is in the 10 FederalRegisternotice. Whatwe askis ifyou submit 11 electronic copies or comments that youprovide a hard 12 copy signed so that we know that it originated from 13 you and that we can have that for our records. 14 The other thing is that we talk about in 15 accordance with 10 CFR 1004.11, is if you have 16 confidential information, the department will review 17 that to make a determination whether the information 18 shouldbe accepted for public disclosure. 19 

### What you should do is if you think 20 somethingisconfidential, you sendanoriginaltous, 21 and any information you think is confidential to the 22 public, you basicallymark out, and that information 23 then could be place in the Freedom of Information 24 Room. So if you have any questions about that, you 25 can see Francine.

(202)234-4433 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE" N,W. WASHINGTON, D,C, 20005-3701 www.nealrgross.com25 1 Okay. All right. The only other thing 2 that we have that Jim had as far as housekeeping was 3 obviously this is a no smoking facility in this room 4 or in the building.at all. So if you do, please 5 during a break you can go out to the front area. 6 Again, I'd just like to thank everybody 7 for coming today just so that we can hear your 8 comments on the process and analytical tools. Again, 9 we want to make sure that we have the right tools and 10 the right process to proceed, the right information to 11 use throughout this rulemaking process. 12 And, again, thank you. And Iwill turn it 13 back over. 14 I guess since we've done the agenda 15 review, are there any questions regarding the agenda 16 or the purpose of today's meeting? 17 (No response.) 18 MR. BERRINGER: All right. So no 19 questions. I'm going to go ahead and proceed. I have 20 some opening slides before we go into the specific 21 analysis. 22 Again, my name is Bryan Berringer. 23 Introduced ourselves. 24 This is just a brief summary of the 25 statutes. I am not going to go into any detail. 

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### Okay. All right. The only other thing 2 that we have that Jim had as far as housekeeping was 3 

### obviously this is a no smoking facility in this room 4 

### or In the building.at all. So if you do, please 5 

### during a break you can go out to the front area. 6 

### Again, I'd just like to thank everybody 7 

### for coming today just so that we can hear your 8 

### comments on theprocess and analytical tools. Again, 9 

### we want to make sure that we have the right tools and 10 

### therightprocesstoproceed, theright informationto 11 

### use throughout this rulemaking process. 12 And, again, thankyou. AndI will turnit 13 

### back over. 14 

### I guess since we've done the agenda 15 

### review, are there any questions regarding the agenda 16 

### or the purpose of today's meeting? 17 

### (No response.) 18 MR. BERRINGER: 

### All 

### right. So no 

### 19 questions. I'mgoingtogoaheadandproceed. I have 20 some opening slides before we go into the specific 21 analysis. 22 Again, my name is Bryan Berringer. 23 Introduced ourselves. 24 25 

### statutes.

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### This is just a brief summary of the I am not going to go into any detail. NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com26 1 These are basically where it was established. 2 Again, we look at -- the original statute 3 looked at ASHRAE 90.1 as far as October 24th, 1992, 4 was the original requirement. ASHRAE then amended 5 those standards. When that happens, the department 6 can either adopt those standards or they have to 7 justify going to a higher level. 8 So this is sort of where we're at in the 9 process, and so are there any questions about the 10 statute or background as far as the authority? 11 (Noresponse.) 12 MR. BERRINGER: We talk in the framework 13 document the definition of both small and large ^*' 14 commercial air conditioning and heat pump covered 15 products. Again, EPCA set the initial standards, and 16 these are basically the definitions of what we're 17 looking at as far as small and large commercial air 18 conditioning and heat pumps. 19 So, again, when we get into the product 20 class discussion, we want to look to see if there's 21 any other classes that you think might be necessary, 22 any subcategories of classes to discuss. 23 What I've done is what the EPCA original 24 requirements were, I've put on there, and what they 25 ASHRAE 90.199 standards are for those products. 

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### 26 1 These are basicallywhere it was established. 2 

### Again, we look at the original statute 3 looked at ASHRAE 90.1 as far as October 24th, 1992, 4 

### was the original requirement. ASHRAE then amended 5 

### those standards. When that happens, the department 6 can either adopt those standards or they have to 7 justifygoing to a higher level. 8 So this is sort of where we're at in the 9 process, and so are there any questions about the 10 statute or background as far as the authority? 11 (No response.) 12 MR. BERRINGER: We talk in the framework 13 document the definition of both small and large 14 commercial air conditioning and heat pump covered 15 products. Again, EPCA set the initial standards, and 16 these are basically the definitions of what we're 17 looking at as far as small and large commercial air 18 conditioning and heat pumps. 19 So, again, when we get into the product 20 class discussion, we want to look to see if there's 21 any other classes that you think might be necessary, 22 any subcategories of classes to discuss. 23 What I've done is what the EPCA original 24 requirements were, I've put on there, and what they 25 ASHRAE 90.199 standards are for those products.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com27 1 Again, we won't be looking at water source. We're is- 2 mainly looking at air source products today for this 3 rulemaking. 4 Again, just internally for FY 2000, we 5 assigned a number of the commercial products a high 6 priority, this being one of them. If you need a copy 7 of this, the January 12, 2001 requirement where we did 8 adopt the number of ASHRAE equipment, one of the ones 9 we saidwe further evaluate was the commercial unitary 10 and heat pump, one of the reasons for the meeting; 11 again, also recommendations for standards were 12 proposed in the National Energy Policy of May 2001. 13 MR. RABA: Jim? 14 MR. MULLEN: Jim Mullen, Lennox. 15 Bryan, could you maybe just take a second 16 and bring some of us up to date a little bit? When 17 you decided and announced back on January 12th, 2001, 18 that you wanted to continue to evaluate commercial 19 equipment, what were the prime driving reasons for 20 that? 21 MR. BERRINGER: Well, we looked at all of 22 them. I mean, we looked at -- I guess we did a 23 preliminary screening analysis, and Dave maybe or Ron 24 probably can help me out a little bit on this, but we 25 just looked at some of the criteria we looked at, 

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### 27 1 

### Again, we won't be looking at water source. We're 2 mainly looking at air source products today for this 3 rulemaking. 4 

### Again, just internally for FY 

### 2000, we 5 assigned a number of the commercial products a high 6 priority, this being one of them. Ifyou need a copy 7 ofthis, theJanuary 12, 2001requirementwherewe did 8 

### adopt the numberofASHRAE equipment, one of the ones 9 

### we saidwe furtherevaluatewas thecommercialunitary 10 and heat pump, one of the reasons for the meeting; 11 again, also recommendations for standards were 12 proposed in the National Energy Policy of May 2001. 13 MR. RABA: Jim? 14 MR. MULLEN: Jim Mullen, Lennox. 15 Bryan, couldyoumaybejust take a second 16 and bring some of us up to date a little bit? When 17 you decidedandannouncedbackonJanuary 12th, 2001, l8 

### that you wanted to continue to evaluate commercial 19 

### equipment, what were the prime driving reasons for 20 that? 21 MR. BERRINGER: Well, we looked at all of 22 them. I mean, we looked at I guess we did a 23 preliminary screeninganalysis, andDavemaybe orRon 24 probably canhelpme out a littlebit on this, but we 25 just looked at some of the criteria we looked at,

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE.• N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com28 1 mainlywhat the energy savings wouldbe potentially if 2 we would go higher than ASHRAE. 3 So it is not a refined study. That's why 4 we want to try to do a data collect, to make sure that 5 we have better information out there. So I did a 6 preliminary analysis for energy savings and sort of 7 said there might be potential for, you know, higher 8 levels. So I think that was the main driving force 9 for us examining it further. 10 But, again, we want to make sure that we 11 have better information, you know, work with the 12 manufacturers to make sure that we have good data that 13 everybody can agree on. 14 MR. MULLEN: Jim Mullen, Lennox again. 15 I think you could have said that about any 16 of the categories that you chosen to accept. You 17 could have always picked the levels that would have 18 been higher efficiency and more energy savings. It 19 seems there must have been some more detail that drove 20 you to saywe need to look further at commercials, and 21 that's really what I was looking for. 22 MR. BERRINGER: If you could go up to the 23 mic, Dave, and just introduce yourself. 24 MR. WINIARSKI: Dave Winiarski, Pacific 25 Northwest National Laboratory. 

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### mainlywhattheenergysavingswouldbepotentiallyif 2 we would go higher thanASHRAE. 3 

### So it is not a refined study. That's why 4 

### we want totrytodoa datacollect, tomake sure that 5 

### we have better information out there. So I did a 6 

### preliminary analysis for energy savings and sort of 7 

### said there might be potential for, you know, higher 8 

### levels. So I think that was the main driving force 9 

### for us examining it further. 10 

### But, again, we want to make sure that we 11 

### have better information, you know, work with the 12 manufacturerstomake surethatwe havegooddatathat 13 

### everybody can agree on. 14 

### MR. MULLEN: Jim Mullen, Lennox again. 15 

### I thinkyoucouldhave saidthatabout any 16 

### of the categories that you chosen to accept. You 17 

### could have always picked the levels that would have 18 

### been higher efficiency and more energy savings. It 19 seemstheremusthavebeensomemoredetail thatdrove 20 youto saywe needto lookfurther at commercials, and 21 that's really what I was looking for. 22 MR. BERRINGER: If you couldgoup to the 23 mic, Dave, and just introduce yourself. 24 

### MR. WINIARSKI: Dave Winiarski, Pacific 25 Northwest National Laboratory.

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com29 1 I believe that the department's decision 2 on this equipment over other equipment types was 3 primarily based on the magnitude of potential energy 4 savings. Obviously this is a very broad category of 5 equipment with significant energy in the U.S., and it 6 was clear that there was at least the potential for 7 large energy savings in this country. 8 MR. AMRANE: He'll remember when we're 9 there, right? 10 However, if I'm not mistaken, the 11 screening analysis showed that a piece for the 12 products between 65,000 BTUs and 135,000 BTUs, that 13 the.ASHRAE levels were justified, correct? 14 MR. BERRINGER: I would say that's 15 correct. There wasn't a large level. I think some of 16 it had to do with coordinating with what the 17 residential to make sure that, you know, we were on 18 the same level there. I think that was some of the 19 consideration, but most of the analysis showed there 20 was only very little increase. So it was mainly the 21 large commercial that we saw a potential increase. 22 But I guess the decision was made to keep 23 it as a package. 24 MR. RABA: In the back, please, and come 25 to the microphone. 

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### I believe that the department's decision 2 

### on this equipment over other equipment types was 3 primarilybased on the magnitude of potential energy 4 

### savings. Obviously this is a very broad category of 5 

### equipment with significant energy in theU.S., and it 6 

### was clear that there was at least the potential for 7 

### large energy savings in this country. 8 

### MR. AMRANE: He'll remember when we're 9 

### there, right? 10 

### However, if I'm not mistaken, the 11 

### screening analysis showed that a piece for the 12 

### products between 65,000 

### BTUs and 135,000 

### BTUs, that 13 

### the.ASHRAE levels were justified, correct? 14 

### MR. BERRINGER: I would say that's 15 

### correct. Therewasn't a large level. I think some of 16 

### it had to do with coordinating with what the 17 

### residential to make sure that, you know, we were on 18 

### the same level there. I think that was some of the 19 

### consideration, but most of the analysis showed there 20 

### was only very little increase. So it was mainly the 21 

### large commercial that we saw a potential increase. 22 

### But I guess the decisionwas made to keep 23 

### it as a package. 24 

### MR. RABA: In the back, please, and come 25 to the microphone.

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com30 1 MR. HOLLOMAN: Brad Holloman, Pacific 1*3 2 Northwest National Laboratory. 3 I was involved a little bit in that 4 rulemaking. Ibelieve by way of clarification some of 5 the -- there was information offered by way of 6 comments at that rulemaking to the effect that this 7 smaller category also bore looking into further. It 8 was not part of the screening analysis, but I believe 9 from the American Council for Energy Efficient Economy 10 and others that provided data on efficiency in sales 11 prices. 12 MR. RABA: I see a hand. Jim Crawford, go 13 ahead. 14 MR. CRAWFORD: Jim Crawford, Trane 15 Company. 16 Let me pick up Jim Mullen's question and 17 address it from a slightly different angle. Let's be 18 very clear that DOE has not been kept in the dark 19 about the ASHRAE proceedings. They have been more 20 actively involved in that process than any other 21 single organization and specifically through their 22 contractor. 23 Therefore, we find it very disappointing 24 that after some nine years and almost as many years 25 working on 90.1, with a national consensus presumably, 

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### MR. HOLLOMAN: Brad Holloman, Pacific 2 Northwest National Laboratory. 3 

### I was involved a little bit in that 4 

### rulemaking. I 

### believebywayof clarificationsomeof 5 

### the there was information offered by way of 6 

### comments at that rulemaking to the effect that this 7 

### smaller category also bore looking into further. It 8 

### was notpart of the screening analysis, but I 

### believe 9 

### fromtheAmericanCouncilforEnergyEfficientEconomy 10 

### and others that provided data on efficiency in sales 11 

### prices. 12 

### MR. RABA: I 

### see a hand. JimCrawford, go 13 

### ahead. 14 

### MR. CRAWFORD: Jim Crawford, Trane 15 Company. 16 Let me pick up Jim Mullen's question and 17 address it from a slightlydifferent angle. Let's be 18 

### very clear that DOE 

### has not been kept in the dark 19 

### about the ASHRAE proceedings. They have been more 20 actively involved in that process than any other 21 

### single organization and specifically through their 22 contractor. 23 Therefore, we find it very disappointing 24 that after some nine years and almost as many years 25 workingon 90.1, 

### witha nationalconsensuspresumably,

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com31 1 that we need to plow this same field all over again. 2 Certainly we can talk about conservation 3 of this and conservation of that. One of the things 4 that could be conserved by a more rational streamlined 5 approach of taking that which we've all already agreed 6 to would be the savings of considerable amounts of 7 federal expenditures and expenditures in state 8 organizations, as well as in the private sector, and 9 we're talking about several million dollars if it's 10 going to be anything like what we've just gone 11 through. 12 We're disappointed. 13 MR. RABA: Thank you, Jim. 14 Bill and then Michael. 15 MR. PRINDLE: Bill Prindle, Alliance to 16 Save Energy. 17 I'm a member of the 90.1 committee and 18 I've sat through the deliberations for the '99 19 standard, and I think I have a little bit of insight 20 of that process into this process. 21 I think it's important for the department 22 to remember that the processes we're talking about are 23 fundamentally different. The ASHRAE process is not 24 driven by any statutory requirements. It's a 25 voluntary consensus process driven, if anything, by 

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### 31 1 that we need to plow this same field allover again. 2 Certainlywe can talk about conservation 3 of this and conservation of that. One of the things 4 thatcouldbeconservedbya morerational streamlined 5 approachoftakingthatwhichwe've allalreadyagreed 6 to would be the savings of considerable amounts of 7 

### federal expenditures and expenditures In state 8 organizations, as well as in the private sector, and 9 we're talking about several million dollars if it's 10 going to be anything like what we've just gone 11 through. 12 We're disappointed. 13 MR. RABA: Thank you, Jim. 14 

### Bill and then Michael. 15 

### MR. PRINDLE: Bill Prindle, Alliance to 16 Save Energy. 17 I'm a member of the 90.1 committee and 18 I've sat through the deliberations for the '99 19 standard, and I think I have a little bit of insight 20 of that process into this process. 21 I think it's important for the department 22 torememberthat·theprocesseswe'retalkingabout are 23 

### fundamentally different. The ASHRAE process is not 24 

### driven by any statutory requirements. It's a 25 voluntary consensus process driven, if anything, by

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com32 1 ANSI requirements for what constitutes the consensus 

# O*k 2 process. 3 There are no economic standards to which 4 the ASHRAE analysis is held. I mean, voluntarily 5 certain kinds of methods have been developed, scaler 6 ratios and so on, but what you find if you look at the 7 scaler ratio that was applied in the case of the '99 8 standard is it equates to something like a seven or 9 eight year payback. 10 The department is required by statute and 11 by process rule to look at minimizing life-cycle 12 costs. Now, that's a fundamentally different economic 13 framework in which to analyze standards. 14 Also, the ASHRAE process does not benefit 15 from the presence of a lot of the independent analysis 16 that DOE is able to provide. You know, most of the 17 analysis in ASHRAE is done on kind of a pro bono 18 basis. 19 Similarly, for cost data ASHRAE had no 20 independent way to make determinations on equipment 21 cost data. So on some of the fundamental analytical 22 issues, it's important to realize and remember as we 23 go through this that the DOE process is fundamentally 24 different answers todifferent statutory requirements, 25 different analytical requirements, and you know, I 

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### 32 1 ANSI requirements for what constitutes the consensus 2 process. 3 There are no economic standards to which 4 

### the ASHRAE analysis is held. I mean, voluntarily 5 certain kinds of methods have been developed, scaler 6 ratios and soon, butwhatyou find ifyou look at the 7 scaler ratio that was applied in the case of the '99 8 standard is it equates to something like a seven or 9 eight year payback. 10 The department isrequiredby statute and 11 by process rule to look at minimizing life-cycle 12 costs. Now, that'sa fundamentallydifferenteconomic 13 framework in which to analyze standards. 14 Also, theASHRAE processdoes notbenefit 15 fromthepresenceofa lotofthe independent analysis 16 

### that DOE is able to provide. You know, most of the 17 analysis in ASHRAE is done on kind of a pro bono 18 

### basis. 19 

### Similarly, for cost data ASHRAE had no 20 independent way to make determinations on equipment 21 cost data. So on some of the fundamental analytical 22 issues, it's important to realize and remember as we 23 go throughthis that the DOE process is fundamentally 24 differentanswerstodifferentstatutoryrequirements, 25 different analytical requirements, and you know, I

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com33 1 think that's why we're here, because we have a *t 2 slightly different set of criteria to meet. 3 MR. RABA: Michael Martin. 4 MR. MARTIN: Iyield to the Trane Company. 5 It's on the same subject. 6 MR. RABA: Okay. Jim Crawford. 7 MR. CRAWFORD: Yes. Jim Crawford. 8 MR. RABA: Thank you. 9 MR. CRAWFORD: Point of order relative to 10 EPAC (phonetic), and I certainly don't have that thing 11 memorized,but I doubt whether the call is to minimize 12 life-cycle cost. I suspect it is to examine life13 cycle cost as one factor to be considered. The 14 distinction is non-trivial, and in examining scaler 15 ratio, that wonderful invention of somebody years ago, 16 you are, in effect, examining life-cycle costs because 17 when you deal with paybacks, you are in the life-cycle 18 cost domain. You're measuring a different parameter 19 in that domain, but you're still in that domain. 20 And if we're going to quote the law, let's 21 quote it right. 22 MR. RABA: Ed Pollack was up, then Beth 23 and Michael. 24 MR. POLLOCK: Yeah, Ed Pollock from *V 

### ~25 Department of Energy. 

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### 33 

### 1 think that's why we're here, because we have a 2 slightly different set of criteria to meet. 3 

### MR. RABA: Michael Martin. 4 

### MR. MARTIN: I yieldtotheTraneCompany. 5 It's on the same subject. 6 

### MR. RABA: Okay. Jim Crawford. 7 

### MR. CRAWFORD: Yes. Jim Crawford. 8 

### MR. RABA: Thank you. 9 

### MR. CRAWFORD: Point of orderrelative to 10 EPAC (phonetic), andI certainlydon'thavethat thing 11 memorized, but I doubtwhetherthecallis tominimize 12 life-cycle cost. I suspect it is to examine life13 

### cycle cost as one factor to be considered. The 14 distinction is non-trivial, and in examining scaler 15 ratio, thatwonderfulinventionofsomebodyyearsago, 16 youare, ineffect, examininglife-cyclecostsbecause 17 whenyoudealwithpaybacks, youareinthe life-cycle 18 cost domain. You're measuring a different parameter 19 in that domain, but you're still in that domain. 20 Andifwe'regoingtoquotethelaw, let f

### s 21 quote it right. 22 MR. RABA: Ed Pollack was up, then Beth 23 and Michael. 24 

### MR. POLLOCK: Yeah, Ed Pollock from 25**Dep~rtment** 

### of Energy.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005·3701 www.nealrgross.com34 1 On the previous slide, Bryan, on this 2 discussion about economics, it's not minimum life3 cycle costs that we're required to evaluate. It's the 4 maximum level of efficiency that's technologically 5 feasible and economically justified, the bottom 6 sentence there. 7 That may and probablywill take you beyond 8 the normal life-cycle cost point. So I'm not sure 9 exactly where the scaler takes you. 10 I will point out, because I was active in 11 the committee when this analysis was first begun, that 12 different from some of the other products, ARI 13 submitted the 90th percentile, which means all of the 14 economics were based on the most expensive designs on 15 the market at each efficiency level. That's one of 16 the reasons we're taking a look at this. 17 Finally, I want to point out that when we 18 issued the termination, we said that we recognized 19 there may not be sufficient improvement for some of 20 these sizes of product to justify going forward with 21 full rulemaking, and that we have the right to make a 22 determination at any point in this analysis that, 23 yeah, the ASHRAE committee made the right decision, at 24 which point we can always go back and adopt that level 25 of efficiency. 

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### On the previous slide, Bryan, on this 2 discussion about economics, it's not minimum life3 cyclecoststhatwe'rerequiredtoevaluate. It'sthe 4 

### maximum level of efficiency that's technologically 5 

### feasible and economically justified, the bottom 6 

### sentence there. 7 Thatmayandprobablywilltakeyoubeyond 8 

### the normal life-cycle cost point. So I'm not sure 9 exactlywhere the scaler takes you. 10 I willpoint out, because I was active in 11 thecommitteewhenthis analysiswas firstbegun, that 12 different from some of the other products, ARI 13 submittedthe 90thpercentile, whichmeans all of the 14 economics werebasedonthe most expensive designs on 15 the market at each efficiency level. That's one of 16 the reasons we're taking a look at this. 17 Finally, I want topoint out that whenwe 18 

### issued the termination, we said that we recognized 19 there may not be sufficient improvement for some of 20 these sizes of product to justifygoing forward with 21 full rulemaking, and that we have the right tomake a 22 determination at any point in this analysis that, 23 yeah, theASHRAE committeemadetherightdecision, at 24 whichpointwe c·analways gobackandadopt that level 25 of efficiency.

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com35 1 Because of the comments we got, wewill do ^*0 2 some analysis, and we will still continue to look for 3 that decision point at various stages in this 4 analysis. 5 MR. RABA: Thank you, Ed. 6 Back to you, Michael. 7 MR. MARTIN: Yes. Michael Martin. 8 I had the privilege of being the 9 mechanical subcommittee chair of 90.1 when we went 10 through the adoption, and I would like to point out 11 that in my experience in voluntary consensus 12 standards, I have never come across a standard that 13 had so many unresolved comments. And quite a number 14 of them were related to this particular aspect. 15 I was not a member when the original 16 forecast of costs were produced by ARI, but I was 17 present at the meetings, and there was a great deal of 18 question as to just how meaningful this was, and we 19 were unable to look into in detail just how this was. 20 This was, after all, about ten years ago, 21 and things have changed quite a lot in ten years, and 22 the other thing that is very key to me is that the 23 California Energy Commissionhas already adoptedmore 24 stringent standards for these air conditioners, andwe * 25 are going to be filing a petition for exemption from 

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### 1 Becauseof thecommentswe got, we willdo 2 

### some analysis, andwe will still continue to look for 3 

### that decision point at various stages in this 4 

### analysis. 5 

### MR. RABA: Thank you, Ed. 6 

### Back to you, Michael. 7 

### MR. MARTIN: Yes. Michael Martin. 8 I 

### had the privilege of being the 9 mechanical subcommittee chair of 90.1 when we went 10 through the adoption, and I would like to point out 11 

### that in my experience in voluntary consensus 12 standards, I have never come across a standard that 13 had so many unresolved comments. And quite a number 14 of them were related to this particular aspect. 15 

### I was not a member when the original 16 forecast of costs were produced by ARI, but I was 17 present at themeetings, andtherewas a greatdeal of 18 

### question as to just how meaningful this was, and we 19 were unable to look into indetail just how this was. 20 This was, after all, about tenyears ago, 21 and things have changedquite a lot in tenyears, and 22 the other thing that is very key to me is that the 23 CaliforniaEnergyCommissionhas alreadyadoptedmore 24 stringent standardsfortheseairconditioners, andwe 25 are going to be filing a petition for exemption from

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W WASHINGTON, D.C. 20005·3701 www.nealrgross.com36 1 preemption, and it would be exceedingly helpful if you 2 were to go ahead and do what you're planning to do now 3 so that when you have to judge on this petition, you 4 will have in front of you data that's produced by 5 these excellent contractors that you have that has 6 been subject to public review. 7 So I would urge you to go ahead and do 8 what you are planning to do, and recognizing that it 9 may come out with some results that are totally 10 different from what I expect, but you definitely 11 should go ahead and continue with your plan of what 12 you're planning to do here. 13 Thank you. 14 MR. RABA: Thank you. 15 Other comments? In the back, please. 16 MR. HUNT: Marshall Hunt, Pacific Gas and 17 Electric Company. 18 I support Mike Martin's comment. 19 Sometimes we are overtaken by events, as we all have 20 discovered, and the fact that it was ten years ago and 21 longer, and the fact that these standards won't take 22 an impact or won't take effect for years to come mean 23 that we need to relook at everything and need to have 24 an open public process. 25 Our customers are looking down at a 

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### 36 

### 1 preemption, anditwouldbeexceedinglyhelpful ifyou 2 weretogoaheadanddowhatyou'replanningtodonow 3 so that when you have to judge on this petition, you 4 will have in front of you data that's produced by 5 these excellent contractors that you have that has 6 been subject to public review. 7 So I would urge you to go ahead and do 8 what you are planning to do, and recognizing that it 9 may come out with some results that are totally 10 

### different from what I expect, but you definitely 11 should go ahead and continue with your plan of what 12 you're planning to do here. 13 Thank you. 14 

### MR. RABA: Thank you. 15 

### Other comments? In the back, please. 16 

### MR. HUNT: Marshall Hunt, PacificGas and 17 Electric Company. l8 I 

### support Mike Martin's comment. 19 Sometimes we are overtaken by events, as we all have 20 discovered, andthe fact that itwas tenyears agoand 21 longer, and the fact that these standards won't take 22 an impact orwon't take effect for years to come mean 23 that we need to relook at everything and need to have 24 an open public process. 25

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### Our customers are looking down at a NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com37 1 surcharge that was passed by the Public Utilities

AM% 2 Commission that raises rate on commercial customers by 3 about 50 percent and have a time of use impact that is 4 tremendous, and we must get that kind of analysis into 5 the forefront of the economics of the situation, and 6 I think we'd find that when we begin to look at the 7 true economics of efficiency in the commercial sector 8 equipment, we would find that new standards should be 9 must stricter than has been proposed under an old set 10 of standards and an old set of situations where the 11 economics look much different. 12 And I know that the industry has been very 13 responsive. They've come out with fine equipment that 14 has responded, and we need to look at that again. So 15 I would definitely support relooking at this 16 equipment, the zero to 65,000 for sure, and also 65 to 17 135. 18 Thank you. 19 MR. RABA: Thank you. 20 I'll get to you. Jim first and Michael. 21 But to our call-in participants, have you been able to 22 hear the comments thus far? 23 MS. POULIN: Yes, fine. Thank you. 24 MR. RABA: Okay. Do you have any comments 25 yourselves perhaps? 

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### surcharge that was passed by the Public Utilities 2 Commissionthatraisesrateoncommercialcustomersby 3 about 50percent andhave a time ofuse impact that is 4 

### tremendous, andwe mustget thatkindof analysis into 5 

### the forefront of the economics of the situation, and 6 

### I think we'd find that when we begin to look at the 7 

### true economics of efficiencyinthe commercial sector 8 

### equipment, we wouldfind that new standards shouldbe 9 

### must stricterthanhas beenproposedunder anold set 10 

### of standards and an old set of situations where the 11 

### economics look much different. 12 

### AndI knowthattheindustryhasbeenvery 13 

### responsive. They'vecomeoutwithfineequipment that 14 

### has responded, andwe needto look at that again. So 15 I 

### would definitely support relooking at this 16 equipment, the zeroto 65,000 for sure, andalso 65 to 17 135. 

### 18 Thank you. 19 

### MR. RABA: Thank you. 20 

### I'll get to you. Jim first and Michael. 21 

### But toourcall-inparticipants, haveyoubeenableto 22 hear the comments thus far? 23 

### MS. POULIN: Yes, fine. Thank you. 24 

### MR. RABA: Okay. Doyouhave anycomments 25 yourselves perhaps?NEALR.GROSS (202)234·4433 COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005·3701 www.nealrgross.com38 1 MS. POULIN: Not right now. 2 MR. RABA: David? Hung? 3 MR. PHAM: No, I don't have any. I'm 4 sorry. 5 MR. RABA: Okay. 6 DR. GOLDSTEIN: This is David Goldstein. 7 I wanted to echo the last two commenters. 8 The ASHRAE process was very flawed. There were some 9 500 commenters just on this one particular issue of 10 air conditioner standards, and one of the reasons for 11 nonresolution is that the data on which the cost 12 analysis was based wasn't released to us in response 13 to comments. So we have no idea; no one has any idea 14 what went into the ASHRAE numbers. 15 That may be fine forASHRAE's process, but 16 if you require comparison of robust models for the DOE 17 proceeding, we'll need some new data on what the costs 18 are, not to mention the fact that ten years later 19 they're probably somewhat different than they were 20 before. 21 MR. RABA: Thank you, David. 22 Now, I saw Jim Crawford. 23 MR. CRAWFORD: Let me first respond to one 24 point that David Goldstein has just made. 25 The figures that were submitted from ARI 

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### 1 MS. POULIN: Not right now. 2 

### MR. RABA: David? Hung? 3 

### MR. PHAM: No, I don't have any. I'm 4 sorry. 5 

### MR. RABA: Okay. 6 

### DR. GOLDSTEIN: This lS 

### David Goldstein. 7 

### I wantedtoecho the last two commenters. 8 

### The ASHRAE process was very flawed. There were some 9 500 commenters just on this one particular issue of 10 air conditioner standards, andone of the reasons for 11 nonresolution is that the data on which the cost 12 analysis was based wasn't released to us in response 13 to comments. Sowe have no idea; no one has any idea 14 what went into the ASHRAE numbers. 15 Thatmaybefine forASHRAE's process, but 16 ifyourequirecomparisonofrobustmodels for theDOE 17 proceeding, we'llneedsomenewdataonwhat thecosts 18 

### are, not to mention the fact that ten years later 19 they're probably somewhat different than they were 20 before. 21 MR. RABA: Thank you, David. 22 

### Now, I saw Jim Crawford. 23 

### MR. CRAWFORD: Letme first respondtoone 24 point that David Goldstein has just made. 25 The figures that were submitted from ARI

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005·3701 www.nealrgross.com39 1 to DOE were public record -- excuse me -- to ASHRAE, 2 they were public record six years ago, seven years 3 ago. I don't remember exactly, and if I recall 4 correctly, I would think that in a meeting in 5 Portland, Oregon, chaired by Mr. Jarnagin, that David 6 Goldstein was there when those numbers were discussed. 7 I may be mistaken on that point. 8 The second point I would like to make

-- 9 DR. GOLDSTEIN: -- the committee's 10 response to me, to the DOE record concerning not 11 releasing the cost data. The final results were all 12 that was released. 13 MR. CRAWFORD: Well, those were costs, 14 David. 15 The second point that I would like to make 16 is that there have been two interventions here talking 17 about things that were ten years ago. If I'm not 18 mistaken,ASHRAE 90.199 statesASHRAE's position as of 19 1999. That's roughly two years ago. 20 So I think that we ought not be talking 21 about ten years ago. EPAC was ten years ago. The '99 22 ASHRAE rules were two years ago. 23 MR. RABA: Michael. 24 MR. MARTIN: I was at that meeting in 25 Portland, and we did get data from ARI. They 

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### 39 1 to DOE were public record

-- excuse me -- to ASHRAE, 2 they were public record SlX 

### years ago, seven years 3 

### ago. I don't remember exactly, and if I recall 4 

### correctly, I would think that in a meeting in 5 

### Portland, Oregon, chairedbyMr. Jarnagin, that David 6 

### Goldsteinwastherewhenthosenumberswerediscussed. 7 

### I may be mistaken on that point. 8 

### The second point I would like to make

-- 9 

### DR. GOLDSTEIN: the committee's 10 response to me, to the DOE record concerning not 11 releasing the cost data. The final results were all 12 that was released. 13 

### MR. CRAWFORD: Well, those were costs, 14 David. 15 The secondpointthat I wouldliketomake 16 isthattherehavebeentwointerventionsheretalking 17 

### about things that were ten years ago. If I'm not 18 mistaken, ASHRAE 90.199 statesASHRAE's positionasof 19 1999. That's roughly two years ago. 20 So I think that we ought not be talking 21 about tenyears ago. EPAC was tenyears ago. The '99 22 ASHRAE rules were two years ago. 23 24 25 

### MR. RABA: Michael. MR. MARTIN: I was at that meeting in Portland, and we did get data from ARI. They

(202)234-4433 NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com40 1 explained how theyput it together, and the individual 2 data from manufacturers was not provided. Some of it 3 they had run into difficulties because there were so 4 many manufacturers that made particular sizes, and it 5 was the best that ARI felt that they could provide, 6 but it really wasn't that complete. 7 MR. CRAWFORD: Individual data from 8 responsible manufacturers will never be released. 9 That's proprietary information, and if we were to 10 release it, we would be very much in danger of 11 significant difficulties with the Department of 12 Justice because we would be disclosing to each other 13 our costs of operation, and we're not allowed to do 14 that. That's against the law, sir. 15 MR. RABA: That was Jim Crawford, Trane. 16 Comments again, please. Michael. 17 MR. MARTIN: Yeah, there is also an 18 enormous difference between what you have to do here 19 when you're coming up with the most stringent standard 20 technologically feasible and economically justified 21 and what ASHRAE is coming up with where the key is to 22 get consensus. And there may well be big differences 23 between those two. 24 MR. RABA: Thank you. 25 A gentleman just entered the room. For 

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### 1 explainedhowtheyput ittogether, andthe individual 2 data frommanufacturers was notprovided. Some of it 3 

### they had run into difficulties because there were so 4 

### manymanufacturers that madeparticular sizes, andit 5 

### was the best that ARI felt that they could provide, 6 

### but it reallywasn't that complete. 7 

### MR. CRAWFORD: Individual data from 8 responsible manufacturers will never be released. 9 That's proprietary information, and if we were to 10 release it, we would be very much in danger of 11 significant difficulties with the Department of 12 Justice because we would be disclosing to each other 13 our costs of operation, and we're not allowed to do 14 that. That's against the law, sir. 15 

### MR. RABA: That was Jim Crawford, Trane. 16 

### Comments again, please. Michael. 17 

### MR. MARTIN: Yeah, there 1S 

### also an 18 enormous difference between what you have to do here 19 whenyou'recomingupwiththemost stringent standard 20 technologically feasible and economically justified 21 andwhat ASHRAE is comingup withwhere the key is to 22 get consensus. And theremaywell bebigdifferences 23 between those two. 24 25

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### MR. RABA: Thank you. A gentleman just entered the room. For NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com41 1 the record, sir, please introduce yourself to the 2 group at the microphone. State your name and 3 organization for the court reporter. 4 MR. WOLF: Okay. I'm Jim Wolf with 5 American Standard and also the Trane Company. 6 MR. RABA: Welcome. 7 MR. AMRANE: Karim Amrane with ARI. 8 To my understanding, I believe that the 9 Pacific Northwest Lab, when it conducted a screening 10 analysis, has reviewed some of the data that were used 11 by the 19.1 committee. So I'm not sure if that's ten 12 years old that is being claimed here. 13 It has been reviewed slightly, and of 14 course, the argument that everything is tenyears old, 15 then why did DOE adopt the efficiency level for some 16 products? The data was also ten years old. 17 MR. RABA: Other comments? Yes, please. 18 MR. MULLEN: Jim Mullen, Lennox. 19 A comment and a question, I guess. The 20 comment is that probably 80 percent of the reasons 21 that were just given were reviewing the commercial 22 standard as with respect to 90.1 would apply to any of 23 the categories that were accepted under 90.1, if you 24 look back at them in light of today. So the question 25 is: does DOE have to go through the full process as 

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### 1 the record, sir, please introduce yourself to the 2 group at the microphone. State your name and 3 organization for the court reporter. 4 

### MR. WOLF: Okay. I'm Jim Wolf with 5 American Standard and also the Trane Company. 6 

### MR. RABA: Welcome. 7 

### MR. AMRANE: Karim Amrane withARI. 8 

### To my understanding, I believe that the 9 Pacific Northwest Lab, when it conducted a screening 10 analysis, hasreviewedsomeof thedatathatwereused 11 bythe 19.1 committee. So I'mnot sure if that's ten 12 years old that is being claimed here. 13 

### It has been reviewed slightly, and of 14 course, theargumentthateverythingistenyearsold, 15 then why did DOE adopt the efficiency level for some 16 products? The data was also ten years old. 17 

### MR. RABA: Other comments? Yes, please. 18 

### MR. MULLEN: Jim Mullen, Lennox. 19 A comment and a question, I guess. The 20 comment is that probably 80 percent of the reasons 21 that were just given were reviewing the commercial 22 standardaswithrespect to 90.1wouldapplytoanyof 23 the categories that were accepted under 90.1, if you 24 lookback at them in light of today. So the question 25 is: does DOE have to go through the full process as

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE,N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com42 1 though you were starting a fresh rulemaking or is it 2 possible to focus on those things that were the prime 3 reasons that 90.1 was not accepted? 4 And inherent in that would be making a 5 good definition of why 90.1 wasn't accepted. 6 MR. RABA: Would anybody care to comment 7 on that? 8 MR. STEPHENS: Charlie Stephens, Oregon 9 Energy Office. 10 I think, if I can just go back to the 11 Federal Registernotice that DOE published,where they 12 published the findings from the preliminary analysis, 13 it basically lays out in some detail there why some 14 things were accepted and why some weren't. Some of 15 them had significant additional savings that looked to 16 be possible and cost effective. Others did not. 17 In some cases there were no levels 18 technologically feasible above the level that ASHRAE 19 set, as it happened, or the savings were very small, 20 but I think the reasons are all pretty well laid out, 21 and the categories that were accepted were defined, 22 and the categories that weren't were defined, and the 23 reasons for that I thought were fairly clear in the 24 Federal Register notice. 25 I concurred with it then, and I still do, 

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### 42 

### 1 though you were starting a fresh rulemaking or is it 2 possible to focus on those things that were the prime 3 reasons that 90.1 was not accepted? 4 And inherent in that would be making a 5 good definition of why 90.1 wasn't accepted. 6 

### MR. RABA: Would anybody care to comment 7 on that? 8 

### MR. STEPHENS: Charlie Stephens, Oregon 9 Energy Office. 10 I think, if I can just go back to the 11 FederalRegisternoticethatDOEpublished, wherethey 12 publishedthe findings fromthepreliminaryanalysis, 13 it basically lays out ln some detail there why some 14 

### things were accepted and why some weren't. Some of 15 themhadsignificantadditional savingsthat lookedto 16 be possible and cost effective. Others did not. 17 

### In some cases there were no levels l8 

### technologically feasible above the level that ASHRAE 19 set, as it happened, or the savings were very small, 20 but I think the reasons are allprettywell laidout, 21 and the categories that were accepted were defined, 22 and the categories that weren't were defined, andthe 23 reasons for that I thought were fairly clear in the 24 Federal Register notice. 25 I concurredwith it then, and I stilldo,

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com43 1 and I think we need to proceed. Many, many things 2 have changed, and many, many things will be different 3 five years from now as we approach the time, whenever 4 we decide it will go into effect. 5 MR. MARTIN: I'd like to agree with what 6 Charlie said. I think you did a great job in that 7 January notice explaining what you did and why you did 8 it. 9 MR. RABA: That was Michael Martin, 10 California Energy Commission. 11 Other comments? 12 (No response.) 13 MR. RABA: Well, I hear views on both 14 sides, equally valid. I think in the process of 15 today's public workshop we'll get some more of these 16 issues on the table for further consideration and what 17 you think of later on, please submit in written 18 comments as well. 19 Are there any further before we proceed 20 on? James -- I mean Michael. I'm sorry. 21 MR. MARTIN: Yeah. Marshall made a 22 comment about air conditioners less than 65,000 BTU 23 per hour, but I understand that's not within the scope 24 of today's discussion. You know, there are those 25 three-phase units that have kind of fallen between the 

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### and I think we need to proceed. Many, many things 2 have changed, andmany, many things willbe different 3 five years from now as we approach the time, whenever 4 

### we decide it will go into effect. 5 

### MR. MARTIN: I'd like to agree with what 6 

### Charlie said. I think you did a great job in that 7 

### Januarynoticeexplainingwhatyoudidandwhyyoudid 8 

### it. 9 

### MR. RABA: That was Michael Martin, 10 California Energy Commission. 11 

### Other comments? 12 

### (No response.) 13 

### MR. RABA: Well, I hear views on both 14 

### sides, equally valid. I think in the process of 15 today's public workshop we'll get some more of these 16 issuesonthetable forfurtherconsiderationandwhat 17 you think of later on, please submit in written 18 

### comments as well. 19 Are there any further before we proceed 20 

### on? James

-- I mean Michael. I'm sorry. 21 

### MR. MARTIN: Yeah. Marshall made a 22 comment about air conditioners less than 65,000 BTU 23 perhour, but I understandthat'snotwithinthe scope 24 

### of today's discussion. You know, there are those 25 three-phaseunitsthathavekindof fallenbetweenthe

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com44 1 cracks, less than 65,000. 2 MR. BERRINGER: Right. You're correct, 3 Michael. Those aren't part of the discussion today. 4 MR. MARTIN: Right. So presumably we 5 would be discussing that as we discussed the single 6 phased units under 65,000 tomorrow. 7 MR. BERRINGER: I'm not sure if we're 8 going to talk about the commercial side about that, 9 but those levels are tied into that, and there would 10 be a separate rulemaking on those products. 11 MR. MARTIN: Okay, good. As long as we 12 understand. 13 MR. BERRINGER: And just to reiterate what 14 Jim.Mullen was asking, we are at a decision point. 15 That's why we put in a Federal Register notice. You 16 know, as Ed Pollock said, we can go back and adopt 17 ASHRAE, you know, or proceed with the rulemaking. So 18 we're trying to make a determination based on the

-- 19 obviouslyyou have two sides to this that we're trying 20 to decipher. 21 You know, we want to make the best 22 judgment that we can. So we want to make sure we 23 have, you know, the best information that we can make 24 our decision and to move forward, and it may be after 25 we do this initial data collection, engineering 

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### 1 cracks, less than 65,000. 2 

### MR. BERRINGER: Right. You're correct, 3 

### Michael. Those aren't part of the discussion today. 4 

### MR. MARTIN: Right. So presumably we 5 would be discussing that as we discussed the single 6 phased units under 65,000 tomorrow. 7 

### MR. BERRINGER: I'm not sure if we're 8 going to talk about the commercial side about that, 9 but those levels are tied into that, and there would 10 be a separate rulemaking on those products. 11 MR. MARTIN: Okay, good. As long as we 12 understand. 13 

### MR. BERRINGER: Andjusttoreiteratewhat 14 Jim Mullen was asking, we are at a decision point. 15 

### That's why we put in a Federal Register notice. You 16 know, as Ed Pollock said, we can go back and adopt 17 ASHRAE, youknow, orproceedwith the rulemaking. So 18 we're trying to make a determination based on the 19 obviouslyyouhavetwo sidestothisthatwe're trying 20 to decipher. 21 You know, we want to make the best 22 

### judgment that we can. So we want to make sure we 23 have, youknow, the best information that we canmake 24 ourdecision and tomove forward, and it maybe after 25 we do this initial data collection, engineering

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com45 1 analysis, preliminary stuff, that we say, okay, we go 2 to ASHRAE or that we feel that, yes, there is. 3 I mean there are very many tradeoffs that 4 we have to look at. If you look at the schedule, you 5 just proceed with that. If we do proceed with the 6 rulemaking portion, it would take a longer process. 7 So obviously those savings would have to be great 8 enough to warrant going to, as we're showing here, 9 about a final rule in August of 2004. If we do a 10 NOPR, it would be January of 2003 and a NOPR in -- I'm 11 sorry -- 2004. 12 So we do have to weigh as far as going to, 13 you know, adopting ASHRAE as soon as possible versus 14 pushing the rulemaking, which is usually typically a 15 three-year process. So those are major concerns, and 16 that is what we're looking for out of this workshop. 17 So I do appreciate comments from both sides. 18 MR. RABA: Go ahead, sir. 19 MR.WOLF: Yeah, I apologize for coming in 20 late, but I -- 21 MR. RABA: Your name again, sir? 22 MR.WOLF: Jim Wolf withAmerican Standard 23 and the Trane Company. 24 MR. RABA: Thank you. O~ 2f25 MR. WOLF: I'm not sure that you discussed 

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### 1 analysis, preliminary stuff, that we say, okay, we go 2 to ASHRAE or that we feel that, yes, there is. 3 

### I mean there areverymanytradeoffs that 4 we have to look at. Ifyou look at the schedule, you 5 

### just proceed with that. If we do proceed with the 6 

### rulemaking portion, it would take a longer process. 7 

### So obviously those savings would have to be great 8 

### enough to warrant going to, as we're showing here, 9 

### about a final rule in August of 2004. If we do a 10 NOPR, itwouldbe Januaryof 2003 anda NOPR in

-- I'm 11 sorry 2004. 12 Sowe dohavetoweighas far asgoingto, 13 you know, adoptingASHRAE as soon as possible versus 14 pushing the rulemaking, which is usually typically a 15 three-yearprocess. So those aremajorconcerns, and 16 that is what we're looking for out of this workshop. 17 So I do appreciate comments from both sides. 18 

### MR. RABA: Go ahead, sir. 19 

### MR. WOLF: Yeah, I apologize forcomingin 20 late, but I 21 MR. RABA: Your name again, sir? 22 MR. WOLF: JimWolfwithAmericanStandard 23 and the Trane Company. 24 25

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### MR. RABA: Thank you. MR. WOLF: I'mnot surethatyoudiscussed NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com46 1 one aspect of the rulemaking that has changed over the 2 years since the law was passed. As I understand, the 3 law is that ASHRAE sets the standard. You evaluate 4 it, make a determination of whether you're going to go 5 through rulemaking or accept ASHRAE. 6 What has changed, and I'm sure you are all 7 aware of it, is the continuous maintenance process. 8 One of the problems you have in evaluating a standard 9 that's set by ASHRAE is that there's always a time 10 delay. The data that was developed and considered by 11 ASHRAE has a year or two on it, or more, by the time 12 it reaches you for evaluation because the ASHRAE 13 process naturally takes a while. 14 The continuous maintenance process, 15 however, solves that problem. The proper approach in 16 the letter of or not the letter of the law, but the 17 spirit of the law with these changing conditions, I 18 would think, would be for you to submit to ASHRAE 19 after your evaluation what those appropriate levels 20 should be through a continuous maintenance process 21 rather than going through a full rulemaking, and you 22 can get a very fast action there. 23 Now, maybe you've already discussed that, 24 but I know ASHRAE is very receptive to considering 25 that input, and that would solve some of the problems 

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### 1 oneaspect oftherulemakingthathaschangedoverthe 2 years since the lawwas passed. As I understand, the 3 

### law is that ASHRAE sets the standard. You evaluate 4 it, make a determinationofwhetheryou'regoingtogo 5 through rulemaking or accept ASHRAE. 6 Whathas changed, andI'msureyouareall 7 

### aware of it, is the continuous maintenance process. 8 One of the problems youhave in evaluatinga standard 9 that's set by ASHRAE lS 

### that there's always a time 10 delay. The data that was developed andconsideredby 11 ASHRAE has a year or two on it, or more, by the time 12 it reaches you for evaluation because the ASHRAE 13 process naturally takes a while. 14 

### The continuous maintenance process, 15 however, solves thatproblem. Theproper approach in 16 the letter of or not the letter of the law, but the 17 spirit of the law with these changing conditions, I 18 

### would think, would be for you to submit to ASHRAE 

### 19 after your evaluation what those appropriate levels 20 should be through a continuous maintenance process 21 rather than going through a full rulemaking, and you 22 can get a very fast action there. 23 Now; maybeyou've alreadydiscussedthat, 24 but I know ASHRAE is very receptive to considering 25 that input, and that would solve some of the problems

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com47 1 that exist because of timing, and I wasn't sure that 2 you discussed that. So I hope that that's one of your 3 options, that it's not merely accept ASHRAE which is 4 based on some what, old data now, and/or go through 5 your own rulemaking. 6 I think the proper middle ground and more 7 efficient way time-wise and consideration of what 8 would be a good standard would be to go through a 9 continuous maintenance process. 10 So I would hope that you include that in 11 your options. Thank you. 12 MR. RABA: Thank you. 13 Ed Pollock, Department of Energy. 14 MR. POLLOCK: Ed Pollock, Department of 15 Energy. 16 In our determination notice which we 17 published and in the discussions which we've had, we 18 several times talked about several different off 19 ramps, and to respond to Jim's comment, that is an 20 option which we continue to consider as we develop new 21 data and have some indication of levels that we think 22 are appropriate. 23 We certainly will be sharing that data 24 with the ASHRAE committee. Perhaps at some point we 0 

### ~~25 may even submit a change proposal. That certainly is 

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### 47 

### 1 that exist because of timing, and I wasn't sure that 2 youdiscussedthat. So I hope that that's oneofyour 3 options, that it's not merely accept ASHRAE which is 4 based on some what, old data now, and/or go through 5 your own rulemaking. 6 I thinkthepropermiddle groundandmore 7 efficient way time-wise and consideration of what 8 would be a good standard would be to go through a 9 continuous maintenance process. 10 

### So I would hope that you include that in 11 your options. Thank you. 12 MR. RABA: Thank you. 13 

### Ed Pollock, Department of Energy. 14 

### MR. POLLOCK: Ed Pollock, Department of 15 Energy. 16 

### In our determination notice which we 17 published and in the discussions which we've had, we 18 

### several times talked about several different off 19 ramps, and to respond to Jim's comment, that is an 20 optionwhichwe continuetoconsideraswe developnew 21 data andhave some indicationof levels that we think 22 are appropriate. 23 We certainly will be sharing that data 24 

### with the ASHRAE committee. Perhaps at some point we 25 may even submit a changeproposal. That certainly is

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com48 1 an option which we recognize might expedite the 2 process for us and conserve some of our precious 3 resources in the rulemaking. We can then focus on 4 some other products. 5 So, yes, thank you for bringing that up, 6 Jim because that is part of the process as we've laid 7 it out in our determination. 8 The other point I wanted to make is the 9 issue was raised on the under 65K. The ASHRAE 10 committee chose to set aside any action on those 11 products until we had completed our residential 12 rulemaking, and so for that reason, there's some 13 question about our ability to act on those products 14 legally until ASHRAE has made a change. 15 The EPAC working implies that or states 16 that ASHRAE 90.1 action then triggers an action by us 17 to either adopt or set more stringent standards. So 18 it's our belief that the committee probablywill adopt 19 the commercial standards being the same as what we 20 have come to adopt in the case of our residential 21 products of those same sizes, the single phase versus 22 a three-phase. 23 That is bynomeans a foregone conclusion, 24 but expect at least that there will be some action 25 after we issue our final rule, and then we will then 

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### 48 

### 1 an option which we recognize might expedite the 2 process for us and conserve some of our precious 3 

### resources in the rulemaking. We can then focus on 4 

### some other products. 5 

### So, yes, thank you for bringing that up, 6 

### Jimbecause that ispart of the process as we've laid 7 

### it out in our determination. 8 

### The other point I 

### wanted to make is the 9 

### issue was raised on the under 65K. 

### The ASHRAE 10 committee chose to set aside any action on those 11 products until we had completed our residential 12 

### rulemaking, and so for that reason, there's some 13 

### question about our ability to act on those products 14 

### legallyuntil ASHRAE has made a change. 15 

### The EPAC working implies that or states 16 

### that ASHRAE 90.1 action then triggers an actionbyus 17 

### to either adopt or set more stringent standards. So 18 

### it'sourbeliefthatthecommitteeprobablywill adopt 19 the commercial standards being the same as what we 20 have come to adopt in the case of our residential 21 

### products of those same sizes, the singlephaseversus 22 a three-phase. 23 That 1S

### bynomeansa foregone conclusion, 24 but expect at least that there will be some action 25 after we issue our final rule, and then we will then

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com49 1 pick up those products for consideration after that *g 

### ~ 2 happens. 3 MR. RABA: Thank you, Ed. 4 Go ahead. 5 MR. AMRANE: Karim Amrane with ARI. 6 Let's assume for a minute after all of 7 this analysis you end up finding that the levels set 8 by ASHRAE are appropriate. Then what you would have 9 done here is' wasted a few years, and our 10 recommendation would be that you should be adopting 11 ASHRAE 90.1 right now which have levels ten to 20 12 percentmore stringent than what you have currently in 13 the federal minimum requirements. 14 And then as Jim Wolf mentioned, if during 15 these analyses it shows that you can raise the level 16 further, then submit an addendum to the ASHRAE 90.1 17 committee. In that case you wouldn't have wasted all 18 of those years with lower ratios. 19 MR. RABA: Harvey. 20 MR. SACKS: Although the

-- 21 MR. RABA: It's Harvey Sacks, ACEEE. 22 MR. SACKS: Harvey Sacks. 23 Although the probability level may 24 resemble that of all the molecules rushing out of the 25 room, I believe the record should show that there is 

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### 1 pick up those products for consideration after that 2 happens. 3 

### MR. RABA: Thank you, Ed. 4 

### Go ahead. 5 

### MR. AMRANE: 

### Karim Amrane withARI. 6 

### Let's assume for a minute after all of 7 

### this analysis you end up finding that the levels set 8 

### byASHRAE are appropriate. Then what you would have 9 

### done here is wasted a 

### few years, and our 10 recommendation would be that you should be adopting 11 ASHRAE 90.1 right now which have levels ten to 20 12 percentmore stringentthanwhatyouhavecurrentlyin 13 the federal minimum requirements. 14 And thenas JimWolf mentioned, ifduring 15 these analyses it shows that you can raise the level 16 further, then submit an addendum to the ASHRAE 90.1 17 committee. In that caseyouwouldn't have wasted all 18 of those years with lower ratios. 19 MR. RABA: Harvey. 20 MR. SACKS: Although the - - 

### 21 MR. RABA: It's Harvey Sacks, ACEEE. 22 MR. SACKS: Harvey Sacks. Although the probability level 24 resemble that of all themolecules rushingout of the 25 room, I believe the record should show that there is

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., NW. WASHINGTON, D.C. 20005·3701 www.nealrgross.com50 1 another hurry-up process available, which is 

# C*~ 2 negotiate an agreement among the parties. 3 MR. MARTIN: I would like to agree with 4 Jim Wolf about his proposal that when you have data 5 that you submit it to ASHRAE standard project 6 committee 90.1, and if you decide not to -- and it's 7 public information -- the California EnergyCommission 8 staff will certainly do so. 9 However, you need to bear in mind that 10 they may or may not decide this is what they want to 11 adopt, and if they can't get consensus on doing it 12 within the committee, it won't happen. 13 So you need to head off in both of those 14 directions, but if everybody is working together, 15 that's certainly a good way to go. 16 It also does strengthen your position to 17 come up with the data that you're planning to do not 18 only to support yourprogram,but to supportASHRAE's, 19 but I'm happy to agree with Jim because I don't always 20 agree with him. 21 (Laughter.) 22 MR. RABA: That was Michael Martin, 23 California Energy Commission. 24 MR. MARTIN: I'm not doing very well in 25 identifying myself. 

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### 1 another hurry-up process available, which is 2 negotiate an agreement among the parties. 3 

### MR. MARTIN: I would like to agree with 4 Jim Wolf about his proposal that when you have data 5 that you submit it to ASHRAE standard project 6 committee 90.1, and if you decide not to -- and it's 7 publicinformation

- - theCaliforniaEnergyCommission 8 staff will certainly do so. 9 

### However, you need to bear in mind that 10 they mayor may not decide this is what they want to 11 adopt, and if they can't get consensus on doing it 12 within the committee, it won't happen. 13 So you need to head off inboth of those 14 directions, but if everybody is working together, 15 that's certainly a good way to go. 16 It also does strengthen your position to 17 come up with the data that you're planning to do not 18 onlyto supportyourprogram, buttosupportASHRAE's, 19 but I'mhappytoagreewithJimbecause I don't always 20 agree with him. 21 (Laughter.) 22 MR. RABA: That was Michael Martin, 23 California Energy Commission. 24 

### MR. MARTIN: I'm not doing very well ln 25 identifying myself.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., NW. WASHINGTON, D.C. 20005-3701 www.nealrgross.com51 1 MR. RABA: Steve Rosenstock. 2 MR. ROSENSTOCK: Steve Rosenstock, Edison 3 Electric Institute. 4 Just in kind of a response from the person 5 from California, it's filing an exemption to -- I 6 forgot what the proper phrase for filing is. 7 MR. MARTIN: Petition for an exemption 8 from preemption. 9 MR. ROSENSTOCK: Thank you. 10 After filing one of those

-- 11 (Laughter.) 12 MR. ROSENSTOCK: -- and basically when 13 they file that, again, in terms of consensus process, 14 you're going above and beyond ASHRAE and might be 15 going above and beyond what DOE says. So one state 16 could literally possibly, again, throw a huge wild 17 card into both processes in terms of achieving any 18 sort of a national type of standard. 19 I don't know analytically how you would 20 deal with that, but again, based on what happens with 21 that petition, that could have a huge impact on 22 everything else that we're going to be talking about 23 today. 24 MR. RABA: An interesting twist. Thank * 25 you. 

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### MR. RABA: Steve Rosenstock. 2 MR. ROSENSTOCK: SteveRosenstock, Edison 3 Electric Institute. 4 Justinkindofa responsefromtheperson 5 

### from California, it's filing an exemption to I 

### 6 forgot what the proper phrase for filing is. 7 

### MR. MARTIN: Petition for an exemption 8 from preemption. 9 

### MR. ROSENSTOCK: Thank you. 10 

### After filing one of those

-- 11 

### (Laughter.) 12 MR. ROSENSTOCK:

- - and basically when 13 they file that, again, in terms of consensusprocess, 14 you're going above and beyond ASHRAE and might be 15 

### going above and beyond what DOE says. So one state 16 could literally possibly, again, throw a huge wild 17 card into both processes in terms of achieving any 18 sort of a national type of standard. 19 I don't know analytically how you would 20 deal with that, but again, based on what happens with 21 that petition, that could have a huge impact on 22 everything else that we're going to be talking about 23 today. 24 

### 25 you.

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### MR. RABA: An interesting twist. Thank

NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com52 1 Charlie and then Jim. 2 MR. STEPHENS: Charlie Stephens from the 3 Oregon Energy Office. 4 Just adding to what Steve said, one of the 5 best ways you can deal with that is to have data, good 6 data. So I think we need to get on with it. 7 MR. MULLEN: Jim Mullen, Lennox. 8 I'm not sure if I understood Karim's 9 earlier comment, but I'm not sure if he asked the 10 question or if the question appeared over here, but is 11 there a process whereby DOE could adopt 90.1, begin to 12 realize the energy savings in the short term, and then 13 continue to look at the levels, or does adoption of 14 90.1 lock DOE out of making any changes until the next 15 change in 90.1? 16 MR. POLLOCK: Ed Pollock, DOE. 17 The statement that Karim made, I believe, 18 was that we would then work throughASHRAE to make the 19 amendments. Jim, you're right for raising that. If 20 we adopt the standard, we can't go back and readjust 21 it until after ASHRAE has acted. So it does limit our 22 options if we were to do that. 23 The way we see it as being better use of 24 our time, as I said, and we laid out in the 25 determination, was go ahead and collect the data, 

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### 52 1 

### Charlie and then Jim. 2 

### MR. STEPHENS: Charlie Stephens from the 3 Oregon Energy Office. 4 

### Justaddingtowhat Stevesaid, oneofthe 5 

### bestwaysyoucandeal withthat istohavedata, good 6 

### data. So I think we need to get on with it. 7 

### MR. MULLEN: Jim Mullen, Lennox. 8 

### I'm not sure if I understood Karim's 9 

### earlier comment, but I'm not sure if he asked the 10 questionorifthequestionappearedoverhere, but is 11 therea processwherebyDOE couldadopt 90.1, beginto 12 

### realizetheenergysavingsinthe shortterm, andthen 13 

### continue to look at the levels, or does adoption of 14 90.1 lockDOE outofmakinganychangesuntil thenext 15 change in 90.1? 16 

### MR. POLLOCK: Ed Pollock, DOE. 17 

### The statement that Karimmade, I believe, 18 

### was thatwe wouldthenworkthroughASHRAE tomake the 19 amendments. Jim, you're right for raising that. If 20 we adopt the standard, we can't go back and readjust 21 

### ituntil afterASHRAE has acted. Soitdoes limit our 22 options if we were to do that. 23 The way we see it as being better use of 24 our time, as I said, and we laid out in the 25 determination, was go ahead and collect the data,

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com53 1 begin the analysis, share that as we go with the 2 committee. If the committee can act -- and I will 3 point out it took ten years to get this one out -- 4 before we get a final rule out, great. Then we've 5 saved our resources. 6 But we will continue in our rulemaking at 7 the same time, and I think that makes sense as far as 8 trying to get the quickest action. 9 I do appreciate Karim's statement on the 10 issue of adopting does perhaps save us some time in 11 getting these standards together, and certainly we 12 need to be very cautious to continue to look and say 13 are we going to get significant savings or is the time 14 effect going to negate those savings in the long run. 15 And will be looking at that. 16 MR. RABA: Thank you, Ed. 17 Further comments. 18 MR. PHAM: Can I have a comment? 19 MR. RABA: Yes, please do. And state your 20 name, please. 21 MR. PHAM: Hung Pham. 22 MR. RABA: Hung Pham, yes. Thank you. 23 MR. PHAM: Copeland Corporation. 24 I am a little bit confused about this 25 timing involved. So I hope somebody could help 

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### 1 begin the analysis, share that as we go with the 2 

### committee. If the committee can act -- and I will 3 point out it took ten years to get this one out -- 4 

### before we get a final rule out, great. Then we've 5 saved our resources. 6 But we will continue inourrulemaking at 7 the same time, and I think that makes sense as far as 8 trying to get the quickest action. 9 I do appreciate Karim's statement on the 10 issue of adopting does perhaps save us some time in 11 getting these standards together, and certainly we 12 need to be very cautious to continue to look and say 13 arewe goingtoget significant savingsoristhe time 14 effect goingto negate those savings in the long run. 15 16 17 18 19 20 

### 21 22 23 24 25 

### And will be looking at that. MR. RABA: Thank you, Ed. Further comments. MR. PHAM: Can I have a comment? MR. RABA: Yes, pleasedo. And stateyour name, please. MR. PHAM: Hung Pham. MR. RABA: Hung Pham, yes. Thank you. MR. PHAM: Copeland Corporation. I am a little bit confused about this timing involved. So I hope somebody could help

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com54 1 clarify here. What Ron's talking about is the fact 

### Ark 2 that the states could adopt 90.199. The time frame 3 we're talking about, anywhere possibly next year 4 maybe, until 2006, somewhere in that time frame, while 5 DOE -- the end is not until 2008. 6 I'm not clear onwhat the process involved 7 here relative to DOE versus the state, and perhaps 8 maybe California and some of the leading states that 9 have examples going beyond 90.1 could let us get a 10 little bit better idea on how this can evolve. 11 It's getting verydifficult toknowhow to 12 design equipment in this fuzzy time frame here because 13 we don't know how long this is. 14 MR. RABA: That's a good point. 15 Who would like to comment on that? 16 Michael. 17 MR. MARTIN: Michael Martin, California 18 Energy Commission. 19 It is complicated. Since ASHRAE's 20 Standard 90.1 is a building standard, it would have 21 made no sense in the legislation to have a building 22 standard with an effective date preempted, and 23 therefore, the federal law does not preempt a state 24 adopting the current ASHRAE levels as a building 25 standard, which is strictly for installation in new NEALR.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 54 1 

### clarify here. What Ron's talking about is the fact 2 

### that the states could adopt 90.199. The time frame 3 we're talking about,anywhere possibly next year 4 

### maybe, until 2006; somewhereinthat timeframe, while 5 

### DOE

-- the end is not until 2008. 6 

### I'mnotclearonwhattheprocessinvolved 7 

### here relative to DOE versus the state, and perhaps 8 

### maybe California and some of the leading states that 9 have examples going beyond 90.1 could let us get a 10 little bit better idea on how this can evolve. 11 It'sgettingverydifficulttoknowhowto 12 designequipment :Lnthis fuzzytime frameherebecause 13 

### we don't know how long this is. 14 

### MR. RABA: That's a good point. 15 

### Who would like to comment on that? 16 Michael. 17 

### MR. MARTIN: Michael Martin, California 18 Energy Commission. 19 It is complicated. Since ASHRAE's 20 Standard 90.1 is a building standard, it would have 21 made no sense in the legislation to have a building 22 

### standard with an effective date preempted, and 23 therefore, the federal law does not preempt a state 24 adopting the current ASHRAE levels as a building 25 standard, which is strictly for installation in new NEALR.GROSS (202)234-4433 COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com55 1 buildings. 2 We have, indeed, adopted that, and it 3 becomes effective on the 29th of this month, and so 4 from the building regulation point of view,you can go 5 ahead and adopt these standards. 6 The other aspect is what we refer to as 7 appliance efficiency standards, which is a restriction 8 on the selling and offering for sale, which will cover 9 any kind of sale whether it's new buildings or not, 10 and for those the states are preempted unless they 11 file and are granted a petition for exemption from 12 preemption. 13 And nobody has done that yet, and exactly 14 how it would work out is not very clear, but that's 15 where we stand at the moment. 16 MR. PHAM: This is Hung Pham again. 17 That's why I'm wondering if we're going 18 through this process and maybe it's just a waste of 19 time because the states can adopt this anyway, whether 20 it is 90.199 or something higher on their own. So, I 21 mean, why go through eight years? Maybe it's not 22 going to show any different than that. The state is 23 going to do it. 24 MR. MARTIN: This is Mike Martin again. 25 I don't think you ought to bank on too 

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### 55 1 buildings. 2 

### We have, indeed, adopted that, and it 3 becomes effective on the 29th of this month, and so 4 fromthebuildingregulationpointofview, youcango 5 ahead and adopt these standards. 6 

### The other aspect is what we refer to as 7 

### applianceefficiencystandards, whichisa restriction 8 

### onthe sellingandofferingfor sale, whichwillcover 9 any kind of sale whether it's new buildings or not, 10 and for those the states are preempted unless they 11 file and are granted a petition for exemption from 12 preemption. 13 Andnobodyhas done that yet, and exactly 14 how it would work out is not very clear, but that's 15 where we stand at the moment. 16 

### MR. PHAM: This is Hung Pham again. 17 That's why I'm wondering if we're going 18 

### through this process and maybe it's just a waste of 19 timebecausethe statescanadoptthisanyway, whether 20 it is 90.199 or somethinghigheron theirown. So, I 

### 21 mean, why go through eight years? Maybe it's not 22 going to show any different than that. The state is 23 going to do it. 24 25

(202)234-4433 

### MR. MARTIN: This is Mike Martin again. I 

### don't think you ought to bank on too NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com56 1 many states petitioning for exemption from a AWe 2 preemption. It's a hard thing to do. 3 MR. RABA: Thank you, Michael. 4 Does that help, Hung? 5 MR. PHAM: I hope that was helpful because 6 I wasn't clear until Michael said that because I 7 thought all the states were going to go aheadwith it. 8 MR. MARTIN: They can on building 9 regulations, but not on restrictions on sale and 10 offering for sale. 11 MR. PHAM: Okay. Thank you. 12 MR. RABA: I see some hands now. First 13 Charlie Stephens and then Harvey Sacks. 14 MR. STEPHENS: Charlie Stephens, Oregon 15 Energy Office. 16 Hung Pham should also remember that 17 there's a time line for the state's petition also. 18 Doe can take up to a year to make a decision on that, 19 and the earliest date after that that whatever the 20 state adopts can go into effect is three years, and 21 DOE in granting a petition, if they were to grant the 22 petition, could actually make that period longer. 23 So we're still looking at four to five 24 years potentially before these states could adopt 25 something, which means that your process in theory 

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### 56 1 

### many states petitioning for exemption from a 2 preemption. It's a hard thing to do. 3 

### MR. RABA: Thank you, Michael. 4 

### Does that help, Hung? 5 

### MR. PHAM: I hopethatwashelpfulbecause 6 I wasn't clear until Michael said that because I 7 

### thought allthe statesweregoingtogoaheadwithit. 8 

### MR. MARTIN: They can on building 9 regulations, but not on restrictions on sale and 10 offering for sale. 11 

### MR. PHAM: Okay. Thank you. 12 MR. RABA: I see some hands now. First 13 Charlie Stephens and then Harvey Sacks. 14 

### MR. STEPHENS: Charlie Stephens, Oregon 15 Energy Office. 16 

### Hung pham should also remember that 17 there's a time line for the state's petition also. 18 Doe can take up to a year tomake a decisionon that, 19 and the earliest date after that that whatever the 20 state adopts can go into effect is three years, and 21 DOE ingrantinga petition, if theywere to grant the 22 petition, could actually make that period longer. 23 

### So we're still looking at four to five 24 years potentially before these states could adopt 25 something, which means that your process in theory

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com57 1 should be over by then, and we should all have the 2 data, and we should all know what we're doing. 3 and so I think the best outcome would be 4 it would all kind of converge on the same numbers. 5 MR. RABA: Thank you. Go ahead, please. 6 MR. SACKS: Harvey Sacks. 7 I'd just like to stress part of Mike 8 Martin's response that the building standard will 9 affect new construction installations, it may in some 10 states affect major retrofits, which are variously 11 defined as 25 percent of the value of the building. 12 Itwill not reflect routine replacements of equipment, 13 and thus will be a significant minority of equipment 14 sales. 15 So the building standards route actually 16 bears the jeopardy of fractionating the market with 17 two different standards within the same state, and I 18 believe that that is a matter of real concern to the 19 manufacturers. 20 MR. RABA: Where are we now? Are there 21 further comments or would you like to take a short 22 break or proceed on with the first presentation? 23 MR. BERRINGER: Ihave a couplemore. Let 24 me just finish this up. 25 I just want to thank you because, Imean, 

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### 1 should be over by then, and we should all have the 2 data, and we should all know what we're doing. 3 and so I think the best outcome would be 4 it would all kind of converge on the same numbers. 5 

### MR. RABA: Thank you. Go ahead, please. 6 

### MR. SACKS: Harvey Sacks. 7 

### I'd just like to stress part of Mike 8 Martin's response that the building standard will 9 affect newconstruction installations, itmay in some 10 states affect major retrofits, which are variously 11 defined as 25 percent of the value of the building. 12 Itwillnotreflectroutinereplacementsofequipment, 13 and thus will be a significant minority of equipment 14 sales. 15 So the building standards route actually 16 bears the jeopardy of fractionating the market with 17 two different standards within the same state, and I l8 

### believe that that is a matter of real concern to the 19 manufacturers. 20 

### MR. RABA: Where are we now? Are there 21 further comments or would you like to take a short 22 break or proceed on with the first presentation? 23 

### MR. BERRINGER: I have a couplemore. Let 24 me just finish this up. 25 I justwant to thankyoubecause, I mean,

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com58 1 you've pretty much summarized all of the options. I 2 mean, one of the things we did back in 1976 was the 3 process improvement rule and the options talking about 4 negotiations, about alternative ways as far as the 5 ASHRAE maintenance programs. All of these options 6 that were brought up, yeah, we're looking at that we 7 want to make sure we hear you on those because we are 8 aware of them. 9 But we want to go, number one, the best 10 route, easiest route, and the quickest route. As Jim 11 Wolf had mentioned, if we can go ASHRAE and it can be 12 done quickly, you know, it's that much better. If it 13 can be negotiated, as we did with ballast in clothes N1W 14 washers, that would be great also. It makes the 15 process go a lot quicker, and we're not looking at so 16 far down the road as far as getting these things. 17 And that uncertainty is obviously for the 18 manufacturers, for everybody, is known as far as what 19 needs to be produced. 20 Let me just go through the rest of these 21 slides, and then we'll take a break, and we'll go to 22 the engineering analysis. 23 We talked about this a little bit earlier 24 again. You've got to turn your head a little bit, but 25 this is sort of what we're looking at, the process for 

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### you've prettymuch summarized all of the options. I 

### 2 mean, one of the things we did back in 1976 was the 3 processimprovementruleandtheoptionstalkingabout 4 negotiations, about·alternative ways as far as the 5 

### ASHRAE maintenance programs. All of these options 6 that were brought up, yeah, we're looking at that we 7 want tomake sure we hearyou on those because we are 8 aware of them. 9 

### But we want to go, number one, the best 10 route, easiest route, and the quickest route. As Jim 11 Wolf hadmentioned, ifwe can goASHRAE and it canbe 12 done quickly, youknow, it's that muchbetter. If it 13 

### can be negotiated, as we did with ballast in clothes 14 

### washers, that would be great also. It makes the 15 process go a lot quicker, andwe're not looking at so 16 far down the road as far as getting these things. 17 And that uncertaintyis obviouslyfor the l8 

### manufacturers, for everybody, is known as far as what 19 needs to be produced. 20 Let me just go through the rest of these 21 slides, and then we'll take a break, and we'll go to 22 the engineering analysis. 23 We talkedabout this a littlebit earlier 24 again. You'vegot toturnyourheada littlebit, but 25**thi~** 

### is sortofwhatwe're lookingat, theprocess for

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com59 1 the rulemaking if we were to decide to go this route. 2 Again, this is just an outline, again, 3 laying it out. It sort of outlines the agenda. It 4 outlines the process. The first step is market 5 technology assessment, looking at product class and 6 baseline, where our starting point is. 7 Again, do a screening analysis to see what 8 products are out there. Look at prototypes. If 9 there's a prototype out there, other items, we're 10 going to go into this in detail, but further with the 11 presentations. 12 Again, the engineering analysis, youknow, 13 trying to get some better data for the efficiency and 14 cost analysis and the building energy use and electric 15 load shape characteristics. 16 And, again, the other analysis that will 17 go into more detail is the life-cycle costs, consumer 18 subgroup, national energy savings, net present value, 19 manufacturing impact, employment, utility, and 20 environmental. 21 Again, that is November 1st this should 22 be. This is 30 days from that. So we talked about 23 the deadline for comments for this workshop would be 24 November 1st. The next steps would be data collection *O 25 and determine -- obviously what we've been talking 

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### the rulemaking ifwe were todecide togo this route. 2 

### Again, this is just an outline, again, 3 

### laying it out. It sort of outlines the agenda. It 4 

### outlines the process. The first step lS 

### market 5 technology assessment, looking at product class and 6 

### baseline, where our startingpoint is. 7 

### Again, doa screeninganalysistoseewhat 8 

### products are out there. Look at prototypes. If 9 

### there's a prototype out there, other items, we're 10 

### going togo into this indetail, but further with the 11 

### presentations. 12 

### Again, theengineeringanalysis, youknow, 13 

### trying to get somebetterdata for the efficiencyand 14 

### costanalysisandthebuildingenergyuseandelectric 15 

### load shape characteristics. 16 

### And, again, the other analysis that will 17 

### go intomore detail is the life-cycle costs, consumer 18 

### subgroup, national**~nergy** 

### savings, netpresentvalue, 19 

### manufacturing impact, employment, utility, and 20 

### environmental. 21 

### Again, that is November 1st this should 22 

### be. This is 30 

### days from that. So we talked about 23 the.deadline for comments for this workshop would be 24 November 1st. Thenext stepswouldbedatacollection 25 and determine obviously what we've been talking

(202)234-4433 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com60 1 about is determine whether to go withASHRAE, initiate *D 

### ~ 2 rulemaking standards. 3 And, again, the possible schedule. We 4 want to do an ANOPR about January 2003, a NOPR January 5 2004, a final rule will be August 2008, and then an 6 effective date four years from that. So you talking 7 about a rulemaking process out to 2008. 8 Obviously if these other options work out 9 as far as the maintenance with ASHRAE, negotiations, 10 those things could actuallybe a better, more quicker, 11 presentable alternative. 12 Thank you very much. 13 MR. RABA: Thank you. 14 All good comments heard this morning. I 15 certainly appreciate everything. 16 There it is, hiding back there. 17 Yeah, all good comments this morning. 18 Thank you very much. 19 This is very vital to the process we go 20 through to get these issues on the table, get your 21 thought processes going, and to come out with a good 22 decision for all concerned. 23 So there's a long way to go. We're just 24 beginning. We expect many more comments and some 25 discussion as we go throughout the day. 

### NEALR.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

### 60 1 about isdeterminewhethertogowithASHRAE, initiate 2 rulemaking standards. 3 

### And, again, the possible schedule. We 4 

### want todo anANOPR aboutJanuary2003, a NOPRJanuary 5 2004, a final rule will be August 2008, and then an 6 

### effective date four years from that. So you talking 7 about a rulemaking process out to 2008. 8 Obviouslyif these otheroptionsworkout 9 as far as the maintenance withASHRAE, negotiations, 10 thosethingscouldactuallybea better, morequicker, 11 presentable alternative. 12 

### Thank you very much. 13 

### MR. RABA: Thank you. 14 

### All good comments heard this morning. I 

### 15 certainly appreciate everything. 16 There it is, hiding back there. 17 

### Yeah, all good comments this morning. 18 Thank you very much. 19 This is very vital to the process we go 20 through to get these issues on the table, get your 21 thought processes going, and to come out with a good 22 decision for all concerned. 23 

### So there's a long way to go. We're just 24 beginning. We expect many more comments and some 25 discussion as we go throughout the day.

(202)234-4433 

### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com61 1 So thank you all. A good job so far. 2 How long would you like to take the break 3 for? Say we come back, say -- I beg your pardon? 4 PARTICIPANT: A good half hour. 5 MR. RABA: A good half hour? No, no, no, 6 no. How about we make it, say, come back when the big 7 hand is on the eight? That's 20 minutes. 8 Too long? Fifteen minutes, on the seven, 9 big hand is on the seven. I'm glad you're so 10 enthusiastic. 11 (Whereupon,the foregoingmatter went off 12 the record at 10:23 a.m. and went back on 13 the record at 10:42 a.m.) 14 MR. RABA: As the big hand approaches the 15 eight, did everybody get a chance to sign in? 16 We had a request earlier that a list of 17 names of the attendees be provided before you all 18 leave today. We'll see that that's done so that you 19 can have a record to take home with you as to who's 20 been here. 21 Also we have some seats available that 22 just opened up the front row, no extra charge. One 23 more here and one more here, if you'd like to move 24 forward to the table and get a better view. 25 Mark Kendall of Arthur D. Little, 

### NEALR.GROSS COURTREPORTERS ANDTRANSCRIBERS 1323RHODE ISLANDAVE.,N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 61 1 

### So thank you all. Agood job so far. 2 

### How longwouldyou like to take the break 3 

### for? Say we come back, say I beg your pardon? 4 

### PARTICIPANT: Agood half hour. 5 

### MR. RABA: Agoodhalf hour? No, no, no, 6 no. How about we make it, say, comebackwhenthebig 7 

### hand is on the eight? That's 20 

### minutes. 8 

### Too long? Fifteenminutes, onthe seven, 9 

### big hand is on the seven. I'm glad you're so 10 

### enthusiastic. 11 

### (Whereupon, the foregoingmatterwent off 12 

### the recordat 10:23 

### a.m. andwent backon 13 

### the record at 10:42 

### a.m.) 14 

### MR. RABA: As the bighandapproaches the 15 

### eight, did everybody get a chance to sign in? 16 

### We had a request earlier that a list of 17 

### names of the attendees be provided before you all 18 

### leave today. We'll see that that's done so that you 19 

### can have a record to take home with you as to who's 20 

### been here. 21 

### Also we have some seats available that 22 

### just opened up the front row, no extra charge. One 23 

### more here and one more here, if you'd like to move 24 

### forward to the table and get a better view. 25

(202)234-4433 

### Mark Kendall of Arthur NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 

### D. Little,

www.nealrgross.com62 1 Incorporated, will be making a presentation on the 2 engineering analysis process, things to be examined, 3 and afterward we would invite your comments. 4 Mark, any technology? 5 Yeah, excuse me. On the agenda, we'll do 6 the market and technology assessment first. 7 MR. KENDALL: Microphone working? 8 MR. RABA: Yes, it is. 9 MR. KENDALL: Okay. Thanks. 10 MR. RABA: And to our call-in guests, 11 we're starting again. We still have two places 12 available at the table if anybody would like to come 13 up here and get a better view. 14 MR. KENDALL: All right. Thank you. 15 The first analytical topic on the agenda 16 is the market and technology assessment. We'll try to 17 pace ourselves here for each these components of the 18 analysis so that we finish on time and maybe a little 19 bit early. This one I would expect to take about 15 20 minutes, depending on questions, 20. So feel free to 21 jump in if you have any questions or comments. 22 The market and technology assessment is 23 basically a data gathering phase, as well as a phase 24 where we try to define what product classes we'll be 25 considering as separately in the analysis. 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 62 

### 1 Incorporated, will be making a presentation on the 2 engineering analysis process, things to be examined, 3 and afterward we would invite your comments. 4 Mark, any technology? 5 

### Yeah, excuseme. On the agenda, we'll do 6 the market and technology assessment first. 7 

### MR. KENDALL: Microphone working? 8 

### MR. RABA: Yes, it is. 9 

### MR. KENDALL: Okay. Thanks. 10 

### MR. RABA: And to our call-in guests, 11 we're starting again. We still have two places 12 available at the table if anybody would like to come 13 up here and get a better view. 14 

### MR. KENDALL: All right. Thank you. 15 The first analytical topic on the agenda 16 isthemarket andtechnologyassessment. We'll tryto 17 pace ourselves here for each these components of the 18 analysis so that we finish on time andmaybe a little 19 bit early. This one I would expect to take about 15 20 minutes, dependingonquestions, 20. So feel free to 21 jump in if you have any questions or comments. 22 

### The market and technology assessment is 23 basically a data gatheringphase, as well as a phase 24 where we try to define what product classes we'll be 25 considering as separately in the analysis.

(202)234-4433 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com63 1 So I'm going to page 1 of the Go 2 presentation. 3 All right. The market and technology 4 assessment feeds into several downstream analyses. 5 There's the screening analysis, the national energy 6 savings, manufacturing impact analysis. Through the 7 market and technology assessment, we're gathering data 8 on firms and industry structure, product 9 characteristics, historical shipments, non-regulatory 10 incentives, regional differences, and others. 11 Now, this is the first rulemaking that the 12 department has done for products that are intended for 13 use in the commercial sector. Most of the materials 14 you are going to see today have been developed 15 throughout DOE's background in residential products. 16 The market and technology assessment will 17 pick up on these differences between the residential 18 markets and the commercial markets. One of them we 19 know very clearly is that commercial air conditioners 20 and heat pumps for commercial markets are not mass 21 produced to the extent that residential products are. 22 There's not as much uniformity between products. 23 There's not as much uniformity between manufacturers, 24 and there's many more manufacturers in that market * 25 producing products that in the residential sector we 

### NEALR.GROSS COURT REPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com**----~--------** 63 1 

### So I'm 

### going to page 1 of the 2 presentation. 3 

### All right. The market and technology 4 assessment feeds into several downstream analyses. 5 

### There's the screening analysis, the national energy 6 

### savings, manufacturing impact analysis. Through the 7 

### marketandtechnologyassessment, we'regatheringdata 8 

### on firms and industry structure, product 9 characteristics, historicalshipments, non-regulatory 10 incentives, regional differences, and others. 11 Now, this isthefirstrulemakingthatthe 12 departmenthasdone forproductsthat are intendedfor 13 use in the commercial sector. Most of the materials 14 you are going to see today have been developed 15 throughout DOE's background in residential products. 16 The·market andtechnologyassessmentwill 17 pick up on these differences between the residential 18 

### markets and the commercial markets. One of them we 19 knowveryclearlyis that commercial airconditioners 20 and heat pumps for commercial markets are not mass 21 producedto the extent that residentialproducts are. 22 There's not as much uniformity between products. 23 There's not asmuchuniformitybetweenmanufacturers, 24 and there's many more manufacturers in that market 25 producing products that in the residential sector we

(202)234-4433 

### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com64 1 may consider niche products because they're designed 2 for specific applications or specific end uses or 3 things like that. 4 So the market and technology assessment 5 will attempt to lay out these unique characteristics 6 of the commercial market and begin to formulate how 7 the department will consider those in the analysis. 8 So turning to Slide 2, Slide 2 lists some 9 of the data sources that we've come across so far. 10 These are sources that relate to definitions of 11 products, shipment information, pricing information, 12 financial information on manufacturers, contractors, 13 distributors engaged in the industry. 14 And the questions that relate to this list 15 of data, which you can throw some of these ideas out 16 or just wait for your written comments to provide 17 them,but if you're aware of any other sources of data 18 that aren't listed here that you thinkwould be useful 19 for the department's understanding of the industry, 20 please provide that to the department, and we'll look 21 into those data. 22 Okay. If no comments on that, I'll turn 23 to Slide 3. 24 MR. SACKS: Excuse me, please. 25 MR. RABA: In the back, yes. 

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### 1 may consider niche products because they're designed 2 for specific applications or specific end uses or 3 things like that. 4 So the market and technology assessment 5 will attempt to layout these unique characteristics 6 of the commercial market and begin to formulate how 7 the department will consider those in the analysis. 8 So turningto Slide 2, Slide 2 lists some 9 of the data sources that we've come across so far. 10 These are sources that relate to definitions of 11 products, shipment information, pricing information, 12 financial information on manufacturers, contractors, 13 distributors engaged in the industry. 14 Andthequestionsthatrelatetothislist 15 of data, whichyou can throw some of these ideas out 16 or just wait for your written comments to provide 17 them, but ifyou're aware of anyothersourcesof data 18 that aren't listedherethatyouthinkwouldbeuseful 19 for the department's understanding of the industry, 20 pleaseprovide that to the department, andwe'll look 21 into those data. 22 23 to Slide 3. 24 25

(202)234-4433 

### Okay. If no comments on that, I'll turn

MR. SACKS: Excuse me, please. MR. RABA: In the back, yes. NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com65 1 MR. SACKS: Harvey Sacks. I'm not sure 2 this is the right place, but in terms of information 3 from sources, we certainly are interested in revealed 4 cost data for incremental efficiency. 5 MR. KENDALL: And could you repeat that? 6 MR. SACKS: Revealed cost data both from 7 sales of higher efficiency units in areas where they 8 have relatively high market penetration, and from 9 comparable technologies in the historical record, such 10 as the revealed costs moving to the ten SEER standard. 11 MR. KENDALL: Okay. Thank you. 12 MR. CRAWFORD: Mark? Jim Crawford. 13 The first point I'd like to make is that 14 you might find annual reports a lot handier than the 15 SEC 10(k). I sure do when I'm looking for 16 information, and they will be very enlightening on 17 some very important points to be dealt with in the 18 economics and manufacturing impact analysis. 19 The other point that I would like to make 20 I didn't want to make until Harvey made his point, and 21 I'm not familiar with the "revealed cost" phrase, but 22 all too often the industry is condemned for 23 productivity improvements that have been realized in 24 the past, and the activation as well. 25 You said that it was going to cost X 

### NEAL R.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323RHODE ISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 65 1 

### MR. SACKS: Harvey Sacks. I'm not sure 2 this is the right place, but in terms of information 3 from sources, we certainlyare interestedinrevealed 4 

### cost data for incremental efficiency. 5 

### MR. KENDALL: And could you repeat that? 6 

### MR. SACKS: Revealed cost data both from 7 

### sales of higher efficiencyunits in areas where they 8 

### have relatively high market penetration, and from 9 

### comparabletechnologiesinthehistoricalrecord, such 10 

### astherevealedcostsmovingtothetenSEER standard. 11 

### MR. KENDALL: Okay. Thank you. 12 

### MR. CRAWFORD: Mark? Jim Crawford. 13 

### The first point I'd like to make is that 14 

### you might find annual reports a lot handier than the 15 

### SEC 10

### (k). I sure do when I'm looking for 16 

### information, and they will be very enlightening on 17 

### some very important points to be dealt with in the 18 

### economics and manufacturing impact analysis. 19 

### The otherpoint that I would like tomake 20 

### I didn'twant tomakeuntilHarveymadehispoint, and 21 

### I'mnot familiarwiththe "revealedcost" phrase, but 22 all too often the industry is condemned for 23 productivity improvements that have been realized in 24 the past, and the activation as well. 25

(202)234-4433 

### You said that it was going to cost X NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com66 1 dollars, and downstream it didn't cost X dollars. You 2 get the new system for about what the old system cost. 3 You can look at numbers anddecide whether 4 or not that's true, but the important point is if 5 you're looking at, for example, an eight versus a ten, 6 if you're looking at an eight versus a ten in year X 7 and then you look at it five years later, the numbers 8 may be different, but the difference between the eight 9 and the ten does not change very much. 10 To upgrade efficiency in any time span 11 costs money. You don't get it for nothing, never. 12 MR. RABA: Charlie Stephens. 13 MR. STEPHENS: That's only true -- Charlie 14 Stephens, Oregon Energy Office -- that's only true in 15 one respect. It's widely analyzed and reported in 16 industrial data in this country anyway that a 17 cumulative doubling of production volume typically 18 produces a ten to 30 percent lowering in the price. 19 It just has to do with production volume, and you can 20 look at almost any industry you want in the country, 21 and those numbers hold, and it has to do with volume. 22 And obviously the higher efficiency stuff 23 is in a much lower volume right now. 24 MR. CRAWFORD: And it lowers the 25 efficiency -- excuse me -- the cost to make an eight 

### NEALR.GROSS COURTREPORTERS ANDTRANSCRIBERS 1323RHODE ISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

### 66 1 

### dollars, anddownstreamitdidn't costX

### dollars. You 2 

### get thenew systemfor aboutwhat theoldsystemcost. 3 

### Youcanlookatnumbersanddecidewhether 4 

### or not that's true, but the important point is if 5 

### you'relookingat, forexample, aneightversus a ten, 6 if you're looking at an eight versus a ten in year X 7 

### and thenyou look at it five years later, the numbers 8 

### maybedifferent, butthedifferencebetweentheeight 9 

### and the ten does not change very much. 10 

### To upgrade efficiency in any time span 11 

### costs money.**Yo~** 

### don't get it for nothing, never. 12 

### MR. RABA: Charlie Stephens. 13 

### MR. STEPHENS: That'sonlytrue Charlie 14 

### Stephens, OregonEnergyOffice

-- that's onlytrue in 15 

### one respect. It's widely analyzed and reported in 16 

### industrial data in this country anyway that a 17 

### cumulative doubling of production volume typically 18 

### produces a ten to 30 

### percent lowering in the price. 19 

### It just has to do withproductionvolume, andyou can 20 

### look at almost any industryyou want in the country, 21 

### and those numbers hold, and it has to do withvolume. 22 

### Andobviouslythehigherefficiencystuff 23 

### is in a much lower volume right now. 24 

### MR. CRAWFORD: And it lowers the 25 efficiency

-- excuse me -- the cost to make an eight

(202)234-4433 

### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com67 1 versus -- just as it would lower the cost to make a 2 ten. The whole scale comes down, not just the higher 3 efficiency product. 4 MR. RABA: And that was Jim Crawford. 5 Thank you, Jim. 6 Charlie. 7 MR. STEPHENS: Charlie. 8 Except right now the eight is the low, is 9 the production volume. Its costs already are lowered 10 byproductionvolumes because it's, by far, the larger 11 part of the column in a commodity market. It's the 12 commodity product. 13 MR. RABA: First Harvey and then back to 14 Jim, please. 15 MR. SACKS: This is Harvey Sacks again, 16 and Iapologize for opening Pandora's box. Iask that 17 the issue be looked at. I did not prescribe a 18 particular outcome in this. I would conclude my 19 statements just that I still have enormous confidence 20 in the ability of the manufacturers to continue 21 improvements. 22 MR. RABA: Did you get that? 23 THE REPORTER: Yes. 24 MR. RABA: Jim, please. 25 MR. CRAWFORD: I certainly agree with 

### NEALR.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323RHODE ISLANDAVE.,N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 67 

### 1 versus -- just as it would lower the cost to make a 2 ten. The whole scale comes down, not just the higher 3 efficiencyproduct. 4 

### MR. RABA: And that was Jim Crawford. 5 

### Thank you, Jim. 6 

### Charlie. 7 

### MR. STEPHENS: Charlie. 8 

### Except right now the eight is the low, is 9 the productionvolume. Its costs alreadyare lowered 10 byproductionvolumesbecauseit's, byfar, the larger 11 

### part of the column in a commodity market. It's the 12 commodityproduct. 13 

### MR. RABA: First Harvey and then back to 14 Jim, please. 15 

### MR. SACKS: This lS 

### Harvey Sacks again, 16 and I apologize foropeningPandora'sbox. I askthat 17 the issue be looked at. I did not prescribe a 18 

### particular outcome in this. I would conclude my 19 statementsjust that I stillhave enormous confidence 20 In the ability of the manufacturers to continue 21 improvements. 22 23 24 25

(202)234-4433 

### MR. RABA: Did you get that? THE REPORTER: Yes. MR. RABA: Jim, please. MR. CRAWFORD: I certainly agree with 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com68 1 Harvey on that. 2 (Laughter.) 3 MR. CRAWFORD: But, you know, I don't know 4 if my friend Morgan is being intentionally obtuse or 5 I'm just beingvery inept at expressing the point, but 6 the fact remains that as you're looking forward to 7 establish some standard level, the volume doesn't yet 8 exist out there, and anybody can produce the less 9 efficient product for significantly less money than a 10 significantly more efficient product, and that will 11 not change. 12 It takes more material, and that will not 13 change, and if you figure some way of reducing 14 material content, you reduce material content onboth. 15 If you figure some way of reducing labor content, you 16 reduce labor content on both. 17 Improved efficiency costs money. That's 18 the only point I'm trying to make. 19 MR. RABA: Okay. Thank you. 20 Mark. 21 MR. KENDALL: Okay. We're on Slide 3. 22 The three questions listed on Slide 3 have to do with 23 some of the questions that the analytical team are 24 asking ourselves right now based on what looking we've 25 done at the market. 

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### 68 

### 1 Harvey on that. 2 (Laughter.) 3 

### MR. CRAWFORD: But, youknow, I don'tknow 4 if my friend Morgan is being intentionally obtuse or 5 I'mjustbeingveryinept atexpressingthepoint, but 6 the fact remains that as you're looking forward to 7 establish some standardlevel, thevolume doesn'tyet 8 exist out there, and anybody can produce the less 9 efficientproduct for significantlylessmoneythan a 10 significantly more efficient product, and that will 11 not change. 12 It takesmore material, and thatwill not 13 change, and if you figure some way of reducing 14 materialcontent, youreducematerialcontentonboth. 15 Ifyou figure some wayof reducing laborcontent, you 16 reduce labor content on both. 17 

### Improved efficiency costs money. That's 18 the onlypoint I'm trying to make. 19 

### MR. RABA: Okay. Thank you. 20 

### Mark. 21 MR. KENDALL: Okay. We're on Slide 3. 22 The three questions listedon Slide 3 have to do with 23 some of the questions that the analytical team are 24 askingourselvesrightnowbasedonwhat lookingwe've 25 done at the market.

(202)234-4433 

### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com69 1 The first question is: should the 2 department consider regional differences in product 3 distribution use or installation? If so, which ones? 4 As a cooling and heating product, 5 obviously different parts of the country have 6 different needs, and we are wondering now to the 7 extent that we should consider those differences in 8 the analysis. 9 The second question is: what assumptions 10 regarding the impact of non-regulatory initiatives 11 should the department use in the analysis? 12 The idea there is ASHRAE 90.199 is being 13 phased in. States will begin to adopt it for new 14 buildings. That process in itself will create demand 15 for products that have efficiency levels that meet or 16 exceed the ASHRAE levels. 17 The same with Energy Star. There's a 18 proposal right now out for Energy Star levels for 19 commercial air conditioning products and utility 20 rebates if they exist. They can create pull for 21 products that are more efficient than today's 22 baseline, and in the market assessment, we would like 23 to capture that information to include maybe in 24 shipment projections downstream in the analysis. 25 MR. CRAWFORD: A quick question. Jim 

### NEALR.GROSS COURTREPORTERS ANDTRANSCRIBERS 1323RHODE ISLANDAVE.,N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 69 1**Th~** 

### first question is: should the 2 

### department consider regional differences in product 3 distributionuse orinstallation? If so, whichones? 4 

### As a 

### cooling and heating product, 5 

### obviously different parts of the country have 6 

### different needs, and we are wondering now to the 7 

### extent that we should consider those differences in 8 

### the analysis. 9 

### The secondquestion is: what assumptions 10 

### regarding the impact of non-regulatory initiatives 11 

### should the department use in the analysis? 12 

### The idea there is ASHRAE 90.199 

### is being 13 

### phased In. States·will begin to adopt it for new 14 

### buildings. Thatprocess in itselfwill createdemand 15 

### for products that have efficiency levels that meet or 16 

### exceed the ASHRAE levels. 17 

### The same with Energy Star. There's a 18 

### proposal right now out for Energy Star levels for 19 

### commercial air conditioning products and utility 20 

### rebates if they exist. They can create pull for 21 

### products that are more efficient than today's 22 

### baseline, and inthemarket assessment, we would like 23 

### to capture that information to include maybe in 24 

### shipment projections downstream in the analysis. 25

(202)234-4433 

### MR. CRAWFORD: A quick question. Jim NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005·3701 www.nealrgross.com70 1 Crawford. 2 Toyour first question there, Idon't know 3 the answer, and one reason I don't know the answer is 4 I don't know what information you think you would 5 extract from the answer, and I think you have to 6 identify where you think it might lead you, and then 7 I think we can together look at whether or not we 8 think the database that might exist out there would 9 help you get there. 10 MR. RABA: Steve Rosenstock. 11 MR. ROSENSTOCK: Steve Rosenstock, EEI. 12 I guess I would refer to one of the 13 previous slides from the introduction in terms of the 14 EPCA versus ASHRAE 90.1, 1999 levels, and obviously 15 the key is obviously, okay,which levels are you going 16 to use for your baseline analysis, and then as you're 17 doing the market assessment, those numbers go, in 18 fact, October 29th, 2001. 19 So, again, you don't have historical

-- 20 again, Idon't know howyou would try to integrate the 21 historical market data into post October 29th. 22 Somehow that has to be done, but obviously what 23 baseline you use is going to obviously make a big 24 difference in some of your analytical results. 25 MR. KENDALL: All right. Two slides from 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 70 

### 1 Crawford. 2 Toyourfirstquestionthere, I 

### don't know 3 the answer, andone reason I 

### don't know the answer is 4 I 

### don't know what information you think you would 5 extract from the answer, and I 

### think you have to 6 identify where you think it might lead you, and then 7 I 

### think we can together look at whether or not we 8 think the database that might exist out there would 9 help you get there. 10 MR. RABA: Steve Rosenstock. 11 MR. ROSENSTOCK: Steve Rosenstock, EEl. 12 I 

### guess I 

### would refer to one of the 13 previous slides from the introduction Interms of the 14 EPCA versus ASHRAE 90.1, 1999 levels, and obviously 15 thekeyis**obviously~** 

### okay, whichlevelsareyougoing 16 touse foryourbaseline analysis, andthen as you're 17 doing the market assessment, those numbers go, in 18 fact, October 29th, 2001. 19 So, again, you don't have historical

-- 20 again, I 

### don'tknowhowyouwouldtrytointegratethe 21 historical market data into post October 29th. 22 Somehow that has to be done, but obviously what 23 baseline you use is going to obviously make a big 24 difference in some of your analytical results. 25

(202)234-4433 

### MR. KENDALL: All right. Two slides from NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., NW. WASHINGTON, D.C. 20005-3701 www.nealrgross.com71 1 now, two or three we'll be talking about the baseline 2 specifically. 3 MR. RABA: Go ahead. 4 MR. ECKMAN: Tom Eckman with the Power 5 Council. 6 Certainly with respect to regional 7 differences I don't know whether the products are 8 significantly different, but there are clearly 9 different design parameters that have to be dealt with 10 in areas with high latent load versus low latent load 11 and in areas that have high peaking temperatures and 12 that's the problem versus that have a constant 13 temperature. 14 The West Coast has a different phenomenon 15 to deal with than the Southwest and the Southeast, and 16 areas that have a high use of economizers because of 17 low humidity and low nighttime temperatures relative 18 to other areas that don't, those are big operating 19 parameter differences that probably relate to 20 engineering optimization as well. They all need to be 21 considered. 22 MR. BRUNDAGE: Don Brundage Southern 23 Company. 24 I'd like to agree completely with what 25 Charlie said. One of our big complaints from the 

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### 1 now, two orthree we'llbe talking about the baseline 2 

### specifically. 3 

### MR. RABA: Go ahead. 4 

### MR. ECKMAN: Tom Eckman with the Power 5 

### Council. 6 

### Certainly with respect to regional 7 

### differences I 

### don't know whether the products are 8 

### significantly different, but there are clearly 9 

### differentdesignparametersthathavetobedealtwith 10 

### in areas withhigh latent loadversus low latent load 11 

### and in areas that have high peaking temperatures and 12 

### that's the problem versus that have a constant 13 

### temperature. 14 

### TheWest Coasthas a differentphenomenon 15 

### todealwiththanthe Southwestandthe Southeast, and. 16 

### areas that have a high use of economizers because of 17 

### low humidity and low nighttime temperatures relative 18 

### to other areas that donit I 

### those are big operating 19 

### parameter differences that probably relate to 20 engineeringoptimizationaswell. Theyallneedtobe 21 

### considered. 22 

### MR. BRUNDAGE: Don Brundage Southern 23 Company. 24 I I

### d like to agree completely with what 25 

### Charlie said.

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### One of our big complaints from the NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com72 1 residential study was inadequate consideration of 2 latent loads in that study. I would hope that the 3 studies done here from the outset would consider 4 latent loads more seriously. 5 MR. RABA: Jim. 6 MR. MULLEN: Jim Mullen. 7 Two things that I may be a little ahead 8 here. The ventilation standards under 62.1, ASHRAE 9 62.1 become veryvital in trying to decide what to do 10 with this equipment, and in fact several of the folks 11 here have mentioned. 12 The other one that I think is probably a 13 major impact if this project goes full term is the 14 implementation of an alternate refrigerant. 15 Commercial equipment today has barely scratched the 16 surface, I think, in applying alternate refrigerant 17 and packaged equipment up to 20 tons, and in a lot of 18 cases the hardware is not even there to do it. That 19 has to be in place in 2010. 20 So there's a major issue out there, I 21 think, design-wise, not just what to do with the 22 efficiency, but the efficiency, if it's going to be 23 mandated in 2008, almost needs to be with the 24 alternate refrigerant. 25 MR. KENDALL: And I think we do plan to 

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### residential study was inadequate consideration of 2 latent loads in that study. I 

### would hope that the 3 studies done here from the outset would consider 4 

### latent loads more seriously. 5 

### MR. RABA: Jim. 6 

### MR. MULLEN: Jim Mullen. 7 

### Two things that I 

### may be a little ahead 8 

### here. The ventilation standards under 62.1, ASHRAE 9 

### 62.1 become veryvital in trying to decide what to do 10 with this equipment, and in fact several of the folks 11 

### here have mentioned. 12 The other one that I 

### think is probably a 13 

### major impact if this project goes full term is the 14 

### implementation of an alternate refrigerant. 15 Commercial equipment today has barely scratched the 16 surface, I 

### think, in applying alternate refrigerant 17 andpackaged equipment up to 20 tons, and in a lot of 18 

### cases the hardware is not even there to do it. That 19 has to be inplace In 2010. 20 So there's a major issue out there, I 

### 21 think, design-wise, not just what to do with the 22 efficiency, but the efficiency, if it's going to be 23 mandated in 2008, almost needs to be with the 24 alternate refrigerant. 25

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### MR..KENDALL: And I 

### think we do plan to NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005·3701 www.nealrgross.com73 1 talk about alternate refrigerants later on today. 2 MR. RABA: And back to you, Jim. Go 3 ahead. 4 MR. CRAWFORD: If we are to get into 5 climatological issues and latent capacity and all of 6 that, I urge you to look very carefully at the 7 performance tables of any air conditioner. The latent 8 sensible split of an air conditioner is not an 9 intrinsic property of the machinery. It's a property 10 of a given set of machinery and the current ambient 11 conditions indoors. 12 When the latent load indoors goes up, the 13 latent capacity increases to try to handle it. That's 14 one of the things an air conditioner works just the 15 way you'd like it to. 16 Imean, here you are pushing heat uphill, 17 which Mother Nature doesn't like, but Mother Nature 18 works with you very well on handling latent capacity 19 to a fair degree, which is one of the reasons we don't 20 have a lot more trouble than we do on a national 21 basis. 22 MR. KENDALL: Okay. Comments on 23 differences in climate, geography. 24 Jim Crawford asked what we would do with 25 that information, and these are some of the things we 

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### 1 talk about alternate refrigerants later on today. 2 

### MR. RABA: And back to you, Jim. Go 3 

### ahead. 4 

### MR. CRAWFORD: If we are to get into 5 

### climatological issues and latent capacity and all of 6 

### that, I 

### urge you to look very carefully at the 7 

### performancetablesofanyairconditioner. The latent 8 

### sensible split of an air conditioner is not an 9 

### intrinsicpropertyof themachinery. It's a property 10 

### of**~** 

### given set of machinery and the current ambient 11 

### conditions indoors. 12 

### When the latent load indoors goesup, the 13 

### latentcapacityincreasestotrytohandle it. That's 14 

### one of the things an air conditioner works just the 15 

### way you'd like it to. 16 I 

### mean, hereyou arepushingheat uphill, 17 

### which Mother Nature doesn't like, but Mother Nature 18 

### works with you very well on handling latent capacity 19 

### toa fair**degre~,** 

### whichis oneof thereasons we don't 20 

### have a lot more trouble than we do on a national 21 

### basis. 22 

### MR. KENDALL: Okay. Comments on 23 differences in climate, geography. 24 Jim Crawford asked what we would do with 25 that information, and these are some of the things we NEALR.GROSS (202)234-4433 COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com74 1 would be considering. 2 Okay. The third bullet point on Slide 3 3 was are there any impending changes in the market of 4 which the department should be aware so that our 5 analysis is as much prospective as it can be rather 6 than retrospective. 7 Okay. Comments on that? 8 MR. RABA: Go ahead, Jim. 9 MR. WOLF: Jim Wolf. 10 Could we back up a little bit to bullet 11 number two? 12 MR. KENDALL: Sure. 13 MR. WOLF: As I think this through, and I 14 may be confused, I'm a little bit concerned because it 15 seems as though if you took the impact of non16 regulatory initiatives, for example, 90.1 in new 17 building construction being implemented during the 18 process from now to 2008, the Energy Star, you're 19 doing futuristic analysis, and you're obviously going 20 to come up with a different answer than was done in 21 ASHRAE 90.1 levels. 22 And so it seems as though you're actually 23 entering into a new rulemaking rather than evaluating 24 90.1 because you've changed the whole base of 25 reference. 

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### 74 

### 1 would be considering. 2 Okay. The third bullet point on Slide 3 3 was are there any impending changes in the market of 4 which the department should be aware so that our' 5 analysis is as much prospective as it can be rather 6 than retrospective. 7 

### Okay. Comments on that? 8 

### MR. RABA: Go ahead, Jim. 9 

### MR. WOLF: JimWolf. 10 Could we back up a little bit to bullet 11 number two? 12 MR. KENDALL: Sure. 13 

### MR. WOLF: As I think this through, and I 14 maybeconfused, I'ma littlebitconcernedbecauseit 15 seems as though if you took the impact of non16 regulatory initiatives, for example, 90.1 ln new 17 building construction being implemented during the 18 process from now to 2008, the Energy Star, you're 19 doingfuturistic analysis, andyou'reobviouslygoing 20 to come up with a different answer than was done in 21 ASHRAE 90.1 levels. 22 And so it seems as thoughyou're actually 23 entering intoa newrulemakingrather thanevaluating 24 90.1 because you've changed the whole base of 25 reference.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D,C. 20005-3701 www,nealrgross,com75 1 So I think it wouldbe a legal question on 2 whether you could do that in your evaluation in their 3 comparative analysis. Maybe it isn't, but I would 4 certainly wonder whether or not that's consistent with 5 the intent of what you're supposed to be doing. 6 MR. KENDALL: Well, I'm tempted to answer 7 that, but since I'm not a lawyer, I know I can 8 probably be arrested. 9 (Laughter.) 10 MR. WOLF: And again, if it isn't a legal 11 question, at least from a procedural analytical, it 12 seems an inconsistency. It would be helpful, yes, for 13 a change to ASHRAE that would satisfy you, but not 14 consistent with an evaluation of ASHRAE of what's been 15 done. 16 So I have a concern about using that. I 17 would say use today's data when you do the analysis. 18 MR. KENDALL: I don't think that there's 19 any requirement in the law for DOE to use the same 20 methodology, the same process, the same assumptions 21 that ASHRAE used in their analysis. 22 Your comment is well taken. Definitely as 23 we're starting the analysis, we'll be interested in 24 knowing what the differences are between what we're 25 doing and what ASHRAE did, and we'll be able to, you 

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### 1 SoI thinkitwouldbea legalquestionon 2 whetheryou coulddo that inyour evaluation in their 3 

### comparative analysis. Maybe it isn't, but I would 4 certainlywonderwhetherornotthat'sconsistentwith 5 the intent of what you're supposed to be doing. 6 

### MR. KENDALL: Well, I'mtemptedto answer 7 that, but since I'm not a lawyer, I know I can 8 probably be arrested. 9 (Laughter.) 10 

### MR. WOLF: And again, if it isn't a legal 11 question, at least from a procedural analytical, it 12 seems aninconsistency. Itwouldbehelpful, yes, for 13 a change to ASHRAE that would satisfy you, but not 14 consistentwithanevaluationofASHRAE ofwhat'sbeen 15 done. 16 

### So I have a concern about using that. I 

### 17 would say use today's data when you do the analysis. 18 

### MR. KENDALL: I don't think that there's 19 any requirement in the law for DOE to use the same 20 methodology, the same process, the same assumptions 21 that ASHRAE used in their analysis. 22 Yourcomment iswelltaken. Definitelyas 23 we're starting the analysis, we'll be interested in 24 knowing what the differences are between what we're 25 doing and what ASHRAE did, and we'll be able to, you

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com76 1 know, based on understanding those differences weigh 2 the pros and cons of making different decisions. 3 So thank you for making that point. 4 MR. ECKMAN: Tom Eckman, Northwest Power 5 Council. 6 With respect to that issue, I think, in 7 particular, the adoption of the ASHRAE 90.1 standard 8 in state regulatory building codes and the impact 9 that's going to have on the production capabilities 10 and potential production costs of various 11 manufacturers, that does need to be taken into account 12 in the manufacturing analysis, impact analysis, 13 because part of the retooling is already underway to 14 meet that requirement, and that cost shouldn't be 15 included in any standard setting process because 16 that's already embodied in the ASHRAE standard. 17 MR. RABA: All right. So Harvey Sacks 18 first, then Charlie Stephens. 19 Charlie. 20 MR. STEPHENS: Charlie Stephens, Oregon 21 Energy Office. 22 That raises another kind of important 23 issue here, and that is that 90.1 is only going to be 24 adopted as a building standard in states that have 25 standards. There are a large number of states and 

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### 1 know, based on understanding those differences weigh 2 the pros and cons of making different decisions. 3 So thank you for making that point. 4 

### MR. ECKMAN: Tom Eckman, Northwest Power 5 

### Council. 6 

### with respect to that issue, I 

### think, in 7 

### particular, the adoption of the ASHRAE 90.1 standard 8 

### in state regulatory building codes and the impact 9 

### that's going to have on the production capabilities 10 and potential production costs of various 11 manufacturers, thatdoesneedtobetakenintoaccount 12 in the manufacturing analysis, impact analysis, 13 because part of the retooling is already underway to 14 meet that requirement, and that cost shouldn't be 15 included In any standard setting process because 16 that's already embodied in the ASHRAE standard. 17 

### MR. RABA: All right. So Harvey Sacks 18 first, then Charlie Stephens. 19 Charlie. 20 

### MR. STEPHENS: Charlie Stephens, Oregon 21 Energy Office. 22 That raises another kind of important 23 issuehere, and that is that 90.1 is onlygoing tobe 24 adopted as a building standard in states that have 25 

### standards.

(202)**~34-4433** 

### There are a large number of states and NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com77 1 jurisdictions in the country that don't have any 2 standards in which to place 90.1. So there's going to 3 be a very big difference between what DOE could 4 potentially do in a rulemaking in setting a standard 5 for equipment efficiency that applies across the 6 country everywhere and what ASHRAE has done, which is 7 a voluntary standard to be adopted in some 8 jurisdictions across the country. 9 And you're going to have to take some of 10 that into account as you try to figure out who has any 11 standards for 90.1 and who doesn't. 12 MR. RABA: Thank you. 13 MR. KENDALL: Yes. Probably the biggest 14 impact on the analysis from these assumptions in 15 bullet two, if you assume that many states, 16 jurisdictions aggressively adopt 90.1 or when an 17 Energy Star level comes out, many jurisdictions adopt 18 that or some incentive programs, then the impact of 19 federal standards that are more stringent thanASHRAE 20 is diminished. Those are the implications of that. 21 MR. RABA: First Jim and then Harvey. 22 MR. MULLEN: At the risk of being ahead of 23 your schedule here, the commercial market is complex 24 in the different forms that product goes to market. 25 There's a design-build market. There's a two minute 

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### 1 jurisdictions in the country that don't have any 2 standards inwhichtoplace 90.1. Sothere'sgoingto 3 

### be a very big difference between what DOE could 4 

### potentiallydo in a rulemaking in setting a standard 5 

### for equipment efficiency that applies across the 6 

### countryeverywhere andwhatASHRAE has done, which is 7 

### a 

### voluntary standard to be adopted in some 8 jurisdictions across the country. 9 And you're going to have to take some of 10 that intoaccount asyoutryto figure outwhohas any 11 standards for 90.1 and who doesn't. 12 

### MR. RABA: Thank you. 13 

### MR. KENDALL: Yes. Probably the biggest 14 impact on the analysis from these assumptions in 15 

### bullet two, if you assume that many states, 16 jurisdictions aggressively adopt 90.1 or when an 17 EnergyStar level comes out, manyjurisdictions adopt 18 

### that or some incentive programs, then the impact of 19 federal standards that aremore stringent thanASHRAE 20 

### is diminished. Those are the implications of that. 21 

### MR. RABA: First Jim and then Harvey. 22 MR. MULLEN: Attheriskofbeingaheadof 23 your schedule here, the commercial market is complex 24 in the different forms that product goes to market. 25 There's a design-build market. There's a two minute

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com78 1 market. There's a national counts market. 2 How do you intend to weigh all of those 3 into a single decision assessment? 4 MR. RABA: That was Jim Mullen. 5 MR. KENDALL: We're not prepared to answer 6 that now. That will be something we'll be coming 7 up -- anything you see this morning, we've put enough 8 thinking into this point to be able to put this 9 presentation together, formulate some plans, and we 10 documented those in the framework document. So there 11 will be some of these questions that we're just not 12 going to be prepared to answer today. Sorry. 13 But, you know, please include your 14 thinking on those and your comments, and those will be 15 some of the things that are going to influence how we 16 move forward. 17 MR. RABA: I think Harvey and then Jim 18 Crawford. 19 MR. SACKS: Mark, this is Harvey Sacks. 20 I find bullet two a bit muddled. I guess 21 your bottom line question is: is this stuff, 90.1 and 22 voluntary programs such as Energy Star, going to 23 change the shipment weighted average? 24 MR. KENDALL: That's correct. 25 MR. SACKS: Okay. Let me please just for 

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### 1 market. There's a national counts market. 2 How do you intend to weigh all of those 3 into a single decision assessment? 4 

### MR. RABA: That was Jim Mullen. 5 

### MR. KENDALL: We'renotpreparedtoanswer 6 

### that now. That will be something we'll be coming 7 up -- anythingyou see this morning, we'veput enough 8 thinking into this point to be able to put this 9 presentation together, formulate some plans, and we 10 documentedthose inthe framework document. So there 11 will be some of these questions that we're just not 12 going to be prepared to answer today. Sorry. 13 

### But, you know, please include your 14 thinkingonthoseandyourcomments, andthosewillbe 15 some of the things that are going to influence howwe 16 move forward. 17 

### MR. RABA: I think Harvey and then Jim 18 

### Crawford. 19 MR. SACKS: Mark, this 1S 

### Harvey Sacks. 20 I findbullet two a bitmuddled. I guess 21 yourbottomlinequestionis: is this stuff, 90.1 and 22 voluntary programs such as Energy Star, going to 23 change the shipment weighted average? 24 25

(202)234-4433 

### MR. KENDALL: That's correct. MR. SACKS: Okay. Let me pleasejust for NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com79 1 those who aren't here from EPA remind folks that 2 Energy Star is not intended as any kind of a 3 regulatory program that could be adopted like a 4 building code by any jurisdiction. I don't want to 5 let that slide through. 6 MR. KENDALL: Yes, sorry. I thought I had 7 corrected myself at the end of that sentence, but 8 apparently not clearly. 9 MR. CRAWFORD: Jim Crawford, and to pick 10 up on what Harvey and Charlie have just said, the 11 nature of the market is that some significant 12 percentage of people who have a tenant who pays a 13 utility bill will buy the least expensive thing that 14 they can get in the market. There will be a full 15 range of product available from the regulated minimum 16 on up to the most cost effective maximum efficiency. 17 That will not change. 18 And we know that there will be many, many 19 jurisdictions that will not adopt informally Energy 20 Star or more formally 90.1, and if that were not the 21 case, we'd all be wasting a lot of time here this 22 morning. 23 I mean, what we're here for is to talk 24 about a uniform national standard and a baseline for 25 which is the current product. It's not what might 

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### 1 those who aren't here from EPA remind folks that 2 Energy Star is not intended as any kind of a 3 regulatory program that could be adopted like a 4 

### building code by any jurisdiction. I don't want to 5 let that slide through. 6 

### MR. KENDALL: Yes, sorry. I thought I had 7 corrected myself at the end of that sentence, but 8 apparentlynot clearly. 9 

### MR. CRAWFORD: Jim Crawford, and to pick 10 up on what Harvey and Charlie have just said, the 11 nature of the market is that some significant 12 percentage of people who have a tenant who pays a 13 utilitybill will buy the least expensive thing that 14 

### they can get In the market. There will be a full 15 range ofproduct available from the regulatedminimum 16 on up to the most cost effective maximum efficiency. 17 That will not change. 18 And we know that there willbemany, many 19 jurisdictions that will not adopt informally Energy 20 Star or more formally 90.1, and if that were not the 21 case, we'd all be wasting a lot of time here this 22 morning. 23 

### I mean, what we're here for is to talk 24 about a uniform national standard and a baseline for 25 

### which is the current product. It's not what might

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com80 1 come out under ASHRAE or something else. It's the 2 current product. .That's the baseline, and that 3 baseline will continue to sell in the market until 4 such time as there is some minimum at a higher level 5 than that, which precludes its being sold. 6 MR. KENDALL: Okay. One question I have 7 which we may be able to answer right now. Do we know 8 the shipment weighted efficiency for commercial air 9 conditioners? 10 I don't believe that type of data is 11 public. 12 MR. CRAWFORD: Well, who's "we"? 13 (Laughter.) 14 MR. KENDALL: For the transcript "we" 15 included the people whose eyes I was making contact 16 with at that point. 17 (Laughter.) 18 MR. RABA: Karim. 19 MR. AMRANE: I think I can respond to 20 that. Yes, we know the shipment and something that 21 you might be able to tell the members. 22 MR. KENDALL: Right. I have to qualify 23 that. Thank you. 24 MR. CRAWFORD: Jim Crawford. 25 I would anticipate that the members would 

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### come out under ASHRAE or something else. It's the 2 

### current product. That's the baseline, and that 3 baseline will continue to sell in the market until 4 

### such time as there is some minimum at a higher level 5 

### than that, which precludes its being sold. 6 

### MR. KENDALL: Okay. One question I have 7 

### whichwe maybe able to answer right now. Do we know 8 

### the shipment weighted efficiency for commercial air 9 

### conditioners? 10 I 

### don't believe that type of data is 11 

### public. 12 

### MR. CRAWFORD: Well, who's "we"? 13 

### (Laughter.) 14 

### MR. KENDALL: For the transcript II

### we II 15 

### included the people whose eyes I was making contact 16 

### with at that point. 17 

### (Laughter.) 18 MR. RABA: 

### Karim. 19 

### MR. AMRANE: I think I can respond to 20 

### that. Yes, we know the shipment and something that 21 

### you might be able to tell the members. 22 

### MR. KENDALL: Right. I have to qualify 23 that. Thank you. 24 25

(202)234-4433 

### MR. CRAWFORD: Jim Crawford. I wouldanticipatethat themembers would NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISUl.NDAVE., NW. WASHINGTON, D.C. 20005-3701 www.nealrgross.com81 1 not resist sharing that information. 2 MR. KENDALL: All right. We'll move to 3 slide four. Slide four lays out the product classes 4 as they are defined in ASHRAE 90.1 for the products 5 we're considering today. I don't know whether we've 6 determinedwhether DOEhas any flexibility in changing 7 the definition of those classes for the federal 8 standards, but for the residential products, the 9 classes that existed previously aren't by necessity 10 the ones that may show up in the next standard. So 11 there's an option which is the second bullet point 12 here. 13 We asked the question: are there other 14 features that would warrant breaking out different 15 classes, split versus packaged, for example, where it 16 may be possible to get higher efficiency out of one 17 subset than another? 18 MR. CRAWFORD: Jim Crawford. 19 Certainly you want to distinguish gas20 electrics from the all electric product, a totally 21 different animal, different market, and it takes a lot 22 of space to squeeze all of that gas heater in there. 23 MR. RABA: Ted Doyle, Mestek. 24 MR. DOYLE: Yeah, I think there is, you 25 know. To me these classes that they -- I've forgotten 

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### 81 1 not resist sharing that information. 2 

### MR. KENDALL: All right. We'll move to 3 

### slide four. Slide four lays out the product classes 4 

### as they are defined in ASHRAE 90.1 for the products 5 

### we're considering today. I don't know whether we've 6 

### determinedwhetherDOEhasanyflexibilityinchanging 7 

### the definition of those classes for the federal 8 

### standards, but for the residential products, the 9 

### classes that existed previously aren't by necessity 10 the ones that may show up in the next standard. So 11 there's an option which is the second bullet point 12 here. 13 

### We asked the question: are there other 14 features that would warrant breaking out different 15 classes, splitversuspackaged, for example, where it 16 may be possible to get higher efficiency out of one 17 subset than another? 18 MR. CRAWFORD: Jim Crawford. 19 Certainly you want to distinguish gas20 electrics from the all electric product, a totally 21 differentanimal, differentmarket, andittakesa lot 22 of space to squeeze all of that gas heater in there. 23 

### MR. RABA: Ted Doyle, Mestek. 24 

### MR. DOYLE: Yeah, I think there lSI 

### you 25 know. Tome theseclassesthat they -- I've forgotten

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com82 1 my biology terms, but it's more like invertebrate2 vertebrae. You know, these are very vague and wide 3 open, and you know, our particular piece of equipment 4 that we manufacture is installed indoors, and that's 5 being lumped together with something that would be 6 installed on a rooftop. 7 MR. RABA: Good point. 8 Karim. 9 MR. AMRANE: Karim Amrane with ARI. 10 I concur with Jim Crawford that you have 11 to distinguish between gas and electric, and ASHRAE 12 90.1 makes that distinction. 13 MR. RABA: Jim Mullen. 14 MR. MULLEN: Jim Mullen. 15 Probably at least one thing you need to 16 look at is units are designed for 100 percent outdoor 17 air use, which are becoming available in the tonnage 18 range. They may or may not be recoverable under 19 current classes, but they are certainly different. 20 The other is I believe there are some gas 21 engine driven equipment in this tonnage size, and the 22 question is: is it covered? 23 MR. KENDALL: Okay. Thanks. 24 MR. RABA: Back to you, Jim. 25 MR. CRAWFORD: Jim Crawford. 

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### 1 my biology terms, but it's more like invertebrate2 

### vertebrae. You know, these are very vague and wide 3 open, andyouknow, ourparticularpiece of equipment 4 that we manufacture is installed indoors, and that's 5 being lumped together with something that would be 6 installed on a rooftop. 7 

### MR. RABA: Goodpoint. 8 

### Karim. 9 

### MR. AMRANE: KarimAmrane withARl. 10 I concur with Jim Crawford that you have 11 to distinguish between gas and electric, and ASHRAE 12 90.1 makes that distinction. 13 

### MR. RABA: Jim Mullen. 14 

### MR. MULLEN: JimMullen. 15 Probably at least one thing you need to 16 look at is units are designed for 100percent outdoor 17 air use, which are becoming available in the tonnage 18 

### range. They mayor may not be recoverable under 19 current classes, but they are certainly different. 20 The otheris I believe there are some gas 21 engine drivenequipment inthis tonnage size, andthe 22 

### question is: 23 24 25

(202)234-4433 

### is it covered? MR. KENDALL: Okay. Thanks. MR. RABA: Back to you, Jim. MR. CRAWFORD: Jim Crawford. NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W WASHINGTON, D.C. 20005-3701 www.nealrgross.com83 1 Just a question to which I don't have the 2 answer, and that is whether or not we are going to 3 bump into high velocity ducts and other niche 4 products, and I don't know, but I think we need to 5 watch out for it. 6 MR. RABA: Noted. Thank you. 7 Michael Martin. 8 MR. MARTIN: Yeah, Karim mentioned the 9 differences between the gas heating and electric 10 cooling unit in ASHRAE 90.1, and I turned back to the 11 original page 2, and it doesn't indicate that. 12 MR. CRAWFORD: That's because it's not 13 complete. 1B 

### ~ 14 MR. MARTIN: I think you're right. Is it 15 a .2 difference? Is that the one? 16 MR. RABA: I hear some side conversation. 17 With the microphone, please. Say your name and who 18 you're with. 19 MR. JARNAGIN: Ron Jarnagin, Pacific 20 Northwest National Lab. 21 Yes, the ASHRAE standard does 22 differentiate in the efficiency between units with 23 electric resistant heating elements versus all others. 24 Unfortunately,up until the previous reprinting of the 25 standard, which is underway right now, that was a 

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### Just a questiontowhich I don't have the 2 answer, and that is whether or not we are going to 3 bump into high velocity ducts and other niche 4 

### products, and I don't know, but I think we need to 5 

### watch out for it. 6 

### MR. RABA: Noted. Thank you. 7 

### Michael Martin. 8 

### MR. MARTIN: Yeah, Karim mentioned the 9 

### differences between the gas heating and electric 10 coolingunit inASHRAE 90.1, and I turnedback to the 11 

### original page 2, 

### and it doesn't indicate that. 12 

### MR. CRAWFORD: That's because it's not 13 

### complete. 14 

### MR. MARTIN: I thinkyou're right. Is it 15 

### a .2 

### difference? Is that the one? 16 

### MR. RABA: I 

### hear some side conversation. 17 

### with the microphone, please. Say your name and who 18 

### you're with. 19 MR. JARNAGIN: Ron Jarnagin, Pacific 20 Northwest National Lab. 21 

### Yes, the ASHRAE standard does 22 differentiate in the efficiency between units with 23 electricresistantheatingelementsversusallothers. 24 Unfortunately, upuntilthepreviousreprintingofthe 25 standard, which is underway right now, that was a

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com84 1 requirement that was contained in a footnote. 2 Those tables have been revised to make 3 that much more explicit so that it's obvious to 4 people, and in the new tables, which we've developed, 5 you will see a differentiation between those two 6 units. 7 MR. CRAWFORD: I have the unfortunate 8 tables inhand if somebody from DOE would like to make 9 copies for the attendees. 10 MR. MARTIN: Well, Iwasn't questioning

-- 11 Michael Martin here. It's just you gave us a handout 12 that didn't have the full details and which they 13 appear to get right. 14 MR. RABA: Thank you for the copies of the 15 tables, Jim Crawford, and we'll make copies right 16 away. 17 MR. CRAWFORD: They came off the Web. So 18 you can't guarantee anything. 19 MR. KENDALL: At this stage of the 20 analysis, it's not too early to let the department 21 know of any products that youwant tomake sure aren't 22 overlooked as special cases. 23 Okay. I'll move on to slide five. 24 All right. Now, we're getting to the 25 discussion of the baseline models. Slide five 

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### 1 requirement that was contained in a footnote. 2 Those tables have been revised to make 3 that much more explicit so that it's obvious to 4 people, and inthenew tables, whichwe've developed, 5 you will see a differentiation between those two 6 units. 7 

### MR. CRAWFORD: I have the unfortunate 8 tables inhandif somebodyfromDOE wouldliketomake 9 copies for the attendees. 10 

### MR. MARTIN: Well, I wasn'tquestioning-- 11 Michael Martinhere. It'sjustyou gave us a handout 12 that didn't have the full details and which they 13 appear to get right. 14 

### MR. RABA: Thankyou forthecopiesof the 15 tables, Jim Crawford, and we'll make copies right 16 away. 17 

### MR. CRAWFORD: Theycame off the Web. So 18 you can't guarantee anything. 19 

### MR. KENDALL: At this stage of the 20 analysis, it's not too early to let the department 21 knowof anyproducts thatyouwant tomake sure aren't 22 overlooked as special cases. 23 24 25 

### Okay. I'll move on to slide five. All right. Now, we're getting to the discussion of the baseline models. Slide five

(202)234-4433 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., NW. WASHINGTON, D.C. 20005-3701 www.nealrgross.com85 1 describes what we mean when we use that term. So the * 2 first bullet point is that a baseline model includes 3 a capacity configuration, efficiency, and features as 4 the description of a product. It's usually based on 5 the most common sold minimum efficiency product in 6 each product class. 7 So once you've got the product defined, 8 you look and see of those variations which are the 9 most common, and when we say minimum efficiency, 10 that's because the new standards would ratchet up the 11 efficiency. The baseline then would be the minimum 12 against which all future changes in efficiency are 13 made. 14 And third bullet point is that it serves 15 as the basis for cost and performance estimates that 16 are intended to represent the typical product, if 17 there is such a thing that can be defined in the 18 commercial market. 19 The analysis that we'll talk about for the 20 rest of the day is complex at times, and adding more 21 and more variations of products to it increases the 22 complexity exponentially. So the attempt is to strike 23 a good balance between understanding the impacts of 24 the new standards on the products and the markets and CB 

### ~25 on energy use on the full range of products, and being 

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### 1 describes what we meanwhenwe use that term. So the 2 first bullet point is that a baseline model includes 3 

### a capacityconfiguration, efficiency, andfeatures as 4 

### the description of a product. It's usually based on 5 

### the most common sold minimum efficiency product in 6 eachproduct class. 7 So once you've got the product defined, 8 you look and see of those variations which are the 9 most common, and when we say minimum efficiency, 10 that's because the new standards wouldratchet up the 11 efficiency. The baseline then would be the minimum 12 against which all future changes in efficiency are 13 mad·e. 14 

### And thirdbullet point is that it serves 15 as the basis for cost and performance estimates that 16 are intended to represent the typical product, if 17 there is such a thing that can be defined in the 18 

### commercial market. 19 Theanalysisthatwe'lltalkabout forthe 20 rest of the day is complex at times, and adding more 21 andmore variations of products to it increases the 22 complexityexponentially. Sotheattempt isto strike 23 a good balance between understanding the impacts of 24 the new standards on theproducts and themarkets and 25 onenergyuseonthe full rangeofproducts, andbeing

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com86 1 able to get the analysis through in a timely fashion 2 and understood by the people who are trying to 3 interpret it. 4 So if you'll flip to slide six, slide six 5 we took a stab at showing what we would mean by a 6 baseline product, and these aren't determined at this 7 point. We're waiting for your input. 8 So this is a packaged year round system, 9 cooling only. If it's year round, it may have gas 10 heat, but we don't distinguish that here. But for 11 less than 135,000 BTUs, you see the type of things 12 that we have to define. 13 So in this case, we chose seven and a half 14 tons, 8.9 EER, 3 COP, and 8.0 IPLV, which I'll talk 15 about in a second, and single compressor, which my be 16 important if we do some sort of cost analysis or for 17 trying to understand how that equipment reacts to 18 changes in load. 19 And then for the over 135 class, you see 20 there the parameters that we have listed. 21 So once we've defined the classes, which 22 were the previous couple of slides, and understood 23 what baseline product we wouldconsider in each class, 24 then we have to flesh out the details of what that 25 product is for the purposes of the analysis. 

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### 1 able to get the analysis through in a timely fashion 2 and understood by the people who are trying to 3 interpret it. 4 

### So ifyou'll flip to slide six, slide six 5 we took a stab at showing what we would mean by a 6 baselineproduct, andthese aren't determinedat this 7 point. We're waiting for your input. 8 

### So this is a packaged year round system, 9 

### cooling only. If it's year round, it may have gas 10 heat, but we don't distinguish that here. But for 11 les's than 135,000 BTUs, you see the type of things 12 that we have to define. 13 Sointhiscase, we chose sevenanda half 14 tons, 8.9 EER, 3 COP, and 8.0 IPLV, which I'll talk 15 about ina second, and single compressor, whichmy be 16 important if we do some sort of cost analysis or for 1 7 trying to understand how that equipment reacts to 18 

### changes in load. 19 And then for the over 135 class, you see 20 there the parameters that we have listed. 21 So once we've defined the classes, which 22 were the previous couple of slides, and understood 23 whatbaselineproductwe wouldconsiderineachclass, 24 then we have to flesh out the details of what that 25 product is for the purposes of the analysis.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com87 1 Provide us with your input on what you 2 think those things should be, please. So the first 3 bullet point, are these features' levels appropriate? 4 Should other features be added? 5 So that's the question. Tonnage, EER, 6 COP, IPLV, and some design related things; that 7 question asks whether those are appropriate or whether 8 there's other factors we should consider. 9 Latent heat was something we heard. 10 Should we be considering some ratios, sensible heat or 11 latent heat ratio there? 12 MR. RABA: Jim or Jim, who'd like to go 13 first? 14 MR. CRAWFORD: Jim Crawford. 15 I'd just comment. I would encourage ADL 16 to elicit from ARI, and I would encourage them to 17 cooperate on the disclosure on a confidential basis of 18 the sales statistics by capacity. 19 And the reason I say on a confidential 20 basis, we really don't want to do market research for 21 those companies who aren't in this current part of the 22 market. 23 MR. MULLEN: Jim Mullen. 24 It would be our recommendation that the 25 baseline units be a ten ton unit and a 20 ton unit. 

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### 1 Provide us with your input on what you 2 think those things should be, please. So the first 3 bulletpoint, are these features' levels appropriate? 4 Should other features be added? 5 

### So that's the question. Tonnage, EER, 6 COP, IPLV, and some design related things; that 7 questionaskswhetherthoseareappropriateorwhether 8 there's other factors we should consider. 9 

### Latent heat was something we heard. 10 Shouldwe beconsideringsomeratios, sensibleheator 11 latent heat ratio there? 12 MR. RABA: Jim or Jim, who'd like to go 13 first? 14 

### MR. CRAWFORD: Jim Crawford. 15 

### I'djust comment. I would encourage ADL 16 to elicit from ARI, and I would encourage them to 17 cooperateonthedisclosureona confidentialbasisof 18 

### the sales statistics by capacity. 19 

### And the reason I say on a confidential 20 basis, we reallydon't want to do market research for 21 thosecompanieswho aren'tinthiscurrentpartof the 22 market. 23 

### MR. MULLEN: Jim Mullen. 24 

### It would be our recommendation that the 25 baseline units be a ten ton unit and a 20 ton unit.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com88 1 There are a couple of reasons for that. 2 The largest tonnage is always the hardest 3 to upgrade and will drive you to the largest cabinet 4 to accommodate all of the parts that go inside. 5 You'll generally find in the commercial business that 6 seven and a half ton units are built off of the ten 7 ton cabinet, and 15 ton units are built off of the 20 8 ton cabinet. So the largest unit really drives the 9 action. 10 MR. RABA: I saw Michael Martin's hand. 11 MR. MARTIN: Yes. I'm a little confused 12 by this slide here. In one play you say for cooling 13 only systems. Year around to me implies that it's got 14 heating. 15 MR. RABA: A little bit louder, please. 16 MR. MARTIN: Huh? 17 MR. RABA: Speak up for the microphone. 18 MR. MARTIN: I'm sorry. 19 MR. RABA: Thank you. 20 MR. MARTIN: You say, "Packaged," comma, 21 "year round," parentheses, "for cooling only systems," 22 and you show a COP, which makes it look like its a 23 heat pump. What was the intent of this? 24 MR. KENDALL: There is no intent. It's an * 25 error. 

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### 1 There are a couple of reasons for that. 2 The largesttonnage is always thehardest 3 to upgrade and will drive you to the largest cabinet 4 to accommodate all of the parts that go inside. 5 You'll generallyfind inthe commercialbusiness that 6 seven and a half ton units are built off of the ten 7 ton cabinet, and 15 tonunits are built off of the 20 8 

### ton cabinet. So the largest unit really drives the 9 action. 10 

### MR. RABA: I saw Michael Martin's hand. 11 MR. MARTIN: Yes. I'm a little confused 12 by this slide here. In one playyou say for cooling 13 onlysystems. Yeararoundtome implies that it'sgot 14 heating. 15 MR. RABA: A little bit louder, please. 16 

### MR. MARTIN: Huh? 17 

### MR. RABA: Speak up for the microphone. 18 

### MR. MARTIN: I'm sorry. 19 

### MR. RABA: Thank you. 20 MR. MARTIN: You say, II

### Packaged," comma, 21 "yearround,"parentheses, "forcoolingonlysystems," 22 and you show a COP, which makes it look like its a 23 heat pump. What was the intent of this? 24 

### 25 error.

(202)234-4433 

### MR. KENDALL: There isnointent. It'san

NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com89 1 MR. MARTIN: Oh. 2 MR. KENDALL: So the intent is that you 3 ignore what's in the parentheses there, "for cooling 4 only systems," and I apologize for that. 5 MR. MARTIN: So we're looking at a package 6 system with gas heating and electric cooling? 7 MR. KENDALL: The intent of this section 8 here is to illustrate the types of parameters that we 9 wouldhave to define when defining a baseline product. 10 So unfortunately we've included everypossible thing, 11 regardless of what the equipment is. 12 MR. MARTIN: Okay. 13 MR. KENDALL: So, yes, you're right. If 14 it's COP, it's a heat pump. If it's year round, it's 15 probably gas heat. And if it's cooling only, it can't 16 be either of those. 17 MR. MARTIN: So we strike the whole line? 18 MR.KENDALL: Well, don't strike anything, 19 but

-- 20 MR. MARTIN: Okay. 21 MR. MULLEN: -- but apply these to 22 whatever product you're thinking of, and pick the 23 appropriate parameters. 24 Thanks. 25 Okay. Now that everyone is stunned 

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### MR. MARTIN: Oh. 2 

### MR. KENDALL: So the intent is that you 3 ignore what's in the parentheses there, "for cooling 4 

### only systems, II 

### and I apologize for that. 5 

### MR. MARTIN: Sowe'relookingata package 6 

### system with gas heating and electric cooling? 7 

### MR. KENDALL: The intent of this section 8 

### here is to illustrate the types ofparameters that we 9 

### wouldhavetodefinewhendefininga baselineproduct. 10 

### Sounfortunatelywe've includedeverypossible thing, 11 

### regardless of what the equipment is. 12 MR. MARTIN: Okay. 13 

### MR. KENDALL: So, yes, you're right. If 14 it's COP, it's a heat pump. If it'syear round, it's 15 probablygas**heat~** 

### Andif it'scoolingonly, it can't 16 be either of those. 17 

### MR. MARTIN: Sowe strike the whole line? 18 

### MR. KENDALL: Well, don'tstrikeanything, 19 but

-- 20 

### MR. MARTIN: Okay. 21 MR. MULLEN: but apply these to 22 whatever product you're thinking of, and pick the 23 appropriate parameters. 24 Thanks. 25 

### Okay. Now that everyone is stunned

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com90 1 wondering what the next mistake is going to be. 2 MR. SACKS: Harvey Sacks. 3 I'm a bit embarrassed, but does the 4 omission imply that the gas heating efficiency is not 5 of concern in this hearing for combined appliances? 6 MR. KENDALL: Are you talking about the

-- 7 MR. SACKS: The gas-electric combined. 8 MR. KENDALL: -- for gas-heat, the rating? 9 MR. SACKS: We will not be concerned at 10 all with the efficiency of the gas side? 11 This would bother Steve, I know. I'd like 12 to help him those few times I can. 13 MR. KENDALL: I can't speak to that. 14 MR. RABA: To the microphone, please. 15 MR. WINIARSKI: If I understand your -- 16 MR. RABA: State your name. 17 MR. WINIARSKI: Dave Winiarski, Northwest 18 Laboratory. 19 If I understand your question is whether 20 the efficiencies of furnaces are going to be included 21 in this rulemaking. If that's correct, I don't think 22 that's the case. I think we're looking at air 23 conditioning or heat pump sizes. 24 MR. SACKS: I only asked it with respect 25 to packaged units, such as rooftop combined electric NEAL R.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 90 

### 1 wondering what the next mistake is going to be. 2 

### MR. SACKS: Harvey Sacks. 3 

### I'm a bit embarrassed, but does the 4 omission implythat the gas heatingefficiencyis not 5 of concern in this hearing for combined appliances? 6 

### MR. KENDALL: Areyoutalkingaboutthe

-- 7 

### MR. SACKS: The gas-electric combined. 8 

### MR. KENDALL: forgas-heat, therating? 9 

### MR. SACKS: We will not be concerned at 10 all with the efficiency of the gas side? 11 ThiswouldbotherSteve, I know. I'dlike 12 to help him those few times I can. 13 

### MR. KENDALL: I can't speak to that. 14 

### MR. RABA: To the microphone, please. 15 

### MR. WINIARSKI: If I understand your -- 16 

### MR. RABA: State your name. 17 

### MR. WINIARSKI: DaveWiniarski, Northwest 18 Laboratory. 19 If I understand your question is whether 20 the efficienciesof furnaces are goingtobe included 21 in this rulemaking. If that's correct, I don't think 22 

### that's the case. I think we're looking at air 23 conditioning or heat pump sizes. 24 

### MR. SACKS: I only asked it with respect 25 to packaged units, such as rooftop combined electric

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### NEALR.

### GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com91 1 gas units, such as Mr. Crawford has identified as 2 posing some challenges. 3 MR.WINIARSKI: Again, and, Bryan, correct 4 me if I'm stepping over my bounds here, but I believe 5 that the efficiencies of the furnaces in those

-- 6 MR. RABA: Louder, please. 7 MR. WINIARSKI: The efficiencies of the 8 furnaces in those equipments would not be subject to 9 this rulemaking. 10 MR. RABA: That was Harvey Sacks and Dave 11 Winiarski speaking. 12 Michael Martin, and reminding everybody 13 please to speak closer to the microphone for the 14 transcript. 15 Thank you. Go ahead, Michael. 16 MR. MARTIN: Michael Martin. 17 The furnace efficiencies were efficiency 18 levels that DOE accepted in January. So they are 19 already adopted. So they would not be included in 20 here, but there's certainly implications of having a 21 furnace within the cabinet that need to be taken care 22 of. 23 MR. RABA: Don Brundage. 24 MR. BRUNDAGE: Don Brundage, Southern 25 Company. NEAL R.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 91 

### 1 gas units, such as Mr. Crawford has identified as 2 

### posing some challenges. 3 

### MR. WINIARSKI: Again, and, Bryan, correct 4 

### me if I'm steppingovermy bounds here, but I believe 5 

### that the efficiencies of the furnaces in those

-- 6 

### MR. RABA: Louder, please. 7 

### MR. WINIARSKI: The efficiencies of the 8 

### furnaces in those equipments would not be subject to 9 

### this rulemaking. 10 

### MR. RABA: That was HarveySacks andDave 11 

### Winiarski speaking. 12 

### Michael Martin, and reminding everybody 13 

### please to speak closer to the microphone for the 14 

### transcript. 15 

### Thank you. Go ahead, Michael. 16 

### MR. MARTIN: Michael Martin. 17 

### The furnace efficiencies were efficiency 18 

### levels that DOE 

### accepted in January. So they are 19 

### already adopted. So they would not be included in 20 

### here, but there's certainly implications of having a 21 

### furnace withinthe cabinet that need tobe taken care 22 

### of. 23 24 

### 25 Company.

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### MR. RABA: Don Brundage. MR. BRUNDAGE: Don Brundage, Southern

NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com92 1 I think I can pretty much speak for the

Aok. 2 industry on this in that the main thing we're looking 3 at here is that DOE should be to all extent possible 4 looking to the 90.1 committee and not looking at a 5 separate rulemaking. 6 So the question of gas, even without the 7 issue here of whether it had already been approved is 8 a little bit irrelevant. If the mechanism for doing 9 this provides a way to provide better research and 10 information to the 90.1 committee so they can make a 11 better standard, I think what's being done here is 12 very, very productive. 13 So I don't look at this as a gas versus 14 electric issue here. 15 MR. KENDALL: The answer to the question 16 depends on the definition of the product, how ASHRAE 17 defines it, and what DOE adopted in January, and that 18 would be something we would clarify in the next thing 19 we publish. 20 MR. RABA: Continue on, Mark. 21 MR. KENDALL: Yeah. Okay. Continuing 22 down slide six, the last two bullet points are 23 encompassed by the same concept which is if you've got 24 a product class defined, if you've got a baseline unit 25 defined within that class, it could be possible to 

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### 92 1 I think I can pretty much speak for the 2 industryonthis in that the main thingwe're looking 3 at here is that DOE should be to all extent possible 4 

### looking to the 90.1 committee and not looking at a 5 separate rulemaking. 6 So the question of gas, even without the 7 

### issue here of whether ithad alreadybeen approved is 8 

### a little bit irrelevant. If the mechanism for doing 9 this provides a way to provide better research and 10 information to the 90.1 committee so they can make a 11 better standard, I think what's being done here is 12 very, very productive. 13 So I don't look at this as a gas versus 14 electric issue here. 15 

### MR. KENDALL: The answer to the question 16 depends on the definition of the product, how ASHRAE 17 defines it, andwhat DOE adopted inJanuary, and that l8 

### wouldbe somethingwe wouldclarifyin the next thing 19 we publish. 20 

### MR. RABA: Continue on, Mark. 21 MR. KENDALL: Yeah. Okay. Continuing 22 down slide six, the last two bullet points are 23 encompassedbythe sameconceptwhichisifyou'vegot 24 a product classdefined, ifyou'vegot a baselineunit 25 defined within that class, it could be possible to

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com93 1 define more than one baseline unit within that class 2 if it's needed to capture the full range of 3 differences within that class. 4 So the second bullet point gets to that 5 point. The third I've mentioned before. 6 So that takes me to the end of the 7 prepared slides. The two that are attached as back8 up, back-up usually means they don't use them unless 9 the topic comes up. It did come up a little earlier. 10 These are topography maps, if you will, by 11 manufacturer, howmanymodels are available in the ARI 12 catalogue for that manufacturer particular EER level. 13 Just so you can see on both of these that 14 what was mentioned earlier about ARI's difficulty in 15 getting data from a quorum of manufacturers at each 16 efficiency level is illustrated by this slide; that 17 the range of products on the market aren't uniform 18 across this whole range. So if you're trying to 19 define the cost, for example, of a product at 9.9 EER, 20 there might only be two or three manufacturers with 21 that product listed. 22 The second one relates to split systems 23 which are -- 24 MR. CRAWFORD: While you're on that, if I 25 may. Jim Crawford. 

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### 1 define more than one baseline unit within that class 2 if it's needed to capture the full range of 3 

### differences within that class. 4 

### So the second bullet point gets to that 5 

### point. The third I've mentioned before. 6 

### So that takes me to the end of the 7 

### prepared slides. The two that are attached as back8 

### up, back-up usually means they don't use them unless 9 

### the topic comes up. It did come up a little earlier. 10 

### These are topography maps, if you will, by 11 manufacturer, howmanymodelsareavailableintheARI 12 catalogue for thatmanufacturerparticularEER level. 13 Just soyou can see onbothof these that 14 what was mentioned earlier about ARI's difficulty in 15 getting data from a quorum of manufacturers at each 16 efficiency level is illustrated by this slide; that 17 the range of products on the market aren't uniform 18 

### across this whole range. So if you're trying to 19 definethe cost, forexample, ofa product at 9.9EER, 20 there might only be two or three manufacturers with 21 that product listed. 22 The second one relates to split systems 23 which are 24 

### MR. CRAWFORD: While you're on that, if I 25 may. Jim Crawford.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com94 1 Two points. One is that the number of the 2 models does not necessarily correlate very well to 3 what the sales volume are at that capacity, and also 4 it isn't a matter of trying to strive for a quorum. 5 The issue is that if the number of manufacturers 6 producing in a given range, however you define that 7 range, capacity-efficiency combination; if the number 8 of manufacturers producing in that is so low that the 9 data once made public discloses to manufacturers too 10 well where their competitors are, then we are, again, 11 in that antitrust issue. 12 The obvious case, if there are two of them 13 and you get the average, you can figure out exactly 14 what the other guy's costs are, and that is 15 telegraphing price, telegraphing cost, and that is 16 illegal. 17 So the last time around on residential we 18 tried to say if we didn't -- I think we said if we 19 didn't have at least five people in the database, that 20 we wouldn't report that data because it tended to 21 telegraph too much. 22 MR. RABA: A good point you're making, 23 Jim. 24 Marshall you were up. 25 MR. HUNT: Marshall Hunt, City Gas and 

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### Twopoints. One isthatthenumberofthe 2 

### models does not necessarily correlate very well to 3 what the sales volume are at that capacity, and also 4 

### it isn't a matter of trying to strive for a quorum. 5 

### The issue is that if the number of manufacturers 6 

### producing in a given range, however you define that 7 

### range, capacity-efficiencycombination; ifthenumber 8 

### of manufacturersproducing in that is so lowthat the 9 

### data once made public discloses to manufacturers too 10 

### well where theircompetitors are, thenwe are, again, 11 

### in that antitrust issue. 12 

### Theobviouscase, iftherearetwoof them 13 

### and you get the average, you can figure out exactly 14 

### what the other guy's costs are, and that is 15 

### telegraphing price, telegraphing cost, and that is 16 

### illegal. 17 

### So the last time aroundonresidential we 18 

### tried to say if we didn't

-- I 

### think we said if we 19 

### didn'thave at least fivepeopleinthedatabase, that 20 

### we wouldn't report that data because it tended to 21 

### telegraph too much. 22 MR. RABA: 

### A good point you're making, 23 

### Jim. 24 

### Marshall you were up. 25

(202)234-4433 MR. 

### HUNT: Marshall Hunt, City Gas and NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com95 1 Electric Company. 2 I need to step back one step. If we were 3 looking at a ten ton as the 130, 135K unit, maybe, Jim 4 Mullen, you can answer this. Would it still be a 5 single compressor? 6 MR. MULLEN: The answer is I don't know. 7 MR. RABA: Jim Mullen. 8 MR. MULLEN: I'd go back and look at our 9 product. Some of the other folks probably would, too, 10 to answer that. 11 MR. MULLEN: Mike Ray says the answer is 12 no.. 13 MR. RABA: Ted? 14 MR. DOYLE: Yeah, I just wanted to add 15 that I think by November 1st of this year, in 16 anticipation of 90.1 already being adopted by states, 17 such as Oregon, California, that you'll see a big 18 change in the way this lays out. 19 We, for one, are expecting to have our 20 90.1 units coming off the assembly line this month. 21 MR. KENDALL: Okay. Thank you. 22 MR. RABA: Back to Jim Mullen. 23 MR. MULLEN: Jim Mullen. 24 Unless I misunderstand this graph or have 25 overlooked something, the title says that efficiency NEALR. GROSS COURT REPORTERSANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

### 95 1 Electric Company. 2 

### I needto stepbackone step. If we were 3 lookingat a tentonasthe 130, 135K

### unit, maybe, Jim 4 

### Mullen, you can answer this. Would it still be a 5 

### single compressor? 6 

### MR. MULLEN: The answer is I 

### don't know. 7 

### MR. RABA: Jim Mullen. 8 

### MR. MULLEN: I'd go back and look at our 9 product. Someoftheotherfolksprobablywould, too, 10 to answer that. 11 MR. MULLEN: Mike Ray says the answer is 12 no.· 13 MR. RABA: Ted? 14 

### MR. DOYLE: Yeah, I just wanted to add 15 that I think by November 1st of this year, in 16 anticipationof 90.1 alreadybeingadoptedby states, 17 such as Oregon, California, that you'll see a big 18 change in the way this lays out. 19 We, for one, are expecting to have our 20 90.1 units coming off the assembly line this month. 21 MR. KENDALL: Okay. Thank you. 22 

### MR. RABA: Back to Jim Mullen. 23 MR. MULLEN: Jim Mullen. 24 

### Unless I 

### misunderstandthis graphorhave 25 overlooked something, the title says that efficiency

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com96 1 very -- you might get something that looks like this 2 graph, but for a 20 ton unit, you would get something 3 that was considerably on the EER scale. 4 MR. KENDALL: Yes, that's true. We have 5 those plots. We didn't include them, but you're 6 exactly right. 7 MR. RABA: Karim. 8 MR. AMRANE: Karim Amrane, ARI. 9 Also, Mark, you are making reference to 10 the 2000 ARI database, and we update this database 11 every six months or so. So, you know, we have a July 12 2001 and probably will have one in December. 13 MR. KENDALL: Thanks. 14 Okay. That's the end of my presentation. 15 MR. RABA: Any further comments or 16 questions for Mark? 17 MR. PHAM: This is Hung Pham. I have a 18 question. 19 MR. RABA: Yes, go ahead, Hung. 20 MR. PHAM: I think it's regarding that 21 other question also I just heard about what if it is 22 a ten ton. Is it single or two compressors? I think 23 we've seen quite a few at ten two that are two 24 compressors. 25 The other question is related to the 

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### 1 very -- you might get something that looks like this 2 graph, but for a 20 tonunit, youwouldget something 3 that was considerably on the EER scale. 4 

### MR. KENDALL: Yes, that's true. We have 5 

### those plots. We didn't include them, but you're 6 exactly right. 7 

### MR. RABA: Karim. 8 

### MR. AMRANE: Karim Amrane, ARI. 9 

### Also, Mark, you are making reference to 10 the 2000 ARI database, and we update this database 11 every sixmonths or so. So, you know, we have a July 12 2001 and probably will have one in December. 13 

### MR. KENDALL: Thanks. 14 

### Okay. That's the endof mypresentation. 15 

### MR. RABA: Any further comments or 16 questions for Mark? 17 

### MR. PHAM: This is Hung Pham. I have a 18 question. 19 

### MR. RABA: Yes, go ahead, Hung. 20 MR. PHAM: I think it's regarding that 21 other question also I just heard about what if it is 22 a ten ton. Is it single or two compressors? I think 23 we've seen quite a few at ten two that are two 24 compressors. 25

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### The other question is related to the NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005·3701 www.nealrgross.com97 1 single versus dual compressors. Iguess there is this *dB 2 EER and IPLV also listed, but I don't know what DOE's 3 intention is because today in EPAC, as far as I know 4 for less than 20 tons, there is no regulation in IPLV. 5 Are we talking about analyzing both and possibly 6 regulating both? 7 MR. KENDALL: I did say that I was going 8 to come back to that, although I thought it was in 9 this presentation, but even if it's in a later one, 10 you're correct that IPLV isn't included in EPACT or 11 the ASHRAE standards for certain products, and the 12 department doesn't intend now to establish a 13 regulation based on IPLV, but is interested in 14 understanding the impact that that more stringent EER 15 standards have on IPLV. 16 So at this point IPLV is part of the 17 analysis, and results will be produced with IPLV in 18 mind, but based on comments and suggestions, the 19 department can decide, I think, to establish IPLV or 20 not. 21 So the baseline IPLV here, IPLVs are 22 listed in the ARI database. This baseline is pretty 23 much the minimum. There may be one or two models 24 listed that have lower IPLV ratings than that, but * 25 this gets the bulk of them. NEALR. GROSS COURT REPORTERSANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 97 

### 1 singleversusdual compressors. I guessthere isthis 2 EER and IPLV also listed, but I don't knowwhat DOE's 3 intention is because today in EPAC, as far as I know 4 for lessthan20 tons, there isnoregulationinIPLV. 5 Are we talking about analyzing both and possibly 6 regulating both? 7 

### MR. KENDALL: I did say that I was going 8 to come back to that, although I thought it was in 9 this presentation, but even if it's in a later one, 10 you're correct that IPLV isn't included in EPACT or 11 the ASHRAE standards for certain products, and the 12 

### department doesn't intend now to establish a 13 regulation based on IPLV, but is interested in 14 understandingthe impact that that more stringent EER 15 standards have on IPLV. 16 

### So at this point IPLV is part of the 17 analysis, and results will be produced with IPLV in 18 mind, but based on comments and suggestions, the 19 department can decide, I think, to establish IPLV or 20 not. 21 

### So the baseline IPLV here, IPLVs are 22 listed in the ARI database. This baseline is pretty 23 

### much the minimum. There may be one or two models 24 listed that have lower IPLV ratings than that, but 25 this gets the bulk of them.

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### GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com98 1 MR. RABA: Hung, does that address your 2 question, your comment? 3 MR. PHAM: So I guess I -- let me confirm 4 and make sure I heard correctly, that it is only for 5 informational purposes. There's no intent to 6 regulate. 7 MR. KENDALL: That's correct. 8 MR. PHAM: Okay. Thank you. 9 MR. RABA: You're welcome, sir. 10 Michael Martin. 11 MR. MARTIN: I would encourage you to 12 continue this research into IPLVs. They were added 13 into the ASHRAE standard in 1989, and then when EPACT 14 was negotiated, the discussion from the industry was 15 that there wasn't enough meaningful data to include 16 them in there, and we were disappointed not to see 17 them back in the 1999 edition, but having information 18 on which to make a sensible decision is certainly a 19 very worthwhile thing to do. 20 MR. RABA: Thank you. 21 MR. PHAM: This is Hung Pham again. 22 The reason I asked that, because it's very 23 important in terms of some of the decisions, I think, 24 related to whether you might employ one compressor or 25 two compressors there, but I think maybe that's 

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### 98 1 

### MR. RABA: Hung, does that address your 2 question, your comment? 3 

### MR. PHAM: So I guess I

-- let me confirm 4 and make sure I heard correctly, that it is only for 5 

### informational purposes. There's no intent to 6 regulate. 7 

### MR. KENDALL: That's correct. 8 

### MR. PHAM: Okay. Thank you. 9 

### MR. RABA: You're welcome, sir. 10 

### Michael Martin. 11 MR. MARTIN: I would encourage you to 12 

### continue this research into IPLVs. They were added 13 into theASHRAE standard in 1989, andthenwhen EPACT 14 was'negotiated, the discussion from the industry was 15 that there wasri't enough meaningful data to include 16 them in there, and we were disappointed not to see 17 themback inthe 1999 edition, but having information 18 on which to make a sensible decision 1S 

### certainly a 19 very worthwhile thing to do. 20 

### MR. RABA: Thank you. 21 

### MR. PHAM: This is Hung Pham again. 22 ThereasonI askedthat, becauseit'svery 23 important interms of some of the decisions, I think, 24 related towhetheryoumight employone compressoror 25 two compressors there, but I think maybe that's

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005·3701 www.nealrgross.com99 1 something some of our system manufacturers would be

A*MON2 able to comment on better. 3 MR. RABA: Anyone care to response? 4 Did you get that for the record? We'll 5 take a look at that. Thank you very much. 6 Mark, are you done? 7 Okay. The next presenter on screening 8 analysis, Dave Winiarski of Pacific NorthwestNational 9 Laboratory. 10 For those of you who can't see or call11 ins, they're getting set up for the next slides. 12 (Pause in proceedings.) 13 MR. WINIARSKI: Is this on? ^

# )14 My name is David Winiarski. I'm a 15 research engineer for PacificNorthwest Laboratory and 16 was involved early on with some of -- can you hear? 17 MR. RABA: Up on the top. Yeah, way up. 18 MR. WINIARSKI: It's not on. I've got one 19 of many red lights going on here. 20 Again, my name is Dave Winiarski. I'm a 21 research engineer at PacificNorthwest Laboratory, and 22 was involved early on both in the development of the 23 ASHRAE levels that we've been talking about, as well 24 as some follow-up analysis by DOE on evaluating those * 25 levels. 

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### 1 something some of our system manufacturers would be 2 able to comment on better. 3 

### MR. RABA: Anyone care to response? 4 

### Did you get that for the record? We'll 5 

### take a look at that. Thank you very much. 6 

### Mark, are you done? 7 

### Okay. The next presenter on screening 8 

### analysis, DaveWiniarskiofPacificNorthwestNational 9 

### Laboratory. 10 

### For those of you who can't see or call11 

### ins, they're getting set up for the next slides. 12 

### (Pause inproceedings.) 13 

### MR. WINIARSKI: Is this on? 14 

### My name is David Winiarski. I'm a 15 researchengineerforPacificNorthwestLaboratoryand 16 was involved early on with some of -- can you hear? 17 

### MR. RABA: Up on the top. Yeah, way up. 18 

### MR. WINIARSKI: It'snot on. I'vegotone 19 

### of many red lights going on here. 20 

### Again, my name isDaveWiniarski. I'ma 21 

### researchengineeratPacificNorthwestLaboratory, and 22 was involved early on both in the development of the 23 ASHRAE levels that we've been talking about, as well 24 as some follow-up analysisbyDOE onevaluatingthose 25 levels.

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com100 1 What I'm going to talk about here is the 2 screening analysis for different efficiency levels or 3 design options for this type of equipment. 4 The screening analysis is a verypragmatic 5 idea developed by DOE so that they don't spend a lot 6 of time evaluating options that are not likely to end 7 up in final products or final standards for any 8 product. 9 It was developed originally for 10 residential rulings, but DOE is basically adopting the 11 same principles for these commercial products. 12 And let's see. As I said, the screening 13 analysis is used to eliminate from further analysis 14 options or efficiency levels that are not sufficiently 15 developed or which the department does not think will 16 have characteristics suitable for their use in a 17 national standards. 18 In the process improvement rule that we 19 talked about published in '96, they outlined some very 20 specific criteria that would be used for screening. 21 Among these are the technological feasibility of any 22 given design option or standard level; certainly 23 impacts on health or safety. Again, these are 24 negative impacts that they're concerned with for 25 screening. Practicability to manufacture the 

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### 1 What I'm going to talk about here is the 2 

### screeninganalysis for different efficiencylevels or 3 

### design options for this type of equipment. 4 

### Thescreeninganalysisisaverypragmatic 5 idea developed by DOE so that they don't spend a lot 6 

### of time evaluatingoptions that are not likelyto end 7 

### up in final products or final standards for any 8 

### product. 9 

### It was developed originally for 10 residentialrulings, butDOE isbasicallyadoptingthe 11 same principles for these commercial products. 12 

### And let's see. As I said, the screening 13 

### analysis is used to eliminate from further analysis 14 

### optionsorefficiencylevelsthatarenot sufficiently 15 

### developedorwhich the department does not thinkwill 16 

### have characteristics suitable for their use in a 17 

### national standards. 18 

### In the process improvement rule that we 19 

### talkedaboutpublishedin '96, 

### theyoutlinedsomevery 20 

### specific criteria that would be used for screening. 21 

### Among these are the technological feasibility of any 22 

### given design option or standard level; certainly 23 

### impacts on health or safety. Again, these are 24 

### negative impacts· that they're concerned with for 25 

### screening.

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### Practicability to manufacture the NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com101 1 products, install and service the products, and the *0 2 installation and service not only deal with the 3 installation and service of a particular product, but 4 also the development of an infrastructure within the 5 time frame as required by the rule such that you can 6 get products serviced or installed if those products 7 require new, innovative technologies. 8 Lastly, certainlynot least in importance, 9 is the impacts on product utility, how well that 10 product will serve the intended use as a final 11 efficiency level or product availability. The 12 department is certainlynot interested in restricting 13 the availability of products that are currently out 14 there. 15 In the framework document, the department 16 has outlined a couple of specific issues where we're 17 requesting to get input from stakeholders. Some of 18 those have been discussed earlier in Mark's 19 presentation, and you will probably notice the 20 reoccurring themes going on throughout this. 21 Among those are this issue that's brought 22 up in the first bullet here. Should the department 23 consider other factors in its development ofpotential 24 design options or are there specific ideas 25 incorporated in those design options that we really 

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### products, install and service the products, and the 2 

### installation and service not only deal with the 3 installationand serviceof a particularproduct, but 4 

### also the development of an infrastructure within the 5 

### time frame as required by the rule such that you can 6 

### get products serviced or installed if those products 7 

### require new, innovative technologies. 8 

### Lastly, certainlynotleastinimportance, 9 

### is the impacts on product utility, how well that 10 

### product will serve the intended use as a final 11 

### efficiency level or product availability. The 12 

### departmentiscertainlynotinterested inrestricting 13 

### the availability of products that are currently out 14 

### there. 15 

### Inthe frameworkdocument, the department 16 

### has outlined a couple of specific issues where we're 17 

### requesting to get input from stakeholders. Some of 18 

### those have been discussed earlier in Mark's 19 

### presentation, and you will probably notice the 20 

### reoccurring themes going on throughout this. 21 

### Among those are this issue that'sbrought 22 

### up in the first bullet here. Should the department 23 

### considerotherfactors initsdevelopmentofpotential 24 

### design options or are there specific ideas 25 incorporated in those design options that we really

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com102 1 want to flesh out in this discussion and in future 

# Q* 2 rulemaking? 3 An example of that is should increases in 4 EER be limited by the latent heat removal capability 5 of the equipment in order to make products suitable 6 for high humidity areas of the country. I know Trane 7 has issued some comments on that. I know that in the 8 development of theASHRAE standard, we had a number of 9 comments on the latent heat capability of these 10 products, and we continue to solicit more information 11 on that, particularly from manufacturers. 12 Yes? 13 MR. CRAWFORD: Jim Crawford, Trane. 14 I'd like to elaborate just a little bit. 15 It is possible to make bad equipment, and bad 16 equipment would be equipment that does not handle 17 humidity, and it isn't just the humid parts of the 18 country. It is almost any part of the country. I 19 suspect that even up in Oregon State they have 20 humidity problems from what I've heard tell. 21 So when you're talking about an EER as 22 distinguished from an SEER, you very much must 23 consider the latent capacity implications in any 24 standard that you set. 25 MR. WINIARSKI: Thank you. 

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### 102 1 want to flesh out In this discussion and in future 2 rulemaking? 3 An example of that is shouldincreases in 4 EER be limitedby the latent heat removal capability 5 of the equipment in order to make products suitable 6 for highhumidity areas of the country. I knowTrane 7 has issued some comments on that. I know that in the 8 developmentof theASHRAE standard, we hada numberof 9 comments on the latent heat capability of these 10 products, andwe continue to solicitmore information 11 on that, particularly from manufacturers. 12 Yes? 13 

### MR. CRAWFORD: Jim Crawford, Trane. 14 

### I'd like to elaborate just a little bit. 15 It is possible to make bad equipment, and bad 16 equipment would be equipment that does not handle 17 humidity, and it isn't just the humid parts of the 18 

### country. It is almost any part of the country. I 

### 19 suspect that even up In Oregon State they have 20 humidity problems from what I've heard tell. 21 So when you're talking about an EER as 22 distinguished from an SEER, you very much must 23 consider the latent capacity implications In any 24 standard that you set. 25

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### MR. WINIARSKI: Thank you. NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com103 1 MR. RABA: Don Brundage. 2 MR. BRUNDAGE: Don Brundage, Southern 3 Company. 4 I would agree with that, that you need to 5 consider that. You also need to be aware, although 6 ASHRAE has to move very slowly with new committees, 7 ASHRAE is starting a new task group to look at 8 humidity issues and the interaction between the 9 different standards, ventilation and efficiency. So 10 you should be aware of that. 11 It has not really fully started yet, but 12 ASHRAE is making an effort on addressing that issue. 13 MR. RABA: Thank you. 14 MR. WINIARSKI: The second bullet here 15 discusses what assumptions should the department make 16 regarding designs for specific capacities of 17 equipment. As I said, there's some reoccurring 18 themes. One of them here might be the issue of single 19 versus dual compressor equipment, and is that already 20 incorporated into the baseline or is that a future 21 design option that we're going to be looking at? 22 And then, again, the follow-up of that is 23 how should the department address the different 24 capacity control measures. There's obviously 25 different ways of controlling capacity. It doesn't 

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### 103 1 

### MR. RABA: Don Brundage. 2 MR. BRUNDAGE: Don Brundage, Southern 3 

### Company. 4 

### I wouldagree withthat, thatyouneedto 5 

### consider that. You also need to be aware, although 6 

### ASHRAE has to move very slowly with new committees, 7 

### ASHRAE is starting a new task group to look at 8 

### humidity issues and the interaction between the 9 

### different standards, ventilation and efficiency. So 10 you should be aware of that. 11 

### It has not really fully startedyet, but 12 

### ASHRAE is making an effort on addressing that issue. 13 

### MR. RABA: Thank you. 14 

### MR. WINIARSKI: The second bullet here 15 

### discusseswhat assumptions shouldthe departmentmake 16 

### regarding designs for specific capacities of 17 

### equipment. As I said, there's some reoccurring 18 

### themes. One of themheremightbethe issueof single 19 versus dual compressorequipment, and is that already 20 incorporated into the baseline or is that a future 21 

### design option that we're going to be looking at? 22 Andthen, again, the follow-up of that is 23 how should the department address the different 24 25 

### capacity control measures. There's different ways of controlling capacity.

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 

### obviously It doesn't

www.nealrgross.com104 1 have to be single versus dual compressor, and so are *^^ 2 there other measures that we should evaluate? 3 MR. CRAWFORD: Jim Crawford again. 4 Again, the distinction between EER and 5 SEER is vital when you look at this point of 6 modulation. Modulation, whether it's variable speed, 7 multiple compressors or some other form, does 8 essentially nothing for you on EER. It may do 9 something for you on IPLV. 10 MR. WINIARSKI: The next bullet really 11 discusses what's in the framework document. In the 12 framework document, Ibelieve, onpage 16 or 18, there 13 is a list, a preliminary list of different design 

# O-~14 options that could potentially be evaluated for new 15 products or potentially be screened out for new 16 products. 17 For those of you who don't have it, I 18 think I have a copy in the back-up slides that list 19 basically the same list of technology choice 20 considerations, and we would be looking to get 21 whatever input we could get at this meeting or in 22 follow-up comments on whether, one, any of these 23 should not be included or should be screened out of 24 further rulemaking, and, two, are there other 

### ~* 25 technologies that you folks know of that should be 

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### 1 have to be single versus dual compressor, and so are 2 

### there other measures that we should evaluate? 3 

### MR. CRAWFORD: Jim Crawford again. 4 

### Again·, the distinction between EER and 5 

### SEER is vital when you look at this point of 6 

### modulation. Modulation, whether it'svariable speed, 7 

### multiple compressors or some other form, does 8 

### essentially nothing for you on EER. It may do 9 

### something for you on IPLV. 10 

### MR. WINIARSKI: The next bullet really 11 

### discusses what's in the framework document. In the 12 

### frameworkdocument, I believe, onpage 16

### or 18, 

### there 13 

### is a list, a preliminary list of different design 14 

### options that could potentially be evaluated for new 15 

### products or potentially be screened out for new 16 

### products. 17 

### For those of you who don't have it, I 18 

### think I 

### have a copy in the back-up slides that list 19 

### basically the same list of technology choice 20 considerations, and we would be looking to get 21 

### whatever input we could get at this meeting or in 22 follow-up comments on whether, one, any of these 23 should not be included or should be screened out of 24 

### further rulemaking, and, two, are there other 25 technologies that you folks know of that should be

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com105 1 included on this list? 2 And, again, back to the reoccurring theme 3 issue, a number of these products will have 4 considerably or options would have considerably 5 different effect with regard topart load performance 6 versus full load performance. 7 As we discussed, the department is 8 definitely interested in understanding the real world 9 energy impact, which gets into evaluating part load 10 performance in terms of doing its energy analysis, but 11 in setting the rules, the final rule as it sits right 12 now or the final rule, the existing method of rating 13 the equipment that we regulate is basically at full 14 load conditions, and so there's an issue there in 15 terms of evaluating the design options, whether we go 16 through something that incorporates only the full load 17 or design options that impact full load efficiency 18 versus those that impact real world performance. 19 Yes? 20 MR. MULLEN: Jim Mullen. 21 About two thirds of the way down the list 22 there's heat pipes for high latent load. 23 MR. WINIARSKI: Yes. 24 MR. MULLEN: That would probably more 25 properly be heat recovery devices. You can do it with 

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### 105 1 included on this list? 2 

### And, again, backtothe reoccurringtheme 3 

### issue, a number of these products will have 4 

### considerably or options would have considerably 5 

### different effectwithregard topart loadperformance 6 

### versus full loadperformance. 7 

### As we discussed, the department is 8 definitelyinterestedinunderstandingthe realworld 9 energy impact, which gets into evaluating part load 10 performanceintermsofdoingitsenergyanalysis, but 11 in settingthe rules, the final rule as it sits right 12 now or the final rule, the existingmethod of rating 13 the equipment that we regulate is basically at full 14 load conditions, and so there's an issue there in 15 terms of evaluatingthe designoptions, whetherwe go 16 throughsomethingthatincorporatesonlythefull load 17 or design options that impact full load efficiency 18 

### versus those that impact real world performance. 19 

### Yes? 20 

### MR. MULLEN: Jim Mullen. 21 About two thirds of the waydown the list 22 there's heat pipes for high latent load. 23 

### MR. WINIARSKI: Yes. 24 

### MR. MULLEN: That would probably more 25 properlybeheat recoverydevices. You cando itwith NEAL

### R.GROSS (202)234-4433 COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com106 1 means other than heat pipe. 2 MR. WINIARSKI: That's actually right. 3 There's a -- I don't know if it's up here, but 4 certainly enthalapy (phonetic)wheels or heat wheels. 5 MR. MULLEN: Well, you have both sensible 6 and latent. 7 MR. WINIARSKI: Right. 8 MR.MULLEN: Andprobably some other forms 9 of it also. 10 MR. WINIARSKI: Right. 11 MR. MULLEN: The other question is you've 12 got a nice list of things that may be available. Are 13 you going to evaluate those for which refrigerant? 14 MR. WINIARSKI: If there are particular 15 technologies which you feel have markedly different 16 possibility for improving theperformance based on the 17 type of refrigerant, I think that would be important 18 input into this process. 19 MR. MULLEN: Saying it a different way, 20 since there probably isn't acompressor out there that 21 will fit all sizes of this equipment or 407(c) 22 refrigerant, are you going to guess what the 23 compressor is going to be and then guess what the 24 efficiency change will be, or how do you intend to 25 handle all of the unknowns in that? 

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### 106 1 means other than heat pipe. 2 

### MR. WINIARSKI: That's actually right. 3 

### There's a I don't know if it's up here, but 4 certainlyenthalapy (phonetic) wheels orheatwheels. 5 

### MR. MULLEN: Well, youhaveboth sensible 6 and latent. 7 

### MR. WINIARSKI: Right. 8 

### MR. MULLEN: Andprobablysomeotherforms 9 of it also. 10 MR. WINIARSKI: Right. 11 MR. MULLEN: The otherquestion isyou've 12 got a nice list of things that maybe available. Are 13 you going to evaluate those for which refrigerant? 14 

### MR. WINIARSKI: If there are particular 15 technologies which you feel have markedly different 16 possibilityforimprovingtheperformancebasedonthe 17 type of refrigerant, I think that would be important 18 input into this process. 19 

### MR. MULLEN: Saying it a different way, 20 sincethereprobablyisn'ta compressorouttherethat 21 will fit all sizes of this equipment or 407(c) 22 

### refrigerant, are you going to guess what the 23 compressor is going to be and then guess what the 24 efficiency change will be, or how do you intend to 25 handle all of the unknowns in that?

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE, N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com107 1 MR.WINIARSKI: In the screening analysis,

Aw 2 that actually is an issue for later on where we're 3 trying to assess the performance of the equipment. In 4 the screening analysis what we would be concerned with 5 might be the availability orpotential availability of 6 those compressors for 407(c). 7 And I think that's it for the screening, 8 if there's any other questions. Yes. 9 MR. STEPHENS: Charlie Stephens. 10 Last I knew, I think you've got a little 11 star there on stuff that's currently in use. Last I 12 knew there's at least one manufacturer doing micro 13 channel evaporator coils. 14 MR. WINIARSKI: I don't know that they 15 exist for this type, for this class of equipment. I 16 would stand corrected in that. 17 MR. STEPHENS: I think up to 15 ton. 18 MR. WINIARSKI: Okay. Do you know -- if 19 you.could submit that manufacturer's name into the 20 record, that would be good. 21 MR. STEPHENS: Their name tag is gone from 22 the other side of the table at the moment. 23 MR. PHAM: This is Hung Pham. Can I have 24 a comment? OP 25 MR. RABA: Go ahead. 

### NEALR.GROSS COURTREPORTERS ANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com**~----~-----------------~--- ~~------**  107 1 

### MR. WINIARSKI: Inthescreeninganalysis, 2 that actually is an issue for later on where we're 3 tryingtoassesstheperformanceof theequipment. In 4 the screeninganalysiswhatwewouldbeconcernedwith 5 

### mightbetheavailabilityorpotentialavailabilityof 6 

### those compressors for 407(c). 7 

### And I think that's it for the screening, 8 

### if there's any other questions. Yes. 9 

### MR. STEPHENS: Charlie Stephens. 10 

### Last I knew, I think you've got a little 11 

### star there on stuff that's currently in use. Last I 12 knew there's at least one manufacturer doing micro 13 channel evaporator coils. 14 

### MR. WINIARSKI: I don't know that they 15 exist for this type, for this class of equipment. I 

### 16 would stand corrected in that. 17 

### MR. STEPHENS: I think up to 15 ton. 18 

### MR. WINIARSKI: Okay. Do you know

-- if 19 you, could submit that manufacturer's name into the 20 record, that would be good. 21 MR. STEPHENS: Theirnametagisgone from 22 the other side of the table at the moment. 23 

### 24 a comment? 25

(202)234-4433 

### MR. PHAM: This isHung Pham. Can I have

MR. RABA: Go ahead. NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com108 1 MR. WINIARSKI: Yes, Hung.

.90 2 MR. PHAM: Under high efficiency 3 compressors and multiple compressors you listed, for 4 example, EG scrolls of twin single technology. I 5 would like to make a comment that we do have modulated 6 scroll technology available also, and I Don't know if 7 you meant it to be implied in there. I wasn't sure 8 what EG scrolls means. 9 We certainly would like modulated scroll 10 to be part of it. 11 MR. WINIARSKI: Okay. Thank you. 12 MR. PHAM: One second question I have is 13 just formy clarification. I didn't understand what's 14 being referred to as sub-coolers. What particular 15 cycle are we referring to? 16 MR. WINIARSKI: Ah, the sub-coolers here, 17 I think we're talking about cooling after it leaves 18 the condenser. There's different technologies for 19 further cooling the refrigerant before it goes into 20 the evaporation. 21 MR. PHAM: We have a technology. We've 22 been looking at that. That refers to the fact that we 23 can do sub-coolingvia vapor injection into the scroll 24 compressor. 25 I certainly would like to know if that is NEAL R. GROSS COURT REPORTERS ANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 108 1 

### MR. WINIARSKI: Yes, Hung. 2 

### MR. PRAM: Under high efficiency 3 

### compressors and multiple compressors you listed, for 4 

### example, EG 

### scrolls of twin single technology. I 5 

### wouldliketomake a comment thatwe dohavemodulated 6 

### scroll technologyavailable also, and I Don't know if 7 

### you meant it to be implied in there. I wasn't sure 8 

### what EG 

### scrolls means. 9 

### We certainlywould like modulated scroll 10 

### to be part of it. 11 

### MR. WINIARSKI: Okay. Thank you. 12 

### MR. PHAM: One second question I have is 13 

### jus.tformy clarification. I didn'tunderstandwhat's 14 

### being referred to as sub-coolers. What particular 15 

### cycle are we referring to? 16 

### MR. WINIARSKI: Ah, the sub-coolers here, 

### 17 I think we're talking about cooling after it leaves 18 

### the condenser. There I

### s different technologies for 19 

### further cooling the refrigerant before it goes into 20 the evaporation. 21 

### MR. PRAM: We have a technology. We've 22 been lookingat that. That refers to the fact thatwe 23 cando sub-coolingviavaporinjectionintothe scroll 24 compressor. 25 I certainlywould like toknow if that is

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### NEALR.

### GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE, N.W WASHINGTON, D.C. 20005-3701 www.nealrgross.com109 1 part of it or are you talking about sub-coolers by 2 different means? 3 MR. WINIARSKI: We're actually not 4 limited. So if there's a technology, again, that you 5 feel ought to be included on this list, please provide 6 further information on. Sub-cooling is more ageneric 7 class or capability in the equipment more than it is 8 a particular design that we're discussing. 9 MR. PHAM: Okay. This last comment here 10 is there is an item on the right side, third bullet 11 down. I wasn't clear there. It refers to a 12 compressor and condenser and indoor. I'm a little bit 13 confused. Maybe you could clarify. Perhaps it's a 14 mixed piping or something. Is it fans maybe? 15 MR. WINIARSKI: You're talking about the 16 bullet that says "invertor driven variable speed 17 indoor condenser compressors"? 18 MR. PHAM: Yes. 19 MR.WINIARSKI: Yeah, that does sound sort 20 of all inclusive here. I think the point was that 21 we're looking at variable speed compressors typically 22 through some sort of pulse modulation of the 23 electrical input into them. 24 The indoor, I think what they were 25 referring to here was either indoor fan or the outdoor 

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### 109 1 part of it or are you talking about sub-coolers by 2 different means? 3 

### MR. WINIARSKI: We're actually not 4 limited. So if there's a technology, again, that you 5 feel ought tobe includedonthis list, pleaseprovide 6 furtherinformationon. Sub-coolingismorea generic 7 class or capability in the equipment more than it is 8 a particular design that we're discussing. 9 

### MR. PRAM: Okay. This last comment here 10 is there is an item on the right side, third bullet 11 down. I wasn't clear there. It refers to a 12 compressorandcondenserandindoor. I'ma littlebit 13 

### confused. Maybe you could clarify. Perhaps it's a 14 mixed piping or something. Is it fans maybe? 15 MR. WINIARSKI: You're talking about the 16 bullet that says "invertor driven variable speed 17 indoor condenser compressors"? 18 

### MR. PHAM: Yes. 19 

### MR. WINIARSKI: Yeah, thatdoes soundsort 20 

### of all inclusive here. I think the point was that 21 we're lookingatvariable speedcompressors typically 22 through some sort of pulse modulation of the 23 electrical input into them. 24 

### The indoor, I think what they were 25 referringtoherewaseitherindoorfanortheoutdoor

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com110 1 fan or compressors. 2 MR. PHAM: Okay. Thanks. 3 MR. RABA: Further comments for David? 4 MR. HUNT: Marshall Hunt for the Gas and 5 Electric Company. 6 Any time we have variable speed units, we 7 ought to be careful to include some kind of signal 8 conditioning so that we don't get a bad power factor, 9 and that might be a slight cost increase OEM, but we 10 definitely need to watch out for that problem. 11 MR. WINIARSKI: Okay. 12 MR. CRAWFORD: Jim Crawford. 13 Depending upon how stringent the standard 14 is on power factor and form factor, that slight 15 increase could cost more than the compressor does. 16 MR. RABA: Noted. Thank you. 17 Further questions for David or comments? 18 Yes, in the back, please. 19 MR. RAY: Mike Ray with Trane Company. 20 I guess in a screening factor I'd like to 21 find out are you taking into account any of the cost 22 feasibilityof doing this because the market will only 23 bear to a certain point. As we look at the 24 technologies that are available, you have to look at 25 also the costs associatedwith those things and figure 

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### 110 1 fan or compressors. 2 

### MR. PHAM: Okay. Thanks. 3 

### MR. RABA: Further comments for David? 4 

### MR. HUNT: Marshall Hunt for the Gas and 5 Electric Company. 6 Anytimewe havevariable speedunits, we 7 ought to be careful to include some kind of signal 8 conditioning sothat we don't get a badpower factor, 9 andthat might be a slight cost increase OEM, but we 10 definitely need to watch out for that problem. 11 MR. WINIARSKI: Okay. 12 MR. CRAWFORD: Jim Crawford. 13 

### Dependinguponhow stringent the standard 14 is on power factor and form factor, that slight 15 increase could cost more than the compressor does. 16 

### MR. RABA: Noted. Thank you. 17 

### Further questions for David or comments? 18 Yes, in the back, please. 19 

### MR. RAY: Mike Ray with Trane Company. 20 I guess ina screening factor I'dlike to 21 find out are you taking into account any of the cost 22 feasibilityofdoingthisbecausethemarketwillonly 23 

### bear to a certain point. As we look at the 24 technologies that are available, you have to look at 25 alsothecostsassociatedwiththosethingsandfigure

(202)234-4433 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com111 1 out, you know, will this customer buy that million is^ 2 dollar unit that's over there or realistically are we 3 more into the range of where the true market is. 4 MR. WINIARSKI: If I can respond, in the 5 process improvement rule, that again was, I believe, 6 directed towards the residential client standards. 7 Cost was explicitly not included in the screening 8 assessments. The primary reason for that is that 9 there are other steps in the process that would 10 analyze cost impacts, and it wasn't deemed necessary. 11 It is not clear that for this ruling that 12 the screening criteria that are set here are the only 13 ones that might be used for screening 14 MR. MULLEN: Jim Mullen. 15 Continuingdown the list, what does double 16 skin add to the technology improvement? 17 MR. WINIARSKI: The double skin cabinets 18 here, I believe, are looking at reduction of heat 19 gains to the cabinet. 20 MR.MULLEN: Idon't think thedouble skin 21 has much to do with that. 22 MR. WINIARSKI: Versus? I'm sorry. 23 Versus like simple insulating? 24 MR. MULLEN: The insulation.

_ 

### ~25 MR. WINIARSKI: Yeah. 

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### 111 1 OUtl 

### you knowl will this customer buy that million 2 dollarunit that/s over there orrealisticallyarewe 3 more into the range of where the true market is. 4 

### MR..WINIARSKI: If I can respondl in the 5 process improvement rulel 

### that again wasl I believel 6 directed towards the residential client standards. 7 Cost was explicitly not included in the screening 8 

### assessments. The primary reason for that is that 9 there are other steps in the process that would 10 analyze cost impacts I 

### and itwasn/t deemednecessary. 11 It isnot clearthat for thisruling that 12 the screeningcriteria that are set here are the only 13 ones that might be used for screening 14 

### MR. MULLEN: Jim Mullen. 15 Continuingdownthelist I 

### whatdoesdouble 16 skin add to the technology improvement? 17 

### MR. WINIARSKI: The double skin cabinets 18 here I 

### I believe I 

### are looking at reduction of heat 19 gains to the cabinet. 20 

### MR. MULLEN: I don/t 

### thinkthedouble skin 21 has much to do with that. 22 MR. WINIARSKI: Versus? 23 Versus like simple insulating? 24 25

(202)234-4433 

### MR. MULLEN: The insulation. MR. WINIARSKI: Yeah. NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 

### 11m 

### sorry.

www.nealrgross.com112 1 MR. MULLEN: The insulation probably has *l, 2 a lot bigger impact in this. I think the double skin 3 is generally associated with indoor air quality 4 applications. 5 MR. WINIARSKI: Okay. 6 MR. MULLEN: So you're really looking 7 at -- 8 MR. WINIARSKI: That insulated cabinet. 9 MR. MULLEN: -- cabinet insulation. 10 MR. WINIARSKI: Okay. 11 MR. RABA: All right, David. Thank you 12 very much. 13 On the next steps to proceed for the 14 agenda, note that the engineering analysis and a lot 15 of these issues, having commented on it earlier, and 16 might invite some additional lengthy discussion,which 17 we'd like to make the best use of your time. 18 So the question to the audience, the 19 group, those concerned: would you like to press on or 20 take a break for lunch? 21 PARTICIPANTS: Press on. 22 MR. CRAWFORD: Press a little bit? 23 Jim Crawford. 24 I just want to come back to the last sheet 

# Q ~25 of David'spresentation. The question is: should the 

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### 112 1 MR. MULLEN: The insulationprobably has 2 a lot bigger impact in this. I think the double skin 3 is generally associated with indoor air quality 4 

### applications. 5 

### MR. WINIARSKI: Okay. 6 

### MR. MULLEN: So you're really looking 7 

### at -- 8 

### MR. WINIARSKI: That insulated cabinet. 9 

### MR. MULLEN: cabinet insulation. 10 

### MR. WINIARSKI: Okay. 11 MR. RABA: All right, David. Thank you 12 verymuch. 13 

### On the next steps to proceed for the 14 agenda, note that the engineering analysis and a lot 15 of these issues, having commented on it earlier, and 16 mightinvitesomeadditionallengthydiscussion, which 17 we'd like to make the best use of your time. 18 

### So the question to the audience, the 19 group, thoseconcerned: wouldyou liketopressonor 20 take a break for lunch? 21 PARTICIPANTS: Press on. 22 MR. CRAWFORD: Press a little bit? 23 

### Jim Crawford. 24 

### I justwant tocomebacktothe last sheet 25 ofDavid'spresentation. Thequestionis: shouldthe

(202)234-4433 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com113 1 department consider other factors, and the answer is, 2 yes, cost. Imean cost is the ultimate determinant, 3 theultimate determinant of feasibility. Imean, that 4 and the law of physics. 5 Soyou have to consider the cost, and cost 6 does impact several of those or at least two or three 7 of those four parameters, but explicitly cost needs to 8 be considered. 9 MR. RABA: Indeed. Thank you, Jim. 10 Bryan first and the Karim. 11 MR. BERRINGER: Just to respond to that, 12 Bryan Berringer. 13 The reason, again, we looked at it in 14 later analysis, in the life-cycle cost analysis and 15 the major impact analysis. Now, those things are 16 there. We just were trying to look at things that 17 were, you know -- obviously that could not physically 18 be done. You know, in some instances it's health and 19 safety and just technology and practice for the 20 market. 21 So that's why cost was not -- 22 MR. CRAWFORD: Let me safe you a lot of 23 money then. The screening analysis is complete. It 24 can all be done. All those things can be done. So * 25 the screening analysis is now complete. 

### NEALR.GROSS COURTREPORTERS ANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 113 1 

### department considerother factors, andthe answer is, 2 

### yes, cost. I mean cost is the ultimate determinant, 3 theultimatedeterminantof feasibility. I mean, that 4 

### and the law of physics. 5 

### Soyouhavetoconsiderthecost, andcost 6 

### does impact several of those or at least two or three 7 

### ofthosefourparameters, butexplicitlycostneedsto 8 

### be considered. 9 

### MR. RABA: Indeed. Thank you, Jim. 10 

### Bryan first and the Karim. 11 

### MR. BERRINGER: Just to respond to that, 12 

### Bryan Berringer. 13 

### The reason, again, we looked at it in 14 

### later analysis, in the life-cycle cost analysis and 15 

### the major impact analysis. Now, those things are 16 

### there. We just were trying to look at things that 17 

### were, youknow

-- obviouslythat couldnot physically 18 

### be done. You know, in some instances it's health and 19 

### safety and just technology and practice for the 20 

### market. 21 

### So that's why cost was not 22 

### MR. CRAWFORD: Let me safe you a lot of 23 

### money then. The screening analysis is complete. It 24 

### can all be done. All those things can be done. So 25 the screening analysis is now complete. NEAL

### R.GROSS (202)234-4433 COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com114 1 I just saved you several hundred thousand 2 dollars. You know, feasibility means is it cost 3 effective, not just is it possible to do it. I mean, 4 we could have a prize here of the person with the best 5 idea is going to be sent to the moon. Now, we know 6 that we know how to do that as a country, but it's not 7 feasible for us to consider that with your budget. 8 And cost is the determinant. 9 MR. RABA: I have conferred with Mark 10 Kendall. He is willing to press on, as you would 11 like. He's comfortable with that because he brought 12 his lunch with him. 13 (Laughter.) 14 MR. RABA: So he may eat and talk at the 15 same time. 16 MR. AMRANE: Did he bring enough for all 17 of us? 18 MR. KENDALL: There's one chip for each of 19 you, one Frito. 20 MR. RABA: The feeding of the 50. 21 MR. KENDALL: Okay. Speaking of cost, the 22 engineering analysis presentation is devoted to the 23 understanding of what a more stringent standard

-- 24 what the impact of a more stringent standard would be 25 on the cost of the equipment and ultimately to the 

### NEALR.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323RHODE ISLANDAVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com**---------~-------** - 114 1 

### I just savedyou severalhundredthousand 2 dollars. You know, feasibility means is it cost 3 

### effective, not just is itpossible to do it. I 

### mean, 4 

### we couldhave a prizehere of thepersonwiththebest 5 

### idea is going to be sent to the moon. Now, we know 6 

### thatwe knowhow todo that as a country, but it'snot 7 

### feasible for us to consider that withyour budget. 8 

### And cost is the determinant. 9 

### MR. RABA: I 

### have conferred with Mark 10 

### Kendall. He is willing to press on, as you would 11 

### like. He's comfortable with that because he brought 12 

### his lunch with him. 13 

### (Laughter.) 14 

### MR. RABA: So he may eat and talk at the 15 

### same time. 16 

### MR. AMRANE: Did he bring enough for all 17 

### of us? 18 MR. KENDALL: 

### There'sonechipforeachof 19 you, one Frito. 20 

### MR. RABA: The feeding of the 50. 21 

### MR. KENDALL: Okay. Speakingofcost, the 22 engineering analysis presentation is devoted to the 23 understanding of what a more stringent standard 24 what the impact of a more stringent standardwouldbe 25 on the cost of the equipment and ultimately to the

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com115 1 price to the consumer. 2 I will move to slide one and spend a bit 3 of time there discussing this very simple draft, but 4 hopefully it will help down the road. 5 On the left-hand side, there's a line 6 relatingproduction costs toproduct deficiency. Now, 7 in this standard, we haven't decided yet how we'll 8 proceed. There's aprocedure that we've historically 9 called the design option approach, where you would 10 take each one of these, acknowledge these in the 11 screening analysis, and assess the impact that each 12 one of those technologies would have on the cost of 13 producing the equipment and the performance of the *^ 

### ~ 14 equipment. 15 And then there's the efficiency level 16 approach, which is that you look at the efficiency 17 rating of equipment independent of the technologies 18 that are used, that are employed in that equipment, 19 and then there's blends of the two, and we'll be 20 discussing some of those differences throughout the 21 next few slides. 22 On slide one, this graph is -- since the 23 department sets the standard based on the efficiency 24 level, not based on the technologies in the equipment, 25 everything has to be converted to this efficiency 

### NEALR.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 115 

### 1 price to the consumer. 2 I 

### will move to slide one and spend a bit 3 of time there discussing this very simple draft, but 4 hopefully it will help down the road. 5 

### On the left-hand side, there's a line 6 relatingproductioncoststoproductdeficiency. Now, 7 in this standard, we haven't decided yet how we'll 8 proceed. There's a procedure that we've historically 9 called the design option approach, where you would 10 take each one of these, acknowledge these in the 11 screening analysis, and assess the impact that each 12 one of those technologies would have on the cost of 13 producing the equipment and the performance of the 14 equipment. 15 

### And then there's the efficiency level 16 approach, which is that you look at the efficiency 17 rating of equipment independent of the technologies 18 

### that are used, that are employed in that equipment, 19 and then there's blends of the two, and we'll be 20 discussing some of those differences throughout the 21 next few slides. 22 On slide one, this graph is

-- since the 23 department sets the standardbased on the efficiency 24 level, notbasedonthetechnologies intheequipment, 25 everything has to be converted to this efficiency

(202)234-4433 

### NEALR.

### GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE,N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com116 1 level approach at the end. So this graph shows just 2 a hypothetical situation where the cost of the 3 equipment is going up as efficiency goes up. 4 Now, what we're talking about here is if 5 you took a snapshot of today's equipment, you would be 6 able to go out, observe it, and talk to the 7 manufacturers. They'd be able to give you the cost of 8 producing each model that they sell to a pretty high 9 degree of certainty at each efficiency level on this 10 chart. 11 What we're talking about incorporating 12 into this analysis is some understanding of what the 13 cost of that product would be when the standard level 14 is more stringent. That topic came up earlier. 15 So we can infer some of that based on 16 equipment that we observed today. There might be an 17 element of engineering expertise that has to go into 18 decide how that equipment may change in the future 19 under more stringent standards or how some of these 20 technologies that are listed in the screening analysis 21 would be employed in the future under more stringent 22 standards even though they may not be today. 23 So this graph captures all of that in one 24 graph, which is this sort of outward looking, what 25 would the cost be to produce equipment under more 

### NEALR.GROSS COURTREPORTERS ANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 116 

### 1 level approach at the end. So this graph shows just 2 a hypothetical situation where the cost of the 3 equipment is going up as efficiency goes up. 4 

### Now, what we're talking about here is if 5 youtooka snapshotof today's equipment, youwouldbe 6 

### able to go out, observe it, and talk to the 7 manufacturers. They'dbe able togiveyouthe costof 8 producing each model that they sell to a pretty high 9 degree of certainty at each efficiency level on this 10 chart. 11 What we're talking about incorporating 12 into this analysis is some understanding of what the 13 

### cost of that product wouldbe when the standard level 14 is more stringent. That topic came up earlier. 15 

### So we can infer some of that based on 16 

### equipment that we observed today. There might be an 17 element of engineering expertise that has to go into 18 

### decide how that equipment may change in the future 19 under more stringent standards or how some of these 20 technologiesthatarelistedinthe screeninganalysis 21 would be employed in the future under more stringent 22 standards even though they may not be today. 23 Sothis graphcaptures all of that inone 24 graph, which is this sort of outward looking, what 25 would the cost be to produce equipment under more

(202)234-4433 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., NW WASHINGTON, D.C. 20005-3701 www.nealrgross.com117 1 stringent standards, and what would the slope and *& 

### ~ 2 shape of that curve be? 3 The results of that

-- 4 MR. RABA: Go ahead, Harvey. 5 MR. SACKS: Harvey Sacks, ACEEE. 6 Going back to my first comment earlier 7 this morning, I greatly respect this as, in your 8 terms, a snapshot. However, the goal of this is to 9 look at consumer prices were the standard to be 10 changed. For that this must be complemented by a 11 graph which shows efficiency as a function of time. 12 MR. KENDALL: Right. You raised this at 13 the

-- 14 MR. SACKS: I raised this at the

-- 15 MR. KENDALL: -- residential furnace and 16 boiler workshop, which is why I tried to explain this 17 a little bit better this time. 18 MR. SACKS: Well, I'm asking that we

-- 19 (Laughter.) 20 MR. SACKS: No, I'm pleased that we all 21 understand it. I'm just saying that if we present the 22 one without the other, it does affect the way we think 23 about these things. I just want to make sure the 24 record reflects our concern about the historical 25 record and predictive capabilities in terms of 

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### 117 1 stringent standards, and what would the slope and 2 shape of that curve be? 3 The results of that

-- 4 

### MR. RABA: Go ahead, Harvey. 5 

### MR. SACKS: Harvey Sacks, ACEEE. 6 

### Going back to my first comment earlier 7 this morning, I greatly respect this as, in your 8 

### terms, a snapshot. However, the goal of this is to 9 look at consumer prices were the standard to be 10 

### changed. For that this must be complemented by a 11 graph which shows efficiency as a function of time. 12 MR. KENDALL: Right. You raised this at 13 the

-- 14 

### MR. SACKS: I raised this at the

-- 15 

### MR. KENDALL:

-- residential furnace and 16 boilerworkshop, which is why I triedtoexplain this 17 a little bit better this time. 18 

### MR. SACKS: Well, I'm asking that we -- 19 

### (Laughter.) 20 

### MR. SACKS: No, I'm pleased that we all 21 understandit. I'mjust sayingthat ifwe present the 22 onewithout theother, itdoes affect thewaywe think 23 about these things. I just want to make sure the 24 record reflects our concern about the historical 25 record and predictive capabilities in terms of

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com118 1 efficiencyas a function of time and, for that matter, 2 market share. 3 Thank you. 4 MR. KENDALL: Okay. 5 MR. MULLEN: Jim Mullen. 6 I'm glad Harvey said that because it 7 brought to mind a question that we had as we read 8 this. The document talks about consumer. Who do you 9 define as the consumer in the commercial business 10 because of so many different facets to the business 11 and applications andwhatever? Who is this life-cycle 12 cost analysis really being done for? Is it for the 13 person that owns the unit, the person that owns the 14 building, the person that leases the building, the 15 school district? 16 MR. KENDALL: Right. That's a question 17 that we've asked as well, and we haven't resolved. 18 That will come up, I'm sure, maybe in your next 19 presentation and maybe again in life-cycle costs. So 20 at that time we can discuss the merits of making any 21 of those selections, any or all of them. 22 That's an important difference between 23 commercial and the residential, is who owns the 24 equipment, who pays the utility bills. 25 MR. BRUNDAGE: Don Brundage, Southern 

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### 118 1 efficiencyas a functionof timeand, forthatmatter, 2 market share. 3 Thank you. 4 

### MR. KENDALL: Okay. 5 

### MR. MULLEN: JimMullen. 6 

### I'm glad Harvey said that because it 7 brought to mind a question that we had as we read 8 this. The document talks about consumer. Who do you 9 define as the consumer in the commercial business 10 because of so many different facets to the business 11 andapplicationsandwhatever? Who isthis life-cycle 12 cost analysis really being done for? Is it for the 13 person that owns the unit, the person that owns the 14 building, the person that leases the building, the 15 school district? 16 

### MR. KENDALL: Right. That's a question 17 that we've asked as well, and we haven't resolved. 18 That will come up, I'm sure, maybe in your next 19 presentation andmaybe again in life-cycle costs. So 20 at that time we can discuss the merits of making any 21 of those selections, any or all of them. 22 That's an important difference between 23 commercial and the residential, 1S 

### who owns the 24 equipment, who pays the utilitybills. 25

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### MR. BRUNDAGE: Don Brundage, Southern NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com119 1 Company. 2 One of my complaints in the residential 3 rulemaking is not considering consumer issues enough, 4 and I think there are some analogies in the commercial 5 markets. When you have somebody who's putting a five6 year roof on a building, he's not looking at life7 cycle costs, and that needs to be included someplace 8 in the analysis. 9 There are segments that have very short 10 payback orientations and others that have very long 11 payback orientation within the commercial class. 12 MR. KENDALL: Thanks for that insight. 13 The life-cycle cost discussion will be later this *^ 

### ~ 14 afternoon and will be much more complete. 15 MR. CRAWFORD: Jim Crawford. 16 I'm by no means a market expert. I 17 suspect and I'm trying to pick up on the point that 18 Don made here; I suspect that in the light commercial 19 market we're going to find a short or immediate 20 payback kind of mentality as contrasted to someone who 21 builds a 40 story building and goes for chillers and 22 things of this sort; that the people who use light 23 commercial tend to be all too often people who pay the 24 bills are often not the people who buy the equipment. 25 And so there is no life cycle cost 

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### 119 1 Company. 2 One of my complaints in the residential 3 rulemakingisnot consideringconsumer issues enough, 4 

### andI thinkthereare someanalogies inthecommercial 5 

### markets. Whenyouhave somebodywho'sputtinga five6 

### year roof on a building, he's not looking at life7 

### cycle costs, and that needs to be included someplace 8 

### in the analysis. 9 

### There are segments that have very short 10 

### payback orientations and others that have very long 11 payback orientation within the commercial class. 12 MR. KENDALL: Thanks for that insight. 13 The life-cycle cost discussion will be later this 14 afternoon and will be much more complete. 15 

### MR. CRAWFORD: Jim Crawford. 16 

### I'm by no means a market expert. I 

### 17 suspect and I'm trying to pick up on the point that 18 

### Donmade here; I 

### suspect that in the light commercial 19 market we're going to find a short or immediate 20 paybackkindofmentalityascontrastedtosomeonewho 21 builds a 40 storybuilding and goes for chillers and 22 things of this sorti 

### that the people who use light 23 commercial tendtobe all toooftenpeoplewhopaythe 24 bills are oftennot thepeople who buythe equipment. 25

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### And so there is no life cycle cost NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com120 1 relative to a consumer because there are two different 

# o ®2 consumers. 3 MR. KENDALL: Okay. So the curve on the 4 left-hand side of slide one feeds into several of the 5 downstream analyses, consumer life-cycle costs, which 6 again we'll talk about later; manufacturer impact. 7 Well, life-cycle costs, the input is price, not cost. 8 I'mgoing to talk about that difference several slides 9 down from here in this section. 10 Manufacturer impact does consider cost to 11 manufacture when we consider the impact that more 12 stringent standards would have on manufacturers, and 13 employment impact, one of the components of that is 14 direct employment impacts, which are we have to 15 understand the labor content that goes into producing 16 equipment. As the standard changes, the labor content 17 may change, and that could affect employment at 18 manufacturing facilities. 19 Slide two. Slide two talks about some of 20 the characteristics that the department would like to 21 see in whatever cost information that it uses as the 22 basis for the analysis. 23 The four main bullet points are credible, 24 transparent, specific, and timely. You can see the * 25 sub-points there. 

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### 120 1 relativetoa consumerbecausetherearetwodifferent 2 consumers. 3 

### MR. KENDALL: Okay. So the curve on the 4 left-hand side of slide one feeds into several of the 5 downstreamanalyses, consumerlife-cyclecosts, which 6 again we'll talk about later; manufacturer impact. 7 

### Well, life-cycle costs, the input isprice, not cost. 8 I'mgoingtotalkaboutthatdifference several slides 9 down from here in this section. 10 Manufacturerimpactdoes considercost to 11 

### manufacture when we consider the impact that more 12 stringent standards would have on manufacturers, and 13 employment impact, one of the components of that is 14 direct employment impacts, which are we have to 15 understandthe labor contentthat goes intoproducing 16 equipment. Asthe standardchanges, thelaborcontent 17 may change, and that could affect employment at 18 

### manufacturing facilities. 19 

### Slide two. Slide two talks about some of 20 the characteristicsthat the department would like to 21 see in whatever cost information that it uses as the 22 basis for the analysis. 23 The fourmainbulletpoints are credible, 24 

### transparent, specific, and timely. You can see the 25 sub-points there.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com121 1 The idea is this is a public process. D 2 It's for the public's interest. All of these 3 characteristics are important to the department and to 4 the preservation of the integrity of the process. 5 So there are many different schemes, 6 techniques,methodologies that we couldbrainstorm on, 7 discuss and choose from in collecting, developing, 8 estimating cost information. 9 At the bottom, on the bottom line, we 10 would hope that anyone we select for the analysis 11 could be described by these bullets. I think you can 12 read them. Unless you want me to clarify something, 13 I'll just move to slide three. 14 Okay. Slide three. When we're talking 15 about drawing that curve on slide one, that's 16 efficiency versus cost. There's two types of data we 17 need to collect. One is efficiency data. The other 18 is cost data. 19 So slide three lists some of the sources 20 of efficiencydata that we've identified and describes 21 some of the advantages and disadvantages associated 22 with those. 23 Manufacturers and suppliers are clearly a 24 source of data on the performance of the equipment 25 they produce andmay produce in the future. Testing, 

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### 121 1 

### The idea is this is a public process. 2 It's for the public's interest. All of these 3 characteristicsareimportanttothedepartmentandto 4 the preservation of the integrity of the process. 5 

### So there are many different schemes, 6 techniques, methodologiesthatwecouldbrainstormon, 7 discuss and choose from in collecting, developing, 8 estimating cost information. 9 

### At the bottom, on the bottom 1ine, we 10 would hope that anyone we select for the analysis 11 couldbe describedby these bullets. I thinkyou can 12 read them. Unless you want me to clarify something, 13 

### I'll just move to slide three. 14 

### Okay. Slide three. When we're talking 15 

### about drawing that curve on slide one, that's 16 

### efficiencyversus cost. There's two types of datawe 17 

### need to collect. One is efficiency data. The other 18 

### is cost data. 19 So slide three lists some of the sources 20 ofefficiencydatathatwe'veidentifiedanddescribes 21 some of the advantages and disadvantages associated 22 with those. 23 Manufacturers andsuppliersareclearlya 24 source of data on the performance of the equipment 25 theyproduce andmayproduce in the future. Testing,

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005·3701 www.nealrgross.com122 1 rating, again, theARI directory, any ratings that are iP 2 published or not published could be used to identify 3 performance of equipment. 4 Technical literature, engineering. So 5 technical literature falls into the same category. 6 Engineering estimates, this is more along the lines of 7 if a piece of equipment is being produced or would be 8 produced possibly in the future and ratings aren't 9 available, engineers could -- experienced engineers 10 could look at that system and compare it against other 11 equipment and make judgments as to the performance of 12 that system using their engineering expertise. 13 The next line down from there is a bit 14 more refined, which would be simulation modeling. 15 There are simulation models available that are listed 16 a couple of slides from now. This would be in the 17 cases f existing equipment simulation models could 18 represent the performance of that equipment and then 19 changes to the design of that equipment could be 20 modeled to determine the impacts on the efficiency. 21 For equipment that's not yet produced in 22 the market, an engineer could develop a prototypical 23 product using a simulation model. 24 Then the last point is prototyping where V 25 you would actually building a piece of equipment or 

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### 122 1 rating, again, theARI directory, anyratingsthat are 2 published or not published could be used to identify 3 performance of equipment. 4 

### Technical literature, engineering. So 5 technical literature falls into the same category. 6 Engineeringestimates, thisismorealongthe linesof 7 if a piece of equipment is beingproducedorwouldbe 8 produced possibly in the future and ratings aren't 9 available, engineers could

-- experienced engineers 10 

### couldlookat that systemandcompareit againstother 11 equipment andmake judgments as to theperformance of 12 that system using their engineering expertise. 13 

### The next line down from there is a bit 14 more refined, which would be simulation modeling. 15 There are simulationmodels available that are listed 16 

### a bouple of slides from now. This would be in the 17 cases f existing equipment simulation models could 18 

### represent the performance of that equipment and then 19 changes to the design of that equipment could be 20 modeled to determine the impacts on the efficiency. 21 For equipment that's not yet produced in 22 the market, an engineer could develop a prototypical 23 product using a simulation model. 24 Then the last point is prototyping where 25 you would actually building a piece of equipment or NEALR.GROSS (202)234-4433 COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com123 1 take a piece of equipment and swap out components to 2 test the performance of that equipment utilizing 3 different design options. 4 These are all possible sources of 5 efficiency/performance information that we would be 6 evaluating and selecting from in order to conduct the 7 analysis. 8 Slide four then talks about the other side 9 of the coin. Slide three was efficiency data. Slide 10 four is cost data. You see some of the same sources 11 listed here on the left. Manufacturers and suppliers; 12 tear-down analysis would be physical examination of 13 equipment to produce an estimate of direct costs, 14 indirect costs, or you could, as we did in the 15 residential, we obtained data from certain 16 manufacturers that looked like bills of materials that 17 we then, rather than tearing down all of that piece of 18 equipment, we started with the bills of materials and 19 costed those up. 20 List prices, published prices, or 21 nonpublished prices for products on today's market, 22 that then we would have to decide how we would alter 23 those prices, if at all, to represent products based 24 on their future standards, and public data, which 25 typically areprettyhighly aggregated,but since this 

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### 123 1 

### take a piece of equipment and swap out components to 2 test the performance of that equipment utilizing 3 different design options. 4 

### These are all possible sources of 5 

### efficiency/performance information that we would be 6 

### evaluating and selecting from inorderto conduct the 7 

### analysis. 8 

### Slidefourthentalksabouttheotherside 9 

### of the coin. Slide three was efficiencydata. Slide 10 

### four is cost data. You see some of the same sources 11 

### listedhereonthe left. Manufacturersandsuppliers; 12 

### tear-down analysis would be physical examination of 13 equipment to produce an estimate of direct costs, 14 

### indirect costs, or you could, as we did in the 15 

### residential, we obtained data from certain 16 

### manufacturersthat lookedlikebillsofmaterialsthat 17 

### we then, ratherthantearingdown all of thatpieceof 18 

### equipment, we startedwiththe billsof materials and 19 

### costed those up. 20 

### List prices, published prices, or 21 nonpublished prices for products on today's market, 22 that then we would have to decide how we would alter 23 those prices, if at all, to represent products based 24 on their future standards, and public data, which 25 typicallyareprettyhighlyaggregated, but sincethis

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com124 1 departmentpublishes information onvalue and quantity 2 shipped, that you could infer somepricing information 3 from. 4 MR. RABA: Bill Prindle. 5 MR. PRINDLE: Question and perhaps a 6 comment. There's check marks placed by some of these 7 methods which seem to be somewhat determinative that 8 these sources allow you to predict future costs, and 9 I think that the term had to be future -- well, 10 okay -- future costs, and the other two methods don't 11 allow you to predict future costs. 12 I just don't see the black and white 13 distinction between the two. For example, well, you 14 know, I mean, if you want market data as far as 15 consumer products are concerned, you need to go to 16 market sources. 17 So I'm just wonderingwhat's the rationale 18 between the check marks, and is that somehow 19 determinative as far as which sources you will or 20 won't use in the analysis. 21 MR. KENDALL: That's not determinative of 22 which sources we will and won't use, and that's a good 23 question because it allows me to explain how all of 24 these things would fit together. 25 I think the keyword in the footnote next 

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### 124 1 departmentpublishesinformationonvalueandquantity 2 shipped, thatyoucouldinfersomepricinginformation 3 from. 4 

### MR. RABA: Bill Prindle. 5 

### MR. PRINDLE: Question and perhaps a 6 comment. There's checkmarksplacedby some of these 7 methods which seem to be somewhat determinative that 8 these sources allow you to predict future costs, and 9 

### I think that the term had to be future well, 10 okay

-- future costs, andthe othertwomethods don't 11 allow you to predict future costs. 12 

### I just don't see the black and white 13 

### distinction between the two. For example, well, you 14 know, I mean, if you want market data as far as 15 consumer products are concerned, you need to go to 16 market sources. 17 SoI'mjustwonderingwhat'stherationale 18 

### between the check marks, and is that somehow 19 determinative as far as which sources you will or 20 won't use in the analysis. 21 

### MR. KENDALL: That'snot determinativeof 22 whichsourceswe will andwon'tuse, andthat'sa good 23 question because it allows me to explain how all of 24 these things would fit together. 25 I think the keyword In the footnote next

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com125 1 to the check marks is direct insights. So rather than 2 having to -- for example, the first one that's not 3 checked here is list prices. So we could get a very 4 clear brochure that describes prices for different 5 models in the manufacturer's line. 6 That directly doesn't allow us to say how 7 those prices would change under more stringent 8 standards, though we would then have to apply some 9 theory to that or we would use that information with 10 another way of developing cost or price information to 11 sort of triangulate list prices may serve as an upper 12 bound for what we would expect to see in the future 13 under more stringent standards. 14 So all of this information can be used, 15 and must of it probably will be used. It will just 16 have to be used in different ways depending on what 17 it's best suited for. 18 MR. RABA: Jim Crawford. 19 MR. CRAWFORD: A couple of points. One, 20 on the identification of list prices, there may be 21 price lists. There may even be something that has a 22 heading that says list prices, but there are no such 23 things. They simply do not exist, and they do not 24 exist for very good reasons. 25 So these are not things that you go into 

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### 125 1 tothecheckmarks isdirect insights. Soratherthan 2 

### having to -- for example, the first one that's not 3 

### checked here is list prices. So we could get a very 4 

### clear brochure that describes prices for different 5 

### models in the manufacturer's line. 6 

### That directlydoesn't allowus to sayhow 7 

### those prices would change under more stringent 8 

### standards, though we would then have to apply some 9 

### theory to that or we would use that information with 10 

### anotherwayofdevelopingcostorpriceinformationto 11 sort of triangulate listpricesmay serve as anupper 12 bound for what we would expect to see in the future 13 

### under more stringent standards. 14 

### So all of this information can be used, 15 and must of it probably will be used. It will just 16 

### have to be used in different ways depending on what 17 

### it's best suited for. l8 MR. RABA: 

### Jim Crawford. 19 MR. 

### CRAWFORD: Acouple of points. One, 20 on the identification of list prices, there may be 21 price lists. There may even be something that has a 22 heading that says list prices, but there are no such 23 

### things. They simply do not exist, and they do not 24 exist for very gobd reasons. 25 So these are not things that you go into

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com126 1 Sears Roebuck to buy, you know. There is no such 2 thing as a list price or a sticker price on the 3 window. 4 Flipping back to the preceding page for a 5 moment, if industry felt that there was a pool of 6 expertise in air conditioning modeling, in air 7 conditioning design and prototyping within one of the 8 laboratories, we'd hire them. We know what it takes 9 to develop that expertise, and we have yet after a 10 decade of doing business with the laboratories to see 11 the level of expertise that leads to precision in 12 costing. 13 MR. STEPHENS: Charlie Stephens, Oregon 14 Energy Office. 15 On the other hand, maybe that's a good 16 rationale for using real data, and we probably can 17 extract about 22 years' worth of data on some of this 18 out of our database for real installed invoice prices 19 on this stuff, and to the extent we can, we will. 20 MR. MULLEN: One question. Jim Mullen. 21 First a comment. 22 You have to be very careful, I think, 23 specifically with commercial equipment because of the 24 many different facets of the market to make sure that 25 you understand each one of those, and whatever answer 

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### 126 1 

### Sears Roebuck to buy, you know. There is no such 2 thing as a list price or a sticker price on the 3 window. 4 Flippingbacktotheprecedingpage for a 5 moment, if industry felt that there was a pool of 6 

### expertise In air conditioning modeling, in air 7 conditioningdesign andprototypingwithinone of the 8 laboratories, we'd hire them. We know what it takes 9 to develop that expertise, and we have yet after a 10 decade of doingbusinesswith the laboratories to see 11 the level of expertise that leads to precision in 12 costing. 13 

### MR. STEPHENS: Charlie Stephens, Oregon 14 Energy Office. 15 On the other hand, maybe that's a good 16 rationale for using real data, and we probably can 17 extract about 22 years' worthof data on some of this l8 

### out of ourdatabase for real installedinvoiceprices 19 on this stuff, and to the extent we can, we will. 20 

### MR. MULLEN: One question. Jim Mullen. 21 First a comment. 22 You have to be very careful, I 

### think, 23 specificallywithcommercial equipmentbecauseof the 24 many different facets of themarket tomake sure that 25 youunderstandeachone of those, andwhatever answer

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com127 1 you arrive at is representative and each segment of 2 the market can live with it. 3 And then the secondquestion, this is just 4 a question because of my lack of knowledge. What is 5 the basis of the data, the census data? And does it 6 cover commercial size equipment? How is that data 7 derived? 8 MR. KENDALL: I think I can talk about how 9 that's derived. Typically they'll survey the 10 companies engaged in theproductionof that equipment. 11 The companies will then provide the Department of 12 Labor -- I guess that's who collects census 13 information -- with quantities shipped within a given 

# Q*'14 class and value shipped at the end of their factory 15 dock. 16 That's typicallyhow it's done. Ihaven't 17 looked specifically. Idon't know if anybody at NL or 18 LBNL has looked specifically at these products, but 19 those two quantity values are published in the census 20 data. 21 MR. DOYLE: I have one question. Ted 22 Doyle. 23 On your simulation modeling, are you 24 taking into consideration the whole system or just the 25 equipment itself? 

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### 127 1 you arrive at is representative and each segment of 2 

### the market can live with it. 3 

### Andthenthe secondquestion, thisisjust 4 

### a question becauie of my lack of knowledge. What is 5 

### the basis of the data, the census data? And does it 6 

### cover commercial size equipment? How is that data 7 

### derived? 8 

### MR. 

### KENDALL: I 

### think I 

### cantalkabouthow 9 

### that's derived. Typically they'll survey the 10 

### companiesengagedintheproductionofthatequipment. 11 The companies will then provide the Department of 12 Labor I 

### guess that's who collects census 13 

### information withquantities shippedwithina given 14 

### class and value shipped at the end of their factory 15 

### dock. 16 

### That'stypicallyhowit'sdone. I 

### haven't 17 lookedspecifically. I 

### don'tknowifanybodyatNL or 18 

### LBNL has looked specifically at these products, but 19 

### those two quantityvalues are publishedin the census 20 data. 21 MR. 

### DOYLE: I 

### have one question. Ted 22 Doyle. 23 

### On your simulation modeling, are you 24 takingintoconsiderationthewhole systemorjustthe 25 equipment itself?

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com128 1 MR. KENDALL: Well, both actually. In the 2 next presentation, it will be about the whole system. 3 Two or three slides down I will talk about just the 4 equipment itself a little bit. 5 MR. SACKS: Harvey Sacks. 6 With respect to census, I'm not quite sure 7 where the lines are, but I have at times found the 8 difference between the industrial product census data 9 and the PPI components of the cost of living, which 10 are fare more disaggregated, to be quite useful. I 11 have not checked what those data look like for these 12 product categories. 13 MR. KENDALL: Right. PPI, I doubt if 14 there will be a PPI for commercially sized, light 15 commercial air conditioners, but if there is, PPI has 16 indexed price trends, historical price trends. 17 MR. SACKS: Continuing that, it's not only 18 a question of whether it does for light commercial air 19 conditioners, but whether it has trend data for 20 analogous compression based product, which may be 21 indicative. They will not be as precise as we would 22 all like and which Jim Crawford has warned us about, 23 but the trends may be indicative. 24 MR. RABA: That was Harvey Sacks. 25 MR. KENDALL: All right. I'm moving now 

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### 128 1 

### MR. KENDALL: Well, bothactually. Inthe 2 next presentation, itwillbe about the whole system. 3 Two or three slides down I will talk about just the 4 equipment itself a little bit. 5 

### MR. SACKS: Harvey Sacks. 6 

### withrespecttocensus, I'mnotquitesure 7 where the lines are, but I have at times found the 8 differencebetweenthe industrialproduct census data 9 and the PPI components of the cost of living, which 10 

### are fare more disaggregated, to be quite useful. I 

### 11 have not checked what those data look like for these 12 product categories. 13 

### MR. KENDALL: Right. PPI, I doubt if 14 there will be a PPI for commercially sized, light 15 commercial airconditioners, but if there is, PPI has 16 indexedprice trends, historical price trends. 17 

### MR. SACKS: Continuingthat, it'snotonly 18 a questionofwhetheritdoes for lightcommercialair 19 conditioners, but whether it has trend data for 20 analogous compression based product, which may be 21 indicative. They will not be as precise as we would 22 all like and which Jim Crawford has warned us about, 23 but the trends may be indicative. 24 

### MR. RABA: That was Harvey Sacks. 25

(202)234-4433 

### MR. KENDALL: All right. NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 

### I'm moving now

www.nealrgross.com129 1 to slide five. So based on the previous few slides, 2 we thought we'd put together a strawman approach. 3 Some of the things we heard this morning, especially 4 early this morning, talked about what level of 5 analysis that the department would need to conduct in 6 order to then make a decision of whether to adopt the 7 ASHRAE levels or continue on. 8 That type of thing would be something we 9 would be conscious of as proceeding along this path 10 because if you look at this path, you can envision a 11 great deal of work, especially if many, many, many 12 product classes are'created. 13 .So the first bullet point I thinkwe would 14 all agree would be done regardless of what we chose to 15 do downstream,which is gather the information that we 16 have available to us now and see what it says. 17 The secondbulletpoint wouldbe something 18 we would hope could occur, and that's to work with the 19 manufacturers in some way to provide another estimate 20 of the cost of the equipment that falls under this 21 standard. 22 The third bullet point talks about based 23 on that graph I showed earlier with the holes at 24 different efficiency levels and different 25 manufacturers, in order to get a good understanding of 

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### 129 1 to slide five. So based on the previous few slides, 2 we thought we'd put together a strawman approach. 3 Some of the things we heard this morning, especially 4 early this morning, talked about what level of 5 analysis that the department wouldneedto conduct in 6 order to thenmake a decision of whether to adopt the 7 ASHRAE levels or continue on. 8 That type of thing would be something we 9 would be conscious of as proceeding along this path 10 because if you look at this path, you can envision a 11 great deal of work, especially if many, many, many 12 product classes are created. 13 SothefirstbulletpointI thinkwe would 14 all agreewouldbedoneregardlessofwhatwe chose to 15 dodownstream, whichisgathertheinformationthatwe 16 have available to us now and see what it says. 17 Thesecondbulletpointwouldbesomething 18 we wouldhope couldoccur, andthat's toworkwiththe 19 manufacturers insome waytoprovide anotherestimate 20 of the cost of the equipment that falls under this 21 standard. 22 The thirdbullet point talks about based 23 on that graph I showed earlier with the holes at 24 

### different efficiency levels and different 25 manufacturers, inordertogeta goodunderstandingof

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., NW WASHINGTON, D.C. 20005-3701 www.nealrgross.com130 1 the continuous range of products on the market we feel Is 2 like we may have to employ some sort of computer 3 simulation to simulate the performance and attach 4 costs to those equipment to fill in some of the gaps. 5 The fourth bullet point is reviews by 6 stakeholders. It's always an important part, 7 especially since the process rule has been issued that 8 the public be encouraged to evaluate the analysis and 9 provide comments. 10 And the fifth bullet point is reconcile 11 results and characterize uncertainty. The more 12 sources of information you use the more difficult it 13 is to make sure that they all relate to each other 14 properly and that you can explain any sources of 15 disagreement. 16 And in this particular product in this 17 market, we would pay particular attention to the size 18 and locations of uncertainties in the analysis. 19 So those five that we've laid out are 20 still verymuch up for discussion, andwe'd appreciate 21 your insights into each of those and all of them 22 together. 23 MR. MULLEN: Jim Mullen. 24 Mark, the thing that I don't see on your I 25 list is that ARI is part of this equation, and I think 

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### 130 1 thecontinuousrangeofproductsonthemarketwe feel 2 like we may have to employ some sort of computer 3 simulation to simulate the performance and attach 4 costs to those equipment to fill in some of the gaps. 5 

### The fourth bullet point is reviews by 6 

### stakeholders. It's always an important part, 7 especiallysincetheprocessrulehasbeenissuedthat 8 the publicbe encouragedto evaluate the analysis and 9 provide comments. 10 And the fifth bullet point is reconcile 11 results and characterize uncertainty. The more 12 sources of information you use the more difficult it 13 is to make sure that they all relate to each other 14 properly and that you can explain any sources of 15 disagreement. 16 

### And in this particular product in this 17 market, we wouldpayparticular attention to the size 18 and locations of uncertainties in the analysis. 19 

### So those five that we've laid out are 20 stillverymuchup fordiscussion, andwe'dappreciate 21 your insights into each of those and all of them 22 together. 23 

### MR. MULLEN: Jim Mullen. 24 Mark, the thing that I don't see on your 25 list isthatARI ispartof thisequation, andI think

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com131 1 you'll find most of the manufacturers will choose to *1 2 ask ARI to be involved in working with you on the 3 cost. 4 MR. KENDALL: Okay. That's not to slight 5 ARI. Manufacturers there includes the trade 6 organization and associates. 7 MR. BERRINGER: Bryan Berringer, DOE. 8 Well, at thisparticularpoint fromARI or 9 the manufacturers are the site, is there apreference 10 as far as the design option as opposed to the 11 efficiency option? Has it been thought about? 12 I guess that's one of the things, one of 13 the first steps to decide. I mean, the two methods 14 are different. 15 MR. RABA: Speak up, please. We can't 16 hear. 17 MR. BERRINGER: I'll repeat it. Bryan 18 Berringer. Can you hear now? Bryan Berringer, DOE. 19 I guess my question would be if there's a 20 preference from the stakeholders onwhether the design 21 option approach or the efficiency option approach 22 should be taken. It's a major step as far as moving 23 forward also. 24 MR. ECKMAN: Tom Eckman. 25 I personally don't have a preference at 

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### 131 1 

### you'll find most of the manufacturers will choose to 2 

### ask ARI to be involved in working with you on the 3 

### cost. 4 

### MR. KENDALL: Okay. That's not to slight 5 

### ARI. Manufacturers there includes the trade 6 

### organization and associates. 7 

### MR. BERRINGER: Bryan Berringer, DOE. 8 

### Well, atthisparticularpointfromARI or 9 

### the manufacturers are the site, is there a preference 10 

### as far as the design option as opposed to the 11 efficiency option? Has it been thought about? 12 

### I guess that's one of the things, one of 13 

### the' first steps to decide. I mean, the two methods 14 

### are different. 15 

### MR. RABA: Speak up, please. We can't 16 hear. 17 

### MR. BERRINGER: I'll repeat it. Bryan 18 

### Berringer. Can you hear now? Bryan Berringer, DOE. 19 I guess my questionwouldbe if there's a 20 preferencefromthestakeholdersonwhetherthedesign 21 

### 22 23 24 25 

### option approach or the efficiency option approach shouldbe taken. It's a major step as forward also.

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### MR. ECKMAN: Tom Eckman. I personally don't have a NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., NW. WASHINGTON, D.C. 20005-3701 

### far as moving

preference at

www.nealrgross.com132 1 this stage because I think it's too early to decide 2 which approach is more appropriate. I think the 3 criteria that I would judge either approach by is 4 whether it's transparent. 5 That is, regardless of whether we do a 6 design option approach or an energy efficiency 7 performance based approach, we have some idea what's 8 behind the numbers. 9 The difficulty we've had in prior 10 rulemaking is understanding and being able to judge 11 independently submissions either by manufacturers or 12 advocates of what's behind the numbers, and so 13 transparencyof the numbers is farmore important than 14 the specific approach selected. 15 MR. MULLEN: Jim Mullen. 16 Just, you know, a couple of thoughts on 17 that issue. Jim Crawford made the point fairly well 18 that the marketplace seeks the most efficient way to 19 get to an efficiency level through its own means and 20 studying the products that are there today at 21 different efficiency levels gives you a pretty good 22 idea of what's cost effective. 23 The hardest part of your task is to decide 24 in 2008 or whenever this would be done what's the cost *V 

### ~ 25 effectiveness of any of those items on the technology 

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### 132 1 this stage because I think it's too early to decide 2 which approach is more appropriate. I 

### think the 3 

### criteria that I 

### would judge either approach by is 4 

### whether it's transparent. 5 

### That is, regardless of whether we do a 6 

### design option approach or an energy efficiency 7 

### performance based approach, we have some idea what's 8 

### behind the numbers. 9 

### The difficulty we've had in prior 10 rulemaking is understanding and being able to judge 11 independently submissions either by manufacturers or 12 advocates of what's behind the numbers, and so 13 transparencyofthenumbers isfarmoreimportantthan 14 the specific approach selected. 15 

### MR. MULLEN: JimMullen. 16 

### Just, you know, a couple of thoughts on 17 

### that issue. Jim Crawford made the point fairly well 18 that the marketplace seeks the most efficient way to 19 get to an efficiency level through its own means and 20 studying the products that are there today at 21 different efficiency levels gives you a pretty good 22 idea of what's cost effective. 23 Thehardestpartofyourtaskistodecide 24 in2008 orwheneverthiswouldbedonewhat's the cost 25 effectiveness of anyof those items onthe technology

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com133 1 list as opposed to the level that they're at today, 2 and it means you have to have a crystal ball that is 3 magnificent. 4 We'd love to benefit from that, but I 5 think it's sort of an unenviable task, and I think I 6 would say it's very, very difficult to bring any of 7 those items to a considerably higher level of product 8 efficiency cost effectively with what's known today. 9 MR. CRAWFORD: Jim Crawford. 10 I hate to disagree with Jim Mullen. It 11 just

-- 12 MR. MULLEN: It never stopped you before. 13 (Laughter.) 14 MR. CRAWFORD: first, if we were to look 15 at the list of technologies, 15, 20 items, whatever 16 there are, there's nothing on there I don't think that 17 has not been in large scale prototype work and/or in 18 the market for at least 20 years, and the only thing 19 that would even be that short a time period would be 20 the invertor. Everything else has been around for, 21 oh, you know, 50, 75 years. 22 There have not been any radical changes in 23 the basic underlying technology inventory except 24 electronics for the last 75 years, and there's not 25 likely to be in the next three or four years. 

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### 133 1 list as opposed to the level that they're at today, 2 and it means you have to have a crystal ball that is 3 magnificent. 4 

### We'd love to benefit from that, but I 

### 5 think it's sort of an unenviable task, and I think I 6 

### would say it's very, very difficult to bring any of 7 

### those items to a considerablyhigher level ofproduct 8 

### efficiency cost effectively with what's known today. 9 

### MR. CRAWFORD: Jim Crawford. 10 I 

### hate to disagree with Jim Mullen. It 11 just

-- 12 

### MR. MULLEN: It never stoppedyoubefore. 13 (Laughter.) 14 

### MR. CRAWFORD: first, if we were to look 15 at the list of technologies, 15, 20 items, whatever 16 there are, there'snothingonthere I don't thinkthat 17 has not been in large scale prototype work and/or in 18 the market for at least 20 years, and the only thing 19 that would even be that short a time period would be 20 the invertor. Everything else has been around for, 21 oh, you know, 50, 75 years. 22 Therehavenotbeenanyradicalchangesin 23 the basic underlying technology inventory except 24 electronics for the last 75 years, and there's not 25 likely to be in the next three or four years.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com134 1 So we know pretty well what inventory of 2 technology is available to us. All of it is mature, 3 even the electronics, although it might not be mature 4 in terms of penetration. It is mature in terms of 5 pricing, and that's because in order to get it into 6 the market they had to drive it down to a mature level 7 and sell it at whatever mark-up they could get if they 8 wanted to see it ever grow. 9 So there are not going to be any major 10 imbalances. 11 Now, if we got some squirrely thing that 12 said, you know, the price of copper relative to steel 13 would change -- the relative price would change by a 14 factor of ten, yeah, that would change some things, 15 but to forecast what it's going to cost to do the 16 kinds of things that you're likely to be able to do, 17 you're going to be able to do that reasonably well, 18 and you did it reasonably well last time. 19 The problem is once you got close enough 20 to confirm our numbers, you said, "Well, yours are 21 right and ours are wrong," you know, and we're going 22 to have that all over again. We're headed down the 23 same road, and that's exactly where we're going to 24 wind up. I'll guarantee it. 25 The most valid numbers are the ones that 

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### 134 1 

### So we know prettywell what inventory of 2 

### technology is available to us. All of it is mature, 3 even the electronics, althoughitmight not bemature 4 

### in terms of penetration. It is mature in terms of 5 

### pricing, and that's because in order to get it into 6 themarket theyhadtodrive itdowntoa mature level 7 

### and sell itatwhatevermark-uptheycouldget ifthey 8 wanted to see it ever grow. 9 So there are not going to be any major 10 

### imbalances. 11 Now, if we got some squirrely thing that 12 said, youknow, the price of copper relative to steel 13 would change

-- the relative price would change by a 14 factor of ten, yeah, that would change some things, 15 but to forecast what it's going to cost to do the 16 kinds of things that you're likely to be able to do, 17 you're going to be able to do that reasonably well, 18 

### and you did it reasonably well last time. 19 The problem is once you got close enough 20 to confirm our numbers, you said, "Well, yours are 21 right and ours are wrong," you know, and we're going 22 to have that allover again. We're headed down the 23 same road, and that's exactly where we're going to 24 

### wind up. 25

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### I'll guarantee it. The most valid numbers are the ones that NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE,N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com135 1 Charlie talked about before. If you can get good, 2 solid numbers for what things have been selling for in 3 the market, that really tells you something. 4 Andwhat I said before about differentials 5 for different efficiency levels needs to be kept in 6 mind when you do that. You know, in our view, the 7 last time around, which may be still -- well, we're 8 still not through with that obviously or we wouldn't 9 be here tomorrow, but the basic prices, there were 10 significant discrepancies, not huge, but significant. 11 Mark-ups were significant, and significant means big 12 enough to sway the outcome of the analysis, and unless 13 we find a better way, we're headed down the same path. *' 

### ~ 14 Relative to where cost information might 15 come from, any manufacturer who gives you any cost 16 information ought to have his hands slapped. It's 17 just a foolish thing for them to do, for them to 18 disclose to you their disaggregated data. Any data 19 that this company supplies will come through 20 aggregated data, through ARI with a large enough base 21 of suppliers so that it does not disclose what is 22 absolutely the most sensitive information in any 23 company in this manufacturing industry. 24 MR. RABA: Good point, Jim. Thank you. 25 First Jim Mullen and then back to Harvey 

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### Charlie talked about before. If you can get good, 2 solidnumbers forwhatthingshavebeensellingforin 3 the market, that really tells you something. 4 

### AndwhatI saidbeforeaboutdifferentials 5 

### for different efficiency levels needs to be kept in 6 

### mind when you do that. You know, in our view, the 7 

### last time around, which may be still well, we're 8 

### still not through with that obviously or we wouldn't 9 

### be here tomorrow, but the basic prices, there were 10 

### significantdiscrepancies, nothuge, but significant. 11 

### Mark-ups were significant, and significant means big 12 

### enoughto swaytheoutcomeoftheanalysis, andunless 13 

### we find a betterway, we'reheadeddownthe samepath. 14 

### Relative to where cost information might 15 

### come from, any manufacturer who gives you any cost 16 

### information ought to have his hands slapped. It's 17 just a foolish thing for them to do, for them to 18 

### disclose to you their disaggregated data. Any data 19 

### that this company supplies will come through 20 aggregateddata, throughARI with a large enoughbase 21 

### of suppliers so that it does not disclose what is 22 absolutely the most sensitive information in any 23 company in this m'anufacturing industry. 24 25

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### MR. RABA: Good point, Jim. Thank you. First Jim Mullen and then back to Harvey NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com136 1 Sacks. 2 MR. MULLEN: Just so it doesn't get lost 3 in the conversation, the alternate refrigerant issue 4 maywell be a big part of the cost efficiency equation 5 because I don't think manufacturers have decided which 6 refrigerant it's going to be, and obviously the 7 components aren't there. So we'll look forward to 8 what comes out of your crystal ball on that. 9 MR. RABA: Harvey. 10 MR. SACKS: Harvey Sacks, ACEEE. 11 I have the advantage or disadvantage of 12 having to remain in the stratosphere in discussions of 13 cost. I can't see inside either Jim's factory, and 14 it's probably best for all concerned. 15 What strikes me though is that for all of 16 these people most of the cost in the product is bought 17 components, pressers and heat exchangers and controls. 18 Most of those are, as Jim Crawford has said, mature 19 products. 20 In that context, price changes within the 21 realm of product continuity, not requiring major new 22 technologies, such as modulating compressors, is a 23 pretty straightforward exercise, but we have to keep 24 in mind that the most efficiently produced product 25 will be that product which is produced in the largest 

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### 136 1 Sacks. 2 MR. MULLEN: Just so it doesn't get lost 3 in the conversation, the alternate refrigerant issue 4 maywellbe a bigpart of the cost efficiencyequation 5 becauseI don'tthinkmanufacturershavedecidedwhich 6 refrigerant it's going to be, and obviously the 7 

### components aren't there. So we'll look forward to 8 what comes out of your crystal ball on that. 9 

### MR. RABA: Harvey. 10 

### MR. SACKS: Harvey Sacks, ACEEE. 11 I have the advantage or disadvantage of 12 havingtoremaininthe stratosphereindiscussionsof 13 cost. I can't see inside either Jim's factory, and 14 it's probablybest for all concerned. 15 What strikesme though is that for all of 16 thesepeoplemost of the cost intheproduct isbought 17 components, pressersandheatexchangersandcontrols. 18 Most of those are, as Jim Crawford has said, mature 19 products. 20 Inthat context, pricechangeswithinthe 21 realm of product continuity, not requiring major new 22 technologies, such as modulating compressors, is a 23 pretty straightforward exercise, but we have to keep 24 in mind that the most efficiently produced product 25 will be that product which isproduced inthe largest

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com137 1 volume on the most productive assembly line, and 2 that's likely to be the baseline equipment. 3 I can't predict; I can't jump directly 4 from today's price for aniche product what that niche 5 product would be as the standard. 6 And the final point I'd want to make here 7 is that some of the interesting things, despite my 8 respect for Jim and his having been here throughout 9 the 75 years of these technologies

-- 10 (Laughter.) 11 MR. SACKS: -- there are a couple of 12 things related to electronics for which there are 13 going to be discontinuities, but that also means that 14 their learning curves are not yet exhausted. We need 15 to be cognizant of that. 16 MR. CRAWFORD: Jim Crawford. 17 We'll debate that over lunch. I don't 18 want to drag that out. 19 I dowant topoint out, however, that your 20 assumption of these air conditioners being made from 21 bought components may look to be true, but in fact, 22 it's not. The largest single item on the cost of an 23 air conditioning system is the compressor, and there's 24 no surprise about that, and I don't think that's a 25 secret. I don't think I'm letting secrets out. 

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### 137 1 volume on the most productive assembly line, and 2 that's likely to be the baseline equipment. 3 

### I can't predict; I can't jump directly 4 fromtoday's pricefora nicheproductwhat thatniche 5 

### product would be as the standard. 6 

### And the final point I'dwant tomakehere 7 

### is that some of the interesting things, despite my 8 

### respect for Jim and his having been here throughout 9 

### the 75 

### years of these technologies 10 

### (Laughter.) 11 MR. SACKS: there are a couple of 12 things related to electronics for which there are 13 going tobe discontinuities, but that alsomeans that 14 their learningcurves are not yet exhausted. We need 15 to be cognizant of that. 16 

### MR. CRAWFORD: Jim Crawford. 17 We'll debate that over lunch. I don't 18 

### want to drag that out. 19 I dowanttopointout, however, thatyour 20 assumption of these air conditioners being made from 21 bought components may look to be true, but in fact, 22 it's not. The largest single item on the cost of an 23 airconditioningsystemisthecompressor, andthere's 24 no .surprise about that, and I don't think that's a 25 

### secret.

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### I don't think I'm letting secrets out. NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., NW. WASHINGTON, D.C. 20005-3701 www.nealrgross.com138 1 The two companies that are present here 2 today, two large unitary companies that are present 3 here today and two others all own either exclusively 4 or a major interest in a compressor manufacturer. 5 I don't know anything about compressor 6 pricing, but I'd be awful unhappy if I found out that 7 we were paying the street price for the compressors 8 that come out of a factory that we partially own. 9 MR. KENDALL: Okay. Based on the 10 facilitator's nod, I will move to slide six. This 11 discussion will go on a little farther now because 12 harkening back to the five step approach that I just 13 discussed, but these four bullets on slide six apply 14 to several different options of approaches we could 15 use. 16 The first bullet point is the role of 17 manufacturers/ARI and other stakeholders in providing 18 data and review. We'd like to know before we start 19 what that level of participation is going to be. 20 The second bulletpoint is the performance 21 modeling tools. I've listed -- there's three models 22 listed here, and then the fourth, which is just simply 23 called spread sheets, which is capturing engineering 24 expertise in a simpler way. 25 And I personally can't speak to either of 

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### 138 1 

### The two companies that are present here 2 today, two large unitary companies that are present 3 here today and two others all own either exclusively 4 or a major interest in a compressor manufacturer. 5 

### I don't know anything about compressor 6 pricing, but I'dbe awful unhappy if I found out that 7 we were paying the street price for the compressors 8 that come out of a factory that we partially own. 9 

### MR. 

### KENDALL: 

### Okay. Based on the 10 

### facilitator's nod, I will move to slide six. This 11 discussion will go on a little farther now because 12 harkening back to the five step approach that I just 13 discussed, but these four bullets on slide six apply 14 to several different options of approaches we could 15 

### use. 16 

### The first bullet point is the role of 17 manufacturers/ARI andotherstakeholders inproviding 18 

### data and review. We'd like to know before we start 19 what that level of participation is going to be. 20 Thesecondbulletpointistheperformance 21 modeling tools. I've listed

-- there's three models 22 listedhere, andthenthe fourth, whichisjust simply 23 called spread sheets, which is capturing engineering 24 expertise in a simpler way. 25 And I personallycan't speakto eitherof

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com139 1 these first three models. So if you have questions on ^^ 

### ~2 those, there may be somebody in here who can answer 3 them, but that person won't be me. 4 The third bullet point I had mentioned 5 before, drawing from multiple sources of information, 6 how should we reconcile and integrate them. The point 7 I had skipped over from slide two is the integrating 8 them into a single set of cost efficiency data. 9 As Jim Crawfordmentioned about going down 10 the same road we went before, that road was not only 11 a single road. It was two roads because we had two 12 sets of data to work with. 13 The department would like to make a 

# Q ~ 14 serious effort this time to have one set of data on 15 which the analysis will be based. 16 The fourth bullet point is what we 17 mentioned before. How should the department consider 18 improvements that impact part load efficiency,but not 19 EER, given that the standard would be based on EER? 20 But we're interested in seeing how that would affect 21 IPLV or other performance related parameters. 22 There's a question about how we should go 23 about doing that. So a lot of these questions are for 24 the team. The team will have to answer all of them, *) 

### ~25 and that holds true for any of the questions in this 

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### 139 1 these first threemodels. So ifyouhavequestionson 2 those, there may be somebody in here who can answer 3 them, but that person won't be me. 4 

### The third bullet point I had mentioned 5 before, drawingfrommultiple sources of information, 6 how shouldwe reconcileandintegratethem. Thepoint 7 I had skipped over from slide two is the integrating 8 them into a single set of cost efficiency data. 9 AsJimCrawfordmentionedaboutgoingdown 10 the same road we went before, that road was not only 11 a single road. It was two roads because we had two 12 sets of data to work with. 13 The department would like to make a 14 serious effort this time to have one set of data on 15 which the analysis will be based. 16 

### The fourth bullet point is what we 17 mentionedbefore. How shouldthe department consider 18 

### improvementsthat impactpartloadefficiency, butnot 19 EER, given that the standard would be based on EER? 20 But we're interested in seeing how that would affect 21 IPLV or other performance related parameters. 22 There's a questionabout howwe shouldgo 23 about doingthat. Soa lotof thesequestions are for 24 the team. The team will have to answer all of them, 25 and that holds true for any of the questions in this

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com140 1 packet, and your input is welcome and encouraged on g* 2 all of them as well. 3 MR. CRAWFORD: Jim Crawford. 4 Relative to models, and this is another 5 area where I'm not an expert, however, I believe that 6 both the first two models and probably all three of 7 them are more than a little bit dated. I'm not aware 8 of any intensive level of effort at Oak Ridge or the 9 NIST in the last shall we say ten, 15 years, or is it 10 20 years? 11 And that being the case, I would suspect 12 that they are, in fact, not very good contemporary 13 models. They were excellent models. they were 14 outstanding models. They were the platform on which 15 industry built their own models many, many years ago 16 and which we continue to refine, and I don't think 17 they're doing that. 18 MR. KENDALL: Okay. 19 MR.-RABA: Keep going. 20 MR. KENDALL: All right. Slide seven is, 21 I believe, the last slide in this presentation. Now 22 we move out of the world of cost into the world of 23 price. This is always a lively discussion. 24 Live-cycle cost analysis takes as an input 25 not the cost of the product, but the price of the 

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### 1 packet, and your input is welcome and encouraged on 2 all of them as well. 3 

### MR. CRAWFORD: Jim Crawford. 4 

### Relative to models, and this is another 5 areawhere I'mnot an expert, however, I believe that 6 both the first two models and probably all three of 7 them are more than a littlebit dated. I'mnot aware 8 of any intensive level of effort at Oak Ridge or the 9 NIST in the last shall we sayten, 15 years, or is it 10 20 years? 11 And that being the case, I would suspect 12 that they are, in fact, not very good contemporary 13 

### models. They were excellent models. they were 14 outstandingmodels. They were the platform on which 15 industrybuilt their own models many, many years ago 16 and which we continue to refine, and I don't think 17 they're doing that. 18 

### MR. KENDALL: Okay. 19 

### MR.·RABA: Keep going. 20 MR. KENDALL: All right. Slide seven is, 21 I believe, the last slide in this presentation. Now 22 we move out of the world of cost into the world of 23 price. This is always a lively discussion. 24 

### Live-cyclecostanalysistakesasaninput 25 not the cost of the product, but the price of the

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com141 1 product, and since for other reasons we will have done 2 a lot of work to determine the cost of the product, 3 this slide tries to explain how we have in the past 4 related that to the price of the product. 5 There are other ways of doing it that we 6 can also discuss. Most of this is related to the 7 mark-up approach whereby we apply mark-ups to the 8 manufacturer's cost. We track the product through the 9 different channels of distribution and apply mark-ups 10 at each stage based on information that we get from 11 public reports 'or surveys or a number of different 12 sources. 13 And at the end we would get then amarked 14 up cost, which would equate to the price that the 15 purchaser pays for that piece of equipment with some 16 range of uncertainty associated with that. 17 Thealternatemethodof identifyingprices 18 has been surveys of existing prices or products. 19 These products that are sold as systems, like air 20 conditioners, furnaces, are more difficult to 21 determine the price through asurvey than forproducts 22 like, say, residential clothes washers, which are sold 23 through Sears. 24 So these issues we struggle with every 25 time. Mark-ups that exist today may not exist in the 

### NEALR.GROSS COURTREPORTERS ANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 141 1 

### product, and sinceforotherreasonswe willhavedone 2 a lot of work to determine the cost of the product, 3 this slide tries to explain how we have in the past 4 

### related that to the price of the product. 5 

### There are other ways of doing it that we 6 

### can also discuss. Most of this is related to the 7 

### mark-up approach whereby we apply mark-ups to the 8 

### manufacturer'scost. We tracktheproductthroughthe 9 

### different channelsof distributionandapplymark-ups 10 

### at**~ach** 

### stage based on information that we get from 11 

### public reports 'or surveys or a number of different 12 

### sources. 13 

### And at the endwe wouldget then a marked 14 

### up 'cost, which would equate to the price that the 15 

### purchaser pays for that piece of equipment with some 16 

### range of uncertainty associated with that. 17 

### Thealternatemethodofidentifyingprices 18 

### has been surveys of existing prices or products. 19 

### These products'that are sold as systems, like air 20 

### conditioners, furnaces, are more difficult to 21 

### determinethepricethrougha surveythanforproducts 22 like, say, residentialclotheswashers, whicharesold 23 through Sears. 24 

### So these issues we struggle with every 25 time. Mark-ups that exist todaymay not exist ln the

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com142 1 sameway in the future undermore stringent standards. 2 So we have to be aware of that as well. 3 Harkingback tomy firstpresentation this 4 morning when I asked are there anypending changes in 5 the market, one of the things that an answer of yes to 6 that question could lead to is the difference in the 7 way we estimate prices for this analysis. 8 So I sort of captured all of the bullet 9 points in those'comments. I guess at this point I'd 10 ask for your comments in return. 11 MR. CRAWFORD: Jim Crawford. 12 On the second bullet, in the most recent 13 exercise in this industry you significantly 14 underestimated the mark-ups. When that was brought to 15 your attentionyou further reduced them. That did not 16 lay a good foundation for us to be very comfortable 17 with mark-ups as a tool to be used this time around. 18 MR. KENDALL: Hopefully, I don't know if 19 tomorrow this topic will come up, but I do want to 20 state that I don't believe that a lot of people 21 understoodwhat we did withmark-ups in that analysis, 22 and it would be worthwhile to review the technical 23 literature that went behind the mark-ups there, and I 24 thinkyou'll see that weweren't, asyou characterize, *W 

### ~ 25 far off from what you think the real result is. 

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### 142 1 samewayinthe futureundermore stringent standards. 2 

### So we have to be aware of that as well. 3 

### Harkingbacktomyfirstpresentationthis 4 

### morningwhen I asked are there anypendingchanges in 5 

### themarket, one ofthe things that ananswerofyes to 6 

### that question could lead to is the difference in the 7 

### way we estimate prices for this analysis. 8 So I sort of captured all of the bullet 9 

### points in those'comments. I guess at this point I'd 10 

### ask for your comments in return. 11 MR. CRAWFORD: Jim Crawford. 12 On the second bullet, in the most recent 13 

### exercise in this industry you significantly 14 underestimatedthemark-Ups. Whenthatwasbroughtto 15 yourattentionyoufurtherreducedthem. That didnot 16 lay a good foundation for us to be very comfortable 17 with mark-ups as a tool to be used this time around. 18 

### MR. KENDALL: Hopefully, I don't know if 19 tomorrow this topic will come up, but I do want to 20 state that I don't believe that a lot of people 21 understoodwhatwe didwithmark-ups inthat analysis, I 

### 22 and it would be worthwhile to review the technical 23 literature that went behindthe mark-Ups there, and I 24 thinkyou'll seethatwe weren't, asyoucharacterize, 25 far off from what you think the real result is.

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com143 1 We might have presented it in a way that ^*h. 2 was not easy to understand, and as you first looked at 3 it, you would misunderstand totally what we did. 4 MR. CRAWFORD: If youwere saying that you 5 were grossly inept at putting together the story that 6 was published in the Federal Register, I can't 7 disagree with you. 8 (Laughter.) 9 MR. CRAWFORD: But if you're saying that 10 I can't multiply three numbers together and figure out 11 what the product of three numbers is that are 12 published in the Federal Register, I would be inclined 13 to take exception with that. 14 MR. KENDALL: Okay. This time around you 15 are very welcomed and encouraged to provide 16 information to the department at an early stage of the 17 analysis so that that can be considered and 18 incorporated. 19 MR. CRAWFORD: We did, and you reduced the 20 mark-ups. 21 MR. RABA: Your comments are noted for the 22 record. Thank you, Jim. 23 Does this conclude the presentation? 24 MR. KENDALL: A question. 

# Q ~25 MR. RABA: Oh, I'm sorry. I didn't see 

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### 1 We might have presented it in a way that 2 

### wasnot easytounderstand, andasyou first lookedat 3 

### it, you would misunderstand totallywhat we did. 4 

### MR. CRAWFORD: Ifyouwere sayingthatyou 5 

### were grosslyinept at puttingtogether the storythat 6 

### was published In the Federal Register, I can't 7 

### disagree with you. 8 

### (Laughter.) 9 

### MR. CRAWFORD: But if you're saying that 10 

### I can'tmultiplythreenumberstogetherandfigure out 11 

### what the product of three numbers is that are 12 

### publishedintheFederalRegister, I wouldbe inclined 13 

### to take exception with that. 14 

### MR. KENDALL: Okay. This time aroundyou 15 

### are very welcomed and encouraged to provide 16 informationtothedepartmentat anearlystageofthe 17 analysis so that that can be considered and 18 

### incorporated. 19 

### MR. CRAWFORD: We did, andyoureducedthe 20 mark-ups. 21 

### MR. RABA: Yourcommentsarenotedforthe 22 record. Thank you, Jim. 23 24 25

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### Does this conclude the presentation? MR. KENDALL: Aquestion. MR. RABA: Oh, I'm sorry. NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005·3701 

### I didn't see

www.nealrgross.com144 1 you back there. Go ahead. 2 MR. SACKS: Harvey Sacks, ACEEE. 3 I don't have very many answers. I would 4 have a couple of questions. 5 One, as you're thinking about mark-up 6 analysis for higher efficiency equipment under a 7 standards environment, the appropriate multiplier, 8 oddly enough,wouldbe as a ceiling, the installation, 9 the mark-ups, I mean, the price mark-ups for base 10 level equipment today, not for the premium 11 differentiated product because that's where the 12 competition is the greatest. 13 I say I think it's the ceiling because I 14 would expect the manufacturers to continue and the 15 installers to continue looking for ways to be more 16 productive in the most competitive sector with their 17 installation. 18 MR. RABA: Charlie Stephens. 19 MR. STEPHENS: Charlie Stephens. 20 Along those same lines, I think earlier 21 rulemakings -- I'll use an example that doesn't 22 involve this industry just so that we don't have any 23 further argument over it -- but we actually have some 24 markets that are relatively mature for some products, 25 and when we see manufacturer costs, the derivation of 

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### 144 1 you back there. Go ahead. 2 MR. SACKS: Harvey Sacks, ACEEE. 3 

### I don't have very many answers. I would 4 have a couple of questions. 5 

### One, as you're thinking about mark-up 6 analysis for higher efficiency equipment under a 7 standards environment, the appropriate multiplier, 8 oddlyenough, wouldbeasa ceiling, the installation, 9 the mark-ups, I mean, the price mark-ups for base 10 

### level equipment today, not for the premium 11 differentiated product because that's where the 12 competition is the greatest. 13 I say I think it's the ceiling because I 14 would expect the manufacturers to continue and the 15 installers to continue looking for ways to be more 16 productive in the most competitive sector with their 17 installation. 18 MR. RABA: 

### Charlie Stephens. 19 

### MR. STEPHENS: Charlie Stephens. 20 

### Along those same lines, I think earlier 21 rulemakings I'll use an example that doesn't 22 involve this industryjust so that we don't have any 23 further argument over it

-- but we actuallyhave some 24 markets that are relativelymature for someproducts, 25 andwhenwe seemanufacturer costs, the derivationof

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com145 1 which we're unfamiliar with, on the table and we see 2 them prettymuch equal to retail price in our market, 3 we know that something is a little off, and we tend to 4 trust the retail market prices in a market that's 5 semi-mature. 6 And to the extent that we have those, I 7 think you're always going to have some argument. If 8 Isee manufacturer costs that look like retail prices, 9 I'm not going to believe that nobody between the 10 manufacturer and the consumer is making any money. 11 MR. RABA: Another comment? Ted. 12 MR. DOYLE: Ted Doyle. 13 Was there any differentiation as far as 14 installation cost as to new installation, as to 15 retrofit or replacement of which probably 75 percent 16 of this market is? 17 MR. KENDALL: Rather than speaking in the 18 past tense, let's talk about what we plan to do. 19 (Laughter.) 20 MR. KENDALL: At this point, we have not 21 made any decisions along those lines, and if there are 22 significant differences between the installation cost 23 of new construction versus retrofit replacement, then 24 we would try to capture those. 25 MR. DOYLE: Yeah, I think the point to be 

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### 145 1 which we're unfamiliar with, on the table and we see 2 themprettymuch equal to retail price inourmarket, 3 we knowthat somethingis a littleoff, andwe tendto 4 trust the retail market prices in a market that's 5 semi-mature. 6 And to the extent that we have those, I 7 think you're always going to have some argument. If 8 I seemanufacturercoststhat looklikeretailprices, 9 I'm not going to believe that nobody between the 10 manufacturer and the consumer is making any money. 11 MR. RABA: Another comment? Ted. 12 MR. DOYLE: Ted Doyle. 13 

### Was there any differentiation as far as 14 installation cost as to new installation, as to 15 retrofit or replacement of whichprobably 75 percent 16 of this market is? 17 MR. KENDALL: Ratherthan speakinginthe 18 past tense, let's talk about what we plan to do. 19 

### (Laughter.) 20 MR. KENDALL: At this point, we have not 21 madeanydecisions alongthose lines, andifthereare 22 significantdifferencesbetweenthe installationcost 23 ofnewconstructionversus retrofit replacement, then 24 we would try to capture those. 25

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### MR. DOYLE: Yeah, I think thepoint tobe NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005·3701 www.nealrgross.com146 1 made now, as 90.1 is adopted by these other states, 2 that it also considers the duct system and the 3 efficiency of that, where in some of our -- 80 percent 4 of our installations might be tying into, you know, a 5 1960s duct system, and you know, how much of that 6 energy is being lost in a wall cavity somewhere. 7 MR. RABA: Anyone else? That's it? 8 MR. CRAWFORD: Jim Crawford. 9 MR. RABA: One more. Jim, go ahead. 10 MR. CRAWFORD: To the last point raised, 11 we need to focus more on the effect of efficiency 12 level on the installation cost than we do on the type 13 of installation because whether it's new construction 14 or old construction, if we're talking about putting in 15 Level X versus Level Y, that's what we've got to look 16 at in either case. The numbers may be different in 17 the two cases, but that's the only way in which you'd 18 have to look at it, but it's installation cost versus 19 efficiency is the first thing you've got to look at. 20 MR. DOYLE: Yeah, I was just suggesting 21 the weight. 22 MR. RABA: And that was Ted Doyle. 23 Karim. 24 MR. AMRANE: This is Karim Amrane. 25 Iwould like to second what Jim just said. 

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### 146 1 made now, as 90.1 is adopted by these other states, 2 

### that it also considers the duct system and the 3 efficiencyofthat, where insomeofour -- 80percent 4 of our installationsmight be tying into, youknow, a 5 1960s duct system, and you know, how much of that 6 

### energy is being lost in a wall cavity somewhere. 7 

### MR. RABA: Anyone else? That's it? 8 

### MR. CRAWFORD: Jim Crawford. 9 

### MR. RABA: One more. Jim, go ahead. 10 MR. CRAWFORD: To the last point raised, 11 we need to focus more on the effect of efficiency 12 level on the installationcost thanwe do on the type 13 

### of installationbecausewhether it'snewconstruction 14 oroldconstruction, ifwe'retalkingaboutputtingin 15 Level X

### versus Level Y, that's what we've got to look 16 at in either case. The numbers may be different in 17 the two cases, but that's the onlyway inwhichyou'd 18 have to look at it, but it's installationcost versus 19 efficiency is the first thing you've got to look at. 20 21 the weight. 22 23 

### 24 25

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### MR. DOYLE: Yeah, I 

### was just suggesting

MR.' RABA: And that was Ted Doyle. Karim. MR. AMRANE: This is Karim Amrane. I 

### wouldliketo secondwhatJimjust said. NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE.,N.w. WASHINGTON, D.C. 20005-3701 www.nealrgross.com147 1 I mean, the residential analysis, for example, that 2 was not in the calculation. Installation cost was 3 almost identical with the NCO (phonetic). 4 MR. RABA: Did you get all of that? 5 THE REPORTER: No. 6 MR. RABA: We have a microphone problem. 7 Could you just restate that, please? Try that one. 8 MR. AMRANE: I said that I think 9 efficiency shouldbe taken into consideration whenyou 10 -- with installation cost. That varies 11 simultaneously. I mean, you cannot assume a constant 12 installation cost for different issues. 13 MR. RABA: Much better. Thank you. 14 MR. CRAWFORD: Just to come back to the 15 question of new versus replacement, where that 16 probably plays the greatest role is in whether or not 17 you can stick this new piece of equipment on the 18 existing curve, and if you have to start tearing up 19 the roof and making a larger curve and perhaps saying, 20 "Gee, this thing also weighs 30 percent more," then 21 maybe I've got to do additional bracing in the roof 22 trusses. 23 That may bear more on the question of 24 feasibility for a decision factor rather than the O 25 price differential. The price differential will be 

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### 147 1 I mean, the residential analysis, for example, that 2 was not in the calculation. Installation cost was 3 

### almost identical with the NCO (phonetic). 4 

### MR.' RABA: Did you get all of that? 5 

### THE REPORTER: No. 6 

### MR. RABA: We have a microphone problem. 7 

### Could you just restate that, please? Try that one. 8 

### MR. AMRANE: I 

### said that I think 9 efficiencyshouldbetakenintoconsiderationwhenyou 10 

### with installation cost. That varies 11 simultaneously. I mean, you cannot assume a constant 12 installation cost for different issues. 13 

### MR. RABA: Much better. Thank you. 14 MR. CRAWFORD: Just to corne back to the 15 

### question of new versus replacement, where that 16 probablyplays the greatest role is inwhetherornot 17 you can stick this new piece of equipment on the 18 existing curve, and if you have to start tearing up 19 theroof andmakinga largercurveandperhaps saying, 20 11

### Gee, this thing also weighs 30 percent more, 11 

### then 21 maybe I've got to do additional bracing in the roof 22 trusses. 23 

### That may bear more on the question of 24 feasibility for a decision factor rather than the 25 

### price differential. The price differential will be

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com148 1 there, but it's the feasibility that may be the 2 determining factor. 3 MR. RAY: Mike Ray with Trane. 4 One point that we're focusing our efforts 5 on packaged units here or it appears that packaged 6 units are the major focus of our discussion. I want 7 to point out and emphasize that we cannot ignore the 8 commercial split systems as well, and in addition, 9 there's some other niche markets. Ibelieve there are 10 some other markets that I believe the gentleman from 11 Mestek has as well. 12 As we go through this process, we can't 13 ignore those products, and I think in the residential 14 rulemaking we did ignore the packaged products in the 15 process. This time, since split systems are an 16 important piece of the market, we can't ignore the 17 split systems there, and we need to do due diligence 18 of reviewing those products as well. 19 MR. RABA: Thank you. 20 Final thoughts for now? 21 Thank you very much, Mark. A very 22 interesting discussion this morning, a lot of good 23 issues brought up on the table that we need to 24 consider throughout the process and expect more input 25 from each person in the written comments as well. 

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### 148 1 there, but it's the feasibility that may be the 2 determining factor. 3 

### MR. RAY: Mike Ray with Trane. 4 Onepoint thatwe're focusing ourefforts 5 on packaged units here or it appears that packaged 6 

### units are the major focus of our discussion. I want 7 to point out and emphasize that we cannot ignore the 8 commercial split systems as well, and in addition, 9 there's someothernichemarkets. I believethereare 10 some other markets that I believe the gentleman from 11 Mestek has as well. 12 

### As we go through this process, we can't 13 ignore thoseproducts, and I think inthe residential 14 rulemakingwe did ignore the packagedproducts inthe 15 

### process. This time, since split systems are an 16 important piece of the market, we can't ignore the 17 split systems there, and we need to do due diligence 18 of reviewing those products as well. 19 

### MR. RABA: Thank you. 20 

### Final thoughts for now? 21 

### Thank you very much, Mark. A very 22 interesting discussion this morning, a lot of good 23 issues brought up on the table that we need to 24 considerthroughout theprocess andexpect more input 25 from eachperson in the written comments as well.

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com149 1 I'm certain the department looks forward 2 to your written comments. Any facts and data, Iwould 3 invite you -- entertain that we probably break for 4 lunch at this time, and then come back, say, at 1:30. 5 Is that too long? Do you want to make it shorter? 6 PARTICIPANT: Tell us where the big hand 7 will be. 8 (Laughter.) 9 MR. RABA: The big hand on the six. 10 Well, we'll start promptlyat 1:30, ifyou 11 would, please. 12 Thank you very much. We made some good 13 progress. 14 (Whereupon,at 12:47p.m., themeetingwas 15 recessed for lunch, to reconvene at 1:30 p.m., the 16 same day.) 17 18 19 20 21 22 23 24 25 

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### 149 1 

### I'm certain the department looks forward 2 toyourwrittencomments. Anyfacts anddata, I would 3 invite you -- entertain that we probably break for 4 lunch at this time, and then come back, say, at 1:30. 5 Is that too long? Do you want to make it shorter? 6 

### PARTICIPANT: Tell us where the big hand 7 will be. 8 (Laughter.) 9 

### MR. RABA: The big hand on the six. 10 Well, we'll startpromptlyat 1:30, ifyou 11 would, please. 12 Thank you very much. We made some good 13 progress. 14 (Whereupon, at 12:47p.m., themeetingwas 15 recessed for lunch, to reconvene at 1:30 p.m., the 16 same day.) 17 18 

### 19 20 

### 21 22 23 24 25

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com150 1 A-F-T-E-R-N-O-O-N S-E-S-S-I-O-N 2 (1:46 p.m.) 3 MR. RABA: It looks like we're all back 4 again. We'll pick up where we left off this morning 5 and get started again for the afternoon session. 6 A couple of things to mention. There's a 7 list of attendees at the back desk there, the check-in 8 desk. So if you want to know who your colleagues are, 9 you might want to pick that up and take a look at 10 that. 11 Also, you will find a blue sheet and 12 evaluation form for this public workshop today. We 13 request that you fill these out before you leave and 14 just drop them off with Debbie at the desk on the way 15 out. 16 One other item, too. We've been having 17 some difficulty with some of the microphones and beg 18 your indulgence to make the effort to lean a little 19 farther forward, speak a littlemore loudly, enunciate 20 more clearly just a bit for our court reporter so when 21 you purchase a transcript you get your money's worth. 22 We had quite a lively discussion this 23 morning. Indeed, I didn't realize the framework 24 document process was going to be that way, and 25 certainly this is a good start. I think there's been 

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### 150 1 

### A-F-T-E-R-N-O-O-N S-E-S-S-I-O-N 2 

### (1:46 p.m.) 3 

### MR. RABA: It looks like we're all back 4 again. We'll pick up where we left off this morning 5 

### and get started again for the afternoon session. 6 

### Acouple of things to mention. There's a 7 

### listof attendeesatthebackdeskthere, thecheck-in 8 

### desk. So ifyouwant toknowwhoyourcolleagues are, 9 

### you might want to pick that up and take a look at 10 that. 11 Also, you will find a blue sheet and 12 evaluation form for this public workshop today. We 13 request that you fill these out before you leave and 14 just drop them off withDebbie at the desk on the way 15 out. 16 One other item, too. We've been having 17 some difficultywith some of the microphones and beg 18 your indulgence to make the effort to lean a little 19 fartherforward, speaka littlemore loudly, enunciate 20 more clearlyjusta bit for ourcourtreporter sowhen 21 youpurchase a transcriptyou getyourmoney's worth. 22 We had quite a lively discussion this 23 

### morning. Indeed, I didn't realize the framework 24 document process was going to be that way, and 25 certainlythis is a good start. I think there's been

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com151 1 a lot of good issues raised, and we need to keep our is^ 2 sensitivitytoward that as we go into this afternoon's 3 session, that the department is, of course, exploring 4 your ideas. 5 We want to receive them for the record so 6 that we can be sure all of your comments and issues 7 are addressed throughout this whole process. It kind 8 of gives the department guidance as to the thinking, 9 and certainlywritten comments are most welcome after 10 all is said and done here today. 11 I believe it was the 30th, was it? What 12 was the date for comments? 13 PARTICIPANT: November 1st. 14 MR. RABA: November 1st. Sorry. November 15 1st was the deadline for written comments also. 16 We're going to pick up this afternoon with 17 David Winiarski of Pacific Northwest National 18 Laboratories. He will continue with the 19 presentations, this time building energy use and 20 electric load shape characterization. 21 To our callers on the phone, would you 22 just kind of let us know you're there? Elizabeth, I 23 think you're there. 24 DR. GOLDSTEIN: David Goldstein is here. 25 MR. RABA: David Goldstein. 

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### 151 1 a lot of good issues raised, and we need to keep our 2 sensitivitytowardthataswe gointothisafternoon's 3 session, that the department is, of course, exploring 4 your ideas. 5 We want to receive them for the record so 6 that we can be sure all of your comments and issues 7 are addressed throughout this whole process. It kind 8 of gives the department guidance as to the thinking, 9 and certainlywrittencomments aremost welcome after 10 all is said and done here today. 11 I believe it was the 30th, was it? What 12 was the date for comments? 13 PARTICIPANT: November 1st. 14 

### MR. RABA: November 1st. Sorry. November 15 1st was the deadline for written comments also. 16 We'regoingtopickupthisafternoonwith 17 

### David Winiarski of Pacific Northwest National 18 

### Laboratories. He 

### will continue with the 19 presentations, this time building energy use and 20 electric load shape characterization. 21 To our callers on the phone, would you 22 just kind of let us know you're there? Elizabeth, I 23 think you're there. 24 

### 25

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### DR. GOLDSTEIN: David Goldstein is here. MR. RABA: David Goldstein. NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE,NW. WASHINGTON, D.C. 20005-3701 www.nealrgross.com152 1 PARTICIPANT: This is Maya 2 (unintelligible) for Energy Efficiency. 3 MR. RABA: Thank you. 4 Is Hung Pham there also? 5 (No response.) 6 MR. RABA: Perhaps he'll call in in just 7 a bit. Welcome back, all. 8 DR. GOLDSTEIN: Thank you. 9 MR. RABA: Proceed, David. 10 MR. WINIARSKI: Is that working? Okay. 11 All right. Is that better? 12 MR. RABA: There you go. 13 MR. WINIARSKI: For this part of the 14 presentation I'd like to talk a little bit about 15 building energy use and electric load shape 16 characterization. For this analysis, one of the 17 complicating issues is that these products are used in 18 a wide variety of commercial buildings, and they're 19 used basically anywhere in the U.S. So there's a lot 20 of climate variation in loads. There's a lot of 21 variation in internal loads, and there's some other 22 complicating factors that deal with how the equipment 23 is generally interfaced with the rest of the building 24 mechanical system. 25 So what I'd like to talk about is quickly 

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### 152 1 

### PARTICIPANT: This is Maya 2 (unintelligible) for Energy Efficiency. 3 

### MR. RABA: Thank you. 4 

### Is Hung Pham there also? 5 

### (No response.) 6 

### MR. RABA: Perhaps he'll call ln in just 7 a bit. Welcome back, all. 8 

### DR. GOLDSTEIN: Thank you. 9 

### MR. RABA: Proceed, David. 10 

### MR. WINIARSKI: Is that working? Okay. 11 All right. Is that better? 12 MR. RABA: There you go. 13 

### MR. WINIARSKI: For this part of the 14 presentation I'd like to talk a little bit about 15 building energy use and electric load shape 16 

### characterization. For this analysis, one of the 17 complicatingissuesisthattheseproducts areusedin 18 a wide variety of commercial buildings, and they're 19 usedbasicallyanywhere in the u.S. So there's a lot 20 

### of climate variation in loads. There's a lot of 21 variation in internal loads, and there's some other 22 complicatingfactors that deal withhow the equipment 23 is generallyinterfacedwiththe rest of thebuilding 24 mechanical system. 25 Sowhat I'dlike to talk about is quickly

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com153 1 what's sort of the process that we're envisioning for *te 

### ~ 2 carrying out this analysis both of the thermal loads 3 that are being presented to the equipment, and after 4 that, the energy use that the equipment presents, and 5 also another aspect that we need to touch on here is 6 what's going to be the impact in terms of the electric 7 load the building presents and the effect on building 8 demand and energy use because of that. 9 Again, the basicpurpose is to analyze the 10 building energy use and characterize the load shapes 11 that are faced by this equipment at different 12 efficiency levels. 13 We also need to analyze the entire 14 building electric load shape, characterize the effect 15 ofpeak demand obviously in commercial buildings. The 16 different rate schedules tend to be heavily influenced 17 by the effect of energy or peak demand on billed 18 electric cost. 19 And, again, we have to cover different 20 buildings and climates. 21 To start offwith,basically there's three 22 steps in the analysis. One is a characterization of 23 the building stock that would typically use this 24 equipment. Possible data sources for that are shown 25 here. 

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### 153 1 what's sort of theprocess that we're envisioning for 2 carrying out this analysis both of the thermal loads 3 that are beingpresented to the equipment, and after 4 

### that, the energyuse that the equipmentpresents, and 5 also another aspect that we need to touch on here is 6 what'sgoingtobethe impact intermsof the electric 7 load thebuildingpresents and the effect onbuilding 8 demand and energyuse because of that. 9 Again, thebasicpurposeistoanalyzethe 10 building energyuse and characterize the load shapes 11 that are faced by this equipment at different 12 efficiency levels. 13 We also need to analyze the entire 14 buildingelectric load shape, characterizethe effect 15 ofpeakdemandobviouslyincommercialbuildings. The 16 differentrateschedulestendtobeheavilyinfluenced 17 by the effect of energy or peak demand on billed 18 

### electric cost. 19 

### And, again, we have to cover different 20 buildings and climates. 21 Tostartoffwith, basicallythere'sthree 22 steps in the analysis. One is a characterization of 23 the building stock that would typically use this 24 

### equipment. 25 here.

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### possible data sources for that are shown

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com154 1 DOE Energy Information Agency's CBECS, 2 commercial building energy consumption survey, is 3 obviously going to be a key data source for a 4 characterization of the building stock. 5 Another possible data source is the MAISY 6 data set that's compiled by Jerry Jackson & 7 Associates. That's a commercially available product, 8 I think, primarily marketed toward utilities, but we 9 can think of that as an attempt to extend the CBECS 10 data set to a wider variety of building types and also 11 collect more information in that data set. 12 Finally, there is other data that wemight 13 collect from utility surveys or industry shipment 14 information that might characterize where different 15 types of equipment go. 16 To that, I might add, we would rely as 17 much as possible on both comments submitted in the 18 record here, as well as characterizations that may 19 come out of discussions with consultants on how 20 equipment is used in buildings. 21 Once we've characterized the building 22 stock, the next step here is to somehow characterize 23 the energy use, well, actually the thermal loads 24 first, and then the energy use of equipment. We would 25 likely do that through the use of different building 

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### 154 1 

### DOE Energy Information Agency's CBECS, 2 commercial building energy consumption survey, is 3 obviously going to be a key data source for a 4 

### characterization of the building stock. 5 Anotherpossibledata source is theMArSY 6 

### data set that's compiled by Jerry Jackson & 

### 7 Associates. That's a commerciallyavailableproduct, 8 I think, primarilymarketed toward utilities, but we 9 can think of that as an attempt to extend the CBECS 10 data set toa widervarietyofbuildingtypes andalso 11 collect more information in that data set. 12 Finally, thereisotherdatathatwemight 13 collect from utility surveys or industry shipment 14 information that might characterize where different 15 types of equipment go. 16 

### To that, I might add, we would rely as 17 much as possible on both comments submitted in the l8 

### record here, as well as characterizations that may 19 come out of discussions with consultants on how 20 equipment is used in buildings. 21 Once we've characterized the building 22 stock, the next step here is to somehow characterize 23 the energy use, well, actually the thermal loads 24 first, andthentheenergyuseofequipment. We would 25 likely do that through the use of different building NEAL

### R.GROSS (202)234-4433 COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com155 1 simulation models. 2 Ipresented here threepossible tools that 3 could be used. One is the BLAST software energy 4 analysis tool. It stands for building loads and 5 system thermodynamics. It's a tool that was developed 6 by the U.S. Army's Construction Engineering Research 7 Laboratory andhas beenprimarily supported by DOE for 8 the last, I suppose, about ten years. 9 Another tool that people might be more 10 familiar with is the DOE2 energy analysis tool that 11 was developed, I believe, originally by LB&L and has 12 probably a wider commercial use of these tools. 13 And a third possible tool is DOE's new 14 Energy Plus software, which is really an attempt to 15 merge these two tools as well as add some new 16 capabilities. 17 We haven't made any formal decisions on 18 which of those tools that we might use for this 19 analysis. We welcome any input that we can get from 20 stakeholders. 21 After we've done the analysis of specific 22 buildings, we're going to develop a set of equipment 23 load profiles and whole building demand profiles that 24 will get fed further on into the life cycle cost 25 analysis for these equipment. 

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### 155 1 simulationmodels. 2 I presentedherethreepossibletoolsthat 3 

### could be used. One is the BLAST software energy 4 

### analysis tool. It stands for building loads and 5 systemthermodynamics. It'sa toolthatwasdeveloped 6 by the U.S. Army's Construction Engineering Research 7 LaboratoryandhasbeenprimarilysupportedbyDOE for 8 

### the last, I suppose, about ten years. 9 

### Another tool that people might be more 10 familiar with is the DOE2 energy analysis tool that 11 was developed, I believe, originallyby LB&L and has 12 probably a wider commercial use of these tools. 13 And a third possible tool is DOE's new 14 Energy Plus software, which is really an attempt to 15 merge these two tools as well as add some new 16 capabilities. 17 We haven't made any formal decisions on 18 which of those tools that we might use for this 19 analysis. We welcome any input that we can get from 20 stakeholders. 21 Afterwe've done the analysis of specific 22 buildings, we're going to develop a set of equipment 23 loadprofiles andwholebuildingdemandprofiles that 24 will get fed further on into the life cycle cost 25 analysis for these equipment.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com156 1 Briefly, the department would like to get 2 any stakeholder input on the tools that I've discussed 3 here or on other tools that might be made available or 4 on data sources that might be made available that 5 could help us proceed with this effort, and hopefully 6 we would be able to, after we leave this meeting, go 7 further into the analysis, share sort of what we 8 believe is the characterization of the existing use of 9 the equipment out with stakeholders for their review. 10 MR. MULLEN: Jim Mullen. Excuse me. 11 MR. WINIARSKI: Yeah. 12 MR.MULLEN: David, as you project forward 13 on equipment efficiency, it's easy to understand how 14 you handle that. How do you handle the varying 15 building loads, that the existing inventory of 16 buildings has some heat loss which may be as well 17 known from utility records, but how do you project 18 what the future brings for the building load, which 19 ought to be decreasing with new construction and 20 upgrades, whatever? 21 MR. WINIARSKI: I'll talk about that in a 22 second here. I've got a couple slides. The next 23 couple of slides really address some of what we 24 thought were some of the more important issues as how 25 you do that. But it's a real challenge. 

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### 156 1 Briefly, the departmentwouldlike toget 2 anystakeholderinputonthetoolsthat I'vediscussed 3 here oronothertools thatmightbemade availableor 4 on data sources that might be made available that 5 couldhelpusproceedwith this effort, andhopefully 6 we would be able to, after we leave this meeting, go 7 further into the analysis, share sort of what we 8 believeisthecharacterizationoftheexistinguseof 9 the equipment outwith stakeholders for theirreview. 10 

### MR. MULLEN: Jim Mullen. Excuse me. 11 MR. WINIARSKI: Yeah. 12 

### MR. MULLEN: David, asyouprojectforward 13 on equipment efficiency, it's easy to understand how 14 

### you handle that. How do you handle the varying 15 building loads, that the existing inventory of 16 buildings has some heat loss which may be as well 17 known from utility records, but how do you project 18 

### what the future brings for the building load, which 19 ought to be decreasing with new construction and 20 upgrades, whatever? 21 

### MR. WINIARSKI: I'll talk about that ina 22 second here. I've got a couple slides. The next 23 couple of slides really address some of what we 24 thought were some of themore important issues as how 25 you do that. But it's a real challenge.

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com157 1 One option isyou assert that newbuilding ^^ 

### ~2 or that existing building construction can be 3 characterized by these existing building data sets, 4 and that new building construction is characterized 5 partly by forward looking building codes, for 6 instance, and in states that don't have building 7 codes, we may have to make some strong assumptions as 8 to what we think it will look like, and we'd welcome 9 any feedback or ideas on how to do that. 10 MR. DOYLE: One question. 11 MR. WINIARSKI: Yeah. 12 MR. DOYLE: You've got anumber of sources 13 there and some as old as ten years old, and I don't 14 know what the accuracy of those ways would be, but is 15 there any -- are youplanning on doing any actual case 16 studies that would, you know -- an actual building, 17 going to look at it and see how that compares with 18 your, you know, computer generated data. 19 MR. RABA: That was Ted Doyle from Mestek. 20 MR. WINIARSKI: In general, probably not. 21 We might use some specific examples. As we have real 22 building data, we may try to examine how the loads 23 that we generate compare with whole building energy 24 consumption loads that are recorded in, for instance, Is* 25 the bills that people who participate in this CBECS 

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### Oneoptionisyouassertthatnewbuilding 2 or that existing building construction can be 3 characterized by these existing building data sets, 4 and that new building construction is characterized 5 

### partly by forward looking building codes, for 6 instance, and in states that don't have building 7 codes, we mayhave tomake some strongassumptions as 8 to what we think it will look like, and we'd welcome 9 any feedback or ideas on how to do that. 10 

### MR. DOYLE: One question. II 

### MR. WINIARSKI: Yeah. 12 MR. DOYLE: You'vegota numberof sources 13 there and some as old as ten years old, and I don't 14 knowwhat the accuracyof those ways wouldbe, but is 15 there any -- areyouplanningondoinganyactual case 16 studies that would, you know

-- an actual building, l7 

### going to look at it and see how that compares with l8 

### your, you know, computer generated data. 19 

### MR. RABA: ThatwasTedDoylefromMestek. 20 

### MR. WINIARSKI: Ingeneral, probablynot. 21 We might use some specific examples. As we have real 22 building data, we may try to examine how the loads 23 that we generate compare with whole building energy 24 consumption loads that are recorded in, for instance, 25 the bills that people who participate in this CBECS

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C 20005-3701 www.nealrgross.com158 1 survey actuallyproduce. There are some options there 2 how to do it. 3 It's really hard to do, you know, 4 individual case studies unless you've got a whole 5 bunch of them and come back and say, yeah, these agree 6 or do not agree with our simulated results. 7 We would like to get, again, as much 8 feedback aspossiblewhere people canprovide examples 9 of that. 10 MR. STOOPS: There are older data sets 11 that P&L (phonetic)has used in the past, the old LCAP 12 data sample. I personally did some -- 13 MR. RABA: Would you get to the 14 microphone? 15 MR. STOOPS: I personally did some 16 metering here right in the Forrestal Building to 17 develop some profiles. We'll use those and apply 18 those as appropriate, but, again, those are old, you 19 know. 20 MR. WINIARSKI: Right. 21 MR. STOOPS: And to do empirical work is 22 just incredibly expensive. Now, if we had agreat big 23 budget, I'd love to do the work,but Idon't know that 24 that's going to be the reality. 25 MR. CRAWFORD: Jim Crawford. 

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### 158 1 surveyactuallyproduce. Thereare someoptionsthere 2 how to do it. 3 

### It's really hard to do, you know, 4 individual case studies unless you've got a whole 5 bunchofthemandcomebackand say, yeah, these agree 6 or do not agree with our simulated results. 7 

### We would like to get, again, as much 8 feedbackaspossiblewherepeoplecanprovideexamples 9 of that. 10 

### MR. STOOPS: There are older data sets 11 that P&L (phonetic) hasusedinthepast I 

### the oldLCAP 12 

### data sample. I personally did some -- 13 

### MR. ·RABA: Would you get to the 14 microphone? 15 

### MR. STOOPS: I personally did some 16 metering here right In the Forrestal Building to 17 

### develop some profiles. We'll use those and apply 18 those as appropriate, but, again, those are old, you 19 know. 20 

### MR. WINIARSKI: Right. 21 

### MR. STOOPS: And to do empirical work is 22 justincrediblyexpensive. Now, ifwe hada greatbig 23 budget, I'dlovetodothework, but I don't knowthat 24 that's going to be the reality. 25

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### MR. CRAWFORD: Jim Crawford. NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W WASHINGTON, D.C. 20005-3701 www.nealrgross.com159 1 I guess on case studies my observation in 

# O* ~ 2 this context is that the contributed value is somewhat 3 limited because if you haven't modeled this building 4 exactly, you probablymodeled the one down the street, 5 and you know, we're still on a miles per gallon kind 6 of world here. What we're trying to do is define 7 what's the right threshold for a standard, and you 8 don't have to get into too many case studies to 9 address that sort of thing, I don't think. 10 One of the things you do need to do very 11 carefully is to define what you're going to use for 12 yourpeak environment, your peak external environment, 13 and what standards are you going to impose upon the 14 system for comfort level or whatever during peak 15 environment? 16 I live in a 97 degree design environment 17 location, and we had 113 degrees last year. If one 18 designed for 113 degrees, by some standards that would 19 be considered to be a severely oversized system. So 20 you need to articulate that up front, and that needs 21 to be a matter of discussion and hopefully consensus 22 in the group. 23 The third point I would make is if those 24 numbers are fairly high, then you need to come back to 25 the point that Jim Mullen has stressed two or three 

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### 159 1 I guess oncase studiesmy observationin 2 thiscontextisthat thecontributedvalueissomewhat 3 limitedbecause if you haven't modeled this building 4 

### exactly, youprobablymodeledtheonedownthe street, 5 and you know, we're still on a miles per gallon kind 6 

### of world here. What we're trying to do is define 7 what's the right threshold for a standard, and you 8 don't have to get into too many case studies to 9 address that sort of thing, I don't think. 10 One of the things you do need to do very 11 carefully is to define what you're going to use for 12 yourpeakenvironment, yourpeakexternalenvironment, 13 

### and what standards are you going to impose upon the 14 system for comfort level or whatever during peak 15 environment? 16 I live in a 97 degree design environment 17 

### location, and we had 113 degrees last year. If one 18 

### designedfor 113

### degrees, bysome standardsthatwould 19 be considered to be a severely oversized system. So 20 you need to articulate that up front, and that needs 21 to be a matter of discussion and hopefully consensus 22 in the group. 23 The third point I would make is if those 24 numbers are fairlyhigh, thenyouneedtocomebackto 25 the point that Jim Mullen has stressed two or three

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com160 1 times, and that's refrigerant. What happens in the *) 

### ~ 2 elevated temperatures is different with some of the 3 new refrigerants than it is with our 22 with respect 4 to capacity, with respect to load, what have you. The 5 performance is not the same. 6 MR. RABA: Thank you. 7 Don. 8 MR. BRUNDAGE: Don Brundage, Southern 9 Council. 10 Modeling of commercial buildings and 11 commercial load in total is something that's being 12 done countless times by countless people around the 13 country, and I would encourage you to if not buy 14 something from the RDIs of the world or whatever, be 15 very careful about using things like case studies in 16 talkingabout something like thisbecause case studies 17 almost bydefinition arewell engineered,well thought 18 out, efficient systems, which is not the norm in the 19 real world. 20 In the real world, people start with 21 safety margins, and then everyone every step of the 22 way adds more safety margins, and you end up with 50 23 percent too large a system because you makemore money 24 on the commission that way, et cetera, et cetera. 25 And there's other assumptions to go in 

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### 160 1 

### times, and that's refrigerant. What happens in the 2 elevated temperatures is different with some of the 3 new refrigerants than it is with our 22 with respect 4 tocapacity, withrespect toload, whathaveyou. The 5 performance is not the same. 6 

### MR. RABA: Thank you. 7 

### Don. 8 

### MR. BRUNDAGE: Don Brundage, Southern 9 Council. 10 Modeling of commercial buildings and 11 commercial load in total is something that's being 12 done countless times by countless people around the 13 country, and I would encourage you to if not buy 14 something from the RDIs of the world or whatever, be 15 very careful about using things like case studies in 16 talkingabout somethinglikethisbecausecase studies 17 almostbydefinitionarewellengineered, wellthought 18 out, efficient systems, which is not the norm in the 19 real world. 20 In the real world, people start with 21 safety margins, and then everyone every step of the 22 way adds more safetymargins, and you end up with 50 23 percenttoolargea systembecauseyoumakemoremoney 24 on the commission that way, et cetera, et cetera. 25

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### And there's other assumptions to go in NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com161 1 there, like commercial building load is not really 2 decreasing in most of the states I've seen. It's 3 increasing because of increased plug loadand computer 4 intensity. 5 You don't need to reinvent the wheel on 6 all of this. Iwould encourage you to try to see what 7 canned stuff there is from EIA or other forecasting 8 outfits that you can use. I think case studies and 9 trying to look at things like that is probably going 10 to lead you to a distorted answer. 11 Thank you. 12 MR. RABA: Thank you. 13 I saw Harvey Sacks' hand. Pass? Thank 14 you. 15 Thank you, Don. 16 MR. WINIARSKI: Thank you. 17 Although there's a whole bunch of 18 different modeling concerns here, I think there's 19 about four of them that really came out when we were 20 putting together the framework document that Iwanted 21 to make sure we tried to address in this meeting or at 22 least bring up so that people could produce some 23 comments on. 24 The first of them I've listed here is how 25 do we deal with economized reusage in commercial 

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### there, like commercial building load is not really 2 

### decreasing in most of the states I've seen. It's 3 increasingbecauseofincreasedplugloadandcomputer 4 

### intensity. 5 

### You don't need to reinvent the wheel on 6 

### all of this. I wouldencourageyouto tryto seewhat 7 

### canned stuff there is from EIA or other forecasting 8 

### outfits that you can use. I think case studies and 9 

### trying to look at things like that is probably going 10 

### to lead you to a distorted answer. 11 

### Thank you. 12 

### MR. RABA: Thank you. 13 

### I saw Harvey Sacks' hand. Pass? Thank 14 

### you. 15 

### Thank you, Don. 16 

### MR. WINIARSKI: Thank you. 17 

### Although there's a 

### whole bunch of 18 

### different modeling concerns here, I 

### think there's 19 about four of them that really came out when we were 20 puttingtogetherthe framework document that I wanted 21 

### tomake surewe triedtoaddress inthismeetingorat 22 least bring up so that people could produce some 23 comments on. 24 The first of them I've listedhere ishow 25 do we deal with economized reusage in commercial

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com162 1 buildings and in new versus existing construction. 2 For those who aren't familiar, the economizer 3 basically uses cool outdoor air when possible to 4 reduce the cooling load or eliminate the cooling load 5 on a piece of equipment, and they tend to be used in 6 certain areas of the country. They tend to be used in 7 larger systems. They are under most building 8 standards at least to try to address the subject. 9 There's a bunch of different ways we could 10 look at economizers. We could look at what's 11 reported, for instance, in the CBEC survey as typical, 12 but that may not be what gets put in in the future. 13 We can look at what a particular building 14 code suggests, like 90.1 suggests, for the future, but 15 that may not be what's actually put in. 16 We welcome comments as to the frequency of 17 use of economizers, as well as the control strategies 18 that might be applied to those economizers in 19 different areas of the country. 20 MR. STEPHENS: Charlie Stephens, Oregon 21 Energy Office. 22 Perhapsmore important thanwhat is likely 23 to go in, which you can probably come to some 24 assumptions about based on what's being sold out 25 there, and you know, either it has it or it doesn't. 

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### 162 1 buildings and in new versus existing construction. 2 For those who aren't familiar, the economizer 3 basically uses cool outdoor air when possible to 4 reduce the cooling loador eliminate the coolingload 5 on a piece of equipment, and they tend to be used in 6 certainareas of the country. Theytendtobeusedin 7 

### larger systems. They are under most building 8 standards at least to try to address the subject. 9 There's'abunchofdifferentwayswe could 10 look at economlzers. We could look at what's 11 reported, forinstance, intheCBEC surveyastypical, 12 but that may not be what gets put in in the future. 13 We canlookat what a particularbuilding 14 code suggests, like90.1 suggests, forthefuture, but 15 that may not be what's actuallyput in. 16 Wewelcomecommentsastothefrequencyof 17 use of economizers, as well as the control strategies l8 

### that might be applied to those economizers in 19 different areas of the country. 20 

### MR. STEPHENS: Charlie Stephens, Oregon 21 Energy Office. 22 Perhapsmoreimportantthanwhatislikely 23 to go in, which you can probably come to some 24 assumptions about based on what's being sold out 25 there, and you know, either it has it or it doesn't.

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE" N,W. WASHINGTON, D,C. 20005-3701 www,nealrgross,com163 1 I think the bigger issue might be how long it works. 2 You might just truncate economizer use altogether at 3 about seven years based on our research and just 4 assume that after that it doesn't work at all. 5 But something along those lines might be 6 more important in your effort than trying to decide 7 what has an economizer and what doesn't. 8 MR. WINIARSKI: Right, and that's 9 certainly an issue that's been brought up before, is 10 reallywhat's the persistence of savings when theyput 11 in economizers in commercial buildings. 12 A second comment or the second bullet down 13 here addresses what Jim Crawford brought up, whichwas 14 how do we deal with sizing of commercial equipment in 15 buildings. 16 For lots of various reasons commercial 17 equipment that gets put in will tend to be oversized 18 in terms of design load condition at some level, and 19 how much it's oversized is going to significantly 20 affect the part loading of the unit, and obviously the 21 part load performance weighs in here. 22 So getting information as to what you 23 folks believe is appropriate sizing assumptions for 24 this analysis is sort of vital. That will also play 25 into what gets used in the life-cycle cost analysis 

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### 1 I think the bigger issue might be how long it works. 2 You might just truncate economizer use altogether at 3 

### about seven years based on our research and just 4 

### assume that after that it doesn't work at all. 5 

### But something along those lines might be 6 

### more important in your effort than trying to decide 7 

### what has an economizer and what doesn't. 8 

### MR. 

### WINIARSKI: Right, and that's 9 certainly an issue that's beenbrought up before, is 10 reallywhat'sthepersistenceof savingswhentheyput 11 

### in economizers in commercial buildings. 12 Asecondcommentorthesecondbulletdown 13 hereaddresseswhatJimCrawfordbroughtup, whichwas 14 

### how dowe deal with sizingof commercial equipment in 15 

### buildings. 16 

### For lots of various reasons commercial 17 equipment that gets put in will tend to be oversized 18 

### in terms of design load condition at some level, and 19 how much it's oversized is going to significantly 20 affectthepartloadingof theunit, andobviouslythe 21 part load performance weighs in here. 22 So getting information as to what you 23 folks believe 1S 

### appropriate sizing assumptions for 24 

### this analysis is sort of vital. That will also play 25 into what gets used in the life-cycle cost analysis

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com164 1 later on. ish 2 Another particularly thorny issue that 3 comes up with modeling is how do we deal with coming 4 up with assumptions with regard to fan static 5 pressures in the analysis. I think that got brought 6 up earlier, is that there's a wide variety of 7 differences in fan static pressures or in this case 8 external static pressure that's facedwith, depending 9 on the building type and the duct construction, and 10 will probably also vary somewhat depending on the age 11 of the building. 12 And so we'd like to somehow come up with 13 some characterization of what might be typical fan 14 statics and how much they might range for given 15 building types. 16 And then the fourth bullet that I've got 17 down here is how do we deal with when the supply fans 18 are operating simply toprovide ventilation air in the 19 building. In most cases at least with existing 20 buildings, the construction is such that these 21 packaged systems will also be used to provide the 22 ventilation air for thebuilding, and that's not going 23 to be true in all cases. In some cases a separate 24 ventilation system may be used, particularly if the 'Q 

### ~25 equipment is used in conjunction with other pieces of 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODE ISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 164 

### 1 later on. 2 Another particularly thorny issue that 3 comes up with modeling is how do we deal with coming 4 up with assumptions with regard to fan static 5 

### pressures ln the analysis. I think that got brought 6 up earlier, is that there's a wide variety of 7 differences in fan static pressures or ln this case 8 external staticpressure that's facedwith, depending 9 on the building type and the duct construction, and 10 will probablyalsovary somewhat dependingonthe age 11 

### of the building. 12 And so we'd like to somehow come up with 13 some characterization of what might be typical fan 14 

### statics and how much they might range for given 15 building types. 16 And then the fourth bullet that I've got 17 down here is how do we deal withwhen the supply fans 18 

### areoperatingsimplytoprovideventilationairinthe 19 

### building. In most cases at least with existing 20 

### buildings, the construction is such that these 21 

### packaged systems will also be used to provide the 22 ventilationairforthebuilding, andthat'snotgoing 23 

### to be true in all cases. In some cases a separate 24 ventilation system may be used, particularly if the 25 equipment isused inconjunctionwithotherpieces of

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com165 1 equipment, like a packaged unit used in conjunction 2 with maybe a central chiller system. 3 So that's going to be an issue, and it 4 will also deal with when we are sort of projecting 5 energy savings. This gets into sort of the 6 differences between the efficiency level assumptions 7 and maybe a design option approach where we would 8 actually have some idea of what the efficiency of the 9 fan might be in that model. 10 That may not exist if we're dealing with 11 simply an efficiency level approach, and we may have 12 to either ask for estimates of that frommanufacturers 13 for each different efficiency level or make some 14 assumptions about what's going to be typical through 15 all efficiency levels. 16 Those are four of the principal ones that 17 we came up with when we were sort of debating this 18 issue as a team. I'm sure there's other ones, 19 particularlymodeling issues, that need to get brought 20 up, but one of them that I think we really need to 21 bring up is really how much detail do we need to put 22 into this level of the analysis. 23 Obviously there's tremendous variation in 24 the loads that can be faced by this equipment because 25 of the variation in all of these parameters, and we'd NEAL R. GROSS COURT REPORTERS ANDTRANSCRIBERS 1323RHODE ISLANDAVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

### 165 1 equipment, like a packaged unit used in conjunction 2 with maybe a central chiller system. 3 

### So that's going to be an issue, and it 4 will also deal with when we are sort of projecting 5 

### energy savings. This gets into sort of the 6 differences between the efficiency level assumptions 7 

### and maybe a design option approach where we would 8 actuallyhave some idea ofwhat the efficiencyof the 9 fan might be in that model. 10 

### That may not exist if we're dealing with 11 simply an efficiency level approach, and we may have 12 toeitheraskforestimatesofthat frommanufacturers 13 for each different efficiency level or make some 14 assumptions about what's going to be typical through 15 all efficiency levels. 16 Those are four of theprincipal ones that 17 we came up with when we were sort of debating this 18 

### issue as a team. I'm sure there's other ones, 19 particularlymodelingissues, thatneedtogetbrought 20 up, but one of them that I think we really need to 21 bring up is really how much detail do we need to put 22 into this level of the analysis. 23 Obviouslythere I

### s tremendousvariationin 24 the loads that canbe faced bythis equipment because 25 of thevariation in all of these parameters, andwe'd

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com166 1 like to get some idea of how much variation is 

# g*~ 2 necessary for this analysis. 3 Yes. 4 MR. STEPHENS: In your modeling are you 5 going to produce load shapes that are then usable 6 combined with pricing, electricity pricing? 7 MR. WINIARSKI: Charlie, could you say it 8 again? 9 MR. RABA: Charlie Stephens, yeah. 10 MR. WINIARSKI: Go to the microphone, 11 please. 12 MR. STEPHENS: Are you going to be 13 producing load shapes out of your modeling that are 14 then translatable into a pricing scheme that can be 15 used to model what happens topricing when load shapes 16 vary in one shape versus another? 17 MR. RABA: Go ahead. 18 MR. STOOPS: John Stoops, LB&L. 19 Hopefully we can cover a little bit in 20 subsequent discussions, but, yes, that's our 21 intention, is to come up with a method to do exactly 22 that, our successes to be determined, but that's our 23 intent. 24 If you have suggestions to help us do it 25 better, Imean, that's why we're here. 

### NEALR.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323RHODE ISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 166 1 

### like to get some idea of how much variation is 2 necessary for this analysis. 3 

### Yes. 4 

### MR. STEPHENS: In your modeling are you 5 

### going to produce load shapes that are then usable 6 

### combined withpricing, electricitypricing? 7 

### MR. WINIARSKI: Charlie, couldyou sayit 8 

### again? 9 

### MR. RABA: Charlie Stephens, yeah. 10 

### MR. WINIARSKI: Go to the microphone, 11 

### please. 12 

### MR. STEPHENS: Are you going to be 13 

### producing load shapes out of your modeling that are 14 

### then translatable into a pricing scheme that can be 15 

### usedtomodelwhathappens topricingwhen loadshapes 16 

### vary in one shape versus another? 17 

### MR. RABA: Go ahead. 18 

### MR. STOOPS: John Stoops, LB&L. 19 

### Hopefully we can cover a little bit in 20 subsequent discussions, but, yes, that's our 21 intention, is to come up with a method to do exactly 22 that, our successes to be determined, but that's our 23 intent. 24 If you have suggestions to help us do it 25 better, I mean, that's why we're here.

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com167 1 MR. WINIARSKI: Right. As with a lot of 2 steps here, these early steps are somewhat predicated 3 on what are going to be the requirements of later 4 steps in the analysis. 5 Yes. 6 MR. CRAWFORD: Jim Crawford. 7 Kind of a general -- Jim Crawford -- a 8 general point. I think that in many of these modeling 9 areas, a smaller workshop is needed, and perhaps the 10 people who ought to attend that are not necessarily 11 people that are in the room. For example, from the 12 manufacturers' standpoint, I'd want to see us have 13 some application engineers here, perhaps other than 14 some of the people that are here now. 15 And I think that relative to the point 16 that Charlie raised about economizers, that's a very 17 troubling question that he raises. We believe that 18 most economizers certainly can be made to work after 19 seven years, and we need to -- I think the regulatory 20 community here needs to address if they're not being 21 used why they're not being used and how to go about 22 getting them used because certainly in terms of total 23 energy conservation, you know, that should be your 24 first, second, and third priority, is to get the *V 

### ~ 25 economizers used and used properly. 

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### 167 1 

### MR. WINIARSKI: Right. As with a lot of 2 steps here, these early steps are somewhat predicated 3 

### on what are going to be the requirements of later 4 

### steps in the analysis. 5 

### Yes. 6 

### MR. CRAWFORD: Jim Crawford. 7 

### Kind of a general -- Jim Crawford -- a 

### 8 generalpoint. I thinkthat inmanyof thesemodeling 9 areas, a smaller workshop is needed, and perhaps the 10 people who ought to attend that are not necessarily 11 

### people that are in the room. For example, from the 12 manufacturers' standpoint, I'd want to see us have 13 some application engineers here, perhaps other than 14 some of the people that are here now. 15 And I think that relative to the point 16 that Charlie raised about economizers, that's a very 17 troubling question that he raises. We believe that 18 

### most economizers certainly canbe made to work after 19 sevenyears, andwe need to -- I think the regulatory 20 community here needs to address if they're not being 21 used why they're not being used and how to go about 22 getting themusedbecause certainly interms of total 23 energy conservation, you know, that should be your 24 first, second, and third priority, is to get the 25 economizers used and used properly.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com168 1 I mean, it's a free ride, and they get 2 turned off maybe because people don't like the way 3 they perform or something else, but we shouldn't just 4 walk away from them and say, well, they're good for 5 seven years, and then they don't work. 6 MR. MULLEN: Jim Mullen. 7 A couple of random thoughts. You know, 8 one is you've got a top four list of things to be 9 concerned about. I think there's probably a fifth 10 one, which is the ventilation load and whether or not 11 62.1 is adopted universally, whether you have demand 12 controls or continuous ventilation. 13 The second thing is I think there are more 14 and more buildings today that don't operate strictly 15 off defensible requirements. A lot of schools today, 16 you actually are running cooling in order to 17 dehumidify, and that somehow needs to be fit into the 18 analysis. 19 And then the third one is, as I recall, in 20 the residential analysis, there was a certain amount 21 of energy consumption built in for commercial use or 22 from commercial buildings due to residential equipment 23 being applied to those buildings at the NOPR level, 24 and so there is some data and some characterization 25 set of buildings. 

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### 168 1 I 

### mean, it's a free ride, and they get 2 turned off maybe because people don't like the way 3 theyperformor somethingelse, but we shouldn'tjust 4 walk away from them and say, well, they're good for 5 seven years, and then they don't work. 6 

### MR. MULLEN: Jim Mullen. 7 

### A couple of random thoughts. You know, 8 one is you've got a top four list of things to be 9 

### concerned about. I 

### think there's probably a fifth 10 one, which is the ventilationload andwhetherornot 11 62.1 is adopted universally, whether you have demand 12 controls or continuous ventilation. 13 The secondthingis I 

### thinktherearemore 14 and more buildings today that don't operate strictly 15 off defensible requirements. Alot of schools today, 16 you actually are running cooling In order to 17 dehumidify, and that somehowneeds tobe fit into the 18 analysis. 19 Andthenthethirdone is, as I 

### recall, in 20 the residential analysis, there was a certain amount 21 of energy consumption built in for commercial use or 22 fromcommercialbuildingsduetoresidentialequipment 23 being applied to those buildings at the NOPR level, 24 and so there is some data and some characterization 25 set of buildings.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com169 1 MR. ECKMAN: Tom Eckman. 2 I would say overlying all of these 3 specific modeling concerns, I may agree with Jim that 4 it may take a special workshop with a limited set of 5 folks or a different set of folks to deal with these 6 issues, but as Jim just raised, the whole concept that 7 you can take and boil this all down to one building 8 type, given the variation in load shape and the 9 operational characteristics of schools versus medical 10 facilities, versus retail, hairdresser shops, versus 11 something else that use this equipment, it's a bit 12 daunting, and the applications of this equipment and 13 the duty cycles that they face and the control 14 strategies that they face or the equipment faces, each 15 one of these is a specific problem by building 16 category and the load shaped barriers, and their rate 17 structures will probably vary accordingly. 18 So while I don't envy you, I think it's 19 much more complex than boiling it down to a single 20 parameter kind of this is the aggregate load shape 21 because I think you're going to mask a lot of the 22 detail that's necessary to decide what to do and which 23 kinds of application. 24 MR. WINIARSKI: I hope I didn't give the 25 wrong impression. Basically we have no intention of 

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### 169 1 

### MR. ECKMAN: Tom Eckman. 2 I would say overlying all of these 3 specificmodelingconcerns, I may agree withJimthat 4 it may take a special workshop with a limited set of 5 folks or a different set of folks to deal with these 6 issues, but asJimjustraised, thewhole conceptthat 7 you can take and boil this all down to one building 8 type, given the variation In load shape and the 9 operationalcharacteristicsof schoolsversusmedical 10 facilities, versus retail, hairdresser shops, versus 11 something else that use this equipment, it's a bit 12 daunting, and the applications of this equipment and 13 the duty cycles that they face and the control 14 strategiesthattheyfaceortheequipment faces, each 15 one of these is a specific problem by building 16 categoryand the load shapedbarriers, and theirrate 17 structures will probablyvary accordingly. l8 

### So while I 

### don't envy you, I 

### think it's 19 much more complex than boiling it down to a single 20 parameter kind of this is the aggregate load shape 21 because I think you're going to mask a lot of the 22 detailthat'snecessarytodecidewhattodo andwhich 23 kinds of application. 24 

### MR. WINIARSKI: I hope I didn't glve the 25 wrong impression. Basicallywe have no intention of

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com170 1 boiling this down to sort of a single prototype 2 building for the U.S. The goal, as is the goal in 3 most of the appliance analysis work that's been done 4 recently, is to -develop sort of a distribution of 5 energy use, energy loads, and later life cycle cost 6 impact such that we can characterize the entire 7 population at some level. 8 Ultimately the decisions have to be made 9 that boil down to essentially adopting one standard 10 level, and whether that's sort of at the average 11 level, which may reflect energy use in the country, or 12 whether it's at sort of the median life-cycle cost 13 level, which sort of impactswinners and losers, those 14 type of decisions are made later on in the analysis. 15 Yeah. 16 MR. HUNT: Marshall Hunt, Pacific Gas & 17 Electric Company. 18 In some researchwe did at our testing lab 19 on I think it was seven and a half ton units, we found 20 that it's particularly important what fan comes with 21 the unit, and sometimes you can choose one of three 22 fans, and the unit may have its efficiency rating 23 based on the lowest horsepower fan, and yet the unit 24 may often show up due to the conservatism on the part 25 of either the engineer or the design-build contractor 

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### 1 boiling this down to sort of a single prototype 2 building for the 

### u.s. The goal, as is the goal in 3 

### most of the appliance analysis work that's been done 4 

### recently, is to develop sort of a distribution of 5 

### energy use, energy loads, and later life cycle cost 6 

### impact such that we can characterize the entire 7 

### population at some level. 8 

### Ultimately the decisions have to be made 9 

### that boil down to essentially adopting one standard 10 

### level, and whether that's sort of at the average 11 

### level, whichmayreflectenergyuse inthe country, or 12 

### whether it's at sort of the median life-cycle cost 13 

### level, whichsortofimpactswinnersandlosers, those 14 

### type of decisions are made later on in the analysis. 15 

### Yeah. 16 

### MR. 

### HUNT: Marshall Hunt, Pacific Gas 

### & 17 Electric Company. 18 Insomeresearchwe didatourtestinglab 19 on I think itwas sevenanda half tonunits, we found 20 that it's particularly important what fan comes with 21 

### the unit, and sometimes you can choose one of three 22 fans, and the unit may have its efficiency rating 23 based on the lowest horsepower fan, and yet the unit 24 may often showup'due to the conservatismon thepart 25 of eitherthe engineerorthe design-buildcontractor

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com171 1 with either the next size up fan or even higher, and 2 it may not even need that, and that's an example of 3 the oversizing that's occurring out there. 4 And with these equipment that are running 5 many, many hours, and the fan energy consumption is 6 swamped, the compressor energy consumption, and so I 7 think the supply fan issue is something we need to 8 look at and be particularly aware of the fact that 9 these units can come with a selection of fans. 10 And how to deal with that issue, I don't 11 have the answer, but it's real, and it needs to be 12 dealt with. 13 MR. WINIARSKI: Right, and I don't know if 14 that variation would be captured, for instance, in 15 ARI's different product ratings or not. 16 MR. AMRANE: Karim Amrane with ARI. 17 I'm confused by the statement because I 18 believe when we test products, we tested the specific 19 model number, and it's not shipped with different 20 packs, I mean, when it goes to the lab. 21 MR. HUNT: Maybe Michael Martin and the 22 Energy Commission could help me on this. 23 I think it is just with one fan and then 24 other fans to be shipped. 25 MR. MARTIN: I have a lot of people 

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### with either the next size up fan or even higher, and 2 it may not even need that, and that's an example of 3 the oversizing that's occurring out there. 4 

### Andwiththese equipment that are running 5 

### many, many hours, and the fan energy consumption is 6 

### swamped, the compressor energy consumption, and so I 7 

### think the supply fan issue is something we need to 8 

### look at and be particularly aware of the fact that 9 

### these units can come with a selection of fans. 10 

### And how to deal with that issue, I don't 11 

### have the answer, but it's real, and it needs to be 12 

### dealt with. 13 

### MR. WINIARSKI: Right, andI don'tknowif 14 

### that variation would be captured, for instance, in 15 

### ARI's different product ratings or not. 16 

### MR. AMRANE: Karim Amrane with ARI. 17 

### I'm confused by the statement because I 18 

### believewhenwe testproducts, we testedthe specific 19 

### model number, and it's not shipped with different 20 

### packs, I 

### mean, when it goes to the lab. 21 

### MR. HUNT: Maybe Michael Martin and the 22 Energy Commission could help me on this. 23 I think it is just with one fan and then 24 other fans to be shipped. 25 

### MR. MARTIN: I have a lot of people NEAL

### R.GROSS (202)234-4433 COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com172 1 interested in it, and the data I've got is strongly 2 conflicting and comes from a number of people in this 3 room and a number of other people, but the intent, as 4 I understand from ARI, is that a model that is listed 5 should have a particular fan with a particular motor 6 on it, and that alternatives are available, but they 7 should have different model numbers. 8 That's my understanding. Now, whether 9 they actually do in all cases or how changes get made 10 between the manufacturer and the site is a little hard 11 to tell. 12 MR. WINIARSKI: I know certainly the 13 products can be ordered with different horsepower 14 motors, often with the same product, but unless 15 there's a significant difference in motor efficiency, 16 that wouldn't affect the rating which is done at a 17 specific test static pressure. 18 MR. SACKS: Harvey Sacks, ACEEE. 19 I'd really have to put this to Karim more 20 as a question than a response. Certainly with the 21 residential standard -- thinking of mice and elephants 22 -- with the residential standard there's a default 23 energy consumption used in the SEER test, but you're 24 allowed to specify a particular air handler with a 25 different energy consumption in making particular 

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### 172 1 interested in it, and the data I've got is strongly 2 conflicting andcomes from a number ofpeople in this 3 room and a number of otherpeople, but the intent, as 4 I understand fromARI, is that a model that is listed 5 should have a particular fan with a particular motor 6 on it, and that alternatives are available, but they 7 should have different model numbers. 8 

### That's my understanding. Now, whether 9 they actuallydo in all cases orhow changes get made 10 betweenthemanufacturerandthe siteisa littlehard 11 to tell. 12 MR. WINIARSKI: I know certainly the 13 products can be ordered with different horsepower 14 motors, often with the same product, but unless 15 there's a significantdifference inmotorefficiency, 16 that wouldn't affect the rating which is done at a 17 specific test static pressure. 18 

### MR. SACKS: Harvey Sacks, ACEEE. 19 

### I'dreallyhave toput this to Karimmore 20 

### as a question than a response. Certainly with the 21 residentialstandard

- - thinkingofmiceandelephants 22

-- with the residential standard there's a default 23 energy consumption used in the SEER test, but you're 24 allowed to specify a particular air handler with a 25 different energy consumption in making particular

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., NW. WASHINGTON, D.C. 20005-3701 www.nealrgross.com173 1 claims about a particular model. 2 And that brings you to the issue of 3 whether, in fact, you do get into substantially 4 different efficiencies. The particular case would be 5 the ECM motors in the circulate mode may use a quarter 6 as much energy as a PSC in the same mode. 7 MR. CRAWFORD: Jim Crawford. I know I 8 don't look like Karim, but that's

-- 9 (Laughter.) 10 PARTICIPANT: He's handsome. 11 MR. CRAWFORD: Well, he's certainly 12 younger, anyway. 13 The residential thing, it is mice and 14 elephants, and this mouse doesn't have a trunk. In a 15 residential product the reason that you have that 16 whole thing about the default watts is the fact that 17 the actual numerical majority of air conditioners go 18 on top of the furnaces and, therefore, they don't have 19 a blower that comes along with them. 20 Whereas in the case of rooftop units, the 21 unit is complete. It contains its own blower. When 22 you have an ECM fan or blower versus an induction 23 motor blower, I think in everybody's product line it's 24 a different model number, as Mike Martin has said. 25 So some of the confounding that you may 

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### 173 1 

### claims about a particular model. 2 

### And tha.t brings you to the issue of 3 

### whether, ln fact, you do get into substantially 4 

### different efficiencies. Theparticularcasewouldbe 5 

### theECMmotors inthe circulatemodemayuse a quarter 6 

### as much energy as a PSC in the same mode. 7 

### MR. CRAWFORD: Jim Crawford. I know I 8 

### don't look like Karim, but that's

-- 9 

### (Laughter.) 10 

### PARTICIPANT: He's handsome. 11 

### MR. CRAWFORD: Well, he's certainly 12 younger, anyway. 13 

### The residential thing, it is mice and 14 elephants, and this mouse doesn't have a trunk. In a 15 residential product the reason that you have that 16 whole thing about the default watts is the fact that 17 the actual numerical majority of air conditioners go 18 ontopofthe furnaces and, therefore, theydon'thave 19 a blower that comes along with them. 20 Whereas inthe case of rooftopunits, the 21 

### unit is complete. It contains its own blower. When 22 you have an ECM fan or blower versus an induction 23 motorblower, I thinkineverybody'sproduct lineit's 24 a different model number, as Mike Martin has said. 25 So some of the confounding that you may

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com174 1 think exists in residential products does not exist 2 here. 

# * 3 MR. WINIARSKI: Right, and that actually 4 gets into a little bit of the

-- 5 MR. CRAWFORD: The splits will come with 6 their own fans. The split commercial units will come 7 with their own fans built in. It's an air handler 8 situation. It's not an A coil or a flat coil. 9 MR. WINIARSKI: Right, and I was going to 10 say that gets into a little bit about building stock 11 characterization. If you look in the CBECS survey at 12 least, if we're going to -- certainly the 13 distribution, the regional distribution and possibly ID 14 the building type distribution of heat pumps is 15 different than it would be for package systems. 16 It may be that the regional or there may 17 be a similar set of distribution for split systems, 18 but it's hard to pull out of the data. So when we 19 start to actually characterize the building stock, we 20 would like to get as much feedback, you know, on 21 whether it would be reasonable, for instance, to 22 simply examine the building stock characterization out 23 of CBECS for packing systems and assume that that 24 applies to splits or whether we try to tease out the *O 25 data as best we can for what looks to be split systems 

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### 174 1 think exists in residential products does not exist 2 here. 3 

### MR. WINIARSKI: Right, and that actually 4 

### gets into a little bit of the

-- 5 

### MR. CRAWFORD: The splits will come with 6 

### theirown fans. The split commercial units will come 7 

### with their own fans built In. It's an air handler 8 

### situation. It's not an Acoil or a flat coil. 9 

### MR. WINIARSKI: Right, and I was goingto 10 

### say that gets into a little bit about building stock 11 characterization. If you look in the CBECS survey at 12 

### least, if we're going to certainly the 13 distribution, the regional distribution and possibly 14 the building type distribution of heat pumps is 15 different than it would be for package systems. 16 It may be that the regional or there may 17 be a similar set of distribution for split systems, 18 

### but it's hard to pullout of the data. So when we 19 start toactuallycharacterize thebuilding stock, we 20 would like to get as much feedback, you know, on 21 

### whether it would be reasonable, for instance, to 22 simplyexaminethebuildingstockcharacterizationout 23 of CBECS for packing systems and assume that that 24 applies to splits or whether we try to tease out the 25 data asbestwe can forwhat looks tobe split systems

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com175 1 as defined. 2 MR. CRAWFORD: Jim Crawford. I believe 3 that ARI can provide statistics on where different 4 types of equipment go geographically, and again, I 5 believe that the members would encourage them to make 6 that information available under confidentiality to 7 the contractor. 8 And as long as I've got the microphone, 9 relative to the diversity in buildings, if you get the 10 information on the diversity of types ofbuildings, an 11 office building being very different than a strip 12 commercial warehouse versus schools and hospitals, if 13 you get your various classes, you don't need to do 14 monstrous amounts of analysis on a diversity within 15 groups because a diversity between groups will give 16 you the diversity that you seek, and you should be 17 able to identify groups of these by some kind of a 18 spikiness (phonetic) measure, you know, total 19 consumption and spikiness, whatever you want to call 20 it that can be applied to the rate structures to let 21 you address the demand charge issue. 22 MR. STOOPS: John Stoops, LBL. 23 I'll ask another question about the 24 building types. From your knowledge of what you ship 25 to in the industry, are there classes of buildings 

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### 175 1 as defined. 2 

### MR. CRAWFORD: Jim Crawford. I believe 3 that ARI can provide statistics on where different 4 types of equipment go geographically, and again, I 5 believe that themembers would encourage them tomake 6 that information available under confidentiality to 7 the contractor. 8 And as long as I've got the microphone, 9 relativetothediversityinbuildings, ifyouget the 10 informationonthediversityoftypesofbuildings, an 11 office building being very different than a strip 12 commercialwarehouseversus schools andhospitals, if 13 you get your various classes, you don't need to do 14 monstrous amounts of analysis on a diversity within 15 groups because a diversity between groups will give 16 you the diversity that you seek, and you should be 17 able to identify groups of these by some kind of a 18 

### spikiness (phonetic) measure, you know, total 19 consumption and spikiness, whatever you want to call 20 it that can be applied to the rate structures to let 21 you address the demand charge issue. 22 

### MR. STOOPS: John Stoops, LBL. 23 

### I'll ask another question about the 24 building types. Fromyourknowledge of what you ship 25 to in the industry, are there classes of buildings

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### NEALR.

### GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com176 1 that represent such an insignificant fraction that we 

# B*I 2 can afford to ignore them? 3 MR. CRAWFORD: When you've got as many 4 hundreds of thousands of buildings as you do, my guess 5 is you need not sweat that too much. The ones that 6 you shouldn't think of are probably the ones that you 7 won't. 8 (Laughter.) 9 MR. WINIARSKI: Another comment that I'll 10 bring up briefly here is in the issue of the 11 simulation. There are different ways in which we can 12 produce. We can do the thermal loads in the 13 simulations. We can do the energy savings estimates 14 within the simulations also, but that requires using 15 some estimates of the part load performance curves 16 that may or may not be appropriate. Most of those 17 have been around for a while. So that may be another 18 area where we would like to get some feedback from 19 industry members. 20 Obviously, I think the curves that are in 21 DOE2 have been around for ten years or maybe longer, 22 and I don't know if the market has changed since then, 23 but obviously issues like dual compressors being in 24 the baseline might be significant. (* 25 Yes? 

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### 176 1 that represent suchaninsignificant fraction that we 2 can afford to ignore them? 3 

### MR. CRAWFORD: When you've got as many 4 hundredsof thousandsofbuildings asyoudo, myguess 5 

### is you need not sweat that too much. The ones that 6 

### you shouldn't think of areprobablythe ones that you 7 

### won't. 8 (Laughter.) 9 

### MR. WINIARSKI: Anothercomment that I'll 10 bring up briefly here is In the issue of the 11 simulation. There are different ways inwhichwe can 12 produce. We can do the thermal loads in the 13 simulations. We can do the energy savings estimates 14 within the simulations also, but that requires using 15 some estimates of the part load performance curves 16 that mayor may not be appropriate. Most of those 17 have been around for a while. So that maybe another 18 area where we would like to get some feedback from 19 industry members. 20 Obviously, I think the curves that are in 21 DOE2 have been around for ten years or maybe longer, 22 and I don't knowifthemarket has changed sincethen, 23 but obviously issues like dual compressors being in 24 the baseline might be significant. 25 Yes?

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., NW. WASHINGTON, D.C 20005-3701 www.nealrgross.com177 1 MR. SACKS: I thought i understood until 2 just that last comment, and that was a question 3 whether part of the analysis is dealing with the 4 buildings or the equipment because if it's dealing 5 with the equipment, these questions like parasitics 6 become important. If it's dealing with the building, 7 I'm not sure where you're putting the duct system. 8 MR. WINIARSKI: This analysis sort of 9 spans both of those areas. Obviously, those two 10 issues, the equipment in the building interface, and 11 where we draw the line that separates the two 12 different parts of the analysis is not clear at this 13 point. 14 MR. SACKS: In that case, with all due 15 respect because I'm not a modeler as anyone here 16 probably knows, it's not clear to me that some of 17 these models have the ability to disaggregate to the 18 level that would be required. DOE2, inparticular, is 19 particularly inhospitable toward componentsother than 20 major components in commercial buildings. 21 Andasyou start thinkingabout economizer 22 cycles and circulation as opposed to treatment, issues 23 like fan energy will become very important. 24 MR. WINIARSKI: Actually I was going to 25 comment that DOE2 and all of these tools will model 

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### 177 1 

### MR. SACKS: I thought i understood until 2 just that last comment, and that was a question 3 whe.ther part of the analysis is dealing with the 4 buildings or the equipment because if it's dealing 5 with the equipment, these questions like parasitics 6 become important. If it's dealingwiththe building, 7 I'm not sure where you're putting the duct system. 8 

### MR. WINIARSKI: This analysis sort of 9 

### spans both of those areas. Obviously, those two 10 issues, the equipment in the building interface, and 11 where we draw the line that separates the two 12 different parts of the analysis is not clear at this 13 point. 14 

### MR. SACKS: In that case, with all due 15 respect because I'm not a modeler as anyone here 16 probably knows, it's not clear to me that some of 17 these models have the ability to disaggregate to the 18 levelthatwouldberequired. DOE2, inparticular, is 19 particularlyinhospitabletowardcomponentsotherthan 20 major components in commercial buildings. 21 Andasyoustartthinkingabouteconomizer 22 cyclesandcirculationasopposedtotreatment, issues 23 like fan energy will become very important. 24 

### MR. WINIARSKI: 

### Actually I was going to 25 comment that DOE2 and all of these tools will model

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W WASHINGTON, D.C. 20005-3701 www.nealrgross.com178 1 economizers fairly well. Where there may be other 2 issues, generally they resort to a performance curve 3 for the compressors, and in fact, the entire 4 condensing part of the system. 5 MR. SACKS: I'm not sure how appropriate 6 it is -- again, Harvey Sacks -- for these smaller 7 systems, but certainly recent work for DOE by A.D. 8 Little has pointed out the secondary loads of which I 9 think the fan is an analogue here, have historically 10 not been tracked well by the default values in DOE2. 11 And I wonder if this is a problem which at 12 the level you're describing requires a component based 13 approach, such as TRANSIS rather than the higher level 14 modeling efforts associated with DOE2. 15 Again, I may fundamentally misunderstand 16 that. 17 MR. WINIARSKI: Yeah, I think that's 18 again, for a separate meeting, sort of the details of 19 this. Briefly, the way DOE2 works, at least, is that 20 you apply -- the fan energy has to be initially 21 separated from the condensingunit, energy consumption 22 and analysis. The condensing unit is modeled using 23 estimates or for these part load performance curves 24 that I spoke of. 25 The fan energy typically is modeled with 

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### economizers fairly well. Where there may be other 2 issues, generally they resort to a performance curve 3 

### for the compressors, and in fact, the entire 4 condensingpart of the system. 5 

### MR. SACKS: I'm not sure how appropriate 6 

### it is again, Harvey Sacks for these smaller 7 systems, but certainly recent work for DOE by A.D. 8 

### Little haspointedout the secondary loads of which I 9 think the fan is an analogue here, have historically 10 not been tracked well by the default values in DOE2. 11 AndI wonderifthis isa problemwhichat 12 thelevelyou'redescribingrequiresa componentbased 13 approach, suchasTRANSIS ratherthanthehigherlevel 14 modeling efforts associated with DOE2. 15 Again, I may fundamentally misunderstand 16 that. 17 

### MR. WINIARSKI: Yeah, I think that's 18 

### again, for a separatemeeting, sort of the details of 19 this. Briefly, the wayDOE2 works, at least, is that 20 you apply the fan energy has to be initially 21 separatedfromthecondensingunit, energyconsumption 22 and analysis. The condensing unit is modeled using 23 estimates or for these part load performance curves 24 that I spoke of. 25 The fan energy typically is modeled with

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com179 1 some sort of constant KW per CFM type number or static 2 pressure type number. 3 You know, if we were assuming variable 4 speed fans, we'd have to figure out a way to deal with 5 that. One option is you use those tools to basically 6 pull out the thermal loads that would be assigned to 7 those equipment, and then use a separate tool like a 8 spreadsheet or something to produce energy consumption 9 data that would track that type of variation. 10 But, again, it's fairly complex, and 11 certainly something for another discussion, I think, 12 rather than this meeting. 13 One other thing I might bring up is that 14 I think all of the industry members probably have 15 tools internally developed to estimate basically cost 16 effectiveness or energy use of their products, and 17 they may be able to provide good information, again, 18 from the application engineering side about what 19 assumptions they've used in development of those 20 tools. 21 Any other questions? Yeah. 22 MR. CRAWFORD: Yeah, Jim Crawford. 23 Just a general observation. As we go 24 forward, and before we go forward, I want to step back 25 and count the number of people in this room today from 

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### 1 some sortof constant KWperCFM typenumberor static 2 

### pressure type number. 3 

### You know, if we were assuming variable 4 

### speedfans, we'dhave to figure outa wayto dealwith 5 

### that. One option isyouuse those tools tobasically 6 

### pullout the thermal loads that would be assigned to 7 

### those equipment, and then use a separate tool like a 8 

### spreadsheetorsomethingtoproduceenergyconsumption 9 

### data that would track that type of variation. 10 

### But, again, it's fairly complex, and 11 

### certainly something for another discussion, I 

### think, 12 

### rather than this meeting. 13 

### One other thing I 

### might bring up is that 14 I 

### think all of the industry members probably have 15 

### tools internallydevelopedtoestimatebasicallycost 16 

### effectiveness or energy use of their products, and 17 

### theymaybe able to provide good information, again, 18 

### from the application engineering side about what 19 

### assumptions they've used in development of those 20 

### tools. 21 

### Any other questions? Yeah. 22 

### MR. CRAWFORD: Yeah, Jim Crawford. 23 

### Just a general observation. As we go 24 forward, andbeforewe goforward, I want to stepback 25 andcount thenumberofpeople inthisroomtodayfrom

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com180 1 the major manufacturers and the number of people 2 where from the Department of Energy and its 3 laboratories. We cannot shadow you on this analysis. 4 We don't have that kind of manpower. 5 And, of course, all of your guys can get 6 in one room, you know, and say, "Well, we agree on 7 this," or that and the other thing. We're much more 8 constrained on that. I can't give half of an analysis 9 to Mike and half of it Jim and half of it to Carey -- 10 well, there are not that many halves anyway. 11 You know, we can't do that, and so I 12 almost hate to say this, but to a very significant 13 degree we are at your mercy, and that's one of the 14 reasons that we're so adamant about some of these 15 fundamental things, because, you know, we can build 16 this just like has been done in the past so that 17 you've got this huge analytical mountain that nobody 18 outside of the analyst knows what in the hell is in 19 there. 20 And, you know, it was reported on the last 21 program that 20 man-months was spent addressing the 22 issue of the difference between average and marginal 23 utility rates. Well, you know, you certainly don't 24 think anybody in this industry is going to shadow 20 25 man-months worth of effort. 

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### 180 1 

### the major manufacturers and the number of people 2 

### where from the Department of Energy and its 3 laboratories. We cannot shadowyou on this analysis. 4 We don't have that kind of manpower. 5 

### And, of course, all of your guys can get 6 in one room, you know, and say, "Well, we agree on 7 this," or that and the other thing. We're much more 8 constrainedonthat. I can'tgivehalfofananalysis 9 to Mike andhalf of it Jim and half of it to Carey 10 well, there are not that many halves anyway. 11 You know, we can't do that, and so I 12 almost hate to say this, but to a very significant 13 degree we are at your mercy, and that's one of the 14 

### reasons that we're so adamant about some of these 15 fundamental things, because, you know, we can build 16 this just like has been done in the past so that 17 you've got this huge analytical mountain that nobody 18 

### outside of the analyst knows what in the hell is in 19 there. 20 And, youknow, itwasreportedonthe last 21 program that 20 man-months was spent addressing the 22 issue of the difference between average and marginal 23 utility rates. Well, you know, you certainly don't 24 think anybody in this industry is going to shadow 20 25 man-months worth of effort.

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com181 1 And, by the way, the answer was: big 2 deal. It didn't make a heck of a lot of difference. 3 MR. WINIARSKI: Yeah, I would invite 4 people to review what was provided for the screening 5 analysis of all these ASHRAE equipment, and there's a 6 discussion, and maybe we need to flesh that out a 7 little bit more about what we had proposed for that 8 level. 9 That was sort of an intermediary level, I 10 think, of analysis between a fairly simple analysis 11 like what was originally done to set the ASHRAE 12 levels, and something more complicated like what is 13 typically done for the appliance rulemakings. 14 MR. CRAWFORD: But, again, you're not 15 trying to design a building. You're trying to get a 16 reasonable characterization of the building stock in 17 the United States. So on any given building or any 18 given group of buildings, if you're off by 15 percent, 19 it doesn't make any difference, assuming that you're 20 able to make errors in both directions. 21 You know, when you throw it all in the big 22 pot, it all comes out in the wash. 23 MR. RABA: Other comments for Dave? Go 24 ahead, Don. 25 MR. BRUNDAGE: Don Brundage, Southern 

### NEALR.GROSS COURTREPORTERS ANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 181 1 

### And, .by the way, the answer was: big 2 

### deal. It didn't make a heck of a lot of difference. 3 

### MR. WINIARSKI: Yeah, I would invite 4 people to review what was provided for the screening 5 

### analysis of all theseASHRAE equipment, and there's a 6 

### discussion, and maybe we need to flesh that out a 7 

### little bit more about what we had proposed for that 8 

### level. 9 

### That was sort of an intermediarylevel, I 10 

### think, of analysis between a fairly simple analysis 11 

### like what was originally done to set the ASHRAE 12 

### levels, and something more complicated like what is 13 

### typically done for the appliance rulemakings. 14 

### MR. CRAWFORD: But, again, you're not 15 

### trying to design a building. You're trying to get a 16 

### reasonable characterization of the building stock in 17 

### the United States. So on any given building or any 18 

### givengroupofbuildings, ifyou'reoffby 15

### percent, 19 

### it doesn't make any difference, assuming that you're 20 

### able to make errors in both directions. 21 

### Youknow, whenyouthrowitall inthebig 22 

### pot, it all comes out in the wash. 23 

### 24 ahead, Don. 25

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### MR. RABA: Other comments for Dave? Go

MR. BRUNDAGE: Don Brundage, Southern NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com182 1 Company. 2 I would agree with Jim, and I think 3 modeling -- I've had a lot of experience with 4 modeling, and I think it would be useful for doing 5 things like defining improvements. It's not going to 6 be useful in this context to define the population. 7 To try to define the population using 8 modeling across all of the varying types and climates 9 would be an impossible task even with the amount of 10 money you have to throw at it. I think modeling 11 aspects of it in coming up with some ideas on how the 12 differences might be between different types of 13 options and using it to supplement a more general type 14 commercial class wouldbe useful, but Iwould question 15 the value of trying to model everything in all 16 possible ways, which I think is what you're doing. 17 MR. RABA: Tom? 18 MR. ECKMAN: Just to echo or maybe take 19 off on that a little bit, ultimately this boils down 20 to the duration of the duty cycle that the equipment 21 is going to face and the cost of that, and at some 22 point it's basically howmany load hours this thing is 23 working an dhow much it saves when it's working at 24 higher efficiencies during those same load hours. 25 So you can probably parameterize it as 

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### 182 1 

### Company. 2 I would agree with Jim, and I think 3 

### modeling I've had a lot of experience with 4 

### modeling, and I think it would be useful for doing 5 

### things like defining improvements. It'snot goingto 6 be useful in this context to define the population. 7 

### To try to define the population using 8 modeling across all of the varyingtypes and climates 9 would be an impossible task even with the amount of 10 

### money you have to throw at it. I think modeling 11 aspects of it in comingup with some ideas onhow the 12 differences might be between different types of 13 optionsandusingitto supplementa moregeneraltype 14 commercialclasswouldbeuseful, but I wouldquestion 15 the value of trying to model everything in all 16 possible ways, which I think is what you're doing. 17 

### MR. RABA: Tom? 18 MR. ECKMAN: Just to echo or maybe take 19 off on that a little bit, ultimately this boils down 20 to the duration of the duty cycle that the equipment 21 is going to face and the cost of that, and at some 22 pointit'sbasicallyhowmanyloadhoursthis thingis 23 working an dhow much it saves when it's working at 24 higher efficiencies during those same load hours. 25

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### So you can probably parameterize it as NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com183 1 long as you have the load shape correct so that you 2 get the right rate, but it's everywhere from 1,000 a 3 year to 6,000 a year duty cycle, and somewhere in 4 there it's cost effective and somewhere it isn't. 5 And the question of howmany buildings and 6 building types are below that category and above that 7 break line. 8 MR. RABA: Okay. Thank you. 9 MR. WINIARSKI: Thank you. 10 MR. RABA: Thank you very much, David. 11 Next up we're going to talk about life12 cycle cost analysis. John Stoops from Lawrence 13 Berkeley National Laboratories. 14 MR. STOOPS: Okay. This is going to say 15 I'm Jim McMahon, which I'm not. Jim clearly has much 16 more experience in this particular set of rulemaking 17 activities, a lot more history than I do. He's off at 18 Tahiti. So we'll have to all have envy for him in 19 such a bum place. 20 And an analogy a bit, and I think that 21 we're all kind of struggling with how ill defined part 22 of this is. If I bring an analogy from the building 23 industry where you have a conceptual design, a Title 24 I, a Title II, and actual construction documents, I 25 think this workshop is really in the conceptual design 

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### 183 1 long as you have the load shape correct so that you 2 get the right rate, but it's everywhere from 1,000 a 3 year to 6,000 a year duty cycle, and somewhere in 4 there it's cost effective and somewhere it isn't. 5 Andthequestionofhowmanybuildingsand 6 buildingtypes arebelowthat categoryand above that 7 break line. 8 

### MR. RABA: Okay. Thank you. 9 

### MR. WINIARSKI: Thank you. 10 MR. RABA: Thank you very much, David. 11 Next up we're going to talk about life12 cycle cost analysis. John Stoops from Lawrence 13 BerkeleyNational Laboratories. 14 

### MR. STOOPS; Okay. This is going to say 15 I'mJimMcMahon, which I'mnot. Jim clearlyhas much 16 more experience in this particular set of rulemaking 17 activities, a lotmorehistorythanI do. He's off at 18 Tahiti. So we'll have to all have envy for him in 19 such a bum place. 20 

### And an analogy a bit, and I think that 21 we'reallkindof strugglingwithhowilldefinedpart 22 of this is. If I bring an analogy from the building 23 industrywhere you have a conceptual design, a Title 24 I, a Title II, and actual construction documents, I 25 thinkthisworkshopisreallyintheconceptualdesign

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., NW. WASHINGTON, D.C. 20005-3701 www.nealrgross.com184 1 phase. 2 We've sort of laid out a framework of how 3 we want to approach this, and we're really gathering 4 that feedback from the audience about the particular 5 details. We really do appreciate the input and the 6 responses that we're receiving. Where we all end up 7 I'm not sure. 8 If we look at the actual language of life9 cycle cost analysis to try to describe exactly what it 10 is, from the governing documents, it is to analyze the 11 savings and operating costs throughout the average 12 life of the covered product in the type or class 13 compared to any increase in the price of or in the 14 initial charges for or maintenance expenses of the 15 covered products which are likely to result from the 16 imposition of standards. 17 I don't know how Francine can cope with 18 being an attorney sometimes with some of these 19 languages, but in legal sense, that's what it's trying 20 to say. In a graphical sense and in an equation 21 sense, if you're a mathematician, that's another way 22 to try to say what it is, where we're looking at the 23 initial cost, the operating expenses, and because 24 money has time value, we try to discount it. So 25 that's a couple of other ways to look at it. 

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### 1 phase. 2 We've sort of laidout a framework ofhow 3 we want to approach this, and we're really gathering 4 that feedback from the audience about the particular 5 

### details. We really do appreciate the input and the 6 responses that we're receiving. Where we all end up 7 I'm not sure. 8 Ifwe lookattheactual languageof life9 cyclecost analysistotrytodescribeexactlywhat it 10 

### is, fromthegoverningdocuments, itistoanalyzethe 11 savings and operating costs throughout the average 12 life of the covered product in the type or class 13 compared to any increase In the price of or In the 14 

### initial charges for or maintenance expenses of the 15 coveredproducts which are likely to result from the 16 imposition of standards. 17 I don't know how Francine can cope with 18 

### being an attorney sometimes with some of these 19 languages, butinlegal sense, that'swhat it'strying 20 

### to say. In a graphical sense and in an equation 21 sense, if you're a mathematician, that's another way 22 to try to say what it is, where we're looking at the 23 initial cost, the operating expenses, and because 24 

### money has time value, we try to discount it. 

### So 25 that's a couple of other ways to look at it. NEALR.GROSS (202)234-4433 COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com185 1 We have lots of uncertainties associated. 2 We have the product life. We have the discount rate 3 itself, how that initial cost varies, and those are 4 all challenges we have to try to determine. 5 So we want from you responses about 6 whether or not these approaches are reasonable. We've 7 had some discussions about regional variations in 8 climate. We haven't really talked yet much about 9 energy price. That's been alluded to. 10 We've had quite a bit of discussion about 11 all of the different kinds of data sources, equipment 12 lifetimes. Should that depend on operating hours, 13 climate, or other application specific variables? 14 As we look at the life-cycle cost stage of 15 the analysis, it's really the first step in the 16 analysis that's really jamming a bunch of the stuff 17 that we've done together, that we've done before 18 together. So we are trying to look at the buildings 19 and the utilities and the equipment, and then trying 20 to bring it all in the same bounds of valuing it in 21 terms of dollars. 22 If we look at the inputs that we're 23 dealing with, we've got the installed cost, and we 24 could talk a lot about what that really means because *V 

### ~ 25 we know that that's a difficult thing to come up with, 

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### 185 1 

### We have lotsofuncertainties associated. 2 We have the product life. We have the discount rate 3 itself, how that initial cost varies, and those are 4 all challenges we have to try to determine. 5 

### So we want from you responses about 6 whetherornottheseapproachesarereasonable. We've 7 had some discussions about regional variations in 8 

### climate. We haven't really talked yet much about 9 energyprice. That's been alluded to. 10 We've hadquite a bit of discussion about 11 all of the different kinds of data sources, equipment 12 lifetimes. Should that depend on operating hours, 13 climate, or other application specific variables? 14 Aswe lookatthelife-cyclecost stageof 15 the analysis, it's really the first step In the 16 analysis that's really jamming a bunch of the stuff 17 that we've done together, that we've done before 18 together. So we are trying to look at the buildings 19 and the utilities and the equipment, and then trying 20 to bring it all in the same bounds of valuing it in 21 terms of dollars. 22 If we look at the inputs that we're 23 dealing with, we've got the installed cost, and we 24 couldtalka lot about what that reallymeans because 25 we knowthat that'sa difficult thingtocomeupwith,

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE.,N.W. WASHINGTON, D.C. 20005·3701 www.nealrgross.com186 1 but we still have to come up with data. We have to 2 drive this process. 3 And so we could look at current or recent 4 purchases. We could calculate it from mark-ups and 5 manufacturer, dealer, and distributor. We have this 6 problem. Yes, it's uncertain about exactly how it's 7 going to be approached, but we have to make a 8 decision, and we have to proceed and do this kind of 9 analysis. 10 We've got operating expenses with energy, 11 maintenance cost. We have to know what the lifetime 12 is. We have to make a decision about what the most 13 appropriate discount rate it. 14 How could we go about that? Well, we've 15 already talked about we could use CBEC's data. We 16 could go through this other set of simulations to come 17 up with that. We need additional information about 18 energy prices. So we could go to EIA and try to come 19 up with that. We could look at the relative 20 importance of marginalprices, gather and analyze data 21 about lifetime discount rates, do a survey of 22 commercials, all of these different approaches that, 23 indeed, we're looking at and considering. How do we 24 go about doing it? 25 We want to come up with something that's 

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### 186 1 

### but we still have to come up with data. We have to 2 drive this process. 3 And sowe couldlook at current orrecent 4 

### purchases. We could calculate it from mark-ups and 5 

### manufacturer, dealer, and distributor. We have this 6 

### problem. Yes, it's uncertain about exactly how it's 7 

### going to be approached, but we have to make a 8 

### decision, and we have to proceed and do this kind of 9 

### analysis. 10 

### We'vegot operatingexpenseswithenergy, 11 maintenance cost. We have to know what the lifetime 12 

### is. We have to make a decision about what the most 13 

### appropriate discount rate it. 14 

### How could we go about that? Well, we've 15 

### already talked about we could use CBEC's data. We 16 couldgothroughthisothersetof simulationstocome 17 up with that. We need additional information about 18 energyprices. So we could go to ErAand try to come 19 

### up with that. We could look at the relative 20 importanceofmarginalprices, gatherandanalyzedata 21 

### about lifetime discount rates, do a survey of 22 commercials, all of these different approaches that, 23 indeed, we're looking at and considering. How do we 24 go about doing it? 25 We want to come up with something that's

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com187 1 really as relatively simple an expression as this, 2 where we have a baseline -- can't even decide what 3 that is necessarily -- and then a series of options 4 that might have variations in installed costs, 5 variations in operating and maintenance costs that's 6 going to then be discounted and come back with 7 variations in life-cycle costs. 8 And then ultimately we need to make a 9 decision in the ultimate rule based upon this life10 cycle cost analysis. 11 But rather than talk about just points, 12 we're really talking about ranges. So we want to look 13 at the variability among these applications, these 14 different operating conditions, climate building 15 characteristics. How many building samples do we 16 need? How many climates do we need? How many 17 different kinds of equipment? 18 That's the problem that we're facing, and 19 we need to make decisions about how we actually 20 capture that variation. 21 To do this in a way that's going to be 22 acceptable to everyone, we need to use commercially 23 available software, use some distribution, make it 24 publicly available, make it as transparent and as easy *F 

### ~ 25 to understand as possible even though by its very 

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### 187 1 really as relatively simple an expression as this, 2 where we have a baseline

-- can't even decide what 3 that is necessarily

-- and then a series of options 4 that might have variations in installed costs, 5 

### variations in operating and maintenance costs that's 6 going to then be discounted and come back with 7 variations in life-cycle costs. 8 

### And then ultimately we need to make a 9 decision in the ultimate rule based upon this life10 cycle cost analysis. 11 But rather than talk about just points, 12 we'rereallytalkingabout ranges. Sowe want to look 13 

### at the variability among these applications, these 14 

### different operating conditions, climate building 15 

### characteristics. How many building samples do we 16 

### need? How many climates do we need? How many 17 different kinds of equipment? 18 That's theproblemthatwe're facing, and 19 we need to make decisions about how we actually 20 capture that variation. 21 To do this in a way that's going to be 22 acceptable to everyone, we need to use commercially 23 available software, use some distribution, make it 24 publiclyavailable, makeitastransparent andaseasy 25 to understand as possible even though by its very

(202)234-4433 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com188 1 nature this is a very complex problem. is 2 So it's this tension of being technically 3 as good as we can make it, yet as visible and 4 transparent to a wide range of interesting parties. 5 It's a challenge. 6 How do I go back? I went two. 7 These are just some random issues that in 8 addition to all of that other things, we have another 9 set of analysis issues that cause us to scratch our 10 head and wonder exactly how to proceed. 11 We've talked a little bit. We've referred 12 to owner and user perspectives. That's an issue. How 13 do we deal with it? 14 We haven't really talked directly about 15 how to capture demand charges. There's been some 16 references that it's really no big deal. Yet for 17 residential that's probably true. I'm not sure if 18 it's going to be completely true for the commercial 19 market. 20 And then if we look at utility 21 deregulation, based upon the experiences that we've 22 had in California and elsewhere, I mean, how are we 23 going to predict the future when the future is as 24 uncertain as it seems to be? 25 Ultimately we come up with some results 

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### 1 nature this is a very complex problem. 2 So it'sthis tensionofbeingtechnically 3 

### as good as we can make it, yet as visible and 4 

### transparent to a wide range of interesting parties. 5 

### It's a challenge. 6 

### How do I go back? I went two. 7 

### These arejust some random issues that in 8 

### addition to all of that other things, we have another 9 

### set of analysis issues that cause us to scratch our 10 

### head and wonder exactly how to proceed. 11 

### We'vetalkeda littlebit. We'vereferred 12 

### toowneranduserperspectives. That'sanissue. How 13 

### do we deal with it? 14 

### We haven't really talked directly about 15 

### how to capture demand charges. There's been some 16 

### references that it's really no big deal. Yet for 17 

### residential that's probably true. I'm not sure if 18 

### it's going to be completely true for the commercial 19 

### market. 20 

### And then if we look at utility 21 

### deregulation, based upon the experiences that we've 22 had in California and elsewhere, I mean, how are we 23 going to predict the future when the future is as 24 uncertain as it seems to be? 25 Ultimately we come up with some results

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C 20005·3701 www.nealrgross.com189 1 where we summarize them. We look at the average or 2 some median life-cycle cost, and we look at some 3 percentage of consumers with net savings or with net 4 costs. 5 And likewise we do an importance analysis 6 to try to focus on issues that will really try to say, 7 well, what really matters the most. What contributes 8 the most to the uncertainty and the variability? 9 And then I think it's just a bunch of 10 back-up slides. I don't think there's any of those 11 individual ones that anyone in the audience would like 12 to discuss. 13 Yes, sir. 14 MR. CRAWFORD: Jim Crawford. 15 Those who went through the last analysis 16 together will not be surprised at what I have to say 17 here. On discount rate, the discount rates that are 18 typically used are far, far too low for consumers or 19 for small business. For small business you have to 20 look at what is their highest marginal rate that 21 they're paying, and you know, it may be for floor 22 stock. It may be a line of credit, whatever, but 23 interests in the ten percent and above are not at all 24 uncommon in business today. There's a whole bunch of 25 stuff called junk bonds which describes that whole 

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### 189 1 

### where we summarize them. We look at the average or 2 some median life-cycle cost, and we look at some 3 percentage of consumers with net savings or with net 4 costs. 5 Andlikewisewe do an importance analysis 6 totrytofocus onissues that willreallytryto say, 7 well, what reallymatters the most. What contributes 8 the most to the uncertainty and the variability? 9 

### And then I think it's just a bunch of 10 

### back-up slides. I don't think there's any of those 11 individualonesthatanyoneintheaudiencewouldlike 12 to discuss. 13 

### Yes, sir. 14 

### MR. CRAWFORD: Jim Crawford. 15 Those who went through the last analysis 16 together will not be surprised at what I have to say 17 here. On discount rate, the discount rates that are 18 typicallyused are far, far too low for consumers or 19 for small business. For small business you have to 20 look at what is their highest marginal rate that 21 they're paying, and you know, it may be for floor 22 stock. It may be a line of credit, whatever, but 23 interests in the tenpercent and above are not at all 24 uncommon inbusiness today. There's a wholebunchof 25 stuff called junk bonds which describes that whole

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com190 1 classification. 2 So interest rates probably ought to be in 3 -- I don't know the commercial field that well, but I 4 would guess probably in the 12 to 15 percent bracket, 5 not the five or three or seven percent like we used 6 last time. 7 One of the justifications used in the past 8 for bringing down the discount rate, you say, well, 9 you've got the effect of taxes, you know, and they're 10 paying with pre-tax dollars and all of that. If you 11 want to play that game, then you have to go back and 12 make the purchase also adjusted for the tax rate. 13 So if my tax rate is 50 percent and I've 14 got a 1,000 purchase, it costs me $2,000, and I've not 15 seen any of that done here. 16 Demand, I'm going to guess that that's 17 highlyvariable, and Iwouldhope that Edison Electric 18 Institute or EPRI or somebody can shed -- or perhaps 19 some of the utilities -- can shed some light on what 20 constitute typical profiles if there is such a thing. 21 And I think the biggest factor is going to 22 be whether or not it has a ratchet built into it. If 23 it's got a 12 month ratchet, it's going to be a very 24 significant thing. 25 MR. STOOPS: Well, and we are out looking 

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### 190 1 classification. 2 So interest ratesprobablyought tobe in 3

-- I don't know the commercial field that well, but I 4 wouldguessprobablyin the 12 to 15percent bracket, 5 not the five or three or seven percent like we used 6 last time. 7 

### Oneofthejustificationsusedlnthepast 8 for bringing down the discount rate, you say, well, 9 you've got the effect of taxes, you know, and they're 10 paying with pre-tax dollars and all of that. If you 11 want to play that game, then you have to go back and 12 make the purchase also adjusted for the tax rate. 13 So if my tax rate is 50 percent and I've 14 got a 1,000purchase, it costsme $2,000, and I'venot 15 seen any of that done here. 16 

### Demand, I'm going to guess that that's 17 highlyvariable, andI wouldhope thatEdisonElectric 18 

### Institute or EPRI or somebody can shed

-- or perhaps 19 some of the utilities

-- can shed some light on what 20 con·stitute typicalprofiles if there is sucha thing. 21 AndI thinkthebiggestfactor isgoingto 22 be whether ornot it has a ratchet built into it. If 23 it's got a 12 month ratchet, it's going to be a very 24 significant thing. 25

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### MR. STOOPS: Well, andwe are out looking NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com191 1 at gathering a host of different rates. We'd have to 2 make some decisions about how to distribute those 3 rates just like we're distributing the building size, 4 the equipment size across the sample of the analyses. 5 MR. CRAWFORD: But I think as we go 6 forward, or maybe not "but," but "and"; as we go 7 forward, it's important that there be, again, some 8 small workshops of the analysts and the people who are 9 expert in this field so that that information comes 10 from the field of expertise into the analysts, and 11 there's a meeting of the minds there rather than 12 coming around after the fact and having the analysts 13 say, "Well, this is how we got our results." 14 MR. STOOPS: Some of your prior comments 15 about not dealing with that particular subject, but in 16 dealing with shipment data and other information, 17 there was a concern about confidentiality you 18 expressed, and the desire to lump stuff together or 19 have large enough samples that could be passed through 20 ARI. 21 How would you handle these working 22 meetings? Would they have to be handled through ARI 23 or can we work individually? Can we develop a list of 24 target individuals? 25 MR. CRAWFORD: Well, on utility rates ARI 

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### 1 at gathering a host of different rates. We'dhave to 2 make some decisions about how to distribute those 3 

### ratesjust likewe're distributing thebuilding size, 4 

### the equipment size across the sample of the analyses. 5 

### MR. CRAWFORD: But I 

### think as we go 6 

### forward, or maybe not "but," but "and"; as we go 7 

### forward, it's important that there be, again, some 8 

### smallworkshops oftheanalysts andthepeoplewho are 9 

### expert in this field so that that information comes 10 

### from the field of expertise into the analysts, and 11 

### there's a meeting of the minds there rather than 12 

### coming around after the fact and having the analysts 13 

### say, "Well, this is how we got our results." 14 

### MR. STOOPS: Some of your prior comments 15 

### aboutnotdealingwiththatparticularsubject, but in 16 

### dealing with shipment data and other information, 17 

### there was a concern about confidentiality you 18 

### expressed, and the desire to lump stuff together or 19 

### havelargeenoughsamplesthatcouldbepassedthrough 20 

### ARl. 21 

### How would you handle these working 22 meetings? Would they have to be handled throughARl 23 orcanwe work individually? Canwe developa listof 24 target individuals? 25

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### MR. CRAWFORD: Well, onutilityratesARl NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com192 1 is not the right outfit. 2 MR. STOOPS: Well, not utility rates, 3 but

-- 4 MR. CRAWFORD: Well, but there's a -- 5 MR. STOOPS: -- the general area. 6 MR. CRAWFORD: There's a significant 7 difference here in that I think that almost all of the 8 utilities and probably all of them have published 9 tariff schedules

-- 10 MR. STOOPS: Right, right. 11 MR. CRAWFORD: -- that tell you exactly 12 what you pay. 13 MR. STOOPS: No, andwe're gathering that, 14 but you had also

-- 15 MR. CRAWFORD: Now, when you're talking 16 about shipment information; when you're talking about 17 what quantities go into a given geographic area; when 18 you're talking about anything in the statistical area 19 on ARI, if you're talking about prices of the 20 products, of ARI products, then I would hope that 21 every manufacturer is going to refer you to ARI for 22 aggregated data. 23 MR. STOOPS: But it's more of the working 24 group question that says how are we making some of 25 these decisions vis-a-vis the model. What models for 

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### 192 1 is not the right outfit. 2 

### MR. STOOPS: Well, not utility rates, 3 but

-- 4 

### MR. CRAWFORD: Well, but there's a 5 

### MR. STOOPS: the general area. 6 

### MR. CRAWFORD: There's a significant 7 differencehere inthat I thinkthat almost allof the 8 utilities and probably all of them have published 9 tariff schedules

-- 10 

### MR. STOOPS: Right, right. 11 MR. CRAWFORD:

-- that tell you exactly 12 what you pay. 13 

### MR. STOOPS: No, andwe'regatheringthat, 14 but you had also

-- 15 

### MR. CRAWFORD: Now, when you're talking 16 about shipment information; whenyou're talkingabout 17 what quantitiesgo intoa givengeographic area; when 18 

### you're talkingabout anything in the statistical area 19 on ARI, if you're talking about prices of the 20 products, of ARI products, then I would hope that 21 every manufacturer is going to refer you to ARI for 22 aggregated data. 23 MR. STOOPS: But it'smore of the working 24 group question that says how are we making some of 25 these decisionsvis-a-vis themodel. What models for

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com193 1 HVAC modeling do individual manufacturers have? 2 You made the suggestion that we have a 3 working group to deal with some of those issues. 4 MR. CRAWFORD: Yeah, yeah. 5 MR. STOOPS: How do we gather that working 6 group? 7 MR. CRAWFORD: Through ARI. 8 MR. STOOPS: That one should be done 9 through ARI? 10 MR. CRAWFORD: Well, relative to the 11 industryparticipation. Theywill coordinate industry 12 participation, and one of the things I thought of 13 earlier that I didn't mention was, you know, we're 14 talking about -- we're all thinking about how muchyou 15 have to disaggregate the building stock. Well, one 16 answer to that is you do not have to disaggregate it 17 any further than the statistics that you can get on 18 how many square feet of each of those types of 19 buildings there are out there. 20 Because if I can't figure out how much of 21 it is out there to put into the national load, to put 22 into the national energy savings calculations, it 23 doesn't do me any good to have this group or that 24 group of the buildings. 25 MR. STOOPS: Don? 

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### 193 1 HVAC modeling do individual manufacturers have? 2 You made the suggestion that we have a 3 working group to deal with some of those issues. 4 

### MR. CRAWFORD: Yeah, yeah. 5 

### MR. STOOPS: Howdowe gatherthatworking 6 group? 7 

### MR. CRAWFORD: ThroughARl. 8 

### MR. STOOPS: That one should be done 9 throughARl? 10 

### MR. CRAWFORD: Well, relative to the 11 industryparticipation. Theywillcoordinateindustry 12 participation, and one of the things I thought of 13 earlier that I didn't mention was, you know, we're 14 talkingabout

-- we'reallthinkingabouthowmuchyou 15 

### have to disaggregate the building stock. Well, one 16 answer to that is you do not have to disaggregate it 17 any further than the statistics that you can get on 18 how many square feet of each of those types of 19 buildings there are out there. 20 Because if I can't figure out howmuchof 21 it is out there toput into the national load, toput 22 into the national energy savings calculations, it 23 doesn't do me any good to have this group or that 24 group of the buildings. 25

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### MR. STOOPS: Don? NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE,N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com194 1 MR. BRUNDAGE: Don Brundage, Southern 2 Company. 3 A comment on the utility and marginal 4 costs and rates issue, and this is probably different 5 from what I or some of the other in the industry have 6 said in the past. Every assumption that's been made 7 on where deregulation is going that's been made in the 8 past five years has been wrong and badly wrong, and 9 there's really not much consensus either on where 10 rates are going. 11 One of my arguments says -- 12 MR. STOOPS: You don't have a good crystal 13 ball that you can tell us? 14 MR. BRUNDAGE: Jim has got a lot better 15 one, what his future shipments are. 16 (Laughter.) 17 MR. CRAWFORD: You're in trouble. 18 MR. BRUNDAGE: And the other thing is, 19 which I have tried to tell people on, in a truly 20 deregulated market, the prices customers -- the prices 21 and rate structures customers see tend to be very 22 simple. You don't do real time prices and marginal 23 this, that, and the other in the loan market to 24 consumers. They do nickel a minute and dime a minute 25 things. 

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### 194 1 

### MR. BRUNDAGE: Don Brundage, Southern 2 Company. 3 

### A comment on the utility and marginal 4 costs andrates issue, and this isprobablydifferent 5 from what I or some of the other in the industryhave 6 said in the past. Every assumption that's been made 7 onwherederegulationisgoingthat'sbeenmade inthe 8 past five years has been wrong and badly wrong, and 9 there's really not much consensus either on where 10 rates are going. 11 One of my arguments says -- 12 MR. STOOPS: Youdon'thavea goodcrystal 13 ball that you can tell us? 14 MR. B'RUNDAGE: Jim has got a lot better 15 one, what his future shipments are. 16 (Laughter.) 17 

### MR. CRAWFORD: You're in trouble. 18 

### MR. BRUNDAGE: And the other thing is, 19 which I have tried to tell people on, in a truly 20 deregulatedmarket, thepricescustomers - - theprices 21 and rate structures customers see tend to be very 22 simple. You don't do real time prices and marginal 23 this, that, and the other in the loan market to 24 consumers. Theydo nickel a minute anddime a minute 25 things.

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com195 1 If you get less complexity, you're in a 2 truly deregulated market. So I guess my point is 3 maybe we're spending too much time and effort on some 4 of these sort of pricing issues, and we need not spend 5 excessive amounts of time on it. 6 MR. STOOPS: Okay. Thanks. 7 Charlie Stephens, then Tom. 8 MR. ECKMAN: Not to be contrary, but at 9 least in our neck of the woods at the moment, one of 10 the major public or private utilities, Tucson Energy, 11 is as we speak placing all of its commercial customers 12 on automated meter reading system and doing real time 13 pricing with those customers. They have a service 14 territory, and it's not restructured, and so it is the 15 incumbent utility and has utility responsibility. 16 So it's different than California used to 17 be but now is rapidly going back to, having utility 18 responsibility. So given the advent of that 19 technology and the deployment of that technology, it's 20 quite possible that significant numbers of this scale 21 of customer will be seeing something like market 22 prices on an hourly basis or four time a day basis. 23 Puget is putting 250 to 300,000 commercial 24 customers on. They already have

-- 25 MR. STOOPS: That many? 

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### 195 1 If you get less complexity, you're in a 2 truly deregulated market. So I guess my point is 3 maybewe're spendingtoomuchtime andeffortonsome 4 of these sort ofpricingissues, andwe neednot spend 5 excessive amounts of time on it. 6 

### MR. STOOPS: Okay. Thanks. 7 

### Charlie Stephens, then Tom. 8 

### MR. ECKMAN: 

### Not to be contrary, but at 9 least in our neck of the woods at the moment, one of 10 themajorpublicorprivateutilities, TucsonEnergy, 11 isaswe speakplacingallof itscommercialcustomers 12 on automatedmeterreading system anddoing real time 13 

### pricing with those customers. They have a service 14 territory, andit'snotrestructured, andsoit isthe 15 incumbent utility and has utility responsibility. 16 So it'sdifferent thanCaliforniausedto 17 be but now is rapidly going back to, having utility 18 

### responsibility. So given the advent of that 19 technologyandthedeploymentofthattechnology, it's 20 quitepossiblethat significant numbers of this scale 21 of customer will be seeing something like market 22 prices on an hourly basis or four time a day basis. 23 Pugetisputting250to300,000commercial 24 customers on. They already have

-- 25

(202)234-4433 

### MR. STOOPS: That many? NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com196 1 MR. ECKMAN: They already have 400,000 * 2 residential customers on that rate schedule. 3 MR. STOOPS: Okay. 4 MR. ECKMAN: So this is not a small 5 deployment. 6 In addition to that, and this is going 7 back to the earlier comment or earlier issue of load 8 shapes, since they are building on that basis and are 9 collecting a significant amount of load shape 10 information, you'll have that available. So it may be 11 possible to get some of that. 12 MR. STOOPS: Do you have contacts that you 13 could share with us? 14 MR. ECKMAN: Yes. 15 MR. STOOPS: Please let us know. 16 MR. RABA: Thank you, Tom. 17 I think Charlie was up and then Don. 18 MR. STEPHENS: Charlie Stephens. 19 I was going to add just on the general 20 picture out on our side of the country you have the 21 additional problem I think unlikeprevious rulemakings 22 where you actually have an interaction between the 23 overall demand or lessening of demand created by 24 various levels of efficiency being considered for an *V 25 end use that has a dramatic impact on the overall 

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### 196 1 

### MR. ECKMAN: 

### They already have 400,000 2 residential customers on that rate schedule. 3 

### MR. 

### STOOPS: Okay. 4 

### MR. ECKMAN: 

### So this is not a small 5 

### deployment. 6 

### In addition to that, and this is going 7 

### back to the earlier comment or earlier issue of load 8 

### shapes, since theyare buildingon that basis and are 9 

### collecting a significant amount of load shape 10 

### information, you'llhavethat available. Soitmaybe 11 possible to get some of that. 12 

### MR. 

### STOOPS: Doyouhavecontactsthatyou 13 

### could share with us? 14 

### MR. ECKMAN: 

### Yes. 15 

### MR. 

### STOOPS: Please let us know. 16 MR. RABA: 

### Thank you, Tom. 17 

### I think Charlie was up and then Don. 18 MR. 

### STEPHENS: Charlie Stephens. 19 I was going to add just on the general 20 picture out on our side of the country you have the 21 

### additionalproblemI thinkunlikepreviousrulemakings 22 where you actually have an interaction between the 23 overall demand or lessening of demand created by 24 various levels of efficiencybeing considered for an 25 end use that has a dramatic impact on the overall

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com197 1 system load, and at critical times. 2 And it interacts with price. It's not 3 just a matter of accounting for demand charges 4 anymore. It actually

-- 5 MR. STOOPS: No, no. That's right. 6 MR. STEPHENS: -- changes the price. 7 MR. STOOPS: And we are talking stabs at 8 looking at that marginal price relationship, andwe're 9 not sure. We're more than willing to share as we 10 proceed, but we're gathering other suggestions. 11 MR. STEPHENS: Yeah, and I think there is 12 data being gathered, I think, in a lot of places where 13 these impacts are already being felt, and it's not 14 trivial, and I don't think you can pay too little 15 attention to it or too much attention to it based on 16 what the billions of dollars that's at stake in 17 California. 18 It's expensive to be wrong in that market, 19 and that's what's happened. It may not be over time 20 as dramatic as it has been, but we're still talking 21 hundreds of millions of dollars for demand avoided in 22 most places in a marketplace that only puts its most 23 expensive generation on the line when demand reaches 24 those high levels. IO 25 So I think that you're going to have to 

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### 197 1 system load, and at critical times. 2 

### And it interacts with price. It's not 3 just a matter of accounting for demand charges 4 

### anymore. It actually

-- 5 

### MR. STOOPS: No, no. That's right. 6 

### MR. STEPHENS:

-- changes the price. 7 

### MR. STOOPS: And we are talking stabs at 8 lookingatthatmarginalpricerelationship, andwe're 9 

### not sure. .We're more than willing to share as we 10 proceed, but we're gathering other suggestions. 11 MR. STEPHENS: Yeah, and I think there is 12 databeinggathered, I think, ina lotofplaceswhere 13 these impacts are already being felt, and it's not 14 trivial, and I don't think you can pay too little 15 attention to it or too much attention to it based on 16 what the billions of dollars that's at stake in 17 California. 18 It's expensivetobewronginthatmarket, 19 and that's what's happened. It may not be over time 20 as dramatic as it has been, but we're still talking 21 hundreds of millions of dollars for demand avoided in 22 most places in a marketplace that onlyputs its most 23 expensive generation on the line when demand reaches 24 those high levels. 25 So I think that you're going to have to

(202)234-4433 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgro55.com198 1 take into account all of those things, but you may be 2 able to do it at avery aggregated level based on data 3 that's probably been gathered now for about 18 months 4 and will continue to be gathered over thenext year in 5 places like Puget Sound, California, and places that 6 are trying to deal with those situations, and you'll 7 connect dollars and load doing that. 8 MR. STOOPS: We're making that effort. 9 MR. BRUNDAGE: Don Brundage again, a 10 follow-up to an earlier comment. 11 We've had quite a few thousand customers, 12 a couple hundred KW and above, on real time pricing 13 for the last, oh, at least the last four or five 14 years, probably more customers longer than most 15 utilities. 16 MR. STOOPS: Okay. 17 MR. BRUNDAGE: And we have had to respond 18 to customer complaints about the unstable nature of 19 the pricing and unpredictability of how much revenue 20 we'd be demanding out of them to provide some more 21 simplified rate options. 22 I'm not trying to minimize the West Coast 23 problems, which are severe, but there are different 24 issues in other parts of the country, and

-- 25 MR. STOOPS: No, and I think the points 

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### 198 1 take into account all of those things, but youmaybe 2 able todo it ata veryaggregatedlevelbasedondata 3 that's probablybeengatherednow for about 18 months 4 andwill continuetobegatheredoverthenextyearin 5 places like Puget Sound, California, and places that 6 are trying to deal with those situations, and you'll 7 connect dollars and load doing that. 8 

### MR. STOOPS: We're making that effort. 9 

### MR. BRUNDAGE: Don Brundage again, a 10 follow-up to an earlier comment. 11 We'vehadquite a few thousandcustomers, 12 a couple hundred KW and above, on real time pricing 13 for the last, oh, at least the last four or five 14 years, probably more customers longer than most 15 utilities. 16 

### MR. STOOPS: Okay. 17 

### MR. BRUNDAGE: Andwe have hadto respond 18 to customer complaints about the unstable nature of 19 the.pricing and unpredictability of how much revenue 20 we'd be demanding out of them to provide some more 21 simplified rate options. 22 I'mnot tryingtominimize theWest Coast 23 problems, which are severe, but there are different 24 issues in other parts of the country, and 25

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### MR. STOOPS: No, and I think the points NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com199 1 we're getting really illustrate the fact that our 2 analysis must, at a minimum, have some regional 3 differences, some regional variation as we go about 4 it. 5 MR. BRUNDAGE: Right. There are a lot of 6 conflicting ways things are pulled, whether you're 7 demand constrained or whether you're not. 8 MR. CRAWFORD: Jim Crawford. 9 One of the saving graces where is the fact 10 that the variability,uncertainty and diversity of all 11 this increases as you get into the out years in your 12 analysis period. If you use a realistic discount 13 rate, it will desensitize your analysis results to a 14 fair degree to variations in the out years. 15 MR. RABA: Jim Miller please. 16 MR. STOOPS: Jim Mullen. 17 MR. RABA: Excuse me. 18 MR. MULLEN: Jim Mullen. 19 A couple of comments. One, I think more 20 and more this equipment is leased as opposed to being 21 purchased, and that needs to be factored into your 22 analysis. 23 MR. STOOPS: Thanks. 24 MR. MULLEN: And then secondly,you talked 25 about a lot of effort going into forecasting electric 

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### 199 1 we're getting really illustrate the fact that our 2 

### analysis must, at a minimum, have some regional 3 

### differences, some regional variation as we go about 4 

### it. 5 

### MR. BRUNDAGE: Right. There are a lot of 6 conflicting ways things are pulled, whether you're 7 demand constrained or whether you're not. 8 

### MR. CRAWFORD: Jim Crawford. 9 Oneofthe savinggraceswhere isthe fact 10 thatthevariability, uncertaintyanddiversityofall 11 this increases as you get into the out years in your 12 analysis period. If you use a realistic discount 13 rate, it will desensitize your analysis results to a 14 fair degree to variations in the out years. 15 

### MR. RABA: Jim Miller please. 16 

### MR. STOOPS: JimMullen. 17 

### MR. RABA: Excuse me. 18 

### MR. MULLEN: Jim Mullen. 19 

### Acouple of comments. One, I think more 20 andmore this equipment is leased as opposedtobeing 21 purchased, and that needs to be factored into your 22 analysis. 23 

### MR. STOOPS: Thanks. 24 

### MR. MULLEN: Andthensecondly, youtalked 25 about a lot of effort going into forecasting electric

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE,N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com200 1 prices and things like that. Is that redundant to 2 this Energy InformationAdministration Energy Outlook? 3 MR. STOOPS: They're somewhat different 4 and hopefully complementary. We work directly with 5 them, but as far as looking at some of the marginal 6 issues, historically that really hasn't done a good 7 job at coupling, and within our own analysis, we 8 really need to couple the variations within this 9 rather specific and the load specific variations. 10 So we think that this coupling needs to 11 occur, and we can't envision how to do it by using the 12 EIA aggregated data. We really need to get in at the 13 disaggregated way and disaggregated at the same time 14 within the analysis. That's our current thought 15 process anyway. 16 MR. CRAWFORD: Jim Crawford. 17 However, if the aggregate of your energy 18 price future forecast is inconsistent with the energy 19 price forecast of the EIA, then I think DOE has a 20 credibility problem. 21 MR. STOOPS: Okay. 22 MR. RABA: I've got a point of order here. 23 This is a curiosity from my point of view. I 24 associate the letters EIA with Electronics Industry 25 Association. I assume we're all -- really we've all 

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### 200 1 

### prices and things like that. Is that redundant to 2 thisEnergyInformationAdministrationEnergyOutlook? 3 

### MR. STOOPS: They're somewhat different 4 

### and hopefully complementary. We work directly with 5 them, but as far as looking at some of the marginal 6 issues, historically that really hasn't done a good 7 job at coupling, and within our own analysis, we 8 really need to couple the variations within this 9 rather specific and the load specific variations. 10 So we think that this coupling needs to 11 occur, andwe can'tenvisionhowtodo itbyusingthe 12 EIAaggregateddata. We reallyneed to get in at the 13 disaggregated way and disaggregated at the same time 14 

### within the analysis. That's our current thought 15 process anyway. 16 

### MR. CRAWFORD: Jim Crawford. 17 However, if the aggregate of your energy 18 price future forecast is inconsistent withthe energy 19 price forecast of the EIA, then I think DOE has a 20 credibilityproblem. 21 

### MR. STOOPS: Okay. 22 MR. RABA: I'vegot a pointof orderhere. 23 

### This is a curiosity from my point of view. I 

### 24 associate the letters EIA with Electronics Industry 25 

### Association.

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com201 1 been doing this. We're really talking about Edison *O g2 Electric Institute, right? 3 MR. CRAWFORD: Energy InformationAgency, 4 which is part of the Department of Energy. 5 MR. RABA: Thank you. I understand now. 6 Appreciate that. 7 Harvey. 8 MR. SACKS: Harvey Sacks. 9 I've been listening to Jim's comments on 10 realistic interest rates and would just offer the 11 observation that to some extent the technologieswe're 12 talking about are demand reducing technologies which 13 at the margin compete with augmented generation for 14 capital. 15 To the extent that's true, then the retail 16 customers' discount rate is not the only rate to be 17 considered. The country as a whole and the utilities 18 are stakeholders in that decisionmaking, and various 19 long rundiscount rates are entirely appropriatewhile 20 we're talking about demand reduction. 21 MR.RABA: Marshall and then Jim Crawford. 22 MR. HUNT: Marshall Hunt, PG&E. 23 I'm not an economist, and in our comments 24 we will respond on the discount rate issue because * 25 there has got to be a way that we can factor in the 

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### 201 1 

### been doing this. We're really talking about Edison 2 Electric Institute, right? 3 

### MR. CRAWFORD: EnergyInformationAgency, 4 which is part of the Department of Energy. 5 

### MR. RABA: Thank you. I understand now. 6 Appreciate that. 7 Harvey. 8 

### MR. SACKS: Harvey Sacks. 9 

### I've been listening to Jim's comments on 10 realistic interest rates and would just offer the 11 observationthattosomeextentthetechnologieswe're 12 talking about are demand reducing technologies which 13 at the margin compete with augmented generation for 14 capital. 15 Totheextentthat'strue, thentheretail 16 customers' discount rate is not the only rate to be 17 considered. The countryas a whole and the utilities 18 

### are stakeholders in that decisionmaking, andvarious 19 longrundiscountratesareentirelyappropriatewhile 20 we're talking about demand reduction. 21 MR. RABA: MarshallandthenJimCrawford. 22 MR.·HUNT: Marshall Hunt, PG&E. 23 I'mnot aneconomist, andinour comments 24 we will respond on the discount rate issue because 25 there has got to be a way that we can factor in the

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com202 1 kind of issues that are raised by the fact that I as 2 a tenant in office space have no say in what air 3 conditioner gets put up there, andyet I am faced with 4 the surcharge that was passed in California by the 5 Public Utilities Commission that in small commercial 6 raised our rates from 12.2 cents a kilowatt hour to 7 16.7 cents a kilowatt hour, and in large commercial, 8 which has a lot of time of use rates, on average 9 raised it from 11 cents a kilowatt hour to over 15 10 cents. 11 And these rates, while they're called 12 surcharges, shouldn't be confused with real increased 13 tariffs that we'll have for a very long time, and PG&E 14 is a regulated distribution utility which is a new 15 beast in the world, which I hope none of the rest of 16 you get to experience, but it's quite an experience, 17 and, yes, the customers are looking frantically for 18 ways out of this, and one of the ways that they are 19 finding is higher efficiency equipment, and we 20 desperately need more of it. 21 And this kind of analysis would look into 22 the availability of it. So we definitely need to look 23 at these kinds of price structures, and I suspect that 24 we're going to see this happening in other areas. 25 I hear from other folks around the country 

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### 202 1 kind of issues that are raised by the fact that I as 2 a tenant in office space have no say in what air 3 conditionergetsputupthere, andyet I am facedwith 4 the surcharge that was passed in California by the 5 Public Utilities Commission that in small commercial 6 raised our rates from 12.2 cents a kilowatt hour to 7 16.7 cents a kilowatt hour, and in large commercial, 8 which has a lot of time of use rates, on average 9 raised it from 11 cents a kilowatt hour to over 15 10 cents. 11 And these rates, while they're called 12 surcharges, shouldn'tbe confusedwithreal increased 13 tariffsthatwe'llhave for a verylongtime, andPG&E 14 is a regulated distribution utility which is a new 15 beast in the world, which I hope none of the rest of 16 you get to experience, but it's quite an experience, 17 and, yes, the customers are looking frantically for 18 

### ways out of this, and one of the ways that they are 19 

### finding is higher efficiency equipment, and we 20 desperately need more of it. 21 And thiskindof analysis would look into 22 the availabilityof it. Sowe definitelyneedto look 23 at thesekindsofprice structures, andI suspectthat 24 we're going to see this happening in other areas. 25 I hearfromotherfolksaroundthecountry

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com203 1 that rates have gone up also. I hope it doesn't 2 happen everywhere, but definitely in our world it has 3 happened throughout the state. 4 MR. RABA: Jim. 5 MR. CRAWFORD: Jim Crawford. 6 Harvey made reference to demand reducing 7 technologies. Clearly if we increase the EER that's 8 a demand reducing activity, whatever technology you 9 usedmight be called a demand reducing technology, but 10 we had a list of technologies before, some 15 or 20 11 items, and to the degree that those are the way in 12 which we increase EER, which most of them won't, there 13 is no -- in that list, there is no uniquely demand 14 reducing technology independent of whatever you do 15 with EER, and there are a couple of them that are 16 going to increase demand very dramatically. 17 There's not a black box out there. 18 There's not this magic fufu juice out there that's 19 going to reduce the demand while we do nothing other 20 than just reduce demand. I mean, it doesn't exist. 21 The laws of physics say it never will exist. 22 MR. RABA: Tom. 23 MR. ECKMAN: This is more a point on the 24 data collection and relationship to the EIA forecast 25 of commercial rates and what have you. 

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### 203 1 

### that·rates have gone up also. I hope it doesn't 2 happeneverywhere, but definitelyinourworld ithas 3 

### happened throughout the state. 4 

### MR. RABA: 

### Jim. 5 

### MR. CRAWFORD: Jim Crawford. 6 

### Harveymade reference to demand reducing 7 

### technologies. Clearly if we increase the EER that's 8 

### a demand reducing activity, whatever technology you 9 

### usedmightbecalleda demandreducingtechnology, but 10 we had a list of technologies before, some 15 or 20 11 items, and to the degree that those are the way ln 12 whichwe increaseEER, whichmostofthemwon't, there 13 is no in that list, there is no uniquely demand 14 reducing technology independent of whatever you do 15 with EER, and there are a couple of them that are 16 going to increase demand very dramatically. 17 

### There's not a black box out there. 18 There's not this magic tutu juice out there that's 19 going to reduce the demand while we do nothing other 20 than just reduce demand. I mean, it doesn't exist. 21 The laws of physics say it never will exist. 22 MR..RABA: 

### Tom. 23 MR. ECKMAN: This is more a point on the 24 data collection and relationship to the EIA forecast 25 of commercial rates and what have you.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com204 1 I think it's incumbent upon the analysis 2 to basically stay current with that. Tomorrow we'll 3 be dealing with the residential analysis

-- 4 MR. STOOPS: Right, right. 5 MR. ECKMAN: -- you know. 6 MR. STOOPS: And EIA is our primary data 7 source. I mean, so clearly we have to use their 8 information as much as possible. 9 MR. ECKMAN: And the issue there is that 10 they don't -- and the CBECS data is not contemporary. 11 It's collected every few years. 12 MR. STOOPS: Hopefully every few years, 13 right. 14 MR. ECKMAN: And recent events on theWest 15 Coast have dramatically changed the price structures 16 at least in our neck of the woods. Seattle, which 17 represents about 50 percent of the commercialbuilding 18 stock in the entire Northwest, has a tail block rate 19 for commercial customers now. It's 18 cents. That's 20 a little bit different than a year ago, like 100 and 21 some percent. 22 MR. STOOPS: Yeah. Well, historically, 23 especially if you look at the Pacific Northwest where 24 it's, you know, two and a half, three and a half, four 25 and a half in parts of the region, and still within NEAL R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODE ISLANDAVE.,N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

### 204 1 I think it's incumbent upon the analysis 2 

### to basically stay current with that. Tomorrow we'll 3 be dealing with the residential analysis 4 

### MR. STOOPS: Right, right. 5 

### MR. ECKMAN:

-- you know. 6 

### MR. STOOPS: And EIA is ourprimary data 7 

### source. I mean, so clearly we have to use their 8 information as much as possible. 9 

### MR. ECKMAN: And the issue there is that 10 theydon't

-- and the CBECS data isnot contemporary. 11 It's collected every few years. 12 MR. STOOPS: Hopefully every few years, 13 right. 14 

### MR. ECKMAN: AndrecenteventsontheWest 15 Coast have dramatically changed the price structures 16 

### at least in our neck of the woods. Seattle, which 17 representsabout50percentofthecommercialbuilding 18 stock in the entire Northwest, has a tail block rate 19 for commercial customers now. It's 18 cents. That's 20 a little bit different than a year ago, like 100 and 21 some percent. 22 MR. STOOPS: Yeah. Well, historically, 23 especiallyifyou look at the PacificNorthwest where 24 it's, youknow, two anda half, threeanda half, four 25 and a half in parts of the region, and still within

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com205 1 the region you can still go to Grant County and have 2 ridiculously low rates. 3 So, I mean, it's a challenge. 4 MR. ECKMAN: Well, and you know, Grant 5 County doesn't have half of the building stock. 6 MR. STOOPS: No, no. That's right. 7 MR. ECKMAN: They may have two cents a 8 kilowatt hour, but, you know, they have one tenth of 9 the building stock. So in terms of who's paying 18 10 cents and facing that price, 50 percent of the 11 commercial building stock is in that service 12 territory, and they will now care about EER. 13 MR. RABA: Karim. 14 MR. AMRANE: Karim Amrane, ARI. 15 You said in your life cycle cost analysis 16 that you will determine the percent of consumers with 17 net savings or with net costs. What's the definition 18 of consumer in this case? 19 MR. STOOPS: That is a question. Can you 20 help us define who the consumers are? I mean, well, 21 that's right. I had another slide that addressed the 22 issue about is it the owner; is it the user; how do we 23 define each of those? Is it leased equipment; is it 24 owned equipment? I mean, even that to the level of 25 disparity, in addition to who's actually paying the 

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### 205 1 the region you can still go to Grant County and have 2 

### ridiculously low rates. 3 

### So, I 

### mean, it's a challenge. 4 

### MR. ECKMAN: Well, and you know, Grant 5 

### County doesn't have half of the building stock. 6 

### MR. STOOPS: No, no. That's right. 7 

### MR. ECKMAN: They may have two cents a 8 

### kilowatt hour, but, you know, they have one tenth of 9 

### the building stock. So in terms of who's paying 18 

### 10 cents and facing that price, 50 percent of the 11 commercial building stock is ln 

### that service 12 territory, and they will now care about EER. 13 

### MR. RABA: Karim. 14 

### MR. AMRANE: Karim Amrane, ARI. 15 You saidinyourlife cycle cost analysis 16 that youwill determine thepercent of consumers with 17 net savings orwithnet costs. What's the definition 18 

### of consumer in this case? 19 

### MR. STOOPS: That is a question. Canyou 20 help us define who the consumers are? I mean, well, 21 that's right. I had another slide that addressed the 22 issue about is itthe ownerj is ittheuserj howdowe 23 define each of those? Is it leased equipmentj is it 24 

### owned equipment? I mean, even that to the level of 25 disparity, in addition to who's actually paying the

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com206 1 bill. 2 So it is a challenge, and if you have any 3 suggestions, we certainly welcome those suggestions. 4 MR. RABA: Is that all for John? 5 MR. STOOPS: Except I think I need to go 6 this way. In the meantime, go ahead, Jim. 7 MR. CRAWFORD: To the last question, I 8 want to just throw something out for us to all think 9 about, and that is do we have any choice other than to 10 assume that in this case that the building is owner 11 occupied. I mean, if we make any other assumption, 12 you're going to wind up with silly results. You're 13 going to wind up having to put owners against 14 occupants because clearly from an occupant's 15 standpoint, what I as an occupant want is can you make 16 it as efficient as possible. 17 I mean, you know, go to whatever the 18 limits of technology. From an owner's standpoint, I 19 want to say, well, let's get the least efficient. 20 Just give me the cheapest thing you can get, and so 21 you've got the competition of interest here, and I 22 don't see how you're going to get around that 23 competition of interest without pooling them. 24 MR. STOOPS: Well, and you just really 25 gave me a lead-in because we are really now trying to 

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### 206 1 

### bill. 2 So it is a challenge, and if youhave any 3 

### suggestions, we certainlywelcome those suggestions. 4 

### MR. RABA: 

### Is that all for John? 5 

### MR. STOOPS: Except I think I need to go 6 

### this way. In the meantime, go ahead, Jim. 7 MR. CRAWFORD: 

### To the last question, I 8 

### want to just throw something out for us to all think 9 

### about, andthat isdowe haveanychoiceotherthanto 10 

### assume that in this case that the building is owner 11 

### occupied. I mean, if we make any other assumption, 12 

### you're going to wind up with silly results. You're 13 

### going to wind up having to put owners against 14 

### occupants because clearly from an occupant's 15 standpoint, what I as anoccupantwant iscanyoumake 16 it as efficient as possible. 17 

### I mean, you know, go to whatever the 18 

### limits of technology. From an owner's standpoint, I 19 want to say, well, let's get the least efficient. 20 Just give me the cheapest thing you can get, and so 21 

### you've got the competition of interest here, and I 22 don't see how you're going to get around that 23 competition of interest without pooling them. 24 

### MR. STOOPS: Well, and you just really 25 gave me a lead-inbecausewe are reallynow trying to

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com207 1 look at consumer subgroup, which is how do we really 2 deal

-- 3 MR. CRAWFORD: Did you get it right? 4 MR. STOOPS: -- with this issue? 5 (Laughter.) 6 MR. STOOPS: And we have. WE have 7 direction of how we're supposed to do this. The 8 department will use regional analysis and sensitivity 9 analysis tools as appropriate to evaluate the 10 potential distribution of impacts of candidate 11 standard levels on consumers. It doesn't define 12 consumers for us. 13 The department will consider impacts on 

# (* ~ 14 significant segments of society in determining 15 standards levels. Where there are significant 16 negative impacts on identifiable subgroups, DOE will 17 consider the efficacy of voluntary approaches as a 18 means to achieve potential energy savings. 19 So really we're directed to do this 20 analysis, but we're really not even sure in the 21 commercial products how to go about it. I mean, what 22 subgroups should be considered for this? Is it owner23 occupant? Is it tenant leased? Is it public sector? 24 Do we have suggestions about how we really should be *V 25 approaching this? 

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### 207 1 look at consumer subgroupI 

### which is how do we really 2 deal 3 

### MR. CRAWFORD: Didyou get it right? 4 

### MR. STOOPS:

-- with this issue? 5 

### (Laughter.) 6 

### MR. STOOPS: And we have. WE have 7 

### direction of how we I

### re supposed to do this. The 8 department willuse regional analysis and sensitivity 9 analysis tools as appropriate to evaluate the 10 

### potential distribution of impacts of candidate 11 standard levels on consumers. It doesnIt 

### define 12 consumers for us. 13 The department will consider impacts on 14 significant segments of society in determining 15 standards levels. Where there are significant 16 negative impacts on identifiable subgroups I 

### DOE will 17 consider the efficacy of voluntary approaches as a 18 

### means to achieve potential energy savings. 19 

### So really we/re 

### directed to do this 20 analysis I 

### but we I

### re really not even sure in the 21 commercialproducts how to go about it. I mean l 

### what 22 subgroups shouldbeconsideredfor this? Is itowner23 occupant? Is it tenant leased? Is itpublic sector? 24 Do we have suggestions about how we really should be 25 approaching this?

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com208 1 I think there's clearly been individuals 2 in the room today who have identified issues that we 3 need to deal with, and we're here to try to gather 4 some additional information to help us make some 5 decisions. 6 MR. RABA: I saw Mark Friedrichs first. 7 MR. FRIEDRICHS: Hi. 8 MR. RABA: Mark Friedrichs, Department of 9 Energy. 10 MR. FRIEDRICHS: Yes, Mark Friedrichs, 11 Department of Energy. 12 On this point, it's a question about how 13 we treat the passthrough of costs for new equipment by 14 owners when that space is rented. Usually in life15 cycle cost analyses, leased space is treated very much 16 like owned space. In other words, the cost of new 17 equipment is assumed to be passed on to the lessors. 18 And I'm not sure that that's the best way 19 of treating those costs, but one question is how 20 should we distinguish between the impact on owners of 21 leased space, users of leased space versus users of 22 space that is owned by the occupants. 23 MR. RABA: Thank you, Mark. 24 Charlie Stephens. 25 MR. STEPHENS: Charlie Stephens. 

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### 208 1 I think there's clearlybeen individuals 2 in the room today who have identified issues that we 3 need to deal with, and we're here to try to gather 4 some additional information to help us make some 5 decisions. 6 

### MR. RABA: I saw Mark Friedrichs first. 7 

### MR. FRIEDRICHS: Hi. 8 

### MR. RABA: MarkFriedrichs, Department of 9 Energy. 10 

### MR. FRIEDRICHS: Yes, Mark Friedrichs, 11 Department of Energy. 12 On this point, it's a question about how 13 we treat thepassthroughofcosts fornewequipmentby 14 

### owners when that space is rented. Usually in life15 cyclecostanalyses, leasedspaceistreatedverymuch 16 

### like owned space. In other words, the cost of new 17 equipment is assumed to be passed on to the lessors. l8 

### And I'mnot sure that that's thebest way 19 of treating those costs, but one question is how 20 shouldwe distinguishbetweenthe impact onowners of 21 leased space, users of leased space versus users of 22 space that is owned by the occupants. 23 24 25

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### MR. RABA: Thank you, Mark. Charlie Stephens. MR. STEPHENS: Charlie Stephens. NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE,N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com209 1 We've wrestled with this for a while, and 2 it was nice of Jim to sort of encapsulate it so well 3 and sort of explain why we have standards. It's for 4 those situations where the people paying the bill for 5 the operation of the equipment aren't the people who 6 get to make the decision about what equipment goes in. 7 And it's a matter of shifting the costs 8 from the owner of the equipment to the person who pays 9 the bill to operate the equipment. It's not been our 10 experience at all that the costs are directly passed 11 on. The space in a building which comes with its 12 cooling and heating equipment and all of the lighting 13 in some cases, not in others, comes at a price per 14 square foot, and that price per square foot I 15 guarantee you will be absolutely the highest price 16 that the market will bear, and it bears no relation 17 whatsoever to the cost of the building, the cost of 18 the equipment in the building or on the building or 19 anything else. It is the highest price that that 20 office space of that quality and that location will 21 bear regardless of the building itself. 22 And that changes pretty regularly. As 23 neighborhoods change, as the condition of the building 24 changes, as the nature of the occupants change, as the 25 real estate market and the economy go up and down; so 

### NEALR.GROSS COURTREPORTERS ANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 209 1 

### We'vewrestledwiththis for a while, and 2 it was nice of Jim to sort of encapsulate it so well 3 

### and sort of explain why we have standards. It's for 4 

### those situationswhere thepeoplepayingthebill for 5 

### the operation of the equipment aren't the people who 6 

### gettomakethedecisionaboutwhat equipmentgoes in. 7 

### And it's a matter of shifting the costs 8 

### fromtheowneroftheequipment tothepersonwhopays 9 

### the bill to operate the equipment. It's not beenour 10 

### experience at all that the costs are directlypassed 11 

### on. The space in a building which comes with its 12 

### cooling andheatingequipment and all of the lighting 13 

### in some cases, not in others, comes at a price per 14 

### square foot, and that price per square foot I 15 

### guarantee you will be absolutely the highest price 16 

### that the market will bear, and it bears no relation 17 

### whatsoever to the cost of the building, the cost of 18 

### the equipment in the building or on the building or 19 

### anything else. It is the highest price that that 20 

### office space of that quality and that location will 21 

### bear regardless of the building itself. 22 

### And that changes pretty regularly. As 23 neighborhoodschange, astheconditionofthebuilding 24 changes, asthenatureoftheoccupantschange, as the 25 real estatemarket and the economygoup and down; so

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com210 1 there is no assumption, I don't believe, to be made 2 about passing on the costs of this particular 3 equipment to whoever is operating it. 4 But there is a very direct relationship 5 between what equipment you own and if you're paying 6 the electric bill and the operating bill. You are 7 going to get hit with that, and I think we've already 8 discussed how. 9 But I think as subgroups, you know, you 10 may have to look at different groups impacted at some 11 sort of blend of discount rates and interest rates and 12 everything else to come up with an overall answer to 13 the question. 14 If you look at this on a grand scale, it's 15 a matter of how much cost will be shifted from the 16 people who avoid cost at purchase to the people who 17 will pay the bill for operating that stuff over the 18 long haul, and I don't know how you're going to get at 19 that on a policy level, but you have that problem to 20 solve in order to come to a rational answer. 21 MR. STOOPS: Well, we need to come up with 22 a model that illustrates it. Hopefully it's 23 reasonably rational. 24 MR. STEPHENS: We'll help you do that. 25 MR. STOOPS: Thanks, thanks. 

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### 210 1 there is no assumption, I don't believe, to be made 2 about passing on the costs of this particular 3 equipment to whoever is operating it. 4 But there is a very direct relationship 5 between what equipment you own and if you're paying 6 

### the electric bill and the operating bill. You are 7 going to get hit withthat, and I thinkwe've already 8 discussed how. 9 But I think as subgroups, you know, you 10 may have to look at different groups impactedat some 11 sortofblendofdiscount ratesandinterest rates and 12 everything else to come up with an overall answer to 13 the question. 14 Ifyou lookatthisona grand scale, it's 15 a matter of how much cost will be shifted from the 16 people who avoid cost at purchase to the people who 17 will pay the bill for operating that stuff over the 18 longhaul, and I don't knowhowyou'regoingtoget at 19 that on a policy level, but you have that problem to 20 solve in order to come to a rational answer. 21 MR. STOOPS: Well, we needtocomeupwith 22 a model that illustrates it. Hopefully it's 23 reasonably rational. 24 25

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### MR. STEPHENS: We'll help you do that. MR. STOOPS: Thanks, thanks. NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com211 1 MR. BRUNDAGE: Don Brundage, Southern 2 Company. 3 I'm going to take sort of a different 4 approach on commercial than I have on some of the 5 residential groups because I think commercial is 6 fundamentally different. 7 I've complained on some of the residential 8 appliances that you didn't pay enough attention to 9 consumers, especially to low income consumers. 10 Actually what Charlie said, yeah, the 11 price of the rent is going to be the price based on 12 competition and what the price given all the 13 characteristics of that piece of property as compared 14 to competing ones. What the competing property's 15 price will be is going to include electricity prices 16 in structure of their cost. 17 And commercial is kind of unique in that 18 in general, not in all cases, the competitors to those 19 commercial customers is someone local, providing a 20 similar service that is probably going to be paying 21 similar electricityprices from a similar or identical 22 supplier. 23 It's like when I've seen some interviews 24 from the utilities raising prices to commercial 25 customers. It says I go out of business. I can't 

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### 211 1 MR. BRUNDAGE: Don Brundage, Southern 2 Company. 3 

### I'm going to take sort of a different 4 approach on commercial than I have on some of the 5 residential groups because I think commercial is 6 fundamentally different. 7 I'vecomplainedonsomeoftheresidential 8 appliances that you didn't pay enough attention to 9 consumers, especially to low income consumers. 10 

### Actually what Charlie said, yeah, the 11 price of the rent is going to be the price based on 12 competition and what the price given all the 13 characteristicsof thatpiece ofpropertyas compared 14 

### to competing ones. What the competing property's 15 price will be is going to include electricityprices 16 in structure of their cost. 17 

### And commercial is kind of unique in that 18 

### ingeneral, not inall cases, thecompetitorstothose 19 commercial customers is someone local, providing a 20 similar service that is probably going to be paying 21 similarelectricitypricesfroma similaroridentical 22 supplier. 23 It's like when I've seen some interviews 24 from the utilities raising prices to commercial 25 

### customers.

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### It says I go out of business. I can't NEALR.

### GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com212 1 afford it. 2 Well, his competitors for that grocery 3 store or that minimart are going to be paying the same 4 additional prices for their suppliers. so as far as 5 competitiveness, it's neutral. They're paying the 6 same thing. 7 So I think there is some appeal to what 8 Jim has said, that you could look at it as owner 9 occupied or another way to look at it is ignore the 10 boundaries between owner and whatever and look at it 11 from a societal point of view, what the total cost 12 benefit is if everyone -- the same person owned 13 everything. 14 MR. STOOPS: From the experience of the 15 audience is there sufficient knowledge, sufficient 16 information transfer within the marketplace so that a 17 person in Office A knows how his utility per square 18 foot price relates to a person in Office B? 19 MR. BRUNDAGE: He doesn't have to know it. 20 Whoever is offering that space out for lease knows 21 what his costs are, and that goes into what he's 22 willing to offer in the marketplace. He's not going 23 to go out there and offer space for rent that he's 24 going to intend to lose money for every month that 

# O*r 25 it's out there. 

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### 212 1 afford it. 2 Well, his competitors for that grocery 3 storeorthatminimart aregoingtobepayingthe same 4 

### additional prices for their suppliers. so as far as 5 

### competitiveness, it's neutral. They're paying the 6 same thing. 7 

### So I think there is some appeal to what 8 Jim has said, that you could look at it as owner 9 occupied or another way to look at it is ignore the 10 boundaries between owner and whatever and look at it 11 

### from a societal point of view, what the total cost 12 benefit is if everyone the same person owned 13 everything. 14 

### MR. STOOPS: From the experience of the 15 audience is there sufficient knowledge, sufficient 16 information transferwithinthemarketplace so that a 17 person in Office A knows how his utility per square 18 foot price relates to a person in Office B? 19 

### MR. BRUNDAGE: He doesn'thavetoknowit. 20 Whoever is offering that space out for lease knows 21 what his costs are, and that goes into what he's 22 willing to offer in the marketplace. He's not going 23 to go out there and offer space for rent that he's 24 going to intend to lose money for every month that 25 it's out there.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com213 1 He's going to have a strong tendency 2 towards at least covering his cash flow even in a bad 3 market. 4 MR. RABA: Harvey. 5 MR. SACKS: Harvey Sacks. 6 This is not a response to Don, but a 7 general reflection on our conversation. I'm not sure 8 if I'm more reminded of the blindmen and the elephant 9 or of Alice talking about verdict first, trial later. 10 To some extent as you gather data on the building from 11 stock, we will see that it ranges from rooftop 12 equipment, that school boards operate in schools in 13 Mississippi to developer built strip malls, to a 14 variety of other applications, some of which are 15 predominantly owned by people who have low discount 16 rates and many of which are people who have high 17 discount rates, some of which are occupant paid. 18 Why don't we get some data, see what it 19 looks like, and then see what the blend is and how we 20 handle it in sensitivity analysis? 21 MR. STOOPS: Our expectation is that we 22 will see some obvious subgroups emerge. We're asking 23 the audience if from their prior knowledge that there 24 are subgroups that we definitely need to look at. 25 MR. RABA: Francine Pinto, Department of 

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### He's going to have a strong tendency 2 

### towards at least coveringhis cash flow even in a bad 3 market. 4 

### MR. RABA: Harvey. 5 

### MR. SACKS: Harvey Sacks. 6 

### This is not a response to Don, but a 7 

### general reflectiononourconversation. I'mnot sure 8 

### if I'mmoreremindedof theblindmen andthe elephant 9 

### or ofAlice talkingabout verdict first, trial later. 10 

### To someextentasyougatherdataonthebuildingfrom 11 

### stock, we will see that it ranges from rooftop 12 

### equipment, that school boards operate in schools in 13 

### Mississippi to developer built strip malls, to a 14 

### variety of other applications, some of which are 15 

### predominantly owned by people who have low discount 16 

### rates and many of which are people who have high 17 

### discount rates, some of which are occupant paid. 18 

### Why don't we get some data, see what it 19 

### looks like, andthen see what the blend is andhowwe 20 

### handle it in sensitivity analysis? 21 

### MR. STOOPS: Our expectation is that we 22 

### will see some obvious subgroups emerge. We're asking 23 

### the audience if from theirpriorknowledge that there 24 

### are subgroups that we definitely need to look at. 25

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### MR..RABA: Francine Pinto, Department of NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005·3701 www.nealrgross.com214 1 Energy. 2 MS. PINTO: Francine Pinto, Department of 3 Energy. 4 One question we can also look at is is the 5 consumer subgroup analysis actually appropriate. 6 Remember in the framework document we said we would 7 use the process rule to the extent it was appropriate 8 because the process rule was based upon the 9 residential equipment. 10 So we can always step back and say, "Well, 11 in this case as to commercial equipment, is this 12 useful to do?" 13 So I think we should also be looking from *D 

### ~ 14 that point of view as well. 15 MR. RABA: Tom Eckman. 16 MR. ECKMAN: I think just to take a little 17 different tact on this one, I have a suspicion, 18 although it probably won't be revealed by real data, 19 but I have a suspicion that the subgroups we're 20 talking about here that are more or less advantaged or 21 disadvantaged are going to be driven more by the 22 building occupancy type since we can't really define 23 ownership. 24 You're going to have schools that operate 25 with a certain building characteristic, but as schools 

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### 214 1 Energy. 2 

### MS. PINTO: Francine Pinto, Department of 3 Energy. 4 Onequestionwe canalso lookat is isthe 5 consumer subgroup analysis actually appropriate. 6 Remember in the framework document we said we would 7 use theprocess rule to the extent itwas appropriate 8 

### because the process rule was based upon the 9 residential equipment. 10 Sowe canalways stepbackandsay, "Well, 11 in this case as to commercial equipment, is this 12 useful to do? II 

### 13 So I thinkwe should alsobe looking from 14 that point of view as well. 15 

### MR. RABA: Tom Eckman. 16 

### MR. ECKMAN: I thinkjusttotake a little 17 different tact on this one, I have a suspicion, 18 although it probably won't be revealed by real data, 19 but I have a suspicion that the subgroups we're 20 talkingaboutherethat aremoreorlessadvantagedor 21 disadvantaged are going to be driven more by the 22 building occupancy type since we can't really define 23 ownership. 24 You're goingtohave schools that operate 25 witha certainbuildingcharacteristic, butas schools

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005·3701 www.nealrgross.com215 1 versus a hair salon, versus a strip mall that have 2 different characteristics in terms of operating hours 3 and load cycle on this equipment. 4 Andyou're going to have locations, north, 5 south, east, and west, that have varying loads, and I 6 think the load duration curve will define populations 7 that are more or less advantaged, and that will be 8 unrelated to ownership. 9 MR. CRAWFORD: Jim Crawford again. 10 I guess there's one group of people not 11 represented here which should be, and that's BOMA, 12 Building Owners-Managers Association. They should 13 definitely be brought into this discussion. 14 And I don't know of a comparable group of 15 tenants, but the other thing that strikes me is that 16 if you do the analysis two ways, and it should be a 17 trivial exercise to do it the second way, if you do it 18 owner occupied, you do it owner-tenant, and then you 19 look at the percentage of people that are advantaged 20 or disadvantaged by different efficiency levels as 21 you're going to do anyway, and you see what the 22 differences are, and you know the direction they're 23 going to be. 24 Then you say, okay, now these two outcomes 25 are different. How do I adjudicate between those two 

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### 215 1 versus a hair salon, versus a strip mall that have 2 different characteristicsinterms of operatinghours 3 and load cycle on this equipment. 4 Andyou'regoingtohavelocations, north, . 5 south, east, andwest, that have varying loads, and I 6 thinkthe loaddurationcurvewill definepopulations 7 that are more or less advantaged, and that will be 8 unrelated to ownership. 9 

### MR. CRAWFORD: Jim Crawford again. 10 

### I guess there's one group of people not 11 represented here which should be, and that's BOMA, 12 Building Owners-Managers Association. They should 13 definitelybe brought into this discussion. 14 And I don't knowof a comparable group of 15 tenants, but the other thing that strikes me is that 16 if you do the analysis two ways, and it should be a 17 trivialexercisetodo it the secondway, ifyoudo it 18 owner occupied, you do it owner-tenant, and then you 19 look at the percentage of people that are advantaged 20 or disadvantaged by different efficiency levels as 21 you're going to do anyway, and you see what the 22 differences are, and you know the direction they're 23 going to be. 24 Thenyousay, okay, nowthesetwooutcomes 25 are different. How do I adjudicatebetweenthose two

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.w. WASHINGTON, D.C. 20005-3701 www.nealrgross.com216 1 outcomes? You say,well, whatpercentage of buildings 2 are owner occupied, and if you weight those 3 appropriatelybased on the percentage of buildings or 4 percentage of floor space that is owner occupied, you 5 will have a balanced answer. 6 MR. STOOPS: Thanks. 7 MR. RABA: Thank you, Jim. 8 Other comments? Charlie Stephens. 9 MR. STEPHENS: Charlie Stephens. 10 Just a quick observation. I think based 11 on the BOMA folks that I know, and I guess I can ask 12 them next week when I talk to them, they're big 13 building guys. They own chillers for the most part. 14 The folks that Iknow that are running the 15 unitary equipment are more Wendy's, Coldwell Banker, 16 people who own, you know, strip malls, fast food 17 restaurants, the kinds of markets that are using the 18 rooftop stuff, other than, of course, the public 19 sector folks that are obviously owner occupied unless 20 the taxpayers are considered the owners. But they are 21 paying the bills. 22 I think if we can get to it, a societal 23 perspective might just help us wash all of this over. 24 I kind of side with Don a little bit that, you know, 25 eventually a societal thing will help us all. 

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### 216 1 outcomes? Yousay, well, whatpercentageofbuildings 2 

### are owner occupied, and if you weight those 3 appropriatelybasedonthepercentage ofbuildings or 4 

### percentage of floor space that is owneroccupied, you 5 will have a balanced answer. 6 

### MR. STOOPS: Thanks. 7 

### MR. RABA: Thank you, Jim. 8 

### Other comments? Charlie Stephens. 9 

### MR. STEPHENS: Charlie Stephens. 10 

### Just a quick observation. I think based lIonthe BOMA folks that I know, and I guess I can ask 12 them next week when I talk to them, they're big 13 

### building guys. They own chillers for the most part. 14 Thefolks that I knowthat arerunningthe 15 unitary equipment are more Wendy's, Coldwell Banker, 16 people who own, you know, strip malls, fast food 17 restaurants, the kinds of markets that are using the 18 

### rooftop stuff, other than, of course, the public 19 sector folks that are obviouslyowneroccupiedunless 20 the taxpayers areconsideredtheowners. But theyare 21 paying the bills. 22 

### I think if we can get to it, a societal 23 perspectivemightjust help us wash all of this over. 24 I kind of side with Don a little bit that, you know, 25 eventually a societal thing will help us all.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com217 1 MR. STOOPS: That's just -- I mean, you 2 guys are good because that's the next topic. 3 MR. CRAWFORD: Okay. Just societal and 4 owner occupied wind up analytically the same thing. 5 MR. STOOPS: We really do need to put on 6 a different hat. What we've been looking at so far, 7 even though -- I mean, the problems are pretty broad, 8 pretty multi-headed beasts. They're still micro or 9 maybe amesa (phonetic) scale. We're going to now step 10 into a real macro scale and look at a set of national 11 issues, and some of these can go fairly quickly. 12 The first one to look at is the national 13 energy savings and net present value analysis, and 14 basically we're going to, once we've taken the step of 15 -- I mean, we talked this morning about the 16 engineering analysis, the equipment analysis. We're 17 building this beast up. We're doing the life-cycle 18 cost analysis. 19 Well, eventually we need to do the whole 20 national analysis, and the national analysis that we 21 talked about briefly is really looking at the base 22 case and the different standard cases, looking at that 23 difference which represents hopefully energy savings, 24 not energy increases, and we're going to report the 25 results in physical units so that they all make some 

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### 217 1 

### MR. STOOPS: That's just

-- I mean, you 2 guys are good because that's the next topic. 3 

### MR. CRAWFORD: Okay. Just societal and 4 owner occupiedwind up analytically the same thing. 5 

### MR. STOOPS: We really do need to put on 6 a different hat. what we've been looking at so far, 7 even though

-- I mean, theproblems areprettybroad, 8 pretty multi-headed beasts. They're still micro or 9 maybeamesa (phonetic) scale. We'regoingtonowstep 10 into a real macro scale and look at a set of national 11 issues, and some of these can go fairly quickly. 12 The first one to look at is the national 13 energy savings and net present value analysis, and 14 

### basicallywe'regoingto, oncewe'vetakenthe stepof 15 

### I mean, we talked this morning about the 16 engineering analysis, the equipment analysis. We're 17 building this beast up. We're doing the life-cycle 18 cost analysis. 19 Well, eventuallywe need to do the whole 20 national analysis, and the national analysis that we 21 talked about briefly is really looking at the base 22 caseandthedifferent standardcases, lookingatthat 23 differencewhichrepresentshopefullyenergysavings, 24 not energy increases, and we're going to report the 25 results in physical units so that they all make some

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com218 1 sense, kilowatt hours, site energy, orquadrillion BTU 2 source energy, economic units, dollars for eachyear, 3 and cumulative. 4 Andwe're going to look at it for about 30 5 years, and actually we have a bit of a difference 6 here. Probably it should be 2030, not 2040. That 7 doesn't quite

-- 8 MR. RABA: Marshall, I see your hand. 9 MR. STOOPS: Yes, Marshall already. 10 MR. HUNT: Yes, I felt it went too fast 11 last time. So let me just butt in here. 12 Ithink we shouldhave abullet here about 13 KW and, therefore, power plants. 14 MR. STOOPS: And power plants, yeah. 15 MR. HUNT: Because I see no peak here. 16 MR. STOOPS: Okay, okay. 17 MR. HUNT: I looked ahead, and I didn't 18 find one. 19 MR. STOOPS: Right, right. That's not 20 expressed here. We will be looking at it. Thank you 21 for nothing that. 22 Sohow arewe going to forecast shipments? 23 We've got a couple of ways. We could use an 24 accounting model or we could extrapolate from time 25 series. 

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### 218 1 sense, kilowatthours, siteenergy, orquadrillionBTU 2 

### source energy, economicunits, dollars for eachyear, 3 

### and cumulative. 4 

### Andwe'regoingtolookat itfor about 30 5 

### years, and actually we have a bit of a difference 6 

### here. Probably it should be 2030, not 2040. That 7 

### doesn't quite

-- 8 

### MR. RABA: Marshall, I 

### see your hand. 9 

### MR. STOOPS: Yes, Marshall already. 10 

### MR. HUNT: Yes, I 

### felt it went too fast 11 last time. So let me just butt in here. 12 I thinkwe shouldhavea bullethereabout 13 KW and, therefore, power plants. 14 

### MR. STOOPS: And power plants, yeah. 15 

### MR. HUNT: Because I see no peak here. 16 

### MR. STOOPS: Okay, okay. 17 

### MR. HUNT: I looked ahead, and I didn't 18 find one. 19 

### MR. STOOPS: Right, right. That's not 20 expressedhere. We will be looking at it. Thankyou 21 for nothing that. 22 Sohowarewe goingtoforecast shipments? 23 

### We've got a couple of ways. We could use an 24 accounting model or we could extrapolate from time 25 series.

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### NEALR.

### GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE,N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com219 1 If we extrapolate from time series, there 

# Q*~ 2 really isn't an explicit accounting function for 3 number of buildings, percent owning equipment, changes 4 of installed costs or operating expenses. So that's 5 going to be a challenge. 6 Forecasting using accounting model, we 7 have new buildings and present by equipment type, 8 hopefully available within these models that we've 9 been using to build this up. We have to come up with 10 something about replacement, and then try to add on 11 impacts from existing nonregulatory efforts, based on 12 efficiencies in future years. For example, 13 refrigerant change-out andmaybe other issues as well. 14 If we look at this input, are there other 15 kinds of inputs that we should use? Are there other 16 information sources on past shipment data by 17 efficiency level? 18 Apparently there is some information 19 available from the appliance industry that hopefully 20 -- I'm not sure exactly what will be shared, and what 21 other non-regulatory initiatives should be considered 22 within the base case itself, other items that we 23 should consider. 24 Lost everyone. A silent crowd. I can't 25 believe it. 

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### 219 1 

### Ifwe extrapolate from time series, there 2 really isn't an explicit accounting function for 3 numberofbuildings, percentowningequipment, changes 4 

### of installed costs or operating expenses. So that's 5 

### going to be a challenge. 6 

### Forecasting using accounting model, we 7 

### have new buildings and present by equipment type, 8 

### hopefully available within these models that we've 9 

### beenusing tobuild this up. We have to come up with 10 

### something about replacement, and then try to add on 11 impacts from existingnonregulatoryefforts, basedon 12 efficiencies in future years. For example, 13 

### refrigerantchange-outandmaybeotherissuesaswell. 14 

### If we look at this input, are there other 15 

### kinds of inputs that we should use? Are there other 16 

### information sources on past shipment data by 17 efficiency level? 18 

### Apparently there is some information 19 available from the appliance industry that hopefully 20

-- I'mnot sure exactlywhat will be shared, andwhat 21 othernon-regulatoryinitiatives shouldbe considered 22 within the base case itself, other items that we 23 should consider. 24 

### Lost everyone. A silent crowd. I can't 25 believe it.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com220 1 Go ahead, Marshall. 2 MR. HUNT: Marshall Hunt, PG&E. 3 Is our CEE person still on board here? 4 MS. POULIN: Yes, I am. 5 MR. HUNT: Because I was thinking that we 6 do have some data with especially PG&E with our 7 express efficiency program that's been going on for 8 some years that's been incentivizinghigher efficiency 9 commercial equipment, and that data might be helpful. 10 And I think CEE might have access to other 11 utilities data. 12 MS. POULIN: Yes, we do. 13 MR. HUNT: Okay. That would be helpful. 14 MR. STOOPS: Okay. 15 MR. HUNT: That's the kind of data you're 16 looking for? 17 MR. STOOPS: Yeah, well. Imean, we could 18 move on and sort of look explicitly by consumer 19 economic factors. I mean, what sort of specific data 20 for operating expenses and purchase expenses can we 21 get to try to drive the models and tools that we'll be 22 using? 23 Not that any of it is going to be real 24 easy to get because we do want to look ultimately at 25 something like this equipment class distributionwhere 

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### 220 1 

### Go ahead, Marshall. 2 MR. HUNT: Marshall Hunt, PG&E. 3 

### Is our CEE person still on board here? 4 

### MS. POULIN: Yes, I am. 5 

### MR. HUNT: Because I was thinkingthat we 6 do have some data with especially PG&E with our 7 express efficiency program that's been going on for 8 someyearsthat'sbeenincentivizinghigherefficiency 9 commercial equipment, and that datamight be helpful. 10 AndI thinkCEEmighthaveaccesstoother 11 utilities data. 12 MS. POULIN: Yes, we do. 13 

### MR. HUNT: Okay. That would be helpful. 14 

### MR. STOOPS: Okay. 15 

### MR. HUNT: That's the kindof datayou're 16 looking for? 17 

### MR. STOOPS: Yeah, well. I mean, we could 18 

### move on and sort of look explicitly by 

### consumer 19 economic factors. I mean, what sort of specific data 20 for operating expenses and purchase expenses can we 21 get totrytodrive themodels andtools thatwe'llbe 22 using? 23 

### Not that any of it is going to be real 24 easy to get because we do want to look ultimately at 25 somethinglikethisequipmentclassdistributionwhere

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com221 1 we're looking at the differences in total shipments by 2 size, by whether they're split or packaged, different 3 kinds of analysis. 4 This is from census data in 1997. For 5 this specific rule, we need to come up with the best 6 data we can, and hopefully, I think ARI has some data 7 that can help with that. 8 MR. AMRANE: Yes, we do have some data we 9 will share. 10 MR. CRAWFORD: What you don't have is by 11 building type. 12 MR. STOOPS: Yeah, and that's going to be 13 a challenge. 14 MR. CRAWFORD: You ought to be able to 15 pull that out of the hat. 16 MR. STOOPS: Well, we have to make some 17 assumptions. 18 MR. CRAWFORD: You know you've got 10,000 19 buildings that are air conditioned, and you've got 20 some idea what the building activity is. Now, again, 21 you don't have to pin down detailed analysis on every 22 building in the world. 23 MR. STOOPS: That's correct. Ultimately 24 because we do want to look at the net present value to 25 try to bring it all into comparable numbers, but for 

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### 1 we'relookingatthedifferences intotal shipmentsby 2 size, bywhether they're splitorpackaged, different 3 

### kinds of analysis. 4 

### This is from census data in 1997. For 5 this specific rule, we need to come up with the best 6 datawe can, andhopefully, I thinkARI has some data 7 that can help with that. 8 

### MR. AMRANE: Yes, we do have some datawe 9 will share. 10 

### MR. CRAWFORD: What you don't have is by 11 building type. 12 

### MR. STOOPS: Yeah, and that's going tobe 13 a challenge. 14 

### MR. CRAWFORD: You ought to be able to 15 pull that out of the hat. 16 

### MR. STOOPS: Well, we have to make some 17 assumptions. l8 

### MR. CRAWFORD: Youknowyou've got lO,OOO 

### 19 buildings that are air conditioned, and you've got 20 some ideawhat the building activity is. Now, again, 2l you don't have topindown detailed analysis on every 22 building in the world. 23 

### MR. STOOPS: That's correct. Ultimately 24 becausewe dowant tolookat thenetpresentvalue to 25 try to bring it all into comparable numbers, but for

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### NEALR.

### GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com222 1 each year analyzed, we'll calculate the difference in 2 installed cost and operating cost between the base 3 case and each of the standard cases and then discount 4 those future cash flows all to the present and some 5 over the years to get net present value, and the 6 present value exceeds -- if the present value of 7 savings exceed cost, then the net present value is 8 positive, and the converse is also true. 9 Basically the approach that we're using, 10 is this the appropriate approach? Are there other 11 suggestions about how to come up with these numbers? 12 Yeah. 13 MR. STEPHENS: Charlie Stephens. 14 One thing Iwould observe here is that you 15 do have historical shipments, right? 16 MR. STOOPS: To a certain degree. 17 MR. STEPHENS: To some extent. I mean, 18 you know

-- 19 MR. STOOPS: Right, right. 20 MR. STEPHENS: -- aggregated. That means 21 depending on what level of sale goes to replacement 22 and what is new construction, you might be able to tie 23 historical to a significant fraction of shipments in 24 the future just because they are replacements. 25 MR. STOOPS: Right, right. 

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### 222 1 eachyear analyzed, we'll calculate the difference in 2 installed cost and operating cost between the base 3 case andeachof the standard cases andthen discount 4 those future cash flows all to the present and some 5 ove'r the years to get net present value, and the 6 

### present value exceeds if the present value of 7 savings exceed cost, then the net present value is 8 positive, and the converse is also true. 9 

### Basically the approach that we're using, 10 lS 

### this the appropriate approach? Are there other 11 suggestions about how to come up with these numbers? 12 Yeah. 13 

### MR. STEPHENS: Charlie Stephens. 14 OnethingI wouldobservehere isthatyou 15 do have historical shipments, right? 16 

### MR. STOOPS: To a certain degree. 17 

### MR. STEPHENS: To some extent. I mean, 18 you know

-- 19 

### MR. STOOPS: Right, right. 20 

### MR. STEPHENS:

-- aggregated. That means 21 depending on what level of sale goes to replacement 22 andwhat isnewconstruction, youmightbe able totie 23 historical to a significant fraction of shipments in 24 the future just because they are replacements. 25

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### MR. STOOPS: Right, right. NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com223 1 MR. STEPHENS: And so you can correlate 2 those pretty well, and the only thing that's really 3 uncertain after that is new construction and the 4 lifetime of whatever is out there installed. 5 MR. STOOPS: How far back does the ARI 6 data go? 7 MR. AMRANE: I don't know. 8 MR. STOOPS: Because the lifetime of some 9 of this equipment is pretty long. So ultimately it 10 would be nice to have data that went back 30 years. 11 MR. AMRANE: I don't think we have 30 12 years. 13 MR. STOOPS: Okay. 14 MR. CRAWFORD: Jim Crawford. 15 Youprobably have it somewhere between ten 16 and 20 years. 17 MR. STOOPS: That would be great though. 18 MR. CRAWFORD: But if we can come up with 19 a mutually agreed estimate of life expectancy of the 20 equipment and a model for what that means, then you 21 can back the rest of it out from knowing what your 22 current market is and what your market has been for 23 the last 15 years. 24 MR. STOOPS: Yeah, yeah. We should be 25 quite close. 

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### 223 1 

### MR. STEPHENS: And so you can correlate 2 those pretty well, and the only thing that's really 3 uncertain after that is new construction and the 4 lifetime of whatever is out there installed. 5 

### MR. STOOPS: How far back does the ARI 6 data go? 7 

### MR. AMRANE: I don't know. 8 

### MR. STOOPS: Becausethe lifetime of some 9 

### of this equipment is pretty long. So ultimately it 10 would be nice to have data that went back 30 years. 11 MR. AMRANE: I don't think we have 30 12 years. 13 MR. STOOPS: Okay. 14 

### MR. CRAWFORD: Jim Crawford. 15 Youprobablyhaveitsomewherebetweenten 16 and 20 years. 17 

### MR. STOOPS: That would be great though. 18 

### MR. CRAWFORD: But ifwe can comeup with 19 a mutually agreed estimate of life expectancy of the 20 equipment and a model for what that means, then you 21 can back the rest of it out from knowing what your 22 current market is and what your market has been for 23 the last 15 years. 24 

### 25 quite close.

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### MR. STOOPS: Yeah, yeah.

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 

### We should be

www.nealrgross.com224 1 MR. RABA: David? 2 MR. WINIARSKI: I'd just like to -- 3 MR. RABA: Speak into the microphone, 4 please. 5 MR. WINIARSKI: Dave Winiarski. 6 I would just like to make a comment that 7 one of the things that we ought to be considering 8 there or getting input from industry on is whether 9 there would be any reason to develop different 10 lifetimes for equipment used in different building 11 types or circumstances, and I don't know that there 12 would be, but I think that's something that you guys 13 would be the experts in providing. 14 MR. STOOPS: Silence, yes. 15 MR. BRUNDAGE: Don Brundage, Southern 16 Company. 17 One comment on this. This is a 18 measurement method, not a presumption of what points 19 that you're choosing as the appropriate one for 20 evaluating alternatives. It's not necessarily -- like 21 some of the discussions at the start of the day, it's 22 not necessarily that you're saying minimizing net 23 present value as always the best solution. 24 This is just a description of the 25 measurement method.

### NEALR.GROSS COURTREPORTERS ANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 224 1 

### MR. RABA: David? 2 

### MR. WINIARSKI: I'djust like to -- 3 

### MR. RABA: Speak into the microphone, 4 please. 5 

### MR. WINIARSKI: Dave Winiarski. 6 

### I would just like to make a comment that 7 

### one of the things that we ought to be considering 8 

### there or getting input from industry on is whether 9 

### there would be any reason to develop different 10 

### lifetimes for equipment used In different building 11 

### types or circumstances, and I don't know that there 12 

### would be, but I think that's something that you guys 13 

### would be the experts in providing. 14 

### MR. STOOPS: Silence, yes. 15 

### MR. BRUNDAGE: Don Brundage, Southern 16 

### Company. 17 

### One comment on this. This is a 18 

### measurement method, not a presumption of what points 19 that you're choosing as the appropriate one for 20 evaluatingalternatives. It'snotnecessarily

- - like 21 some of the discussions at the start of the day, it's 22 not necessarily that you're saying minimizing net 23 present value as always the best solution. 24 

### This is just a description of the 25 measurement method.

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com225 1 MR. STOOPS: And then a decision will be 2 made based up some of those measurements. This is not 3 the only national measurement to be made as well 4 because there's manufacturer impact, employment 5 impact, utility impact. 6 MR. RABA: Ted Doyle. 7 MR. DOYLE: One comment about the life 8 cycle is that as the efficiency goes up, you know, we 9 need bigger coils, move more air, and that sort of 10 thing, andwe have control overbuilding the equipment 11 up to the standard that the DOE sets forward, but not 12 to the installation in which it's installed into, and 13 that directly affects the life cycle of the equipment. 14 MR. STOOPS: Is there any -- from your 15 experience, I mean, there's no correlation between 16 life of equipment and efficiency level, is there? 17 Haveyou notedwithin the manufacturing is 18 there any correlation between efficiency level and 19 lifetime? 20 MR. DOYLE: At this point I couldn't tell 21 you. 22 MR. CRAWFORD: Jim Crawford. 23 Let me address that in a somewhat 24 different way. If we collectively set the next 25 efficiency standard too high, you will find that it 

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### 1 MR. STOOPS: And then a decision will be 2 madebasedup someof thosemeasurements. This isnot 3 

### the only national measurement to be made as well 4 

### because there's manufacturer impact, employment 5 

### impact, utility impact. 6 

### MR. RABA: Ted Doyle. 7 

### MR. DOYLE: One comment about the life 8 cycle is that as the efficiencygoes up, you know, we 9 need bigger coils, move more air, and that sort of 10 thing, andwehavecontroloverbuildingtheequipment 11 up to the standardthat the DOE sets forward, but not 12 to the installationinwhich it's installedinto, and 13 thatdirectlyaffectsthe lifecycleoftheequipment. 14 

### MR. STOOPS: Is there any -- from your 15 experience, I mean, there's no correlation between 16 life of equipment and efficiency level, is there? 17 Haveyounotedwithinthemanufacturingis 18 there any correlation between efficiency level and 19 lifetime? 20 

### MR. DOYLE: At thispoint I couldn't tell 21 you. 22 MR. CRAWFORD: Jim Crawford. 23 

### Let me address that in a somewhat 24 

### different way. If we collectively set the next 25 efficiency standard too high, you will find that it

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com226 1 will have a remarkable effect on the longevity of the 2 existing inventory. 3 (Laughter.) 4 MR. CRAWFORD: And that'svery, very real, 5 and that's something that none of us should want. We 6 set those numbers too high. People are going to just 7 keep the old equipment in service, and we're not going 8 to achieve any of the objectives that we're all here 9 about. 10 MR. BRUNDAGE: A quick comment. Don 11 Brundage, Southern Company. 12 The particular effect that Jim is talking 13 about seems to have been modeled in fairly good detail 14 in some of the residential equipment. So I'm 15 confident that you'll handle it well this time. 16 MR. STOOPS: Okay, okay. Karim. 17 MR. AMRANE: Karim Amrane, ARI. 18 Could you tell us how you can define in 19 the life-cycle cost losers and winners? 20 MR. STOOPS: We haven't fully defined 21 losers and winners at this stage. We're still looking 22 at relative issues about -- I mean, if we look at the 23 different standard levels and look at a particular 24 subgroup, there's going to be a difference as we look 25 at each of those, and as far as threshold values, 

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### 226 1 

### will have a remarkable effect on the longevityof the 2 existing inventory. 3 (Laughter.) 4 

### MR. CRAWFORD: Andthat'svery, veryreal, 5 

### and that's something that none of us shouldwant. We 6 

### set those numbers too high. People are going tojust 7 

### keeptheoldequipment inservice, andwe'renotgoing 8 

### to achieve any of the objectives that we're all here 9 

### about. 10 

### MR. BRUNDAGE: A quick comment. Don 11 

### Brundage, Southern Company. 12 

### Theparticulareffect that Jimis talking 13 

### about seems tohavebeenmodeledinfairlygooddetail 14 

### in some of the residential equipment. So I'm 15 confident that you'll handle it well this time. 16 

### MR. STOOPS: Okay, okay. Karim. 17 

### MR. AMRANE: Karim Amrane, ARI. 18 

### Could you tell us how you can define in 19 the life-cycle cost losers and winners? 20 

### MR. STOOPS: We haven't fully defined 21**los~rs** 

### andwinnersat this stage. We're stilllooking 22 at relative issues about

-- I mean, if we look at the 23 different standard levels and look at a particular 24 subgroup, there's going tobe a difference as we look 25 at each of those, and as far as threshold values,

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE,N.W. WASHINGTON, D.C 20005-3701 www.nealrgross.com227 1 those that are making more or those that are -- it has 2 a net cost that exceeds -- you know, a negative net 3 present value versus a positive, about the relative 4 sense; we have not made any of those decisions yet. 5 We expect that there will be variations, 6 and one could characterize those as winners and losers 7 and neutrals, but we certainly haven't set any 8 thresholds or bounds about that yet. 9 Do you have any suggestions? 10 MR. AMRANE: No, I guess I just -- you 11 know, for the residential rulemaking, DOE has changed 12 the definition of winners and losers along the way. 13 In the ANOPR, it was something. In the NOPR it was 14 something else, and we would like to know in advance. 15 I mean, on what basis will you -- 16 MR. STOOPS: Yeah, yeah, yeah. 17 MR. AMRANE: -- will you decide? 18 MR. STOOPS: By the time we get to the 19 ANOPR, I think that we'll have a decision. We'll have 20 something. Maybe it won't change again. 21 MR. RABA: Well, your endurance is, 22 indeed, praiseworthy. Would you all like to take a 23 break, 15 minutes? 24 Let's do that. Thank you verymuch, John. 25 Good job. 

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### 227 1 

### those that aremakingmoreorthose that are -- ithas 2 

### a net cost that exceeds

-- you know, a negative net 3**pre~ent** 

### value versus a positive, about the relative 4 

### sense; we have hot made any of those decisions yet. 5 

### We expect that there will be variations, 6 

### andonecouldcharacterizethoseaswinnersandlosers 7 

### and neutrals, but we certainly haven't set any 8 

### thresholds or bounds about that yet. 9 

### Do you have any suggestions? 10 

### MR. AMRANE: No, I guess I just

-- you 11 

### know, for the residential rulemaking, DOE has changed 12 

### the definition of winners and losers along the way. 13 

### In the ANOPR, it was something. In the NOPR it was 14 

### something else, andwe would like toknow in advance. 15 

### I mean, on what basis will you 16 

### MR. STOOPS: Yeah, yeah, yeah. 17 

### MR. AMRANE:

-- will you decide? 18 

### MR. STOOPS: By the time we get to the 19 

### ANOPR, I 

### thinkthatwe'llhave a decision. We'llhave 20 something. Maybe it won't change again. 21 

### MR. RABA: Well, your endurance is, 22 

### indeed, praiseworthy. Would you all like to take a 23 break, 15 

### minutes? 24 

### 25 Good job.

(202)234-4433 

### Let'sdothat. Thankyouverymuch, John.

NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com228 1 (Whereupon,the foregoingmatter went off Aa.g 2 the record at 3:29 p.m. and went back on 3 the record at 3:49 p.m.) 4 MR. RABA: We're all set to start. 5 Mark Kendall is returning now for the 6 presentation of manufacturer impact analysis. 7 MR. KENDALL: Okay. If you could take a 8 brief look at the beginning of your packet from this 9 morning, there was the flow chart in Bryan Berringer's 10 presentation that described the whole process. I just 11 wanted to let you know where we are now. 12 We've gone all the way through to the 13 first double line here that says ANOPR. So everything 14 you've heard so far today has dealt with things that 15 would appear in an ANOPR, which would be about 18 16 months from now. 17 From this point on, you're going to hear 18 things that we won't even really begin until after 19 that ANOPR occurs. So we're presenting these. You'll 20 notice that there may be one or two slides in each 21 topic, presenting these just so that you'll know 22 what's planned in the future near the end of the 23 analysis so that in case you're wondering, well, 24 aren't they going to consider manufacture impacts, 25 yes, we are, but that's scheduled for after the ANOPR 

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### 228 1 (Whereupon, the foregoingmatterwent off 2 the record at 3:29 p.m. and went back on 3 

### the record at 3:49 

### p.m.) 4 

### MR. RABA: We're all set to start. 5 

### Mark Kendall is returning now for the 6 presentation of manufacturer impact analysis. 7 

### MR. KENDALL: Okay. If you could take a 8 brief look at the beginning of your packet from this 9 morning, therewasthe flowchart inBryanBerringer's 10 presentationthatdescribedthewholeprocess. I just 11 wanted to let you know where we are now. 12 We've gone all the way through to the 13 first double lineherethat saysANOPR. Soeverything 14 you've heard so far today has dealt with things that 15 would appear in an ANOPR, which would be about 18 16 months from now. 17 From this point on, you're going to hear 18 things that we won't even really begin until after 19 thatANOPRoccurs. Sowe'representingthese. You'll 20 notice that there may be one or two slides in each 21 topic, presenting these just so that you'll know 22 what's planned in the future near the end of the 23 analysis so that in case you're wondering, well, 24 aren't they going to consider manufacture impacts, 25 yes, we are, but that's scheduled for after theANOPR

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### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com229 1 is published. 2 Somypresentationwill be specificallyon 3 manufacturer impact analysis, and if I flip to slide 4 one, the manufacturer impact analysis, once the 5 department has narrowed down the range of efficiency 6 levels that it would like to consider, it attempts to 7 identifywhat the financial impactsmostlywould be on 8 manufacturers and different groups of manufacturers. 9 So the first bullet lists some of those 10 things that the department has looked at in the past: 11 cash flows and net present value, product flow, 12 manufacturing capacity, employment levels, and 13 competition. Some of these things are called out in 14 statute, and some of these things have been brought up 15 by stakeholders. 16 So if there are aspects of manufacture 17 impact that are specific to commercial air 18 conditioners that you would like the department to 19 consider, please include those in your comments. 20 The second'bullet discusses products or 21 subgroups particularly sensitive to the impacts of new 22 standards. 23 The third is other regulations that 24 contribute to cumulative burden. The statute 25 recognizes that there are other regulations at the 

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### 229 1 is published. 2 Somypresentationwillbespecificallyon 3 

### manufacturer impact analysis, and if I 

### flip to slide 4 

### one, the manufacturer impact analysis, once the 5 

### department has narrowed down the range of efficiency 6 

### levels that it would like to consider, it attempts to 7 

### identifywhatthefinancial impactsmostlywouldbeon 8 

### manufacturers and different groups of manufacturers. 9 

### So the first bullet lists some of those 10 

### things that the department has looked at inthe past: 11 cash flows and net present value, product flow, 12 manufacturing capacity, employment levels, and 13 

### competition. Some of these things are called out in 14 

### statute, andsomeofthesethingshavebeenbroughtup 15 

### by stakeholders. 16 

### So if there are aspects of manufacture 17 

### impact that are specific to commercial air 18 

### conditioners that you would like the department to 19 consider, please include those in your comments. 20 The second·bullet discusses products or 21 subgroupsparticularlysensitivetotheimpactsofnew 22 standards. 23 

### The third is other regulations that 24 

### contribute to cumulative burden. The statute 25 recognizes that there are other regulations at the

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLA.NDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com230 1 federal level, state level that are imposed upon 2 manufacturers, and the department has considered the 3 extent to which those build up over time and make the 4 business environment more difficult. 5 So that would be one of the things we 6 would plan to consider here, as well, and the last 7 bullet point just leaves it open to what I said 8 before: other things that aren't listed here that 9 manufacturers would think would be important to 10 consider. Those are certainly the department is able 11 to consider those ideas. 12 So that would end the manufacturer impact 13 presentation. If anybody has any comments, I can take 14 those. Otherwise I would turn it back over to John 15 Stoops. 16 MR. RABA: Jim Crawford. 17 MR. CRAWFORD: Very quickly, you have 18 dropped your question at the end the cash flows and 19 net present value, which are very important. 20 MR. RABA: Excuse the interruption, Jim. 21 We're trying to beam our callers in. 22 MR. CRAWFORD: All I'm saying is pick up 23 your first bullet in your question. 24 MR. KENDALL: Okay. Is there any other 25 comments? Yes. 

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### 230 1 federal level, state level that are imposed upon 2 manufacturers, and the department has considered the 3 extent towhichthose buildup over time andmake the 4 business environment more difficult. 5 So that would be one of the things we 6 would plan to consider here, as well, and the last 7 

### bullet point just leaves it open to what I said 8 

### before: other things that aren't listed here that 9 manufacturers would think would be important to 10 consider. Those are certainlythe department is able 11 to consider those ideas. 12 Sothatwouldendthemanufacturer impact 13 presentation. Ifanybodyhas anycomments, I cantake 14 

### those. Otherwise I would turn it back over to John 15 Stoops. 16 

### MR. RABA: Jim Crawford. 17 

### MR. CRAWFORD: Very quickly, you have 18 dropped your question at the end the cash flows and 19 net present value, which are very important. 20 MR. RABA: Excuse the interruption, Jim. 21 We're trying to beam our callers in. 22 MR. CRAWFORD: All I'm saying is pick up 23 your first bullet in your question. 24 

### MR. KENDALL: Okay. Is there any other 25 comments? Yes.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com231 1 MR. MULLEN: Jim Mullen. 2 Just a couple of general comments. This 3 is becoming a much more difficult business for 4 manufacturers. If you think about it, a manufacturer 5 used to have one line of commercial equipment that was 6 at a fixed efficiency level that he sold throughout 7 the U.S. and Canada. 8 Now, you need to have two, probably a low 9 cost line that sold into one market, a 90.1 line that 10 sold into another market, and maybe even a level of 11 efficiencies above 90.1 for areas where there are 12 rebates. 13 So what's going from a process of having 14 to engineer one line of equipment is now nearly to 15 three, and we'd certainly appreciate not having a 16 fourth. 17 Another part of that is that it becomes 18 almost a nightmare with all of the jumble of 19 regulations and localities now as to where you stock 20 what equipment and what you can sell and can't sell. 21 As 90.1 becomes implemented in different states or 22 adopted in certain states with similar or various 23 effective dates, you have a huge process of trying to 24 decide which inventory, what product to build, where 25 you can inventory it, and where you can sell it. 

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### 231 1 

### MR. MULLEN: JimMullen. 2 Just a couple of general comments. This 3 is becoming a much more difficult business for 4 manufacturers. Ifyou think about it, a manufacturer 5 usedtohaveonelineofcommercialequipment thatwas 6 at a fixed efficiency level that he sold throughout 7 the U.S. and Canada. 8 Now, youneedtohave two, probablya low 9 cost line that sold intoone market, a 90.1 line that 10 sold into another market, and maybe even a level of 11 efficiencies above 90.1 for areas where there are 12 rebates. 13 So what's going from a process of having 14 to engineer one line of equipment is now nearly to 15 three, and we'd certainly appreciate not having a 16 fourth. 17 

### Another part of that is that it becomes 18 

### almost a nightmare with all of the jumble of 19 regulations and localities now as to where you stock 20 what equipment and what you can sell and can't sell. 21 As 90.1 becomes implemented in different states or 22 adopted in certain states with similar or various 23 effective dates, you have a hugeprocess of tryingto 24 decide which inventory, what product to build, where 25 you can inventory it, and where you can sell it.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W WASHINGTON, D.C. 20005-3701 www.nealrgross.com232 1 And so the commercial business as awhole, 2 I think, is probably struggling a little bit today 3 with a larger inventory than it used to have for all 4 of those reasons, plus an addition of engineering 5 costs to try and get the design work done, if you 6 track all of the additional bills of materials and 7 make all of the changes as you have to to keep up with 8 UL or whomever else. 9 MR. KENDALL: Thank you. 10 MR. CRAWFORD: A small please, I guess. 11 MR. KENDALL: You reminded me of something 12 that hasn't come up today, but that I should mention. 13 A very important part of this manufacture impact 14 analysis is the visits that the department and we 15 undertake to discuss one on one with individual 16 companies what some of their important issues are, as 17 well as those that pertain to the whole industry. 18 In the past we've scheduled a round of 19 interviews during the MIA. We've also scheduled a 20 round of interviews early in the process during the 21 ANOPR phase, and those would be something that we 22 would, of course, like the opportunity to do again, 23 and that would occur over the next couple of months. 24 So somebody will probably be contacting 25 ARI to discuss setting up these visits and discussing 

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### 232 1 

### Andsothecommercialbusinessasa whole, 2 I think, is probably struggling a little bit today 3 with a larger inventory than it used to have for all 4 of those reasons, pIus an addition of engineering 5 costs to try and get the design work done, if you 6 track all of the additional bills of materials and 7 make all of the changes asyouhave to tokeepupwith 8 

### UL or whomever else. 9 

### MR. KENDALL: Thank you. 10 

### MR. CRAWFORD: A small please, I guess. 11 

### MR. KENDALL: Youremindedme of something 12 that hasn't come up today, but that I shouldmention. 13 A very important part of this manufacture impact 14 analysis is the visits that the department and we 15 undertake to discuss one on one with individual 16 companies what some of their important issues are, as 17 well as those that pertain to the whole industry. 18 In the past we've scheduled a round of 19 

### interviews during the MIA. We've also scheduled a 20 round of interviews early in the process during the 21 ANOPR phase, and those would be something that we 22 would, of course, like the opportunity to do again, 23 and that would occur over the next couple of months. 24 So somebody will probably be contacting 25 ARI todiscuss settingup these visits and discussing

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com233 1 these issues more in depth with individual companies. is* 2 MR. RABA: Harvey Sacks, please. 3 MR. SACKS: Harvey Sacks. 4 Jim Mullen, we very much sympathize with 5 the problem with stocking at three different levels. 6 I think I would speak for most of the advocacy 7 community in wanting to work very hard to maintain a 8 differentiated level, which you refer to as rebate 9 level, and to roll together into a single sensible 10 level something that's above 90.1 and the present base 11 model. 12 So we would be trying very hard to help 13 differentiation, but we may not agree on the details 14 of what the baseline model ought to be. 15 Thank you. 16 MR. RAY: Mike Ray with Trane. 17 To play off of what Jim Mullen has said, 18 the complexity of building the products, it's very 19 difficult having three different lines like he was 20 saying, but not only that. The suppliers that provide 21 us with components work on operation, and they have to 22 provide us these components as we go down the line. 23 That adds another level of complexity as 24 well not only for us, but for our supplies upstream * 25 from us that did have to provide us those components. 

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### 1 these issuesmore Indepthwithindividual companies. 2 MR. RABA: Harvey Sacks, please. 3 

### MR. SACKS: Harvey Sacks. 4 JimMullen, we very much sympathize with 5 the problem with stocking at three different levels. 6 I 

### think I 

### would speak for most of the advocacy 7 community in wanting to work very hard to maintain a 8 differentiated level, which you refer to as rebate 9 level, and to roll together into a single sensible 10 level somethingthat'sabove 90.1andthepresentbase 11 model. 12 So we would be trying very hard to help 13 differentiation, but we may not agree on the details 14 of what the baseline model ought to be. 15 Thank you. 16 

### MR. RAY: Mike Ray with Trane. 17 

### To playoff of what Jim Mullen has said, 18 

### the complexity of building the products, it's very 19 difficult having three different lines like he was 20 saying, butnot onlythat. The suppliersthatprovide 21 uswithcomponentsworkonoperation, andtheyhaveto 22 provide us these components as we go down the line. 23 That adds another level of complexity as 24 well not only for us, but for our supplies upstream 25 fromus that didhave toprovideus those components.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE,N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com234 1 So that adds to the problems as well. 2 MR. KENDALL: Thank you. 3 MR.RABA: Iunderstand thosemanufacturer 4 visits are very important and very helpful to all 5 concerned, too, and they do bring out a lot of good 6 issues and facts on the table as well, and they're 7 usually very well handled. 8 Does that conclude themanufacturer impact 9 analysis part, Mark? 10 MR. KENDALL: Yes. 11 MR. RABA: Thank you very much. 12 Any other ideas on that? I missed it. 13 Michael Martin. 14 MR. MARTIN: Michael Martin, California 15 Energy Commission. 16 I look at our goal here to get down to 17 reducing the numbers rather than increasing the 18 numbers. If we increase the efficiency, we will get 19 rid of those that fail to meet the 90.1 level, and if 20 we increase it beyond the 90.1 level, we're still 21 getting rid of the 90.1 level. 22 So I'm looking from the current three to 23 two. I tend to agree with Harvey, having some super 24 good one that aimed for the future is a good idea. 25 MR. RAY: To respond to that, Mike Ray 

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### 1 So that adds to the problems as well. 2 

### MR. KENDALL: Thank you. 3 

### MR. RABA: I understandthosemanufacturer 4 

### visits are very important and very helpful to all 5 concerned, too, and they do bring out a lot of good 6 issues and facts on the table as well, and they're 7 usuallyvery well handled. 8 Doesthatconcludethemanufacturerimpact 9 analysis part, Mark? 10 

### MR. KENDALL: Yes. 11 MR. RABA: Thank you very much. 12 

### Any other ideas on that? I missed it. 13 Michael Martin. 14 

### MR. MARTIN: Michael Martin, California 15 Energy Commission. 16 I look at our goal here to get down to 17 reducing the numbers rather than increasing the 18 

### numbers. If we increase the efficiency, we will get 19 

### ridof those that fail tomeet the 90.1 

### level, and if 20 

### we increase it beyond the 90.1 

### level, we're still 21 

### getting rid of the 90.1 

### level. 22 

### So I'm looking from the current three to 23 

### two. I tend to agree with Harvey, having some super 24 

### go04 one that aimed for the future is a good idea. 25

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### MR. RAY: To respond to that, Mike Ray NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com235 1 with Trane again. 2 That might be a good goal to have as long 3 as everybody can agree to what that super level is, 4 but if California decides that the level is one thing, 5 Oregondecides it's another,perhaps Wisconsin chooses 6 another, Florida a different one, that adds complexity 7 of, okay, which one do we build to. 8 And so I agree it would be good to reduce 9 the number, and that's our goals, but you see one of 10 the things that we face as a manufacturer. We want to 11 try to address the markets where we can. 12 MR. MARTIN: I agree with you entirely. 13 The reason we've got to understand is because we did 14 satisfy with the federal standards, and if we come up 15 with a level that we can live with, that would be just 16 great. 17 MR. SACKS: Harvey Sacks. 18 These two shygentlemen sittingback here, 19 Mr. Raynolds and Mr. Linn, represent Northeast 20 Efficiency Partnerships, which is one of a number of 21 organizations we provide a little technical support 22 for; workingveryhard to establish coordinated levels 23 for utility incentives and other forms of recognition, 24 working with EPA and the Energy Star program to try to i 25 support as well as we can the level of differentiated 

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### 235 1 with Trane again. 2 That might be a goodgoal to have as long 3 as everybody can agree to what that super level is, 4 

### but ifCaliforniadecidesthat the levelisonething, 5 Oregondecidesit'sanother, perhapsWisconsinchooses 6 another, Floridaa differentone, thataddscomplexity 7 of, okay, which one do we build to. 8 And so I agree itwouldbe goodto reduce 9 the number, and that's our goals, but you see one of 10 thethings thatwe face as a manufacturer. We want to 11 try to address the markets where we can. 12 MR. MARTIN: I agree with you entirely. 13 The reason we've got to understand is because we did 14 satisfywiththe federal standards, and if we come up 15 witha level thatwe canlivewith, thatwouldbejust 16 great. 17 

### MR. SACKS: Harvey Sacks. 18 

### Thesetwoshygentlemensittingbackhere I 19 

### Mr. Raynolds and Mr. Linn, represent Northeast 20 Efficiency Partnerships, which is one of a number of 21 organizations we provide a little technical support 22 fori 

### workingveryhardtoestablishcoordinatedlevels 23 forutilityincentivesandotherformsofrecognition, 24 workingwithEPA andtheEnergyStarprogramtotryto 25 support as well as we can the level of differentiated

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com236 1 products and hope that they will be profitable for all 

# B*~ 2 of the manufacturers. 3 Did you want to comment on that? Please. 4 MR. RAYNOLDS: Ned Raynolds, Northeast 5 Energy Efficiency Partnerships. 6 Harvey is right, of course. Northeast 7 Energy Efficiency Partnerships was founded five years 8 ago and has had a fair amount of success in helping 9 utilities across the Northeast establish coordinated 10 programs for promoting high efficiency equipment. 11 We're also this fall in the process, just 12 have recently launched a project that we are calling 13 the Northeast equipment standards project, which is 14 aimed at gettingpolicy makers across the Northeast to 15 get together and take a look at the potential for new 16 or increased standards along the lines of what 17 California is doing. 18 It is our intent to coordinate across the 19 region and with other things that are going on across 20 the country to something that should be taken into 21 account. 22 MR. RABA: Thank you very much for making 23 us aware of that. 24 MR. STEPHENS: Charlie Stephens, Oregon 25 Energy Office. 

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### 236 1 

### productsandhopethat theywillbeprofitable for all 2 of the manufacturers. 3 

### Didyouwant to comment on that? Please. 4 

### MR. RAYNOLDS: Ned Raynolds, Northeast 5 

### Energy Efficiency Partnerships. 6 

### Harvey is right, of course. Northeast 7 

### EnergyEfficiencyPartnershipswas founded five years 8 

### ago and has had a fair amount of success in helping 9 

### utilities across the Northeast establish coordinated 10 

### programs for promoting high efficiency equipment. 11 

### We're also this fall intheprocess, just 12 

### have recently launched a project that we are calling 13 

### the Northeast equipment standards project, which 1S 14 

### aimedatgettingpolicymakersacross theNortheastto 15 

### get together and take a look at the potential for new 16 

### or increased standards along the lines of what 17 

### California is doing. 18 

### It is our intent to coordinate across the 19 

### region andwith other things that are going on across 20 

### the country to something that should be taken into 21 

### account. 22 MR. RABA: Thankyouverymuch for making 23 us aware of that. 24 

### MR. STEPHENS: Charlie Stephens, Oregon 25 Energy Office.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com237 1 I'd also add that those of us who 2 occasionally find ourselves from states who are back 3 in the energy codes and standards business do try to 4 coordinate for the reasons mentioned. We aren't 5 trying to complicate the lives of manufacturers. 6 We're just pursuing efficiency as best we can. 7 MR. RABA: Thank you, Charlie. 8 Further comments? 9 (Noresponse.) 10 MR. RABA: Let's go on then. John Stoops 11 will present the economic impact analysis or introduce 12 us to -- 13 MR. STOOPS: Employment. 14 MR. RABA: -- those issues. 15 MR. STOOPS: Yes, right. 16 MR. RABA: Thank you very much. 17 MR. STOOPS: There are a few other related 18 issues. We should have them all here together sort of 19 at the end. It's very much at the end. It's after 20 the ANOPR. As was stated before, it's really just an 21 outline of what we think. 22 There is a new standard, and there is an 23 expectation that there will be some impact, potential 24 impact on employment. There's potentially two, direct *V 

### ~ 25 as well as indirect.

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### 237 1 

### I'd also add that those of us who 2 occasionally find ourselves from states who are back 3 

### in the energy codes and standards business do try to 4 

### coordinate for the reasons mentioned. We aren't 5 

### trying to complicate the lives of manufacturers. 6 

### We're just pursuing efficiency as best we can. 7 

### MR. RABA: 

### Thank you, Charlie. 8 

### Further comments? 9 

### (No response.) 10 

### MR. RABA: 

### Let's go on then. John Stoops 11 

### willpresenttheeconomicimpactanalysisorintroduce 12 

### us to 13 

### MR. STOOPS: Employment. 14 

### MR. RABA:

-- 

### those issues. 15 

### MR. STOOPS: Yes, right. 16 

### MR. RABA: 

### Thank you very much. 17 

### MR. STOOPS: Therearea fewotherrelated 18 issues. We shouldhave themallheretogether sortof 19 

### at the end. It's very much at the end. It's after 20 theANOPR. As was statedbefore, it's reallyjust an 21 

### outline of what we think. 22 There is a new standard, and there is an 23 expectationthat there willbe some impact, potential 24 impactonemployment. There'spotentiallytwo, direct 25 as well as indirect.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com238 1 If you have -- from the manufacturer 2 impact analysis, we should be able to extract 3 information that looks about the direct impact on the 4 employed people within the industry, and hopefully we 5 could also extract indirect employment impacts from 6 shifting consumer expenditures among goods, the 7 substitution effect, or the income effect by the 8 change in the equipment in energy costs. 9 So that's information to feed this 10 analysis will come out of previous analyses, is how we 11 currently have it envisioned, but are there any 12 suggestions for other specific approaches? Any 13 specific methods to deal with the employment impact, 14 or is it so far in the future that no one wants to 15 think about it for a year and you'll get back to me 16 when you have that all solved? 17 (Laughter.) 18 MR. STOOPS: Harvey? 19 MR. SACKS: Harvey Sacks. 20 The one thing that I've missed in prior 21 analyses, and I think you've alluded to some 22 alternatives in other parts of the proposed analysis 23 for sensitivity, is you have produced numbers, numbers 24 specifically in five figures as net employment 25 impacts, manufacturer employee impacts. I have not 

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### 238 1 

### If you have from the manufacturer 2 impact analysis, we should be able to extract 3 information that looks about the direct impact on the 4 

### emp10yedpeoplewithinthe industry, andhopefullywe 5 could also extract indirect employment impacts from 6 

### shifting consumer expenditures among goods, the 7 substitution effect, or the income effect by the 8 change in the equipment in energy costs. 9 

### So .that's information to feed this 10 

### analysiswillcomeoutofpreviousanalyses, ishowwe 11 

### currently have it envisioned, but are there any 12 

### suggestions for other specific approaches? Any 13 

### specific methods to deal with the employment impact, 14 

### or is it so far in the future that no one wants to 15 

### think about it for a year and you'll get back to me 16 

### when you have that all solved? 17 (Laughter.) 18 MR. 

### STOOPS: Harvey? 19 

### MR. SACKS: Harvey Sacks. 20 

### The one thing that I've missed in prior 21 

### analyses, and I think you've alluded to some 22 alternatives in other parts of the proposed analysis 23 forsensitivity, isyouhaveproducednumbers, numbers 24 specifically in five figures as net employment 25 

### impacts, manufacturer employee impacts.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 

### I have not

www.nealrgross.com239 1 been able to judge whether these are significant of Is 2 themselves, not to the families involved, but if these 3 are numbers which within your method would be assumed 4 to be significant changes or part of the inherent 5 variability to be expected in the analysis. 6 So I would ask for that, and I would ask 7 for the employment analysis to the extent it's 8 considered significant to be trended against 9 manufacturing trends in the industry over the last 10 several decades as they've moved to more and more 11 automated processes for assembly. 12 MR. STOOPS: Okay. We'll think about 13 that. 14 MR. RABA: First Charlie, then Jim 15 Crawford. 16 MR. STEPHENS: Charlie Stephens. 17 I'd also be interested in this particular 18 analysis to see some numbers for the whole industry, 19 including the people who sell and service and 20 otherwise deal with the equipment. Because, you know, 21 it's been said that in a lot of different 22 manufacturing situations, that group of people is much 23 larger than the people doing the manufacturing, and 24 you are going to do the whole picture, I presume; is O 

### ~ 25 that correct? 

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### 1 been able to judge whether these are significant of 2 

### themselves, nottothefamilies involved, but ifthese 3 

### are numbers whichwithinyourmethodwouldbe assumed 4 

### to be significant changes or part of the inherent 5 

### variability to be expected in the analysis. 

### 6 So 

### I would ask for that, and 

### I would ask 7 

### for the employment analysis to the extent it's 8 

### considered significant to be trended against 9 

### manufacturing trends in the industry over the last 10 

### several decades as they've moved to more and more 11 

### automated processes for assembly. 12 MR. 

### STOOPS: Okay. We'll think about 13 

### that. 14 MR. RABA: 

### First Charlie, then Jim 15 

### Crawford. 16 MR. 

### STEPHENS: Charlie Stephens. 17 

### I'dalsobe interestedinthisparticular 18 

### analysis to see some numbers for the whole industry, 19 

### including the people who sell and service and 20 otherwisedealwiththeequipment. Because, youknow, 21 

### it's been said that in a 

### lot of different 22 manufacturingsituations, thatgroupofpeopleismuch 23 larger than the people doing the manufacturing, and 24 you are going to do the whole picture, I presume; is 25 that correct?

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com240 1 MR. STOOPS: Yes, we expect to do that. 2 MR. CRAWFORD: Jim Crawford. 3 We have currently a situation that may 4 enable you to get a finger on the pulse of the 5 sensitivity of this industry to a perturbation. Our 6 industry is in a state of perturbation right now due 7 to several factors I won't go into. September 11th 8 may be one of them. 9 And the industry is taking time out in the 10 fourth quarter. Different manufacturers have 11 different ways in which they will approach that. In 12 the course of your visits to manufacturers, you may 13 want to discuss this issue. This is one that should 14 be discussed one on one with manufacturers and not 15 through ARI because aggregated doesn't tell you 16 anything, and it's information that none of us are 17 going to seek a press agent to put on the front page 18 of the paper, but they're not really big, big secrets. 19 If a number of people get furloughed from 20 a given manufacturing site, it's a little bit 21 difficult to keep that under your hat, but it will 22 give you some idea of the sensitivity. You may find 23 it's a good deal more sensitive; there are fairly 24 minor perturbations than you would anticipate. 25 MR. STOOPS: I know that I've briefly NEAL R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

### 240 1 

### MR. STOOPS: Yes, we expect to do that. 2 

### MR. CRAWFORD: Jim Crawford. 3 

### We have currently a situation that may 4 

### enable you to get a finger on the pulse of the 5 

### sensitivity of this industry to a perturbation. Our 6 

### industry is in a state of perturbation right now due 7 

### to several factors I won't go into. September 11th 8 may be one of them. 9 Andthe industryistakingtimeout Inthe 10 fourth quarter. Different manufacturers have 11 

### different ways in which they will approach that. In 12 the course of your visits to manufacturers, you may 13 want to discuss this issue. This is one that should 14 be discussed one on one with manufacturers and not 15 through ARI because aggregated doesn't tell you 16 anything, and it's information that none of us are 17 going to seek a press agent to put on the front page 18 ofthepaper, butthey'renotreallybig, bigsecrets. 19 If a numberofpeople get furloughed from 20 a given manufacturing site, it's a little bit 21 difficult to keep that under your hat, but it will 22 give you some idea of the sensitivity. You may find 23 it's a good deal more sensitive; there are fairly 24 minor perturbations than you would anticipate. 25

(202)234-4433 

### MR. STOOPS: I know that I've briefly NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com241 1 mentioned that Ispent some time in Europe. One of my 2 issues in Europe was associated with Volvo, the Volvo 3 manufacturing plant, and Iwas astounded at a certain 4 nature of the degree of automation within that plant 5 and how significant fractions of the line, for 6 example, just wouldn't -- I mean, is this industry 7 heading in similar kinds of trends or even where is it 8 now? 9 MR. CRAWFORD: I would say that the 10 principal evolution/revolutionof this industry in the 11 last 20, 30, 40, 50 years probably has been the just 12 in time manufacturing. 13 MR. STOOPS: Okay. 14 MR. CRAWFORD: You don't find -- at the 15 unit level you don't find large numbers of robotic 16 operations I don't think. You may in some of the 17 component operations, but of course, you know, if 18 you've been watching manufacturing in North America 19 for the last 30 or 40 years, there was a great surge 20 of enthusiasm years ago, and I think it has died back 21 quite a bit for practical reasons, some of which may 22 have to do with maquilladora plants. I'm not sure. 23 MR. RABA: Any further comments on the 24 employment part of this? Isee that John is preparing *) 

### ~ 25 on the next presentation on utility impact analysis, 

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### 241 1 mentionedthat I spent sometime inEurope. One ofmy 2 issues inEuropewas associatedwithVolvo, theVolvo 3 manufacturingplant, and I was astounded at a certain 4 nature of the degree of automation within that plant 5 

### and how significant fractions of the line, for 6 example, just wouldn't -- I mean, is this industry 7 headinginsimilarkinds of trends orevenwhere is it 8 now? 9 

### MR. CRAWFORD: I would say that the 10 principalevolution/revolutionofthisindustryinthe 11 last 20, 30, 40, 50 years probably has been the just 12 in time manufacturing. 13 MR. STOOPS: Okay. 14 MR. CRAWFORD: You don't find

-- at the 15 unit level you don't find large numbers of robotic 16 

### operations I don't think. You may in some of the 17 component operations, but of course, you know, if 18 you've been watching manufacturing in North America 19 for the last 30 or 40 years, there was a great surge 20 of enthusiasmyears ago, and I think it has diedback 21 quite a bit for practical reasons, some of which may 22 have to do with maquilladora plants. I'm not sure. 23 MR. RABA: Any further comments on the 24 employmentpartof this? I see thatJohnispreparing 25 on the next presentation on utility impact analysis,

(202)234-4433 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com242 1 not economic utility, but utility because there could 2 be a bit of confusion. 3 MR. STOOPS: The purpose. Estimate the 4 effects on electric supplies of reduced energy sales 5 due to these energy efficiency standards. Again, 6 we're assuming that these standards are going to work 7 and reduce the energy consumption. 8 I suppose there could be increases back in 9 the plants, but I don't think we're going to consider 10 that. 11 We're going to use the NEMS, another 12 acronym, National Energy Model -- National Energy 13 Method -- no, what is it? NEMS, please. Modeling 14 System, there we are. Thank you. 15 It is an integrated model of the U.S. 16 energy sector, including supply and demand. It is 17 reasonably publicly available, although any of these 18 models, tools, databases, they may be available 19 publicly, but they're not necessarily user friendly. 20 Trying to use these can be a challenge. 21 Hopefully our documentation andprocesses 22 and combinations'and fairly simplified spreadsheets 23 will help bring some transparency to the whole 24 process, but the basic models, the basic data is not 25 that easy to use necessarily. 

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### 242 1 not economic utility, but utilitybecause there could 2 be a bit of confusion. 3 

### MR. STOOPS: The purpose. Estimate the 4 

### effects on electric supplies of reduced energy sales 5 

### due to these energy efficiency standards. Again, 6 

### we're assumingthat these standards are going towork 7 

### and reduce the energy consumption. 8 

### I supposetherecouldbeincreasesbackin 9 

### the plants, but I don't thinkwe're going to consider 10 

### that. 11 

### We're going to use the NEMS, another 12 acronym, National Energy Model National Energy 13 

### Method

-- no, what is it? NEMS, please. Modeling 14 System, there we are. Thank you. 15 

### It is an integrated model of the U.

### S. 16 

### energy sector, including supply and demand. It is 17 reasonablypublicly available, although any of these 18 

### models, tools, databases, they may be available 19 publicly, but they're not necessarily user friendly. 20 Trying to use these can be a challenge. 21 Hopefullyourdocumentationandprocesses 22 and combinations and fairly simplified spreadsheets 23 will help bring some transparency to the whole 24 process, but the basic models, the basic data is not 25 that easy to use necessarily.

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com243 1 So we're going to extrapolate beyond 2020 is* 2 as need be or as these models are updated, we'll 3 clearly use the most current one. So we'll use the 4 EIA annual Energy Outlook. We'll see what their 5 update looks like and use the latest one when it's 6 available, depending on how it relates to where we are 7 in the analysis process. 8 And then that will come into the national 9 energy savings spreadsheet. We'll actually extract 10 that, which is a tool that LBL has developed, which I 11 think because this is a very inside crowd, so I'm sure 12 you folks are somewhat familiar with that. 13 There will have to be some modifications *B 14 and customization made for this particular product 15 class, but that will be the basic issue. All the 16 other inputs are from EIA. 17 MR. RABA: We have a hand raised over 18 here, John. 19 MR. STOOPS: Yes, yes. 20 MR. RABA: Pause a moment. Marshall. 21 MR. HUNT: Marshall Hunt again. 22 On the demand side, I do notice it's 23 mentioned, but do you feel that there will need to be 24 any upgrading of the spreadsheet or the analysis to 25 capture this better, the demand impacts? 

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### 243 1 

### Sowe'regoingtoextrapolatebeyond2020 2 as need be or as these models are updated, we'll 3 

### clearly use the most current one. So we'll use the 4 

### EIA annual Energy Outlook. We'll see what their 5 update looks like and use the latest one when it's 6 

### available, dependingonhow itrelatestowherewe are 7 

### in the analysis process. 8 

### And then thatwill come intothe national 9 

### energy savings spreadsheet. We'll actually extract 10 

### that, which is a tool that LBL 

### has developed, which I 11 

### thinkbecausethis isa veryinside crowd, so I'msure 12 

### you folks are somewhat familiar with that. 13 

### There will have to be some modifications 14 

### and customization made for this particular product 15 

### class, but that will be the basic issue. All the 16 

### other inputs are from EIA. 17 

### MR. RABA: 

### We have a hand raised over 18 

### here, John. 19 

### MR. STOOPS: Yes, yes. 20 MR. RABA: 

### Pause a moment. Marshall. 21 

### MR. HUNT: Marshall Hunt again. 22 On the demand side, I do notice it's 23 mentioned, but doyou feel that there will need tobe 24 any upgrading of the spreadsheet or the analysis to 25 capture this better, the demand impacts?

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### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W WASHINGTON, D.C. 20005-3701 www.nealrgross.com244 1 MR. STOOPS: We're looking at that. We *g 2 expect there will be some updates. At a minimum we 3 want to try to capture some of the marginal impacts a 4 little bit better than we have in the past. We're not 5 absolutely certain of the precise approaches we're 6 making. We are doing some exploratory analyses, 7 trying to look at that. 8 Again, these sponges saying what specific 9 suggestions do you have, can you point us in the 10 direction of another tool, another algorithm that we 11 can incorporate into it. We'd gladly accept that 12 suggestion and try to follow up on it. 13 So we've got all of this data, hopefully 14 all of these conclusions. We punch it through NEMS. 15 We look at the change, and as the output we have the 16 change in energy sales, and it actually goes beyond 17 electricity because there is an assumption about 18 generation mix, and so we can even see some gas and 19 oil impacts by region. We can look at that change in 20 the mix. We do have some plant impacts as well, as 21 far as that, as well as the need for new capacity 22 construction. So it really tries to come back and 23 capture that. 24 And then we've got -- yeah, there is 25 another one here -- and then the general invitation to NEAL R.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

### 244 1 

### MR. STOOPS: We're looking at that. We 2 

### expect there will be some updates. At a minimum we 3 want to tryto capture some of the marginal impacts a 4 littlebitbetterthanwe have inthepast. We'renot 5 absolutely certain of the precise approaches we're 6 

### making. We are doing some exploratory analyses, 7 trying to look at that. 8 Again, these sponges sayingwhat specific 9 suggestions do you have, can you point us In the 10 direction of another tool, another algorithm that we 11 

### can incorporate into it. We'd gladly accept that 12 suggestion and try to follow up on it. 13 So we've got all of this data, hopefully 14 all of these conclusions. We punch it through NEMS. 15 We look at the change, and as the output we have the 16 change in energy sales, and it actually goes beyond 17 electricity because there is an assumption about 18 generation mix, and so we can even see some gas and 19 oil impacts byregion. We can look at that change in 20 

### the mix. We do have some plant impacts as well, as 21 far as that, as well as the need for new capacity 22 construction. So it really tries to come back and 23 capture that. 24 And then we've got yeah, there is 25 anotheronehere

- - andthenthegeneral invitationto

(202)234-4433 NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.w. WASHINGTON, D.C. 20005-3701 www.nealrgross.com245 1 suggest additional inputs, additional methods should 2 you have any particular suggestions. 3 Yes. 4 MR. CRAWFORD: Jim Crawford, Trane 5 Company. 6 One overall observation is that the 7 incremental change in the capacity demandwill be lost 8 in the population changes inmost regions, and if you 9 just go through the numbers of what one EER unit 10 means, for example, and what percentage gets changed 11 in a year, and then what percentage is air conditioned 12 of the total load of the utility and some of those 13 simple things that you can grab out of the air and get 14 reasonably close, you'll find that you're down in the 15 neighborhood of maybe one to .2 of a percent of the 16 capacitywill be influenced in any givenyear by this, 17 and the population shifts going on in the country, 18 both shifts as well as growth or decrease, if you're 19 in the Northeast, totally overwhelm this. 20 So this reallydoesn't deserve awhole lot 21 of great depth of analysis. 22 The other observation that Iwouldmake is 23 when you do as you inevitably will, run this up to how 24 many hundred thousand gigawatt power plants will be 

# Q a25 eliminated, also give an honest rule of thumb like, 

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### 245 1 suggest additional inputs, additional methods should 2 

### you have anyparticular suggestions. 3 Yes. 4 

### MR. CRAWFORD: Jim Crawford, Trane 5 Company. 6 

### One overall observation is that the 7 incrementalchange inthecapacitydemandwillbe lost 8 

### in thepopulation changes inmost regions, and if you 9 just go through the numbers of what one EER unit 10 means, for example, and what percentage gets changed 11 ina year, andthenwhatpercentageis airconditioned 12 of the total load of the utility and some of those 13 

### simplethings thatyou cangrabout of the airandget 14 reasonablyclose, you'll find that you're down in the 15 neighborhood of maybe one to .2 of a percent of the 16 capacitywillbeinfluencedinanygivenyearbythis, 17 and the population shifts going on in the country, 18 

### both shifts as well as growth or decrease, if you're 19 in the Northeast, totally overwhelm this. 20 Sothisreallydoesn'tdeservea wholelot 21 of great depth of analysis. 22 Theotherobservationthat I wouldmakeis 23 whenyoudoasyouinevitablywill, runthisup tohow 24 many hundred thousand gigawatt power plants will be 25 eliminated, also give an honest rule of thumb like,

(202)234·4433 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005·3701 www.nealrgross.com246 1 you know, how many quads are saved if everybody just 2 turns off one 50 watt bulb for over a 30 year period. 3 A 50 watt bulb is worth a little over a quad. 4 And it's important to do that because any 5 time you talk about the American society, you've got 6 big numbers and big numbers. People are, "Owee, look 7 at the big numbers," and when you multiply by 30 8 years, you get bigger numbers. 9 MR. STOOPS: Don? 10 MR. BRUNDAGE: Don Brundage, Southern 11 Company. 12 I'm sure you're going to do it, but a lot 13 of the efficiency improvement things that were on your 14 earlier list improve total energy consumption,but not 15 necessarily EER. That's what Jim said earlier. 16 And for the impact on utilities, a lot of 17 those sort of things are not really going to help us 18 on peak demand, and if you do something that doesn't 19 help us on peak demand and cuts energy sales in most 20 markets, that's going to hurt utilities. It's going 21 to lower load factor, raise cost for everyone else. 22 MR. STOOPS: Okay, okay. Are there other 23 factors or other parts of the analysis that you think 24 we should consider, like distribution or transmission? 25 Is there any way to approach those issues? 

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### 246 1 you know, how many quads are saved if everybody just 2 turns off one 50 watt bulb for over a 30 yearperiod. 3 A 50 watt bulb is worth a little over a quad. 4 And it's important todo thatbecause any 5 time you talk about the American society, you've got 6 bignumbers andbignumbers. People are, "Owee, look 7 at the big numbers," and when you multiply by 30 8 years, you get bigger numbers. 9 

### MR. STOOPS: Don? 10 

### MR. BRUNDAGE: Don Brundage, Southern 11 Company. 12 I'm sureyou're going todo it, but a lot 13 oftheefficiencyimprovementthingsthatwereonyour 14 earlierlistimprovetotalenergyconsumption, butnot 15 necessarilyEER. That's what Jim said earlier. 16 And for the impact onutilities, a lot of 17 those sort of things are not really going to help us 18 on peak demand, and if you do something that doesn't 19 help us on peak demand and cuts energy sales in most 20 

### markets, that's going to hurt utilities. It's going 21 to lower load factor, raise cost for everyone else. 22 MR. STOOPS: Okay, okay. Are there other 23 factors orotherparts of the analysis that you think 24 we shouldconsider, likedistributionortransmission? 25 Is there any way to approach those issues?

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com247 1 MR. BRUNDAGE: That's going to be very ist 2 regional. I know that some areas have problems on 3 siting transmission. On the other hand, on one of our 4 states, I looked up on the list of what regulations 5 are in putting in transmission, and the only thing 6 they listedwas Department of Transportation standards 7 on making them safe for vehicles running into them. 8 MR. STOOPS: Good. 9 MR. BRUNDAGE: So it's basically put them 10 wherever you want to. 11 MR. STOOPS: Yeah, yeah. 12 MR. BRUNDAGE: That's not true in a lot of 13 places. We recognize that. 14 MR. STOOPS: No, no, no. NMBI (phonetic), 15 NMBI. 16 MR. CRAWFORD: If DOE wanted to fund it, 17 it might be interesting to tack onto this an estimate 18 of what various load leveling techniques would do. 19 They're going to do great things for the utilities. 20 They're not going to do very much for saving of energy 21 because they all use more energy than they save. 22 MR. STOOPS: But they maymake sense from 23 other perspectives though. 24 MR. CRAWFORD: Well, I mean, they may be 

### ~* 25 beneficial depending upon what your energy sources 

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### MR. BRUNDAGE: That's going to be very 2 

### regional. I know that some areas have problems on 3 sitingtransmission. On theotherhand, ononeof our 4 states, I looked up on the list of what regulations 5 are in putting in transmission, and the only thing 6 theylistedwasDepartmentofTransportationstandards 7 on making them safe for vehicles running into them. 8 

### MR. STOOPS: Good. 9 

### MR. BRUNDAGE: So it'sbasicallyput them 10 wherever you want to. 11 

### MR. STOOPS: Yeah, yeah. 12 MR. BRUNDAGE: That'snot true lna lotof 13 places. We recognize that. 14 

### MR. STOOPS: No, no, no. NMBI (phonetic), 15 NMBI. 16 

### MR. CRAWFORD: If DOE wanted to fund it, 17 it might be interestingto tack onto this an estimate 18 of what various load leveling techniques would do. 19 They're going to do great things for the utilities. 20 They'renot goingtodoverymuch for savingof energy 21 because they all use more energy than they save. 22 

### MR. STOOPS: But theymaymake sense from 23 other perspectives though. 24 

### MR. CRAWFORD: Well, I mean, theymaybe 25 beneficial depending upon what your energy sources

(202)234-4433 

### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com248 1 are.

Am* 2 MR. STOOPS: Right, right. 3 MR. CRAWFORD: If you can eliminate 4 peaking or reduce peaking, it may be beneficial to 5 society, and youknow, the energy measure today almost 6 ought to be carbon dioxide instead of quads. 7 MR. STOOPS: Jim is just really good 8 about

-- 9 MR. RABA: He's a good segue. 10 MR. STOOPS: Isn't he? He's just wonder. 11 MR. RABA: He's great. He knows the 12 script. 13 MR. STOOPS: Yeah, he must because the ~^

# Q14 final one that we need to look at -- 15 MR. RABA: The taxpayers appreciate it. 16 MR. CRAWFORD: As long as I'm picking 17 cudos, and we are in the home stretch, let me make one 18 general observation. I think all of us who are 19 participating in this process today came with the 20 understanding that if we were active in a discussion, 21 as some of us have been, that we didn't need to write 22 every word that we have said down on a piece of paper, 23 that that's why a transcript is being taken. 24 MR. STOOPS: Speaking for myself, I mean, 

# Q ~25 clearly we're going to look at this, as well as the 

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### 1 are. 2 

### MR. STOOPS: Right, right. 3 

### MR. CRAWFORD: If you can eliminate 4 peaking or reduce peaking, it may be beneficial to 5 society, andyouknow, theenergymeasuretodayalmost 6 ought to be carbon dioxide instead of quads. 7 

### MR. STOOPS: Jim is just really good 8 about

-- 9 

### MR. RABA: He's a good segue. 10 

### MR. STOOPS: Isn't he? He'sjustwonder. 11 MR. RABA: He's great. He knows the 12 script. 13 

### MR. STOOPS: Yeah, he must because the 14 final one that we need to look at -- 15 

### MR. RABA: The taxpayers appreciate it. 16 

### MR. CRAWFORD: As long as I'm picking 17 cudos, andwe are inthehome stretch, letme make one 18 

### general observation. I think all of us who are 19 participating in this process today came with the 20 understanding that ifwe were active ina discussion, 21 as some of us have been, that we didn't need to write 22 everywordthatwe have saiddownona piece ofpaper, 23 that that's why a transcript is being taken. 24 

### MR.·STOOPS: Speakingformyself, I mean, 25 clearly we're going to look at this, as well as the

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com249 1 written information, wherever it comes from. That's 2 a very sizable job over the next several weeks. 3 So it's too bad that it's a month before 4 we have the real deadline for the written one, but 5 that's what we need to allow. 6 Finally, the environmental, the CO2 7 issues. The purpose is to estimate the impacts of 8 these new energy efficiency standards so we'll have, 9 again, the baseline and the various options. There 10 may be a specific recommendation. 11 We actually use the NEMS model, again, 12 because it does allow us to look at the impacts from 13 carbon dioxide, NOx compounds, and even some issues 14 about the trading price of SO2, and should things 15 change within the framework, the time framework of 16 when this goes, then you know, we might even look at 17 other issues because the whole world is looking at 18 different issues. The United States is looking at 19 different issues about how it's responding to the 20 different kinds of issues. 21 So we know that that's a big uncertain 22 about exactly what it will be. We're looking out in 23 the future for quite a while. Based uponwhat we have 24 now, this is what we're going to look at, but it might 25 slightly change based upon responding to what the 

### NEALR.GROSS COURTREPORTERS ANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com**~-~-~~---** 249 1 

### written information, wherever it comes from. That's 2 

### a very sizable job over the next several weeks. 3 So it's too bad that it's a month before 4 we have the real deadline for the written one, but 5 that's what we need to allow. 6 

### Finally, the environmental, the 7 

### issues. The purpose is to estimate the impacts of 8 these new energy efficiency standards so we'll have, 9 

### again, the baseline and the various options. There 10 

### may be a specific recommendation. 11 

### We actually use the NEMS model, again, 12 

### because it does allow us to look at the impacts from 13 carbon dioxide, NOx compounds, and even some issues 14 about the trading price of S02' and should things 15 change within the framework, the time framework of 16 when this goes, then you know, we might even look at 17**oth~r** 

### issues because the whole world is looking at 18 

### different issues. The United States is looking at 19 different issues about how it's responding to the 20 

### different kinds of issues. 21 

### So we know that that's a big uncertain 22 

### about exactly what it will be. We're looking out in 23 

### the future forquite a while. Baseduponwhat we have 24 

### now, this iswhatwe'regoingto lookat, but itmight 25 

### slightly change based upon responding to what the

(202)234-4433 

### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com250 1 current rules are and laws are. *WL 2 Are there other environmental factors that 3 the department should consider? I mean, that menu, 4 that list could get really long. I don't know. 5 One of the things we're not looking at is 6 energy security as well. I mean that's not an 7 environmental issue, but it's another issue. I don't 8 think it's mandated legislatively, but -- yes? 9 MR. HUNT: Marshall Hunt, PG&E. 10 I understand there's trading issues with 11 the other pollutants also. So -- 12 MR. STOOPS: Yeah. We should look at 13 those as those markets develop, and we will. 14 MR. HUNT: Thank you. 15 MR. BRUNDAGE: Don Brundage, Southern 16 Company. 17 Areyou choosing the environmental factors 18 to look at based on which ones are controlled under 19 current government laws and regulations or how are you 20 determining which environmental factors to include? 21 MR. STOOPS: Francine or Bryan, I'm going 22 to have to punt on that one because I'm ignorant. 23 MS. PINTO: I do not know the answer to 24 that. 

# b ~25 MR. POLLOCK: Ed Pollock, Department of 

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### 250 1 

### current rules are and laws are. 2 

### Arethereotherenvironmentalfactorsthat 3 

### the department should consider? I 

### mean, that menu, 4 

### that list could get really long. I don't know. 5 

### One of the things we're not looking at is 6 

### energy security as well. I mean that's not an 7 

### environmental issue, but it's another issue. I don't 8 

### think it's mandated legislatively, but

-- yes? 9 

### MR. HUNT: Marshall Hunt, PG&E. 10 I 

### understand there's trading issues with 11 

### the'other pollutants also. So

-- 12 

### MR. STOOPS: Yeah. We should look at 13 those as those markets develop, and we will. 14 

### MR. HUNT: Thank you. 15 

### MR. BRUNDAGE: Don Brundage, Southern 16 Company. 17 Areyouchoosingtheenvironmentalfactors 18 to look at based on which ones are controlled under 19 currentgovernment lawsandregulationsorhowareyou 20 determining which environmental factors to include? 21 MR. STOOPS: Francine orBryan, I'mgoing 22 to have to punt on that one because I'm ignorant. 23 

### 24 that. 25

(202)234-4433 

### MS. PINTO: I do not know the answer to

MR. POLLOCK: Ed Pollock, Department of NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com251 1 Energy. 2 The waywe look at some of these in terms 3 of savings will depend on the laws that regulate it. 4 So we will be looking at basically the ones that are 5 commonly considered. The way you look at them, the 6 discussion of can you trade them and other things, the 7 impact and the benefit from the standards will be 8 different depending on what law is regulating those. 9 MR. BRUNDAGE: Don Brundage again. 10 I have no problems with for informational 11 purposes including estimates, any sorts of things that 12 are not regulated, but unless they are regulated or 13 has something like a trading price related to it, I 14 mean, at this point the value of reducing carbon 15 emissions is very problematic from this point of view 16 because there's noUnited States regulation concerning 17 it. 18 And I realize there may be something in 19 the future for mercury and air toxics and all of these 20 other sorts of things, but it's not really mature at 21 this point. 22 MR. RABA: Jim Mullen first, and then Jim 23 Crawford. Excuse me. 24 MR. MULLEN: Oh, that's okay. 25 I wanted to follow up on a point Don was 

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### 251 1 Energy. 2 The waywe look at some of these in terms 3 

### of savings will depend on the laws that regulate it. 4 

### So we will be looking at basically the ones that are 5 

### commonly considered. The way you look at them, the 6 

### discussionof canyoutrade themandotherthings, the 7 

### impact and the benefit from the standards will be 8 

### different depending on what law is regulating those. 9 

### MR. BRUNDAGE: Don Brundage again. 10 I 

### havenoproblemswithfor informational 11 purposesincludingestimates, anysortsofthingsthat 12 are not regulated, but unless they are regulated or 13 

### has something like a trading price related to it, I 14 

### mean, at this point the value of reducing carbon 15 emissions isveryproblematic from thispoint of view 16 

### becausethere'snoUnitedStatesregulationconcerning 17 

### it. 18 And I realize there may be something in 19 the future formercuryandairtoxics andallof these 20 other sorts of things, but it's not really mature at 21 this point. 22 MR. RABA: JimMullen first, andthenJim 23 Crawford. Excuse me. 24 

### 25

(202)234-4433 

### MR. MULLEN: Oh, that's okay. I wanted to follow up on a point Don was NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com252 1 making. In Texas, for example, I think the power 2 plant emissions of nitrous oxides go down about 90 3 percent in the next six or seven years, and the direct 4 question is: is that factor -- are things like the 5 Texas rule factored into the future NOx reduction 6 estimates. 7 MR. STOOPS: Yes, we'll have to do that. 8 MR. CRAWFORD: Okay. Well, of course, on 9 carbon dioxide, there's been a great deal of talk 10 about the Kyoto Protocol, and although we haven't 11 ratified it, and we may or may not ratify it, we did, 12 in fact, sign up to some commitments when the protocol 13 was drafted in Kyoto a few years ago, and I would 14 assume that we intend to try to honor something in the 15 ballpark of what we committed to, which is a net 16 reduction of about 30 percent from business as usual 17 emissions by the end of the decade. 18 So if we're going to try to find peace 19 with the world on all fronts, which we need to do, we 20 need to be very concerned about carbon dioxide 21 emissions to the point that Jim Mullen was referring 22 to the NOx. 23 We've got lots of parts of this country 24 that are in nonattainment or near nonattainment on 25 ozone, and NOx is probably the number one villain 

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### 252 1 

### making. In Texas, for example, I think the power 2 plant emissions of nitrous oxides go down about 90 3 percent inthenext sixor sevenyears, andthedirect 4 

### question is: is that factor

-- are things like the 5 Texas rule factored into the future NOx reduction 6 estimates. 7 

### MR. STOOPS: Yes, we'll have to do that. 8 

### MR. CRAWFORD: Okay. Well, of course, on 9 carbon dioxide, there's been a great deal of talk 10 about the Kyoto Protocol, and although we haven't 11 ratified it, andwe mayormay not ratify it, we did, 12 infact, signupto somecommitmentswhentheprotocol 13 

### was drafted in Kyoto a few years ago, and I would 14 assume thatwe intendtotrytohonor somethinginthe 15 ballpark of what we committed to, which is a net 16 reduction of about 30 percent from business as usual 17 emissions by the end of the decade. 18 So if we're going to try to find peace 19 withthe worldon all fronts, whichwe need to do, we 20 need to be very concerned about carbon dioxide 21 emissions to the point that Jim Mullen was referring 22 to the NOx. 23 We've got lots of parts of this country 24 that are in nonattainment or near nonattainment on 25 ozone, and NOx is probably the number one villain

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### NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W WASHINGTON, D.C. 20005-3701 www.nealrgross.com253 1 there, and I think we all know the role of SOx 2 relative to acid rain as good reasons for addressing 3 all of them. 4 How they shouldbe articulated or how they 5 should be used in the decision process, basically they 6 probably shouldn't because that's not part of this 7 law. 8 MR. POLLOCK: This is Ed Pollock, 9 Department of Energy. 10 If you've been following the White House 11 agenda, many of you will know that the White House 12 right now is developing a new environmental policy, 13 and so as we get to this point in the rulemaking, 14 which is a couple of years ago, some of those 15 conditions and criteria that are being applied, maybe 16 even the criteria on the rulemaking might be changed. 17 I don't know, but it will change the game plan a 18 little bit for us. 19 So this is just the beginning of asking, 20 you know, what factors should be considered based on 21 what we know today. As you have thoughts, as things 22 change, we certainly will be coming back to you and 23 asking you for continuing discussion on this topic 24 basically after we get the ANOPR out. 25 MR. BRUNDAGE: Final comment. Don 

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### 253 1 there, and I think we all know the role of SOx 2 relative to acid rain as good reasons for addressing 3 

### all of them. 4 

### Howtheyshouldbearticulatedorhowthey 5 

### shouldbeusedinthedecisionprocess, basicallythey 6 

### probably shouldn't because that's not part of this 7 

### law. 8 

### MR. POLLOCK: This is Ed Pollock, 9 Department of Energy. 10 If you've been following the White House 11 agenda, many of you will know that the White House 12 right now is developing a new environmental policy, 13 and so as we get to this point in the rulemaking, 14 which is a couple of years ago, some of those 15 conditions andcriteriathat are beingapplied, maybe 16 even the criteriaonthe rulemakingmight be changed. 17 I don't know, but it will change the game plan a 18 

### little bit for us. 19 So this is just the beginning of asking, 20 you know, what factors shouldbe considered based on 21 what we know today. As you have thoughts, as things 22 change, we certainly will be coming back to you and 23 asking you for continuing discussion on this topic 24 basically after we get the ANOPR out. 25 MR. BRUNDAGE: Final comment. Don

(202)234-4433 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 ( www.nealrgross.com254 1 Brundage, again. 2 A final comment on pollution issues. The 3 regulations onpollution, especially forutilities are 4 insanely complicated and multi-level, and like Mr. 5 Mullen was talking about in Texas, there's an awful 6 lot of NOx reduction that's going to occur in this 7 country due to local nonattainment areas and things 8 that are not directly related to a single federal 9 bill, and I hope the actual reductions that are 10 planned -- my own company is currently spending over 11 $800 million on NOx reductions. They are included 12 within your forecast of the future and some good 13 source that puts all of these different types of 14 regulations together. 15 MR. RABA: Are there any comments from our 16 call-in attendees? 17 Okay. Jim Crawford. 18 MR. CRAWFORD: Yeah, if I may, I want to 19 pick up on what Don just said. If you do examine NOx, 20 in particular, then I would urge you to examine it 21 both in the business as usual and in the forecast 22 reduction of emissions per unit energy output so that 23 you highlight what the electric utilities are 24 undertaking relative to the environmental improvement. 25 I mean, if we're going to do it, let's do 

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### 254 1 Brundage, again. 2 Afinal comment onpollutionissues. The 3 regulationsonpollution, especiallyforutilitiesare 4 

### insanely complicated and multi-level, and like Mr. 5 Mullen was talking about in Texas, there's an awful 6 lot of NOx reduction that's going to occur In this 7 country due to local nonattainment areas and things 8 that are not directly related to a single federal 9 bill, and I hope the actual reductions that are 10 planned

-- my own company is currently spending over 11 $800 million on NOx reductions. They are included 12 within your forecast of the future and some good 13 source that puts all of these different types of 14 regulations together. 15 

### MR. RABA: Are thereanycomments fromour 16 call-in attendees? 17 

### Okay. Jim Crawford. 18 MR. CRAWFORD: Yeah, if I may, I want to 19 pickuponwhatDonjust said. IfyoudoexamineNOx, 20 in particular, then I would urge you to examine it 21 both in the business as usual and in the forecast 22 reductionof emissionsperunit energyoutput so that 23 you highlight what the electric utilities are 24 undertakingrelativetotheenvironmentalimprovement. 25

(202)234-4433 

### I mean, ifwe're goingto do it, let's do NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com255 1 it and give these folks the credit that they deserve. 2 MR. RABA: All right. We're at a point 3 now in our agenda on a decision here. Are there any 4 further comments maybe overall on what's been 5 discussed today? Any parting thoughts or some general 6 remarks you'd like to leave for the record that we 7 could all consider later on? 8 Comments from the callers? 9 (No response.) 10 MR. RABA: I hear none. 11 It's been a long, full day, lively at 12 times, and certainly we've gotten a lot out of it. 13 Many issues have surfaced, some anticipated, some not, 14 but it's all good. 15 And these will be looked at very 16 thoroughly both in the oral testimony or for the 17 transcript rather and writing, and certainly your 18 comments as they come in throughout this, and 19 certainly to work closely with energy efficiency 20 advocates, utilities, consumer groups and 21 manufacturers and associations throughout the process 22 will make it much more transparent and much more 23 evaluable when a determination, a standard, whatever 24 comes out, does come out. 25 So we appreciate so much you all being 

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### 255 1 

### it andgive these folks the credit that theydeserve. 2 

### MR. RABA: All right. We're at a point 3 now in our agenda on a decision here. Are there any 4 

### further comments maybe overall on what's been 5 discussedtoday? Anypartingthoughtsorsomegeneral 6 

### remarks you'd like to leave for the record that we 7 

### could all consider later on? 8 

### Comments from the callers? 9 

### (No response.) 10 

### MR. RABA: I hear none. 11 

### It's been a long, full day, lively at 12 

### times, and certainly we've gotten a lot out of it. 13 

### Manyissueshavesurfaced, someanticipated, somenot, 14 

### but it's all good. 15 

### And these will be looked at very 16 thoroughly both in the oral testimony or for the 17 transcript rather and writing, and certainly your 18 

### comments as they come in throughout this, and 19 certainly to work closely with energy efficiency 20 

### advocates, utilities, consumer groups and 21 

### manufacturers andassociations throughout theprocess 22 will make it much more transparent and much more 23 evaluable when a determination, a standard, whatever 24 comes out, does come out. 25

(202)234-4433 

### So we appreciate so much you all being NEAL

### R.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com256 1 here today and traveling this far for these workshops 2 today and tomorrow, if you're going to stay. 3 I invite any concluding comments or 4 remarks from Bryan Berringer and Ed Pollock and 5 Department of Energy. 6 MR. BERRINGER: Yeah, Bryan Berringer. 7 Just ifyou turnback toyour introductory 8 slides if you still have them out, on page 8, I just 9 want to go over the-next steps so that we're sort of 10 clear and make a correction on that. Again, it's page 11 8 at the very front. 12 So we're looking at if people want to do 13 additional comments, respond to some of the questions 14 we had today. I thought today's discussion was very 15 good. 16 The comment period will be November 1st. 17 So about 30 days, and a lot of your comments or 18 concerns today were ones we were aware of, and it 19 sounds like we still need to come to some conclusions. 20 So if people have suggestions on how we can do the 21 analysis or what information we should use to do the 22 analysis and how to proceed, we'd appreciate it. 23 Then obviously the next steps would be 24 working with the manufacturers and ARI to set up some 25 manufacturer interviews to just sort of step through, 

### NEALR.GROSS COURT REPORTERSANDTRANSCRIBERS 1323RHODE ISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

### 256 1 

### here todayandtravelingthis far for these workshops 2 today and tomorrow, if you're going to stay. 3 I 

### invite any concluding comments or 4 remarks from Bryan Berringer and Ed Pollock and 5 Department of Energy. 6 

### MR. BERRINGER: Yeah, Bryan Berringer. 7 

### Justifyouturnbacktoyourintroductory 8 

### slides if you still have them out, on page 8, I 

### just 9 want to go over the next steps so that we're sort of 10 

### clearandmake a correctiononthat. Again, it'spage 11 8 

### at the very front. 12 So we're looking at if people want to do 13 additional comments, respondto some of the questions 14 we had today. I 

### thought today's discussion was very 15 good. 16 The comment period will be November 1st. 17 So about 30 days, and a lot of your comments or 18 

### concerns today were ones we were aware of, and it 19 sounds likewe stillneedtocometo someconclusions. 20 So if people have suggestions on how we can do the 21 analysis or what information we should use to do the 22 analysis and how to proceed, we'd appreciate it. 23 Then obviously the next steps would be 24 workingwiththemanufacturers and ARI to setup some 25 manufacturer interviews tojust sort of stepthrough,

(202)234-4433 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com257 1 you know, the data so we can do some more detailed ^*^ 2 analysis so that then we can make a decision whether 3 it makes sense to go ahead and adopt ASHRAE or if it 4 makes sense to, you know, move to a 5 rulemaking/standard process, or some of the other 6 options that were reached today that talk about 7 negotiations, ASHRAE, continualmaintenance, a number 8 of avenues that we can take. 9 So obviously there's no foregone 10 conclusions, but we would appreciate if you have 11 additional comments to send them to us, E-mail them to 12 us. Call me up, let me know what you think, and we'll 13 proceed from there. 14 So, again, I just want to thank everybody 15 for coming today. I appreciate the good input. I 16 think this is -- you know, part of the process 17 improvement was to have this more open conversation 18 and to have it up front so we don't get tied into any 19 one analysis or any one problem. 20 So again, Iappreciate it, and I'll see if 21 Ed Pollock would like to make any closing remarks. 22 MR. POLLOCK: Thank you, Bryan. 23 Only just to thank all of you for 24 participating today. It was agood discussion, and to Is 25 emphasize the plug that Bryan put here at the end. 

### NEALR.GROSS COURT REPORTERS ANDTRANSCRIBERS 1323 RHODE ISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

### 257 1 you know, the data so we can do some more detailed 2 analysis so that then we can make a decision whether 3 

### it makes sense to go ahead and adopt ASHRAE or if it 4 

### makes sense to, you know, move to a 5 

### rulemaking/standard process, or some of the other 6 

### options that were reached today that talk about 7 

### negotiations, ASHRAE, continualmaintenance, a number 8 

### of**~venues** 

### that we can take. 9 

### So obviously there's no foregone 10 conclusions, but we would appreciate if you have 11 additionalcomments to sendthemtous, E-mail themto 12 us. Callme up, letme knowwhatyou think, andwe'll 13 proceed from there. 14 

### So, again, I justwant to thank everybody 15 

### for coming today. I appreciate the good input. I 16 

### think this is you know, part of the process 17 improvement was to have this more open conversation 18 and to have it up front sowe don't get tied into any 19 one analysis or anyone problem. 20 Soagain, I appreciateit, and I'llseeif 21 Ed Pollock would like to make any closing remarks. 22 MR. POLLOCK: Thank you, Bryan. 23 

### Only just to thank all of you for 24 participatingtoday. Itwas a gooddiscussion, andto 25 emphasize the plug that Bryanput here at the end.

(202)234-4433 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com258 1 We had quite a bit of discussion earlier 2 this morning about the use ofASHRAE. Certainly using 3 ASHRAE, using consensus outside of ASHRAE, all of 4 those are processes which can move us more quickly to 5 a final solution or a final decision on what the 6 standard level should be, are things that we would 7 encourage and support in any way that we can. 8 I recognize the problem of uncertainty 9 both on manufacturers, on utilities, and so if we 10 could find a way to come to a conclusion on this 11 rulemaking process more quickly to give you more 12 certainty in the future, we would want to support 13 that. 14 It also, of course, reduces our use of 15 resources which we can use on other areas, and given 16 what's going on right now on the Hill in terms of 17 budget, we need to be very conscious and conscientious 18 about the way we use the resources that are available 19 to this office. 20 Thank you. 21 MR. RABA: Please fill out your comment 22 sheets and turn them in at the back of the room. 23 No more comments. Give yourselves around 24 of applause for a job well done today. 25 Thank you, ladies and gentlemen. Good 

### NEALR.GROSS COURT REPORTERSANDTRANSCRIBERS 1323RHODE ISLANDAVE.,N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 258 1 We had quite a bit of discussion earlier 2 thismorningabout theuse ofASHRAE. Certainlyusing 3 ASHRAE, using consensus outside of ASHRAE, all of 4 those are processes which canmove us more quickly to 5 a final solution or a final decision on what the 6 standard level should be, are things that we would 7 encourage and support in any way that we can. 8 I recognize the problem of uncertainty 9 both on manufacturers, on utilities, and so if we 10 could find a way to come to a conclusion on this 11 rulemaking process more quickly to give you more 12 certainty in the future, we would want to support 13 that. 14 It also, of course, reduces our use of 15 resources which we can use on other areas, and given 16 what's going on right now on the Hill in terms of 17 budget, we needtobeveryconscious andconscientious 18 about the way we use the resources that are available 19 to this office. 20 Thank you. 21 MR. RABA: Please fill out your comment 22 sheets and turn them in at the back of the room. 23 Nomore comments. Giveyourselvesa round 24 of applause for a job well done today. 25

(202)234-4433 Thank you, ladies and gentlemen. Good 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com259 1 job. 2 MR. BERRINGER: Thank you, Jim. 3 (Applause.) 4 (Whereupon,at 4:33 p.m., the meeting was 5 adjourned.) 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 *O 

### ~25 

### NEALR.GROSS COURTREPORTERS ANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. (202)234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 259 

### 1 job. 2 

### MR. BERRINGER: Thank you, Jim. 3 (Applause.) 4 (Whereupon, at 4:33 p.m., themeetingwas 5 adjourned.) 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

(202)234-4433 

### NEALR.GROSS COURTREPORTERSANDTRANSCRIBERS 1323 RHODEISLANDAVE., N.W. WASHINGTON, D.C. 20005-3701 www.nealrgross.com260 CERTIFICATE

This is to certify that the foregoing transcript in the matter of: Public Workshop

Before: Office of Energy Efficiency and Renewable Energy

Date: October 1, 2001

Place: Washington, DC

represents the full and complete proceedings of the aforementioned matter, as reported and reduced to typewriting. --------**~----- --~** **-~**



### 260 CERTIFICATE



### This is to certifythat the foregoing transcript in the matter of:

Before:

Date:

Place: Public Workshop

Office of Energy Efficiency and Renewable Energy October 1, 

### 2001 Washington, DC

represents the full and complete proceedings of the aforementioned typewriting. matter, as reported and reduced to