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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **U.S. DEPARTMENT OF ENERGY**

**+ + + + + MANUFACTURED HOUSING WORKING GROUP** 

**+ + + + + PUBLIC MEETING** 

**+ + + + + THURSDAY**  **AUGUST 21, 2014**

**+ + + + + The Public Meeting met in Room**  **8E-089, 1000 Independence Avenue, S.W., Washington, D.C., at 9:00 a.m, Eileen Hoffman,**  **Meeting Facilitator, presiding. PRESENT**  **EILEEN HOFFMAN, Meeting Facilitator, Federal Mediation and Conciliation Service**  **TED BANTLE, Meeting Facilitator, Federal Mediation and Conciliation Service**  **JOHN CASKEY, National Electric Manufacturers Association**  **KEITH DENNIS, National Rural Electric Cooperative Association**  **ISHBEL DICKENS, National Manufactured Home Owners Association ** * **SCOTT DRAKE, East Kentucky Power Cooperative ** * **STACY EPPERSON, Next Step Network MARK EZZO, Clayton Homes, Inc. ** * **RICHARD HANGER, Housing Technology and Standards ** * **BERT KESSLER, Palm Harbor Homes, Inc. *** **ERIC LACEY, Responsible Energy Codes Alliance** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### EMANUEL LEVY, Systems Building Research **Alliance MICHAEL LUBLINER, Washington State**  **University Extension Energy Program ROBERT LUTER, Lippert Components, Inc. ** * **RICHARD POTTS, Virginia Department of Housing and Community Development ** * **JAVIER RAMIREZ, Meeting Facilitator, Federal Mediation and Conciliation Service**  **ROBIN ROY, Natural Resources Defense Council MANUEL SANTANA, Cavco Industries**  **PETER SCHNEIDER, Efficiency Vermont *** **DAVID TOMPOS, NTA, Inc. MICHAEL WADE, Cavalier Home Builders ** * **MARK WEISS, Manufactured Housing Association for Regulatory Reform**  *** Present via teleconference ALSO PRESENT:**  **ED BARBOUR, Navigant Consulting JANET FREIMUTH, Office of Conflict**  **Prevention and Resolution, U.S. Department of Energy**  **JOSEPH HAGERMAN, Energy Efficiency and Renewable Energy Office U.S. Department**  **of Energy JAMES MARTIN, Office of Manufactured Housing**  **Programs, U.S. Department of Housing and Urban Development**  **PAM PONTILLO, Office of Conflict Prevention and Resolution, U.S. Department of**  **Energy DON SURRENA, National Association of**  **Homebuilders KANITA VAIDYANATHAN, Office of the General**  **Counsel, U.S. Department of Energy MATTHEW WALKER, Navigant Consulting** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **C-O-N-T-E-N-T-S**

**Call to Order, Welcome, Introductions 6 and Housekeeping**  **Eileen Hoffman Meeting Facilitator**  **Opening Remarks by Department of 11 Energy**  **Joe Hagerman Energy Efficiency and Renewable**  **Energy Office U.S. Department of Energy**  **Opening Remarks by Working Group Members 14 Michael Lubliner 14**  **Stacy Epperson 15 Mark Weiss 16**  **Keith Dennis 16 David Tompos 17**  **Manny Santana 17 Robin Roy 17**  **John Caskey 18 Emanuel Levy 18**  **Eric Lacey 19 Joe Hagerman 19**  **U.S. Department of Energy Rob Luter 23**  **Rick Hanger 23 Further Remarks and Agenda Overview 23**  **Eileen Hoffman Meeting Facilitator**  **Department of Energy Presentations: 25 PNNL Analysis and LCC Activities**  **Joe Hagerman Energy Efficiency and Renewable**  **Energy Office U.S. Department of Energy** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **PNNL Analysis 26 Life-Cycle Cost Spreadsheet 90**  **Matthew Walker Navigant Consulting**  **Additional Introductions 133**

**2015 IECC 134 Eric Lacey**  **Responsible Energy Codes Alliance** 

**Framework 192 Emanuel Levy**  **Systems Building Research Alliance**

**Public Comment 365**

**Next Steps 380**

**Adjourn 392**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 P-R-O-C-E-E-D-I-N-G-S**  **2 9:06 a.m.**  **3 MS. HOFFMAN: Good morning.**  **4 I am Eileen Barkas Hoffman, one of**  **5 the facilitators from FMCS, Federal Mediation**  **6 and Conciliation Service, for the DOE ASRAC**  **7 Manufactured Housing Working Group.**  **8 Welcome.**  **9 We have got two really packed**  **10 sessions to go through today and tomorrow.**  **11 First, let me introduce my**  **12 colleagues, and then, we will go around the**  **13 room.**  **14 MR. RAMIREZ: Hi. Javier Ramirez**  **15 out of the Chicago office.**  **16 MR. BANTLE: And I am Ted Bantle.**  **17 I work in the Office of Alternative Dispute**  **18 Resolution with Eileen here out of D.C.**  **19 MS. HOFFMAN: And then, I would**  **20 just ask all of the Working Group members that**  **21 are here, and then, we will hear from the**  **22 folks doing it by remote, starting with** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Michael.**  **2 MEMBER LUBLINER: Michael**  **3 Lubliner, Washington State University,**  **4 Extension Energy Program.**  **5 MEMBER EPPERSON: Stacy Epperson,**  **6 Next Step Network.**  **7 MEMBER WEISS: Mark Weiss,**  **8 Manufactured Housing Association for**  **9 Regulatory Reform.**  **10 MEMBER DENNIS: Keith Dennis,**  **11 National Rural Electric Cooperative**  **12 Association.**  **13 MEMBER TOMPOS: David Tompos, NTA.**  **14 MEMBER ROY: Robin Roy, Natural**  **15 Resources Defense Council.**  **16 MEMBER CASKEY: John Caskey. I'm**  **17 on ASRAC, and I work for the National**  **18 Electrical Manufacturers Association.**  **19 MEMBER LEVY: Emanuel Levy,**  **20 Systems Building Research Alliance.**  **21 MEMBER LACEY: Eric Lacey,**  **22 Responsible Energy Codes Alliance.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. HAGERMAN: Joe Hagerman, DOE.**  **2 MS. HOFFMAN: Okay. We would like**  **3 to hear from the folks in the back from DOE.**  **4 MS. VAIDYANATHAN: Kavita**  **5 Vaidyanathan, DOE General Counsel's Office.**  **6 MR. BARBOUR: Ed Barbour, Navigant**  **7 Consulting.**  **8 MS. HOFFMAN: Okay. We have one**  **9 person in the audience.**  **10 MS. PONTILLO: Hi. I'm Pam**  **11 Pontillo in the Office of Conflict Prevention**  **12 and Resolution at the Department of Energy.**  **13 Thank you.**  **14 MS. HOFFMAN: Right. Thank you.**  **15 And before we get into the formal**  **16 program, we want to hear who is on remote.**  **17 First, who are the members and alternates, and**  **18 then, any of the public.**  **19 MR. RAMIREZ: And also, the folks**  **20 on the phone, please designate if you are a**  **21 voting member today.**  **22 MEMBER DICKENS: Good morning.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 This is Ishbel Dickens from the**  **2 National Manufactured Home Owners Association.**  **3 I am a voting member, and it is still a little**  **4 dark here in Seattle.**  **5 MR. RAMIREZ: Thank you.**  **6 MEMBER HANGER: This is Rick**  **7 Hanger. I am with the State of Colorado,**  **8 Division of Housing. I am a voting member.**  **9 MEMBER EZZO: Mark Ezzo, Clayton**  **10 Homes, and I'm a voting member.**  **11 MEMBER LUTER: Good morning.**  **12 Rob Luter with Lippert Components,**  **13 also a voting member.**  **14 MEMBER SCHNEIDER: Peter**  **15 Schneider, Efficiency Vermont, a voting**  **16 member.**  **17 MEMBER WADE: Michael Wade,**  **18 Cavalier Homes, also a voting member.**  **19 MS. HOFFMAN: Is Scott Drake on**  **20 the line?**  **21 (No response.)**  **22 And let me just see. Bert** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Kessler?**  **2 (No response.)**  **3 Okay. And I think that's it.**  **4 Okay. All right.**  **5 MR. HAGERMAN: This is Joe**  **6 Hagerman.**  **7 Here is who we have online. We**  **8 have Ishbel Dickens. We've got Scott Drake.**  **9 We have Mark Ezzo, Richard Hanger, Bert**  **10 Kessler, Robert Luter, Richard Potts, Peter**  **11 Schneider, and Michael Wade.**  **12 And if we get anybody else online,**  **13 we will announce their names as well.**  **14 MR. RAMIREZ: Manny, can you go**  **15 ahead and turn your microphone on and**  **16 introduce yourself?**  **17 MEMBER SANTANA: Manny Santana,**  **18 Cavco Industries, Phoenix.**  **19 MS. HOFFMAN: Okay. Just a couple**  **20 of things we learned from the last time we**  **21 met. If you want to speak, an easy way is**  **22 just to put your name tent up. I think that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 is Robin Roy's idea. But, in any event, thank**  **2 you on that score.**  **3 Okay. All right. Well, welcome.**  **4 And I would like to ask DOE to say a few**  **5 remarks, and we will, then, work through what**  **6 our agenda is.**  **7 MR. HAGERMAN: So, this is Joe**  **8 Hagerman, DOE.**  **9 I just want to thank everybody**  **10 again for taking the time out of their busy**  **11 lives to come here and discuss this consensus**  **12 process for manufactured housing.**  **13 We would really encourage that,**  **14 you know, there's been a lot of questions**  **15 asked by the group and we have done a lot of**  **16 analysis that we have shared with everyone.**  **17 So, we think it is going to be a pretty**  **18 productive day, as we discuss the actual**  **19 standard-setting. So, we look forward to the**  **20 positive discussions that we have.**  **21 And I just wanted to ask, too,**  **22 maybe we could take a few minutes just to ask** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the members how they think the process has**  **2 been running thus far. If there is anything**  **3 that we need to do to get information quicker**  **4 to you or anything that you would like us to**  **5 do to help the conversation moving along, we**  **6 are very interested in hearing that.**  **7 I can say that we have gotten a**  **8 lot of questions from individual members. And**  **9 how we have been treating those thus far is,**  **10 if we get a question, we try to get an answer.**  **11 And then, we send out the question and the**  **12 answer to everybody.**  **13 And we have realized that we need**  **14 to start keeping kind of a running FAQ, so**  **15 Frequently Asked Questions or questions that**  **16 get asked. And so, that is the docket. So,**  **17 in case you forget one in your inbox or you**  **18 want to see the total list of all the**  **19 questions that have been asked, we are going**  **20 to do that after this meeting. We are going**  **21 to start a running list of questions and**  **22 answers and post that to the docket.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 We have been pretty diligent about**  **2 posting everything.**  **3 Somebody's GPS is going off.**  **4 But we have been really good about**  **5 keeping all the dockets -- I mean, sorry --**  **6 all the files and the correspondence on the**  **7 docket. But if you do see that we have missed**  **8 something, please let us know. It is not our**  **9 intent to not post things to the document.**  **10 I believe that Energetics did send**  **11 out the docket URL to everybody. And so, you**  **12 should have that and you should be able to go**  **13 through it.**  **14 And I believe they posted the**  **15 transcripts yesterday. The transcripts, as**  **16 you read through them, there are some typos**  **17 and whatnot. And we erred on the side of**  **18 getting the transcript posted as quickly as**  **19 possible rather than going through and**  **20 cleaning up errors. So, a lot of times you**  **21 see acronyms, like the ICC is kind of missed**  **22 a couple of times, and the IECC is kind of** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 missed a couple of times, but I think you can**  **2 figure it out.**  **3 Yes, the Wi-Fi password is**  **4 energy.wireless, all lowercase. And I think**  **5 it is behind you here, the sign behind you.**  **6 All right. So, if you have any**  **7 other questions for us, we would love to hear**  **8 some feedback from you guys on what we could**  **9 do better.**  **10 You know we are trying to be as**  **11 responsive as possible to you and trying to**  **12 make sure that we get the conversation rolling**  **13 and we get a consensus standard as quickly as**  **14 possible.**  **15 MS. HOFFMAN: I think it wouldn't**  **16 be a bad idea to go around the room and hear**  **17 how is the process working so far and, also,**  **18 if there is someone who is a Chair of a**  **19 subcommittee, if there is a report or how far**  **20 along you are on that.**  **21 Why don't we start with Michael?**  **22 MEMBER LUBLINER: The last meeting** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I was communicating via phone, so I didn't get**  **2 the benefits of interacting with people here**  **3 in person. But I thought from that**  **4 perspective the process went real well. I was**  **5 able to share my input, and I look forward to**  **6 doing it here again today.**  **7 MS. HOFFMAN: Now you have a**  **8 subcommittee.**  **9 MEMBER LUBLINER: Now, on the**  **10 subcommittee, since I have been on vacation**  **11 since the last meeting --**  **12 MS. HOFFMAN: Right.**  **13 MEMBER LUBLINER: -- I have done**  **14 nothing, but I have been reviewing some of the**  **15 work that some of the people on the**  **16 subcommittee like Emanuel have been crunching**  **17 out and others. So, I think that we are in a**  **18 good position today for some good discussions**  **19 in that area.**  **20 MS. HOFFMAN: Okay.**  **21 MEMBER EPPERSON: Hi. This is**  **22 Stacy Epperson.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I think it is a thoughtful, good,**  **2 fair, and transparent process. I am the point**  **3 person for the Subcommittee on Finance, and we**  **4 met this week. We have been inventorying our**  **5 data. We have quite the list, quite the stack**  **6 of studies that we are reviewing.**  **7 Just a couple of highlights. You**  **8 know, we already have data on loan size and**  **9 interest rates and downpayments and FICO**  **10 scores. We have all that today that, if we**  **11 need to share that, we can. And we have**  **12 identified experts in the field we are going**  **13 to spend some time with.**  **14 Thank you.**  **15 MS. HOFFMAN: Thank you.**  **16 MEMBER WEISS: Mark Weiss.**  **17 I think we had a good exchange**  **18 last time and look forward to the same this**  **19 session.**  **20 MEMBER DENNIS: Keith Dennis.**  **21 I think it is going great. The**  **22 amount of information that has been coming** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 quickly is great. Thanks.**  **2 MS. HOFFMAN: And you heard it was**  **3 Keith Dennis? Okay.**  **4 MEMBER DENNIS: Keith Dennis, yes.**  **5 MEMBER TOMPOS: Dave Tompos from**  **6 NTA.**  **7 I this, so far, so good. I think**  **8 the FAQs is a great idea. We have only had**  **9 one meeting. So, I think after today we will**  **10 have a lot more feedback for you.**  **11 MEMBER SANTANA: Manny with Cavco.**  **12 I think that the process has taken**  **13 the time that these things take. I think we**  **14 should all come to the realization that the 60**  **15 days at the end of September/October is fast**  **16 approaching, and we are going to struggle to**  **17 come up with a term sheet, I think, at this**  **18 pace, although I think this is the pace we**  **19 need to take.**  **20 MEMBER ROY: Rob Roy, NRDC.**  **21 I think it has been a great**  **22 process. Nobody has been shy. There are a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 lot of areas that are useful. Even though we**  **2 didn't get into the real substance of stuff**  **3 yet, I have no doubt we will continue to**  **4 debate these things intelligently.**  **5 And, Manny, I think we are going**  **6 to do a fine job in the end. We are really**  **7 going to see that finish line coming running.**  **8 (Laughter.)**  **9 MEMBER CASKEY: John Caskey, NEMA.**  **10 And I think the process is going**  **11 well, and I particularly think the last**  **12 session where you identified a lot of the**  **13 issues in the industry I think was very**  **14 important in trying to sift through all that.**  **15 So, I am looking forward to good progress over**  **16 the next couple of days.**  **17 MEMBER LEVY: Emanuel Levy.**  **18 You will hear enough from me**  **19 later, but I think the process is going well**  **20 and I think the inputs have been very**  **21 constructive thus far. And I look forward to**  **22 a great meeting.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER LACEY: Eric Lacey,**  **2 Responsible Energy Codes Alliance.**  **3 I found the spreadsheets from PNNL**  **4 to be very, very useful, and we worked on them**  **5 a little internally and kind of tested them**  **6 out, based on what we know about the codes, as**  **7 they are adopted for stick-built housing. And**  **8 I have checked in with a couple of our members**  **9 to see what kinds of innovative ideas they had**  **10 of how to get to some of these levels in**  **11 manufactured housing, and I think it is going**  **12 to spur some real innovation.**  **13 MR. HAGERMAN: Let me just add to**  **14 that. This is Joe Hagerman, DOE.**  **15 The PNNL team that we have set up**  **16 to do this fast turnaround analysis for us,**  **17 they have been doing a good job, I think, at**  **18 producing the type of materials that the**  **19 Working Group needs.**  **20 I do have to apologize. The first**  **21 issuance of the PNNL analysis had an error in**  **22 it that I didn't catch until they did the Uo** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 calculator that Emanuel asked for, and then,**  **2 I caught the error and asked them to rerun all**  **3 the analysis again.**  **4 So, I apologize for that. If you**  **5 see anything in terms of errors or you think**  **6 something looks suspicious, then please flag**  **7 it and we can get the team to run down the**  **8 analysis or have a phone call with everybody.**  **9 So, you know, we put that out there.**  **10 I can say that Robin Roy asked a**  **11 question of the analysis team to model a**  **12 manufactured home that meets the ENERGY STAR**  **13 requirement. And I was really hoping that I**  **14 would be able to able to present that today.**  **15 But, in reviewing the data, I saw another**  **16 little problem or a potential problem that I**  **17 asked the team to hunt down. In one climate**  **18 zone the ENERGY STAR manufactured home was**  **19 using more energy than kind of the baseline**  **20 HUD home. So, that just didn't sound right to**  **21 me.**  **22 So, they are going to run that and** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 present that document to us, hopefully by the**  **2 end of day tomorrow. We will be in**  **3 discussions by then. We will, hopefully, have**  **4 some added data.**  **5 And they are ready. They are**  **6 prepared and set up to do model runs to meet**  **7 the needs of the Working Group. So, if there**  **8 is something between today and tomorrow that**  **9 you want to see modeled, we can quickly model**  **10 that.**  **11 MS. HOFFMAN: Okay. Any of our**  **12 members on the remote want to mention**  **13 anything? Otherwise, we will get started.**  **14 But, if you do, the question is, how is that**  **15 process going so far?**  **16 MR. RAMIREZ: We had one**  **17 additional member of the public come in the**  **18 back. Would you mind introducing yourself?**  **19 MR. SURRENA: Yes. I'm Don**  **20 Surrena from the National Association of Home**  **21 Builders.**  **22 MR. RAMIREZ: I'm sorry, could you** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 approach the microphone? There are folks that**  **2 are online that need to hear as well. Thank**  **3 you.**  **4 MR. SURRENA: Don Surrena with the**  **5 National Association of Home Builders.**  **6 MR. RAMIREZ: Thank you.**  **7 MR. SURRENA: Thank you.**  **8 MS. HOFFMAN: All right. So,**  **9 thank you.**  **10 So, anyone on remote of our**  **11 members that would like to make any comments?**  **12 MEMBER LUTER: This is Rob Luter**  **13 at Lippert Components.**  **14 I would just like to echo some of**  **15 the other comments. I think the process is**  **16 going fairly well so far. There's a lot to**  **17 do. I think the candor expressed by everyone**  **18 so far is going to go a long way to getting us**  **19 where we need to go, and I appreciate that**  **20 from everybody.**  **21 MEMBER HANGER: This is Rick**  **22 Hanger out in Colorado.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I do just appreciate the**  **2 information provided by PNNL. It is not**  **3 information I am able to get directly. So, it**  **4 is very helpful.**  **5 MS. HOFFMAN: Okay. Hearing no**  **6 more, we are going to get started.**  **7 First, we wanted to let you know**  **8 about the website to get all the information.**  **9 We cobbled together our own summary of what**  **10 happened in the last two days of the meeting**  **11 as a draft. So, please look it over.**  **12 But the transcript really is the**  **13 official record. But, for those of you who**  **14 want the condensed version, we put together a**  **15 summary, and you are welcome to look at it.**  **16 Since it is in draft, any comments or changes**  **17 would be most appreciated.**  **18 In terms of our format today, as I**  **19 said, you all, I think, have a copy of the**  **20 agenda, but it is pretty packed. We will be**  **21 hearing in a few minutes from DOE, from Joe**  **22 and from Research as well, on the PNNL** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 analysis and LCC activities.**  **2 Then, we will be hearing from Eric**  **3 Lacey the 2015 IECC Code, and he will be going**  **4 through it with us step-by-step, I hope.**  **5 Every word, yes.**  **6 (Laughter.)**  **7 The unexpurgated version, yes.**  **8 Then, we have a lunch break from**  **9 12:00 to 1:00.**  **10 1:00 to 2:00, continued discussion**  **11 of the 2015 IECC Codes.**  **12 And then, at 2:00, from 2:00 to**  **13 3:45, Emanuel Levy will have a framework**  **14 discussion. He also promises we may have some**  **15 slides to enhance that presentation.**  **16 Then, after break, we will have**  **17 comments from the Working Group and comments,**  **18 a especially-designed period from 4:30 to 5:00**  **19 for any comments from the public.**  **20 And then, our wrap-up. And then,**  **21 we have got a really busy day tomorrow as well**  **22 where we will be looking at more of the Mind** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Map that my colleague and wonderful co**  **2 facilitator Javier Ramirez put together.**  **3 Because what we did the last two**  **4 days of the first meeting set was really to,**  **5 hopefully, define many, many of the topics**  **6 that we have to address for this draft rule.**  **7 And we will also hear any comments**  **8 about if there needs to be another Working**  **9 Group or how we are going to structure that,**  **10 and then, talk about next steps.**  **11 So, we have got a lot on our**  **12 plate. We have got a deadline. And, without**  **13 further ado, my colleagues, I am going to turn**  **14 it over to Joe.**  **15 Thank you.**  **16 MR. HAGERMAN: This is Joe**  **17 Hagerman, DOE.**  **18 Before I go into the PNNL**  **19 analysis, are there any opening comments that**  **20 the Working Group members would like to share**  **21 with us in terms of anything that they have**  **22 kind of realized? I know we asked you the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 question if you thought the process was going**  **2 well. All right, you have answered that**  **3 question. But do you have any opening**  **4 statements about the content in terms of**  **5 developing the standard that you would like to**  **6 make? You can say no. I am not trying to put**  **7 anybody on the spot here. But we would**  **8 welcome opening comments now.**  **9 (No response.)**  **10 Okay. All right. I didn't think**  **11 so.**  **12 All right. So, let's get started**  **13 with the PNNL analysis.**  **14 The people on the webinar can see**  **15 this? Okay.**  **16 And everybody should have, I**  **17 believe, a handout that has this information**  **18 on it.**  **19 And largely, I am going to walk**  **20 you through the two spreadsheets that were**  **21 generated in the last week, the last two**  **22 weeks. And I have made 10 copies of the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 spreadsheets here, and I will pass those**  **2 around. Ten copies is roughly the size of a**  **3 phone book. I know we have more than 10**  **4 people in the room. So, if you would like to**  **5 share these, we would encourage that.**  **6 I personally think that the**  **7 printouts are not as helpful as the actual**  **8 spreadsheet, right, because you can actually**  **9 drill down to the information you are looking**  **10 for. But, nevertheless, here's the**  **11 spreadsheets.**  **12 MEMBER LUTER: Joe, this is Rob,**  **13 Lippert.**  **14 Will these materials be available**  **15 electronically for those of us out in**  **16 cyberspace?**  **17 MR. HAGERMAN: That's right. So,**  **18 the documents I am going to cover thus far or**  **19 today is the spreadsheet, and then, you should**  **20 see the PowerPoint on the screen, if you are**  **21 signed into the webinar. And then, of course,**  **22 we will post after this meeting the PowerPoint** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 and all the materials.**  **2 MEMBER LUTER: Out on the docket?**  **3 MR. HAGERMAN: Out on the docket.**  **4 MEMBER LUTER: Okay. Great.**  **5 Thank you.**  **6 MR. HAGERMAN: I don't have a**  **7 problem with sending the PowerPoint right now**  **8 to the Working Group members, if you would**  **9 just like to have a copy of that. And we**  **10 could make that happen right now. So,**  **11 Jeremiah is going to do that.**  **12 MEMBER HANGER: This is Rick.**  **13 That would be great.**  **14 MR. HAGERMAN: Are there any more**  **15 questions on the phone before we get started?**  **16 (No response.)**  **17 All right. So, I just wanted to**  **18 kind of quickly walk over what the PNNL**  **19 analysis covers and how they generated it.**  **20 And then, if you have specific questions about**  **21 assumptions or results, then we can write**  **22 those down and get the PNNL team to formally** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 address those.**  **2 And so, of course, all the**  **3 analysis is predicated on some inputs, right?**  **4 Some there are some assumptions you have to**  **5 make, some inputs that you have to put into**  **6 the calculator or the EnergyPlus software**  **7 before they generate all these results.**  **8 And so, I really would appreciate**  **9 it if all the Working Group members, and the**  **10 manufacturers in particular, would look over**  **11 these assumptions and make sure that they are**  **12 consistent with the industry, what the**  **13 industry is doing and industry averages, and**  **14 whatnot, because, obviously, the inputs are**  **15 the principal parameters that are run in**  **16 EnergyPlus. So, if the inputs are wrong, of**  **17 course, the results are going to be wrong.**  **18 So, okay, the description of the**  **19 analysis. What PNNL did was they modeled two**  **20 manufactured homes, a single section,**  **21 singlewide, and a doublewide, a double**  **22 section. And the dimensions of those sections** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 are listed. So, 14'x66' and a 28'x56'. So,**  **2 we are using those as a good representative**  **3 sample of the sizes of the manufactured homes.**  **4 They modeled four commonly-used**  **5 heating and fuel systems from electric**  **6 resistance to heat pumps, to natural gas**  **7 furnaces, to LPG furnaces, and also included**  **8 cooling equipment. And they used the minimum**  **9 appliance standards for those equipment. So,**  **10 they did not assume any high-efficiency**  **11 equipment.**  **12 All right. Next page. They**  **13 modeled each home in 15 locations,**  **14 representing the 15 climate zones as defined**  **15 by the IECC. And we made sure to use**  **16 locations that could be mapped to the three**  **17 HUD zones.**  **18 The five code scenarios, they also**  **19 ran it for five codes, with the HUD code as**  **20 the baseline, and then, 2006, 2009, 2012, and**  **21 2015 IECC, as we described earlier. And so,**  **22 this resulted in over 600 individual models** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 being run, at which case they tallied the**  **2 results and gave you a summary in this**  **3 spreadsheet.**  **4 They did use the Building America**  **5 schedules, so the schedules of occupancy and**  **6 how many people are using the homes, how many**  **7 times they open the refrigerator, how many**  **8 times they open the door, et cetera, et**  **9 cetera, for the schedule and the loading.**  **10 And they modeled those results in**  **11 one-hour increments and, then, summed them up.**  **12 So, it is not just a day analysis or a 15-**  **13 minute-interval analysis.**  **14 Any questions about that?**  **15 (No response.)**  **16 All I am trying to point out here**  **17 is there is a lot of data behind the tables**  **18 that you were presented.**  **19 So, next slide.**  **20 All right. So, for the purpose of**  **21 PNNL analysis, it is to estimate the energy**  **22 use and operating expenses. So, for this** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 purpose, PNNL identified building parameters**  **2 at the component level, such as insulation for**  **3 walls, ceilings, and floors, window U-factors,**  **4 envelope leakage, lighting, and hot water pipe**  **5 insulation.**  **6 Next slide.**  **7 So, as we know, the HUD code, the**  **8 current HUD code doesn't break those**  **9 components out. They only prescribe an**  **10 overall U-factor. So, the overall U-factor**  **11 prescribed in the HUD code has been translated**  **12 into building component insulation values for**  **13 energy use for the analysis purpose.**  **14 Yes, Robin?**  **15 MR. RAMIREZ: Let's just take a**  **16 quick pause because we want to make sure that**  **17 this is the right version that is up here.**  **18 MR. HAGERMAN: So, I apologize. I**  **19 think the handouts have a slight typo. They**  **20 have "PNKL," the "kilowatt lab". It is**  **21 supposed to be "PNNL".**  **22 MEMBER ROY: While we are getting** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that sorted --**  **2 MR. HAGERMAN: Yes, why don't you**  **3 ask your question?**  **4 MEMBER ROY: Robin Roy.**  **5 I have a question. On the**  **6 assumptions, like this all makes perfect**  **7 sense. One really major, I think perhaps**  **8 driving assumption on the both amenity for a**  **9 home and the energy use is the relative**  **10 glazing area. I think that is a big driver if**  **11 you change one of these. It would change a**  **12 lot with the energy use, and it has certainly**  **13 changed what it is like to live in one of**  **14 these.**  **15 Where did you get the assumptions**  **16 for that?**  **17 MR. HAGERMAN: Right. I can ask**  **18 them that question again just to confirm, but**  **19 I believe that they used information from a**  **20 previous RFI on how big that area is. I want**  **21 to think it was a comment that Michael**  **22 Lubliner submitted.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Mike? Mike?**  **2 MEMBER LUBLINER: I am recalling I**  **3 saw something like 12 percent, but I have a**  **4 similar question. I would like to figure out**  **5 where the documentation is.**  **6 I know we in the Northwest have**  **7 run energy-efficiency programs and we track**  **8 the percent of glazing of the floor area. But**  **9 I have no idea if that is representative of**  **10 other areas of the country in non-energy**  **11 programs.**  **12 It would be an interesting to do a**  **13 parametric analysis to see what the impact**  **14 going from a minimum of 8 -- I don't think you**  **15 can go below 8 without egress issues -- to 12**  **16 is in terms of the implication on the Uo, if**  **17 that is something. I don't know how big of a**  **18 deal that is going to be.**  **19 But glazing area, depending on the**  **20 U-value of the glazing can have a lot of**  **21 effect in trading off other insulation values.**  **22 So, that is appropriate.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER TOMPOS: Dave Tompos from**  **2 NTA.**  **3 Eight is the minimum. I think you**  **4 are going to find in most homes 12 is going to**  **5 be probably what the minimum actually is. You**  **6 are not going to see a lot less than that.**  **7 MR. HAGERMAN: This is Joe**  **8 Hagerman, DOE.**  **9 So, this is a really important**  **10 issue. I will get an answer for what they**  **11 modeled here, but is there an "ask" for them**  **12 to do some analysis at lower levels, at higher**  **13 levels? Do the manufacturers want to comment**  **14 on what levels they should be modeling, what**  **15 assumptions? What is the input here that they**  **16 need to assume?**  **17 MEMBER LUBLINER: I would like to**  **18 see a parametric --**  **19 MR. HAGERMAN: Microphone, you've**  **20 got to do the microphone,.**  **21 MEMBER LUBLINER: I'm sorry again.**  **22 I would like to see a parametric** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 analysis, if the group feels it is**  **2 appropriate, that would look at everything**  **3 from 8 percent up to 12, or at least do an 8**  **4 percent run and see if that is a big enough**  **5 tradeoff that we need to consider.**  **6 But, again, I don't know what the**  **7 distribution is. The average might be 12, but**  **8 that might mean that a bunch of them are at 13**  **9 and a bunch of them are down at 8, 9, or**  **10 something.**  **11 So, does the industry or does IBTS**  **12 or does HUD actually record that kind of**  **13 information? Maybe, then, it is just up to**  **14 the industry to share.**  **15 MEMBER TOMPOS: Dave Tompos.**  **16 I don't think we record it. I**  **17 mean, we check with every plan, that we look**  **18 at it. And again, I think you are going to**  **19 find that 12 is more the minimum than 8. You**  **20 know, if you want any windows in your home, 12**  **21 is going to be the minimum. So, maybe it**  **22 would be a good idea to see what the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 difference is if we go to the next percentage,**  **2 you know, 15 or maybe even a 20 percent.**  **3 MEMBER LUBLINER: Absolutely.**  **4 Looking at maybe 8, 10, 12, and 14 would give**  **5 us a sense of, is this a big enough issue that**  **6 we need to worry about it in terms of the**  **7 ability to trade off with other measures?**  **8 That is my biggest concern, not knowing what**  **9 that is.**  **10 MEMBER LACEY: Michael, this is**  **11 Eric Lacey.**  **12 If you look at the PNNL**  **13 spreadsheet that calculates the U sub o, you**  **14 can modify that. We did this internally and**  **15 started testing out just different glazing**  **16 areas. And it does have a huge impact on the**  **17 U sub o.**  **18 I mean, the U sub o assigns an**  **19 assembly area to all of the assemblies, the**  **20 ceiling, the wall, and everything, but the**  **21 glazing does make a big difference. They all**  **22 make a difference, but glazing makes a really** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 big one.**  **2 And we found that turning up or**  **3 down that glazing area percentage in the**  **4 assumption can have a huge impact on the U sub**  **5 o. So, if you want, I would be happy to show**  **6 you how we monkeyed with the spreadsheet to**  **7 make that work.**  **8 MEMBER LUTER: This is Rob at**  **9 Lippert.**  **10 I would echo that sentiment and,**  **11 also, add that many of the assumptions made in**  **12 this analysis are represented to be at the HUD**  **13 code minimum. And this isn't at HUD code**  **14 minimum. It may be the more common**  **15 percentage, but I would like to at least see**  **16 the analysis at HUD code minimum 8 percent,**  **17 just to see how it shakes out.**  **18 MR. RAMIREZ: Eric, on your report**  **19 that you are going to be doing, is that**  **20 something that you could do on there?**  **21 (No audible response.)**  **22 Okay, perfect.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER EZZO: This is Mark Ezzo at**  **2 Clayton Homes.**  **3 The 12 percent number that is**  **4 being used in a lot of these analyses I think**  **5 is an okay number to use. I mean, we see**  **6 glazing percentages, obviously, greater than**  **7 that. We also see glazing percentages a**  **8 little bit less than that.**  **9 And I think I heard somebody say**  **10 maybe the way to tackle it is to 10 percent,**  **11 12 percent, and 14 percent. To me, I think**  **12 that makes sense.**  **13 So, if we are looking at the**  **14 14'x66' model, for example, I think we used or**  **15 PNNL used the 111 square feet of glass in that**  **16 house at 12 percent, which that is an okay**  **17 number. But, I mean, we can tell you, we have**  **18 14'x66' homes that have less than that, and we**  **19 have 14'x66' homes that have a little bit more**  **20 than that.**  **21 So, I guess, in summary, I think**  **22 10 percent, 12 percent, and 14 are good** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 numbers. Eight is probably a little bit of a**  **2 stretch on the low side. I am not saying that**  **3 there is not a home out there or homes out**  **4 there that have 8, but that is getting really**  **5 low.**  **6 And then, going over 14 I think is**  **7 also very infrequent. I mean, 14 percent**  **8 glazing on a 14'x66' is almost 130 square**  **9 feet, which is a lot of glass in a little**  **10 home.**  **11 MS. HOFFMAN: Okay. Thank you.**  **12 MEMBER ROY: Just one quick one.**  **13 Robin Roy.**  **14 So, Mark, that is kind of what**  **15 drove my question in the first place. That**  **16 was very helpful, your comment.**  **17 I am just keen to see that the**  **18 result of this process is not that we drive**  **19 out the type of house that you guys find**  **20 really attractive and consumers find**  **21 attractive, like a 14 percent window home. As**  **22 long as you guys are comfortable with that and** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 the manufacturers are comfortable with that, **2 that sounds good to me. 3 MEMBER LEVY: A couple of**  **4 questions or a couple of comments. 5 Emanuel Levy, Systems Building**  **6 Research Alliance. 7 The issue of window area relates**  **8 to a couple of things. One is, obviously, if 9 you have a target for Uo value and you have a**  **10 small home with a large window area, it is 11 going to be very difficult to comply. So,**  **12 that is going to be the worst-case analysis. 13 It is not the 8 percent case. It is the**  **14 single section home that has a lot of glazing 15 area. That will be a real problem. So, I**  **16 think we should keep that in mind as we are 17 talking about this.**  **18 We did a survey years ago for 19 basically the same purpose, and PNNL did a**  **20 survey back in '92 -- I have it here -- that 21 talks a little bit about the basis of where**  **22 those numbers came from originally.**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 And what you find is that the**  **2 amount of window area fluctuates. It depends**  **3 on the type of building. Single section and**  **4 multi-section will be different. But, also,**  **5 markets are different. Price point really**  **6 drives window area. The higher-priced homes**  **7 will tend to have more window areas, as you**  **8 expect. And so, you would find those in the**  **9 Northwest, and there are certain markets that**  **10 tend to have larger window areas. So, I don't**  **11 know to what extent we need to keep that in**  **12 mind as we are talking about this, too. The**  **13 areas in the South, which tend to be less**  **14 costly, tend to have a smaller window base.**  **15 But, as Mark pointed out, there are plenty of**  **16 exceptions to that rule.**  **17 MR. HAGERMAN: So, just to close**  **18 this out, we need to sort of vote on what we**  **19 are doing here, what the PNNL analysis team is**  **20 going to do here for us.**  **21 You know, you were asking them to**  **22 do three runs of everything that they have** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 run. So, you know, they have run 600**  **2 simulations here, and you want to see that at**  **3 10, 12, and 14 percent, is that correct? We**  **4 all agree to that? Does somebody want to see**  **5 8?**  **6 MEMBER LACEY: This is Eric.**  **7 I don't know if you need to rerun**  **8 everything. I mean, I think the information**  **9 is in the spreadsheet. You could just change**  **10 the assumptions in that spreadsheet, and it**  **11 will give you a calculated Uo. I mean, it may**  **12 not be quite as, yes, it may not be quite as**  **13 accurate, but that would be an easier way.**  **14 MR. HAGERMAN: I just need some**  **15 direction here.**  **16 MEMBER EZZO: This is Mark Ezzo at**  **17 Clayton.**  **18 The spreadsheet, though, it shows**  **19 a home that complies. And tell me if I am**  **20 saying this wrong. But, if you increase the**  **21 glazing area to 14 in order to comply with the**  **22 climate zone, whether it is IECC or HUD, it is** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 going to have to adjust the cavity insulation**  **2 values and/or window U-value accordingly,**  **3 right?**  **4 MR. HAGERMAN: I believe so.**  **5 This is Joe Hagerman.**  **6 I believe so.**  **7 MEMBER EZZO: Okay. Okay.**  **8 MR. HAGERMAN: That's why I**  **9 believe they have to rerun this. Correct?**  **10 MS. HOFFMAN: So, are you asking**  **11 for a sense of the Committee to direct PNNL to**  **12 run it again for 8, 10, 12, and 14? They ran**  **13 12. So, for 8, 10, and 14?**  **14 MR. HAGERMAN: The question is, do**  **15 we have to run 8? That is the question.**  **16 MEMBER ROY: Robin Roy.**  **17 I am really interested in the 12**  **18 and 14, 12 being reasonable, and 14. Eight is**  **19 not going to be constraining. It is whether**  **20 we can make a home at 12 that is really the**  **21 issue or the 14. So, I don't think it is**  **22 worth any effort to go to 10 and the 8 that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 much. We know we can get there.**  **2 MEMBER TOMPOS: Dave Tompos.**  **3 We don't need the 8. You are not**  **4 going to find many down there, and it is not**  **5 going to make a difference because it is going**  **6 to be a better case.**  **7 MR. HAGERMAN: All right.**  **8 MEMBER LUBLINER: Mike Lubliner.**  **9 I would like to see the 10,**  **10 though, because we do see some of the**  **11 distribution of our homes, because they are**  **12 larger homes, that get down into the 10, like**  **13 as you were just discussing. So, maybe 10,**  **14 12, and 14 is appropriate.**  **15 MR. HAGERMAN: Could we do the**  **16 thumbs, 10, 12, 14?**  **17 All right.**  **18 MR. RAMIREZ: And 12 is done**  **19 already, right?**  **20 MR. HAGERMAN: That's right.**  **21 MR. RAMIREZ: So, it is just 10,**  **22 the new ones are 10 and 14.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MS. HOFFMAN: Right.**  **2 MR. HAGERMAN: Thank you, Emanuel.**  **3 MS. HOFFMAN: And we should also**  **4 hear from our remote members.**  **5 MEMBER EZZO: Thumbs up. Mark**  **6 Ezzo.**  **7 MS. HOFFMAN: Okay. We are**  **8 assuming it is thumbs up.**  **9 MEMBER LUTER: Rob Luter. Thumbs**  **10 up.**  **11 MS. HOFFMAN: Okay.**  **12 MR. RAMIREZ: Yes, I guess for the**  **13 future, if your thumb is down --**  **14 MS. HOFFMAN: Let us know.**  **15 MR. RAMIREZ: -- let us know.**  **16 Otherwise, we will just assume that you are**  **17 all right.**  **18 MS. HOFFMAN: But thank you. So,**  **19 you've got that.**  **20 MEMBER LUTER: Sure.**  **21 MS. HOFFMAN: Yes, Eric?**  **22 MEMBER LACEY: This is Eric.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I have a question for the**  **2 manufacturers, and this is something I just**  **3 don't know. In stick-built homes you have**  **4 quite a bit of flexibility as to the**  **5 assembling areas, the amount of ceiling area**  **6 and wall area and everything. And I**  **7 understand it is going to be a lot more**  **8 limited. But in a U sub o calculation, you**  **9 have a base set of assumptions that is based**  **10 on not just glazing area, but ceiling area and**  **11 wall area and floor area.**  **12 Would it be fruitful at all or**  **13 would it make any difference to test out**  **14 different areas? Or is there just not that**  **15 much flexibility in the relative areas of the**  **16 assemblies? Does that make sense?**  **17 MEMBER TOMPOS: Dave Tompos.**  **18 That was the next thing I was**  **19 going to bring up before we rerun anything, is**  **20 to talk about some of the limitations that we**  **21 have.**  **22 In this analysis, for example,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 they are putting an R30 in a floor cavity in**  **2 some of the higher or northern zones. And**  **3 there just physically isn't enough room to put**  **4 an R30 in the floor cavities. Typically,**  **5 anything 14 wide and less is a 2x6 floor**  **6 system.**  **7 And the way these work is you have**  **8 a metal frame underneath that that helps**  **9 support it, and then, typically, what a**  **10 manufacturer does is they put an R11 blanket**  **11 down, and then, they have R11 bat that goes up**  **12 into each cavity. And that R11 blanket is**  **13 going to get compressed in certain areas,**  **14 because you have the I-beam that is going to**  **15 get compressed by that. And then, you can't**  **16 fit -- I think you are going to have a 7-inch**  **17 space to fit that R22 insulation. So, once**  **18 you compress that down to 5.5 inches, you end**  **19 up with about, it is less than 19. I think it**  **20 is 18.7, in that range.**  **21 So, those are a couple of things**  **22 that need to maybe get changed again in this** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 analysis. I know in the northern zones you**  **2 have R22 in the current HUD code. That is the**  **3 insulation that they are putting in there.**  **4 But, once it gets compressed, it goes down to**  **5 about an R18.7. And then, there is just**  **6 physically no way to get an -- I don't even**  **7 know if you can do it with foam, which we are**  **8 hopefully not talking about yet.**  **9 And even in the IECC, it talks**  **10 about the maximum value that you can put in.**  **11 It calls out in the prescriptive method an**  **12 R30, but it says, when there are space**  **13 constraints, you do a minimum of R19. So,**  **14 even the IECC recognizes some space**  **15 constraints.**  **16 So, I think those are two areas**  **17 that we need to address when we rerun the**  **18 analysis. You are only going to get about an**  **19 R19.**  **20 Now you do have the area in the**  **21 middle part of the home that you can put more**  **22 insulation in, but you also have to remember** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that we have the supply ducts in that area.**  **2 So, there is some compression there, too. But**  **3 you would be able to get a little more**  **4 insulation, but I still don't think you are**  **5 going to get it to an R30.**  **6 You also have the R30 in the**  **7 ceiling, which they did recognize there are**  **8 some constraints there, but there is also**  **9 going to be some truss configurations that I**  **10 think it is going to be very difficult to get**  **11 an R30 in some truss configurations, not to**  **12 mention cathedrals. It is never going to**  **13 happen in most cathedral homes. And I don't**  **14 want to limit construction types in homes.**  **15 So, those are my several concerns**  **16 that I think we need to talk about before we**  **17 rerun any analysis.**  **18 MEMBER LEVY: Yes, Dave brings up**  **19 a really important point. And that is that**  **20 the assumptions that are being used here for**  **21 the model prejudice the results. And not that**  **22 these aren't typical; I think they are. You** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 can make a case for all the assumptions being**  **2 here. They are fairly typical. These are**  **3 typical single and multi-section homes where**  **4 the window area may be 12 or 11 percent, but**  **5 those aren't big differences.**  **6 But what Dave is talking about is,**  **7 if we had started with the assumption, for**  **8 example, that the ceiling was a cathedral**  **9 ceiling with a scissor truss, then the ability**  **10 to get higher insulation levels is really**  **11 pretty limited.**  **12 I am not sure it is necessary to**  **13 look at all those things, all the cases. I**  **14 think we can identify some sensitivity**  **15 analyses for specific locations to do that.**  **16 But I think we should start putting together**  **17 a list of the things, like what Dave is**  **18 talking about, that might cause hardship for**  **19 anybody who is building a particular design**  **20 and evaluate those as sensitivity studies.**  **21 MEMBER EZZO: This is Mark Ezzo.**  **22 MR. HAGERMAN: This is Joe** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Hagerman, Mark.**  **2 MEMBER EZZO: Go ahead, Joe. Go**  **3 ahead.**  **4 MR. HAGERMAN: So, I agree. I**  **5 mean, this analysis and the inputs here,**  **6 strictly reading the code, right, they don't**  **7 have any kind of manufacturability lens over**  **8 these, right?**  **9 And we have no problem modeling**  **10 whatever you want to model. We just need to**  **11 know what those inputs are. And I don't know**  **12 if we want to put this not in the parking lot,**  **13 but if we want to make a list of these, start**  **14 making a list of these as changes to the**  **15 inputs, we can. And we just need to do that**  **16 and assign it to the labs to run the analysis**  **17 again.**  **18 So, Mark Weiss first, and then,**  **19 Mark Ezzo.**  **20 MEMBER EZZO: Okay.**  **21 MEMBER WEISS: Thanks, Joe.**  **22 I have sort of a macro-question** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 related somewhat to the issue that David**  **2 raised. And that is, do the costs in this**  **3 modeling, do the costs include any collateral**  **4 impacts related to the changes? For example,**  **5 with respect to air exchange and costs of**  **6 dealing with impacts to that arising from what**  **7 you are doing here, if that makes sense?**  **8 MR. HAGERMAN: These are just**  **9 straight energy consumption costs. So, what**  **10 they do is they model the unit and they**  **11 simulate the unit being occupied for a year.**  **12 And they get the annual energy consumption**  **13 that you would see at the meter. And then,**  **14 they multiply that by an EIA projection of**  **15 energy costs.**  **16 MEMBER WEISS: So, just to be**  **17 clear, collateral costs such as what I am**  **18 talking about.**  **19 MR. HAGERMAN: Right.**  **20 MEMBER WEISS: Potentially, others**  **21 are not part of this.**  **22 MR. HAGERMAN: Yes, it doesn't** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 assume a cost in terms of price difference of**  **2 going from R19 bat wall to an R30, no. It**  **3 just shows you what the meter would see in**  **4 terms of what people are paying, their utility**  **5 bill.**  **6 Mark Ezzo, you had a question?**  **7 MEMBER EZZO: Yes. The U-values,**  **8 the component U-values for ceiling, floor, and**  **9 wall shown in these spreadsheets, I think what**  **10 it is going to all boil down to is we are**  **11 going to need to give I think DOE and PNNL**  **12 some information from the manufacturers' side**  **13 as to the real reality of those U-factors that**  **14 are assumed.**  **15 So, for instance, back to Dave**  **16 Tompos' point about our R30 in the floor, I am**  **17 looking on the spreadsheet and it shows the**  **18 corresponding U-value for that cavity is .034.**  **19 So, I guess the question for us manufacturers**  **20 is, can we put R30 in a floor and get a**  **21 U-value of .034 with a 2x6 floor and**  **22 compressed insulation between the I-beam and** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the floor framing, and those kinds of things?**  **2 So, I mean, do we know where these**  **3 U-values came from? Are there assumptions,**  **4 are there designs that we can look at that**  **5 would allow us to determine whether or not we**  **6 can hit that .034?**  **7 The same thing with the ceiling, I**  **8 mean, are there ceiling profiles we could look**  **9 at for the different R-values for 30 and 38 to**  **10 see if we can hit those same U-values that are**  **11 shown in this chart?**  **12 MEMBER LEVY: Mark, on the**  **13 spreadsheet it is not apparent, but you can**  **14 look at the underlying analysis. It will show**  **15 you what the individual component U-values**  **16 are.**  **17 MR. HAGERMAN: That's Emanuel.**  **18 MEMBER EZZO: I see those, yes.**  **19 MR. HAGERMAN: Yes, so if you go**  **20 to Table 1, just quicky go to the handout that**  **21 I gave everybody, these are printouts from the**  **22 spreadsheets. And it is kind of hard to go** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 through spreadsheets as a group, but here we**  **2 go.**  **3 If you go to Table 1-A, you see**  **4 the summary of the code requirements analyzed**  **5 for manufactured housing. So, you see the map**  **6 of the IECC climate zones, the HUD zones, and**  **7 then, what the building components, what the**  **8 performance specification of all the building**  **9 components are. And those are the inputs that**  **10 PNNL used to run their analysis.**  **11 Now, if you go to -- let's see,**  **12 where was the 30 in here -- yes, so if you go**  **13 to IECC Climate Zone 8, HUD Zone 3, you see an**  **14 R30 in the floor insulation R-values. And I**  **15 think what David Tompos is saying is that it**  **16 is not practical in the industry to achieve**  **17 that.**  **18 And so --**  **19 MEMBER EZZO: Right. And -- go**  **20 ahead.**  **21 MR. HAGERMAN: Yes, so, Mark, what**  **22 my suggestion would be is, if you or another,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 David or Emanuel, if somebody wants to come up**  **2 with a Working Group or a subcommittee that**  **3 annotates this list and says, you know, R30 is**  **4 impossible, R28 is the maximum or R20 is the**  **5 maximum we could possibly do for that climate**  **6 zone, just because of the assembly, I mean, we**  **7 need to start recording those kinds of**  **8 conversations and changing these inputs, so we**  **9 can redo the analysis for you guys.**  **10 MR. RAMIREZ: Let me ask the**  **11 group, though, that seems like for us to tie**  **12 down -- this is Javier -- for us to tie down**  **13 the time to do that, because it is somewhat**  **14 technical, is there a subcommittee group that**  **15 could do that, that could work on that and**  **16 make those changes, and get them to Joe, so**  **17 that we could run it?**  **18 MR. HAGERMAN: Yes.**  **19 MEMBER EZZO: This is Mark.**  **20 I think the answer is, yes, I**  **21 don't think that is really that cumbersome to**  **22 do.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 The spreadsheet I am looking at is**  **2 the one titled, "PNNL MH Uo Calculator". And**  **3 so, like, Joe, you were saying from the other**  **4 file. The one I am looking at, for Zones 7**  **5 and 8, this shows an R30 floor. The**  **6 corresponding U-factor is .034.**  **7 My whole point is, can we as an**  **8 industry, can manufacturers hit .034, or**  **9 something close to that, with an R30 floor,**  **10 based on the way we build them?**  **11 I think that is Dave Tompos' point**  **12 also. I mean, recognize you can't get full**  **13 R30 value out of the floor. I mean, we know**  **14 that. But really what it boils down to is the**  **15 U-factor. That is where the calculation comes**  **16 in. That 30, while it is important, it really**  **17 doesn't factor into the calculation. The**  **18 calculation uses the U-factor, which is the**  **19 assembly, the component, the floor component**  **20 U-value, right?**  **21 So, whether you put R20 or R40 in**  **22 a floor, you are going to come up with a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 U-factor that includes the geometry and**  **2 compression.**  **3 So, I guess, long story short, us**  **4 manufacturers, you know, me and Manny and Bert**  **5 and others, I think we just need to look at**  **6 these U-values and the R-values that are**  **7 associated to them, and come back to the**  **8 Committee and say, "Yes, we can do that" or**  **9 "No, we can't." Or we come back and say, to**  **10 put R30 in the floor, you need a 2x10 floor**  **11 framing.**  **12 MR. RAMIREZ: So, what timeframe**  **13 are you looking at on that? How long would it**  **14 take you to do that?**  **15 MEMBER EZZO: Well, we have all**  **16 that data already that we use. So, I don't**  **17 think it would take long to do at all.**  **18 MR. RAMIREZ: Okay. Manny?**  **19 MEMBER EZZO: Manny, do you want**  **20 to weigh-in?**  **21 MEMBER SANTANA: Yes. Manny with**  **22 Cavco.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 You know, as far as the**  **2 constraints of plank construction that have an**  **3 impact on this, I don't know if we need a**  **4 Working Group. I think we can just bring out**  **5 those realities right now. You know, they**  **6 aren't much.**  **7 You know, a typical floor**  **8 construction is 2x6 floor joists. Typically,**  **9 you have a blanket insulation in the floor, in**  **10 what we call the belly, which is in between**  **11 the I-beams, and then, bats on the outside,**  **12 although some plants do blankets underneath**  **13 the entire floor.**  **14 I can only speak to my experience,**  **15 but in my experience the blankets that are**  **16 available to our industry come in R7 and R11,**  **17 and that's it. So, when you need R22, you**  **18 just put two layers of R11. You know, we**  **19 don't buy R13. We buy some, but you don't buy**  **20 a whole lot. You know, there are very few**  **21 plants that buy R13 for the walls. You know,**  **22 it is mostly R11, R19. For an R19, as you** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 know, you need to use 2x6 walls. There is R15**  **2 available, but it is a lot more expensive than**  **3 R11 or R19 even.**  **4 In the ceiling, the physical**  **5 constraints you have there are all ceilings**  **6 are built with pre-manufactured trusses. And**  **7 this truss has a predetermined height at the**  **8 heel, which is above the side walls. And so,**  **9 if that is only 5.5 inches, and you need an**  **10 inch for an air gap, then you only have 4.5**  **11 effective inches, right? And then, the rate**  **12 at which that area grows depends on the slope**  **13 of the ceiling.**  **14 And so, if you have a singlewide**  **15 that has a cathedral and you only have 12**  **16 inches or 18 inches at the ridge and you have**  **17 5.5 inches at the heel, that doesn't give you**  **18 a whole lot of room for adding insulation.**  **19 So, that is what we have to work with here.**  **20 And Dave and Mark and everybody**  **21 made a really good point as to issues they had**  **22 with the analysis. I don't know how much it** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 matters to conduct the analysis for the HUD**  **2 code units' usual actual insulation packages,**  **3 because I will give you an example.**  **4 On Table both 1 and 2 of the**  **5 spreadsheet, for Zone 1 or for Climate Zone**  **6 1A, the very first line, we are using 13 in**  **7 the wall, 30 in the ceiling, 30 in the floor.**  **8 For that zone, a typical plant would use 14 in**  **9 the ceiling, 11 in the wall, and 11 in the**  **10 floor. So, I don't know if we need to model**  **11 that.**  **12 MR. RAMIREZ: Could you modify**  **13 that sheet, so we could give it to Joe? So,**  **14 that way, he could run that.**  **15 MEMBER SANTANA: Yes.**  **16 MR. RAMIREZ: Could you add those**  **17 numbers in the line there?**  **18 MS. HOFFMAN: Keith has been**  **19 trying to say something.**  **20 MEMBER DENNIS: Yes. Well, I just**  **21 want to clarify. So, we are talking about the**  **22 code. You are saying the code says 30. In** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 reality, there's compressions and there's**  **2 trusses. So, you can't put 30 in.**  **3 Is it that, in impracticality, the**  **4 actual number is less, so it has to be modeled**  **5 less, but it still meets code if it is less**  **6 than 30? I guess I don't understand**  **7 completely the correlation between what we are**  **8 modeling and what is being put in, what is**  **9 code.**  **10 So, I see the code said 30 and 38,**  **11 but we are saying that 30 and 38 can't be done**  **12 in reality. So, currently, are they not**  **13 really meeting these codes or are we just**  **14 saying that, for modeling purposes, a 30**  **15 doesn't actually equal 30, so you should put**  **16 something lower in the model?**  **17 MEMBER SANTANA: Manny again.**  **18 So, when you say "code," you are**  **19 talking about the HUD code or the modeling for**  **20 the HUD code unit or the modeling for the**  **21 IECC?**  **22 MEMBER DENNIS: Yes, I mean, the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 ceiling goes up to 30. And somebody mentioned**  **2 30 in, say, Zone 6A for ceiling wasn't**  **3 necessarily achievable in the HUD code because**  **4 of trusses and cathedral ceilings. So, if**  **5 that is not possible, how do things meet, I**  **6 guess my question is, how do things meet HUD**  **7 code now?**  **8 And then, the floor, you know, it**  **9 is a 22 here, and I thought I heard you say**  **10 something along the lines of, while it says**  **11 22, in actuality, at a plant it would be less**  **12 than that.**  **13 So, like how do people meet the**  **14 codes if in practicality they can't already**  **15 meet the codes?**  **16 MEMBER SANTANA: Okay. I think**  **17 the answer to that is in the HUD code you have**  **18 to meet a minimum U-value for the entire**  **19 structure.**  **20 MEMBER DENNIS: Uh-hum.**  **21 MEMBER SANTANA: So, then, how you**  **22 meet that depends on your construction. But** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 there are no minimum R-values for the floor,**  **2 the ceiling, or the roof. You just need to**  **3 meet the U-values.**  **4 MEMBER DENNIS: Oh, okay.**  **5 MEMBER SANTANA: Because of**  **6 performance, exactly.**  **7 MR. HAGERMAN: Right. This is Joe**  **8 Hagerman.**  **9 And that is a little bit of the**  **10 rub here, right? The rub is the IECC**  **11 specifies the component values. And so, we**  **12 are trying to go in between one code that does**  **13 the component values and the other code that**  **14 just does the raw U sub o, right?**  **15 MEMBER SANTANA: Right. Right.**  **16 That is why the first analysis that came up**  **17 from DOE had the component U-values. And**  **18 then, there was a request to go and ask for**  **19 the total U-values, so that you can try to**  **20 compare apples and apples.**  **21 MR. HAGERMAN: Right. So, that is**  **22 the main rub here between the two codes,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 right? So, that is the one in Joe Hagerman's**  **2 personal opinion, not speaking for the**  **3 Department, that this Committee has to**  **4 resolve, right? Because it is very clear in**  **5 the legislation, you know, the target is the**  **6 2015 code which prescribes all the component**  **7 U-factors. So, that is the problem we have to**  **8 solve.**  **9 MR. RAMIREZ: Let's get Michael**  **10 and, then, David.**  **11 MEMBER LUBLINER: Okay. So, we**  **12 build, under our ENERGY STAR manufactured**  **13 homes programs, we probably build over 100,000**  **14 homes where we build something attempting to**  **15 get to R30 in the floor.**  **16 In the Northwest, some of the**  **17 homes are built with 2x8 as well as some of**  **18 the homes are 2x6. So, what I question is,**  **19 for the industry, what percentage of the homes**  **20 are 2x8 versus 2x6? But hold off on answering**  **21 that for a second.**  **22 When we have a 2x6, we basically** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 use a number of different approaches to**  **2 getting the R30. We will put a layer of R11**  **3 blanket in, like is typically the case. And**  **4 then, they will put, from the rim to the**  **5 outrigger, an R21 bat or an R19 bat. If they**  **6 put an R19 bat in, the nominal insulation**  **7 level, if you account for no compression, is**  **8 R30.**  **9 I think that is a legitimate,**  **10 reasonable way to get R30, and we can talk**  **11 about the ramifications it has on the Uo value**  **12 in the calculation. But that, to me, would be**  **13 an appropriate way.**  **14 Another way that we have done it**  **15 over the years, some of the plants have done**  **16 it, is take three R11 belly blankets and**  **17 actually slice at each of the floor joists**  **18 back, so that the insulation, the belly**  **19 insulation, comes up.**  **20 The most important thing is**  **21 insulating the rim joist, so we don't have a**  **22 void at the rim joist that is a huge thermal** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 bridge, which is what we see all the time,**  **2 insulation coming down at that point, whether**  **3 we do it in the factory or with infrared**  **4 cameras. So, that is another approach, would**  **5 be to use multiple layers of belly insulation.**  **6 I think it would also be**  **7 appropriate, if the industry is transforming**  **8 to higher levels, to engage the insulation**  **9 manufacturers in producing higher-density**  **10 products for belly. I think that is a long**  **11 term goal. I think Manny has articulated that**  **12 there are some limitations right now with what**  **13 they have.**  **14 But the whole issue of high**  **15 density, if we want to go to R15, you know, in**  **16 there or R21, our experience has been that you**  **17 can get the factory to do it.**  **18 The final way that they will do it**  **19 is they will put an R11 in the belly, and they**  **20 will blow loose fill all the way in, and they**  **21 will do it at a high density. And again, I am**  **22 talking about between the outrigger and the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 rim joist. From there, in the middle you are**  **2 open; you have got plenty of room. You meet**  **3 the stats.**  **4 So, we are talking about a portion**  **5 of the home for the homes that have 2x6. I**  **6 think that we could probably just accept that**  **7 there is some compression. And that belly**  **8 does pooch down, for lack of a better word,**  **9 pooch down between the I-beam and the rim**  **10 joist.**  **11 So, perhaps if you put an R11 down**  **12 there and you stick an R30, I mean an R21 in**  **13 there, you are getting equivalency to R30.**  **14 That would be what I would look at for**  **15 challenging, and that based on 100,000 homes**  **16 built that way in the Northwest.**  **17 Thank you.**  **18 MR. RAMIREZ: David?**  **19 MEMBER TOMPOS: Dave Tompos.**  **20 The problem with trying to put an**  **21 R30 in there, you are going to end up with**  **22 about, depending on the space of that, you** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 know, if you are using fiberglass, it is going**  **2 to be compressed at about 50 percent. And**  **3 when we do the calculations in HUD, we take**  **4 all that into account.**  **5 One of the numbers, the charts in**  **6 here, you basically, if that is a uniform**  **7 compression, you can only take 61 percent of**  **8 that actual R-value. So, we take all that**  **9 into consideration. The I-codes don't -- I**  **10 know you are supposed to, but they take an R19**  **11 and put it in the walls. Even though it does**  **12 compress in a 5.5-inch cavity, they say it is**  **13 good. We are a little more regulated and have**  **14 to meet what the code says.**  **15 The other point I wanted to make**  **16 was Mark Ezzo brought up the fact that, well,**  **17 we may have to go to a 2x10, 2x8 floor system.**  **18 My concerns with that would be -- and I know**  **19 a lot of the manufacturers on this call, I**  **20 don't know if at all they extend into**  **21 Connecticut or Massachusetts -- we have some**  **22 travel height limitations of, in those two** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 states I believe it is 13'6". And we may not **2 be able to add four inches to height to some 3 of these homes because you won't be able to**  **4 ship them at all. So, I don't want to limit 5 -- you know, Connecticut and Massachusetts**  **6 should still be able to buy manufactured 7 homes.**  **8 MEMBER SANTANA: Yes, just a 9 followup to a statement that Michael made.**  **10 You know, I think it is important to identify 11 if on the analysis when we say R-values for**  **12 walls succeeding a floor, do we talk about 13 installed insulation or the assembly R-value?**  **14 Because, you know, he said that you can 15 install R19 insulation, but, then, as a**  **16 component, you get R30 in the floor. 17 You know, now that is something**  **18 that needs to be, I guess, understood and 19 accepted. Because a lot of folks, you know,**  **20 we have to put a certificate of the installed 21 insulation, and it can't be for the assembly**  **22 or for the component. It has to be just for**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the installed insulation.**  **2 So, when we say R13 or R30 in the**  **3 floor, are we saying installed insulation or**  **4 are we saying what the assembly counts out at?**  **5 MS. HOFFMAN: Okay. Thank you.**  **6 Mark?**  **7 MEMBER WEISS: That's okay. I**  **8 have another general question. Let the**  **9 technical discussion play out a little bit.**  **10 MR. RAMIREZ: Well, I just thought**  **11 that that was, it seems like a key question**  **12 that we need to get answered there. And Eric**  **13 may have a response.**  **14 MEMBER LACEY: I can try to**  **15 clarify, Manny, that the R-value table that**  **16 the spreadsheet shows, those are nominal**  **17 R-values just for the component itself. So,**  **18 just the insulation R-value.**  **19 Behind that, I mean, it doesn't**  **20 tell you what the framing fraction is or any**  **21 of the other bridging effects or any of that.**  **22 It is just kind of the component that you** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 would buy off the shelf as an R30 or an R19,**  **2 or so on.**  **3 Whereas, the U-factor table is the**  **4 assembly U-factor that includes all of those**  **5 things, the framing members and everything.**  **6 Does that clarify it?**  **7 MEMBER SANTANA: I saw that in the**  **8 calc, and I think that is the reason why I**  **9 brought it up in that. So, when the table has**  **10 R30, that means we have to install R30. So,**  **11 we are going to have a tough time physically**  **12 installing R30 into even 2x8 joists, if it is**  **13 installed in somebody's --**  **14 MEMBER LUBLINER: So, you have**  **15 factories that are doing that in the Northwest**  **16 right now, that nominal R-value of R30, by**  **17 putting a layer of R11 and, then, putting an**  **18 R19 in the joists. And there is some**  **19 compression at R11 that pooches out. It is**  **20 not a true R11. That would be accounted for**  **21 in the calculation with the overall U-value.**  **22 But when I was talking nominal,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 when I was looking at those tables, I was**  **2 assuming that an R34 would be a 2x6 with one**  **3 R11 belly and, then, R19. That was my**  **4 definition of it. And I think you can do that**  **5 at the factory.**  **6 MEMBER TOMPOS: Dave Tompos.**  **7 Michael, one of the things that**  **8 happens is you have a calculation that is a**  **9 minimum. Most manufacturers up in the Midwest**  **10 are exceeding that. So, you can put R50 in**  **11 the belly, if you want, but we don't really**  **12 have to do a calculation to show that that**  **13 meets anything.**  **14 So, they are meeting the minimum**  **15 U-value for that overall structure, and then,**  **16 you can blow in anything you want into the**  **17 belly. The problem is going to be when we are**  **18 required to meet an R30 and can't meet that**  **19 because you can't physically meet that with**  **20 the size limitations we have and taking**  **21 compression into effect.**  **22 MEMBER LUBLINER: So, I think it** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 gets back to what the definition is. I am**  **2 talking about a nominal R30 from the I-beam to**  **3 the outrigger. That is where the issue is.**  **4 And what I am suggesting is that, if that is**  **5 what we are talking about -- that is an R11 in**  **6 the belly that has got some compression, a**  **7 belly blanket with another R19 in the cavity**  **8 -- and if you add that up, that is a nominal**  **9 R30. And if you went to high-density, like**  **10 121, which is what we are using in the walls**  **11 instead of R19, then you would actually exceed**  **12 that.**  **13 So, I guess my question would be,**  **14 Emanuel, I know in the ENERGY STAR homes this**  **15 is where we are seeing this. Are you seeing**  **16 that approach to get to the R30 criteria in**  **17 the ENERGY STAR Homes Program around the**  **18 country?**  **19 MEMBER LEVY: Emanuel Levy.**  **20 I think the issue that is being**  **21 discussed here is that two different**  **22 manufacturers can install what some call R30** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 and come up with two different U-values. And**  **2 that is the problem we are grappling with**  **3 here.**  **4 And I think one of the exercises**  **5 we are going to have to go through before this**  **6 is over is to come up with some consensus as**  **7 to what R30 equates to -- and this is coming**  **8 back to Mark's point earlier -- what R30**  **9 equates to as a nominal labeled R-value to a**  **10 U-value, to a component U-value.**  **11 Actually, later on in the**  **12 discussion, I have that as one of the slides**  **13 that I want to talk about. And I think one of**  **14 the things we are going to have to do before**  **15 our process is over is, as a group, have a**  **16 concurrence about what that is.**  **17 MR. RAMIREZ: When do we need to**  **18 do that? Do we need to do that -- is that**  **19 something that we should do right now?**  **20 MEMBER LEVY: I don't think we can**  **21 do it at this session.**  **22 MR. RAMIREZ: Okay.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER LEVY: I think what I will**  **2 suggest later is that we go away, come back**  **3 with a proposal to put on the table that**  **4 people can react to, rather than try to debate**  **5 what the U-value is today.**  **6 MR. RAMIREZ: Got you. Okay.**  **7 MR. HAGERMAN: Joe Hagerman.**  **8 MEMBER KESSLER: This is Bert.**  **9 MR. HAGERMAN: Go ahead, Bert.**  **10 MEMBER KESSLER: Bert at Palm**  **11 Harbor.**  **12 I happen to have a spreadsheet**  **13 open right now that does floor U, and I have**  **14 an R19 bat with an R11 blanket, as Michael**  **15 suggested, with 2x6 floor joists at 16 on**  **16 center, 99.5-in I-beam spacing and 164-inch**  **17 floor bit. And the best U we can get is .042.**  **18 But if I change that to a 2x8, it goes to**  **19 .040. If I go to a 2x10, it goes to .033.**  **20 Now, as I mentioned, the**  **21 components used are affected by a number of**  **22 things, not just floor joist size, but also** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I-beam spacing and floor width. But that just**  **2 gives you an idea of where we are at. We are**  **3 not even close to .031, I guess it was that**  **4 was used for the calculations.**  **5 MEMBER EZZO: .034.**  **6 MEMBER KESSLER: .034?**  **7 MR. RAMIREZ: Is there a value to**  **8 the group in seeing that spreadsheet?**  **9 MEMBER EZZO: This is Mark Ezzo at**  **10 Clayton.**  **11 Yes, Bert is echoing exactly what**  **12 I brought up initially, in that all this**  **13 analysis on the PNNL Uo calculator**  **14 spreadsheet, just for the example of R30, is**  **15 using a U component in the floor of .034. And**  **16 you can put a nominal R30 in the floor, but**  **17 you won't get .034 as the component U-value**  **18 for the floor.**  **19 So, where the calculation on this**  **20 PNNL document is saying that that works, in**  **21 reality, for us, if we ran that calculation,**  **22 it would not work.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 So, the point I was making is I **2 think we need to provide the DOE the numbers 3 like Bert just showed and say, "Here's the**  **4 real Uo number for a floor that we are coming 5 up with." Plug those numbers into these**  **6 tables and see what we come up with. 7 MEMBER LEVY: Mark and Bert, can**  **8 you get those numbers to Joe then? 9 MEMBER EZZO: Sure.**  **10 MR. HAGERMAN: Right. So, let's 11 just also not forget the goal here. I mean,**  **12 the goal is to see how we take what you are 13 doing today and get it closer to the 2015**  **14 IECC. 15 So, I do believe, Mark,**  **16 absolutely, we need to see what you are doing 17 today, and then, we need to have a discussion**  **18 on how we get to the 2015 and what just isn't 19 possible in the 2015, given how you**  **20 manufacture these units. 21 MEMBER EZZO: Right.**  **22 MR. HAGERMAN: Right.**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER EZZO: Let me ask one more**  **2 question. I hate to make this any more**  **3 complicated than it is, but in the 2015 IECC,**  **4 and in all previous versions of the Energy**  **5 Code, it gives you two options for thermal**  **6 compliance.**  **7 You know, one is you use a**  **8 prescriptive table that says put these**  **9 R-values and use this type of window in your**  **10 home, and there is no calculation required.**  **11 Okay? That is the first table that comes up**  **12 in the residential section of the Energy Code.**  **13 So, it tells me, from looking at**  **14 Zone 7 and 8 for the 2015 Code, it says you**  **15 don't need to run any calculations. Just make**  **16 sure you use a window that has got .032. You**  **17 have got 49 on the roof, 38 in the floor, and**  **18 what in the wall? Twenty in the wall with an**  **19 R5 insulation wrap.**  **20 And then, there are footnotes that**  **21 say, in lieu of the 38 floor, I can fill the**  **22 full-depth cavity of R19, which is really** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 helpful. That is one way to do it, and**  **2 there's no calculation. There is no U-factor.**  **3 I am not having to do a component calculation**  **4 for the geometry in my truss or compression in**  **5 my floor. So, that is one method.**  **6 And then, the second method that**  **7 the IECC gives us is what we are talking about**  **8 here. And that is using U-factors for all**  **9 these components. And we haven't in this**  **10 Committee talked at all about the first**  **11 method.**  **12 So, I am just kind of throwing**  **13 that out there to the group, that there is**  **14 another way that this is being accomplished in**  **15 the IECC Code that we haven't talked about.**  **16 MS. HOFFMAN: Eric?**  **17 MEMBER LACEY: Yes, this is Eric**  **18 Lacey.**  **19 I am going to be talking in just a**  **20 little bit about the different compliance**  **21 options in the IECC and how they might match**  **22 up or not match up with what is going on at** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 HUD. And I think I will answer some of those**  **2 questions that you have.**  **3 MEMBER EZZO: Okay. Cool. All**  **4 right.**  **5 MEMBER LACEY: Or you can ask them**  **6 again if I don't.**  **7 (Laughter.)**  **8 MS. HOFFMAN: No. Great.**  **9 And in terms of this discussion,**  **10 there was a question that Joe raised which**  **11 was, what kind of data or questions needed to**  **12 be answered in research. Is that something**  **13 that can be done now, which is what Javier was**  **14 asking? Could it be done by the end of the**  **15 day or by tomorrow in terms of our timeframe?**  **16 MR. RAMIREZ: One of them was I**  **17 heard that Manny was going to get them some**  **18 numbers and modify the list.**  **19 MS. HOFFMAN: Okay.**  **20 MR. RAMIREZ: And then, the other**  **21 thing, Mark and Bert were going to submit at**  **22 least the numbers that they have, I guess show** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 what is the current place of what they can or**  **2 can't do.**  **3 But are there any additional**  **4 numbers?**  **5 MR. HAGERMAN: This is Joe**  **6 Hagerman, DOE.**  **7 Let me just recap on what I think**  **8 I am going to instruct the team to do because**  **9 it is very similar to what you just said.**  **10 MR. RAMIREZ: Okay.**  **11 MR. HAGERMAN: So, the first set**  **12 of analysis they are going to run is changing**  **13 the glazing area from 10 to 12 to 14. All**  **14 right? We discussed that and closed that one**  **15 out already.**  **16 The second analysis I think we are**  **17 asking them to run is Manny and potentially**  **18 some other people are going to give us what**  **19 the industry I believe is already**  **20 manufacturing component-by-component.**  **21 Correct? And so, we will have that as the new**  **22 HUD baseline, as to what manufacturers are** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 actually producing. Right?**  **2 We have not yet discussed what I**  **3 think we are all trying to drive to, which is,**  **4 how does that change to get to the 2015 IECC?**  **5 We don't yet have a proposal of me doing any**  **6 analysis there.**  **7 I can say the team is doing**  **8 analysis right now for a question that Robin**  **9 Roy asked where they are modeling, just like**  **10 they have modeled here, an ENERGY STAR home,**  **11 which we should get that tomorrow, hopefully.**  **12 MS. HOFFMAN: And I wanted to ask**  **13 David and Manny, can you help give that data**  **14 then, those questions?**  **15 MR. RAMIREZ: What kind of**  **16 timeframe are you looking at on that? Is that**  **17 something that you can get them by the end of**  **18 today or is that a bit more intensive?**  **19 MEMBER SANTANA: I can get that by**  **20 the end of today.**  **21 MR. RAMIREZ: Excellent. Okay.**  **22 Great.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 And then, Mark --**  **2 MEMBER SANTANA: But I will add --**  **3 this is Manny -- I will add that is only going**  **4 to come from one manufacturer.**  **5 MS. HOFFMAN: Right.**  **6 MEMBER SANTANA: You know, there**  **7 are different construction practices.**  **8 MS. HOFFMAN: So, also there are**  **9 some folks remotely. Was it Mark Ezzo? Oh,**  **10 so Emanuel will get to it.**  **11 MR. HAGERMAN: Yes, Emanuel says**  **12 he is going to get to this later.**  **13 MS. HOFFMAN: Okay.**  **14 MR. HAGERMAN: So, our discussion**  **15 right now might be trumpeted by --**  **16 MS. HOFFMAN: Okay.**  **17 MR. RAMIREZ: Yes, some of it I**  **18 know that it seemed like, I knew that Eric was**  **19 going to be getting to. I guess the question**  **20 I would have for you all, is that something**  **21 that we want to move on to?**  **22 Joe, did you have any other slides** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that you needed to show for today?**  **2 MR. HAGERMAN: So, I have a couple**  **3 more slides, but I think the conversation has**  **4 preempted these slides.**  **5 MR. RAMIREZ: Okay.**  **6 MR. HAGERMAN: So, everything that**  **7 we have discussed is past what is on the**  **8 screen here.**  **9 MR. RAMIREZ: Okay. Well, Mark**  **10 has been really patient, and I want to make**  **11 sure that I get there. I appreciate that**  **12 because it seems like they are on a roll here**  **13 with that conversation.**  **14 So, Mark?**  **15 MEMBER WEISS: Well, when I am**  **16 patient, it is probably because I have a**  **17 question I am not sure about.**  **18 MS. HOFFMAN: Oh.**  **19 MEMBER WEISS: It is safe to**  **20 assume that this modeling software we are**  **21 talking about here -- and you might have**  **22 addressed this last week to some extent. I** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 mean, this was not developed specifically for**  **2 manufactured housing. Okay. What is it**  **3 developed for? Is this generic residential**  **4 single -- okay, what is it then?**  **5 MR. HAGERMAN: Yes, and I can get**  **6 you the background on EnergyPlus, the**  **7 calculator that is used here. It is a**  **8 physics-based model for any kind of building**  **9 simulation. So, it can do annual energy,**  **10 interval meter energy usage of a building. It**  **11 is referenced in just about every code as the**  **12 de facto energy modeling software. And I can**  **13 get you a cutsheet on what that means and**  **14 where it is referenced.**  **15 MR. RAMIREZ: Okay, Luby? Oh, I'm**  **16 sorry. Robin?**  **17 MEMBER ROY: Robin Roy.**  **18 It is just a clarifying question.**  **19 The Uo spreadsheet that you sent out, which is**  **20 I think the core of what we are talking about**  **21 here, that it doesn't necessarily calculate**  **22 these San Louis values quite right.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 It is referencing another**  **2 spreadsheet, is that right, that we don't have**  **3 access to? It might be useful to see that**  **4 because I think what Bert is talking about and**  **5 what Mark Ezzo is talking about is their own**  **6 calculators that are trying to fill in the**  **7 role that is played by the floor calcs**  **8 spreadsheet, which is referenced by the Uo**  **9 spreadsheet. It would be very nice to have**  **10 that.**  **11 It might be even easier for Bert**  **12 and Mark Ezzo to riff off of that than to come**  **13 up with their own, have to supply their own**  **14 proprietary software for us to look at.**  **15 MR. HAGERMAN: Right. This is Joe**  **16 Hagerman.**  **17 Absolutely. I think there are**  **18 some hidden tabs here, just doing some**  **19 simple -- yes, but I don't know if you have**  **20 access to them or not. But I will get with**  **21 them and give you access to everything.**  **22 Yes, Emanuel says he can see them.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I think they are just doing calculations.**  **2 MR. RAMIREZ: Yes. So, Rob will**  **3 take a second and see if they are actually**  **4 there.**  **5 Mark?**  **6 MEMBER WEISS: Yes, and just to**  **7 follow up, the reason for asking that**  **8 question, the reason is, you know,**  **9 manufactured housing is a unique product. It**  **10 is different from other types of housing. It**  **11 is a unique product, and it serves a unique**  **12 function. So, that is why I am asking about**  **13 where this modeling comes from.**  **14 MR. HAGERMAN: No, and I**  **15 appreciate that question. The software that**  **16 we use is, like I said, a physics-based model.**  **17 So, we still think the laws of physics apply**  **18 to manufactured housing.**  **19 MS. HOFFMAN: It might be a good**  **20 time to have a break, if we have come to a**  **21 conclusion for this part of the discussion,**  **22 because on our agenda I think we have that,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 yes.**  **2 MR. HAGERMAN: Well, we have not**  **3 gone over the life cycle.**  **4 MS. HOFFMAN: Oh, okay.**  **5 MR. HAGERMAN: So, remember, we**  **6 said in the last meeting that we were going to**  **7 put together a life-cycle cost spreadsheet.**  **8 And so, Matthew from Navigant has been putting**  **9 that together for everybody.**  **10 MS. HOFFMAN: Oh.**  **11 MR. HAGERMAN: So, I wanted him to**  **12 stand up and kind of talk through what he has**  **13 been doing to put that spreadsheet together.**  **14 MS. HOFFMAN: Okay, fine.**  **15 MR. HAGERMAN: And hopefully, we**  **16 will get that spreadsheet possibly by next**  **17 week. It ties into the previous spreadsheets**  **18 you have seen.**  **19 So, Matthew?**  **20 MR. WALKER: Okay. So, my name is**  **21 Matthew Walker, and I work for Navigant**  **22 Consulting.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I will be providing some of the**  **2 technical support on the life-cycle cost**  **3 analysis for this Working Group and for Joe.**  **4 So, we will try to be brief, but**  **5 this first slide gives an overview of what the**  **6 life-cycle cost analysis is all about. Life**  **7 cycle cost represents the full cost of**  **8 ownership for a single consumer. So, it is**  **9 generally a summation of every monetary**  **10 payment that is made over the life of owning**  **11 that particular home.**  **12 The current analysis, the way I**  **13 have been developing it is that it focuses on**  **14 the incremental costs associated with adopting**  **15 the more efficient measures. It has the**  **16 advantage of us being able to avoid pricing**  **17 out carpet or sink fixtures and showers that**  **18 aren't affected by the energy efficiency**  **19 regulation. So, in the end, we have a life**  **20 cycle cost savings associated with a**  **21 difference in the cost of operation of homes**  **22 of different efficiency.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 So, the green figure just gives a**  **2 general overview of the calculation,**  **3 algorithm. It is basically looking at the**  **4 first cost or the housing purchase relative to**  **5 the operating expenses or your energy costs**  **6 and potentially maintenance. And that is**  **7 something we can talk about. And then, both**  **8 of those components are brought down to a**  **9 present value, so that you can compare all of**  **10 those monetary payments on an apples-to-apples**  **11 basis.**  **12 Then, the figure on the right is**  **13 something that we saw last time, two weeks**  **14 ago. Emanuel drew it up on the board, and it**  **15 is the best explanation of how to interpret**  **16 the LCC results. So, I will just go through**  **17 it real quick again.**  **18 In the figure, we have life-cycle**  **19 cost on the vertical axis, and on the**  **20 horizontal axis, efficiencies. So, as you**  **21 move to the right, efficiency increases. As**  **22 you move to the right, energy use decreases** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 and, also, your use of o is decreasing as we**  **2 move to the right.**  **3 So, you figure a HUD code as kind**  **4 of your starting point. And as you move to**  **5 the right, you are purchasing a more efficient**  **6 home. But, as represented by the green dot,**  **7 the energy cost savings are enough to offset**  **8 that investment in the more efficient home.**  **9 And that continues down to the red point where**  **10 you have maximized your savings. But you can**  **11 actually continue past that point, and you can**  **12 continue buying more and more efficient homes.**  **13 And there may be a few models, such as the**  **14 blue home, where you continue to save money,**  **15 just not as much as with that maximum savings**  **16 red home.**  **17 And then, you can actually push**  **18 the envelope so far that you shoot off the end**  **19 and you are off that purple dot where you have**  **20 sort of maxed-out; you have bought this space**  **21 age home and there is just no way for the**  **22 operating cost savings to offset that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 investment. So, we would certainly say that**  **2 that purple home is not cost-effective**  **3 relative to the yellow starting point.**  **4 Are there any questions on this**  **5 slide before we keep going?**  **6 (No response.)**  **7 No?**  **8 And just an update on the status**  **9 of the model itself. Basically, calculations**  **10 are in place; the structure is in place. The**  **11 biggest thing that is missing is the cost data**  **12 associated with those aims, energy-efficiency**  **13 measures.**  **14 Mark?**  **15 MEMBER WEISS: If you could walk**  **16 me through how the analysis deals with someone**  **17 who is priced out of the market based on these**  **18 increased first costs, the increased cost to**  **19 purchase?**  **20 MR. WALKER: Right. And I can say**  **21 to that, real briefly, basically, the life**  **22 cycle cost analysis doesn't address the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 concern you are speaking to. So, that would**  **2 be a separate layer, a separate layer to talk**  **3 about sort of that elasticity of demand of the**  **4 consumer that just is unable, is no longer**  **5 going to purchase based on a change in price.**  **6 I would say that there is a**  **7 component of affordability in the discount**  **8 rate that is selected for bringing those**  **9 future energy cost savings down to the present**  **10 level, but I realize it is not the full**  **11 picture that you are talking about.**  **12 MEMBER WEISS: Okay. Thanks.**  **13 MR. WALKER: Yes.**  **14 MEMBER TOMPOS: Dave Tompos from**  **15 NTA.**  **16 When we say "life cycle," is that**  **17 the entire life? What are you assuming is the**  **18 life of the home? And is that for every**  **19 homeowner? Are we assuming they own the home**  **20 for that length of time? Or are you assuming**  **21 like an average seven-year ownership?**  **22 MR. WALKER: Right. So, I mean,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that is a great question. That is an**  **2 assumption that has to be decided on for this**  **3 analysis.**  **4 I mean, I will say, traditionally,**  **5 in sort of DOE's world in these times of**  **6 rulemakings, we might look at a period of**  **7 something like 30 years. We also might look**  **8 at a period of until the house falls apart and**  **9 is no longer usable. But this is a decision**  **10 that can be made, and it is an important**  **11 decision because it does affect that life**  **12 cycle cost value and where you might fall on**  **13 this plot.**  **14 So, that is a decision that can be**  **15 made, and I think it may be something that**  **16 Emanuel reviews later with the framework for**  **17 the term sheet, and I also have a slide on it**  **18 coming up soon.**  **19 MR. HAGERMAN: This is Joe**  **20 Hagerman.**  **21 You know, all these models have**  **22 inputs, right, and assumptions. And that is** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 one of the important assumptions and inputs**  **2 that the group here is going to have to decide**  **3 on, right, and talk to.**  **4 MEMBER LEVY: I have a question.**  **5 Emanuel Levy.**  **6 Let me mention the 800-pound**  **7 gorilla in the room. When you discover that**  **8 the IECC 2015 does not lie on the cost curve,**  **9 is not the bottom point on the curve, and it**  **10 is not cost-effective, which we most generally**  **11 will discover that, or at least for some**  **12 cases --**  **13 MR. WALKER: Okay.**  **14 MEMBER LEVY: -- what is our**  **15 solution? You know, where do we go from**  **16 there?**  **17 MR. HAGERMAN: So, let me speak to**  **18 that. This is Joe Hagerman.**  **19 So, that is a great point. In the**  **20 ICC Code as developed through their own**  **21 process where people come and decide on what**  **22 the reasonable person should do when they** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 build something, right, they do not run any**  **2 type of life-cycle analysis on those**  **3 provisions before they issue their code,**  **4 right.**  **5 So, absolutely, I think you are**  **6 right. I think that is the point where we**  **7 depart from meeting the 2015 code, and we**  **8 either ratchet things up or we ratchet things**  **9 down because of the results of the life cycle.**  **10 Does that make sense?**  **11 Because, remember, the statute**  **12 says meet the 2015 wherever you can, but not**  **13 when it is not cost-effective, right? It is**  **14 pretty clear.**  **15 That is one of the ongoing issues**  **16 that this group is going to have to decide,**  **17 right?**  **18 MEMBER LEVY: Yes, and I was**  **19 hoping you would go there, Joe, because I**  **20 think the question to the Committee really is,**  **21 when it is "less than," what does that mean in**  **22 terms of what we are recommending? And if it** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 is "more than," is that appropriate? Is it**  **2 appropriate that we go beyond, this Committee**  **3 consider going beyond the 2015? To me, that**  **4 is one of the key questions that this**  **5 Committee is going to have to deal with today**  **6 or at some point in the near future.**  **7 MR. HAGERMAN: Okay. Luby?**  **8 MEMBER LUBLINER: Yes, a scoping**  **9 question on the life-cycle cost analysis.**  **10 Mike Lubliner here.**  **11 I work on the Manufactured Housing**  **12 Consensus Committee with some of my**  **13 counterparts here. And we had made some**  **14 proposals to the Committee to consider ENERGY**  **15 STAR appliances and ENERGY STAR HVAC and**  **16 ENERGY STAR lighting and water heating. Those**  **17 proposals were rejected by the Consensus**  **18 Committee with the justification that DOE was**  **19 going to be addressing that.**  **20 I just want to make it clear that**  **21 I am not seeing anything in those areas being**  **22 addressed by DOE now, whether that is good,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 bad, you know. So, my question really is,**  **2 will the life-cycle cost analysis consider**  **3 anything besides the shell measures, as we are**  **4 seeing so far?**  **5 MR. HAGERMAN: So, I believe Eric**  **6 is going to describe some different paths by**  **7 which you can meet code levels, right? I**  **8 would assume that one of those paths may take**  **9 into consideration higher-efficiency**  **10 appliances --**  **11 MEMBER LUBLINER: Okay, great.**  **12 MR. HAGERMAN: -- as potentially**  **13 like tradeoffs.**  **14 MEMBER LUBLINER: Excellent.**  **15 MR. HAGERMAN: That is how I would**  **16 imagine it being --**  **17 MEMBER LUBLINER: But this**  **18 particular analysis --**  **19 MR. HAGERMAN: This does not.**  **20 MEMBER LUBLINER: Does not.**  **21 Thanks. It is just for clarification.**  **22 MR. HAGERMAN: It is going to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 assume the federal minimum appliances.**  **2 MEMBER LUBLINER: Right. And so,**  **3 then, a question for legal counsel would be,**  **4 does DOE have the authority beyond -- my**  **5 understanding is that the NAECA does not apply**  **6 to the federal government. It only applies to**  **7 States.**  **8 So, I would like to seek**  **9 clarification as to whether you have the**  **10 authority to do that at some point. And I**  **11 don't want to hold the process up or the ASRAC**  **12 up on that. I would just like to be clear on**  **13 that.**  **14 MR. HAGERMAN: All right. We will**  **15 look into that, but --**  **16 MEMBER LUBLINER: Thank you.**  **17 MR. HAGERMAN: -- I would bring**  **18 your question and your comments back up maybe**  **19 as Eric talks about what he is going to talk**  **20 about, because I believe there are alternative**  **21 paths to meeting the code that might address**  **22 your concerns.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER LUBLINER: Excellent.**  **2 Thank you.**  **3 MR. RAMIREZ: John?**  **4 MEMBER CASKEY: Yes, John Caskey,**  **5 NEMA.**  **6 So, I understand your simplified**  **7 model here and the purple dot that says that**  **8 doesn't appear cost-effective.**  **9 MR. WALKER: Sure.**  **10 MEMBER CASKEY: Where does the**  **11 projected age of the product itself or the**  **12 lifetime of the product fit into this? At**  **13 some point the payback could be so long or the**  **14 life-cycle cost, the value of the life-cycle**  **15 cost really could be out beyond the life of**  **16 the product itself. I mean, how do you take**  **17 that into account?**  **18 MR. WALKER: Well, I guess a**  **19 payback period can be calculated. So, that**  **20 would tell you the number of years it takes**  **21 for you to recoup that investment, and then,**  **22 after that, you would begin to realize those** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 savings. And we can compare that to the**  **2 actual lifetime -- or I guess "lifetime" is**  **3 probably not the right word to use -- the**  **4 amount of time a consumer spends in that home,**  **5 to see whether or not we think those two**  **6 numbers work well together.**  **7 MEMBER CASKEY: Okay. Well, there**  **8 is both the average time that Consumer A**  **9 spends in a home, but, then, there is also at**  **10 some point the home itself may deteriorate to**  **11 the point of not being usable anymore. So, we**  **12 certainly don't want the simple payback to**  **13 stretch out beyond the lifetime of the product**  **14 itself.**  **15 MR. WALKER: Right. Yes, I think**  **16 you're right.**  **17 MR. HAGERMAN: This is Joe**  **18 Hagerman.**  **19 MEMBER CASKEY: So, I just want to**  **20 make sure that is taken into account. I mean,**  **21 looking at life-cycle cost is one thing, but**  **22 you also need to make sure you are not** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 exceeding the lifetime of the product.**  **2 MR. HAGERMAN: This is Joe**  **3 Hagerman.**  **4 I agree with you, and I think that**  **5 some of the energy-efficiency measures are**  **6 going to have different lifetimes than the**  **7 other efficiency measures, right? And then,**  **8 we are looking at a grouping of efficiency**  **9 measures that have different lives to them.**  **10 So, we will have to weigh that.**  **11 The group will have to weigh that as they**  **12 think through how they come up with the life**  **13 of each efficiency measure and, then, the life**  **14 of the house itself.**  **15 MR. WALKER: All right, I will**  **16 move on.**  **17 So, this next slide just gives an**  **18 overview of some of the financial parameters**  **19 that go into the calculation. And these are**  **20 really critical. We have already touched on**  **21 one, the analysis period or lifetime. Yes, so**  **22 it is very critical for calculating the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 tradeoffs between the first cost and the **2 operating expenses. 3 I won't go through all of them,**  **4 but I think a couple of them are interesting 5 or would be worth talking about.**  **6 So, the discount rate is a 7 representation of the time value of money or**  **8 the opportunity cost that the consumer has as 9 they weigh purchasing more efficient measures**  **10 versus paying off consumer debts, retirement 11 investments, perhaps even a mortgage itself.**  **12 So, that discount rate is used to 13 bring those future energy costs down to the**  **14 present-day value. It has the effect of sort 15 of, a larger discount rate has the effect of**  **16 diminishing the impact of future energy cost 17 savings.**  **18 So, then, the analysis period or 19 the lifetime of the product, that is the**  **20 amount of time over which the LCC calculation 21 is going to capture those operating expenses**  **22 or capture those energy cost savings. So,**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 generally, a longer analysis period would**  **2 allow you to capture more savings and**  **3 potentially have a better opportunity of**  **4 offsetting those first costs.**  **5 Then, we have some kind of**  **6 standard items here: mortgage interest,**  **7 downpayments, taxes. I think I should just**  **8 hit the fuel escalation rate. That is**  **9 basically a forecast of how electricity or gas**  **10 prices are going to change over time, and that**  **11 allows the analysis to apply a more**  **12 appropriate cost value to energy expenditures**  **13 further out in the future rather than just**  **14 assuming the 2013 or current-year prices**  **15 persist.**  **16 So, all of these values here are**  **17 things that need to be agreed upon and**  **18 consensus would have to be reached.**  **19 Go ahead.**  **20 MEMBER WEISS: Mark Weiss, MHARR.**  **21 Based on your prior answer, I take**  **22 it that these parameters don't take into** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 account what I would call the societal cost of**  **2 exclusion of significant numbers of lower**  **3 income people from homeownership, the only**  **4 homeownership they can afford. Is that**  **5 correct?**  **6 MR. WALKER: That is correct.**  **7 MR. HAGERMAN: Hold on.**  **8 So, that is correct in this**  **9 analysis --**  **10 MR. WALKER: Right.**  **11 MR. HAGERMAN: -- but there is**  **12 other analysis that take that into**  **13 consideration, just like the previous**  **14 discussion on the Uo values don't take into**  **15 account your concern, right? But your concern**  **16 will be addressed in other analysis. Does**  **17 that make sense?**  **18 Yes, the analyses are siloed by**  **19 design, right?**  **20 MEMBER WEISS: Okay. That's fine.**  **21 I will be waiting. Thanks.**  **22 MR. WALKER: Great. Well, I will** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 move on.**  **2 MR. RAMIREZ: Do you have a**  **3 question? Okay.**  **4 MR. WALKER: So, then, just a**  **5 little bit more on the first cost. First**  **6 cost, I am using the term loosely here. It is**  **7 associated with the housing purchase. Now in**  **8 manufactured homes generally you have a loan**  **9 and you pay for that home over time. So, it**  **10 is not really first cost. It is costs**  **11 associated with the housing purchase. And**  **12 that is a category of costs that can be sort**  **13 of weighed against the savings that you get**  **14 from your energy cost savings.**  **15 So, the energy-efficiency measures**  **16 analyzed will need to be assigned costs. We**  **17 were just talking about that a couple of**  **18 minutes ago.**  **19 LCC calculates things on a retail**  **20 level pricing rather than manufacturer costs.**  **21 So, we have to be sure that those prices**  **22 represent what the end-use consumer is paying.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 And then, just two kind of**  **2 secondary-order type effects that could**  **3 potentially happen, these bottom two bullets.**  **4 It is possible that the energy-efficiency**  **5 requirements could change the size**  **6 requirements of heating and cooling equipment,**  **7 which could come with some sort of savings.**  **8 I think that could be a topic for discussion**  **9 at a later time, but it would be something**  **10 that would need to be decided upon.**  **11 And similarly, the energy**  **12 efficiency requirements could change the**  **13 installation cost. I think that was something**  **14 that Dave was talking about earlier with**  **15 changing the height of the home and, then, no**  **16 longer being able, perhaps not even actually**  **17 being able to ship the home. But perhaps in**  **18 other cases you might have to pay extra money**  **19 for different permits or different safety**  **20 requirements to ship a different sized home.**  **21 So, these are all items that would**  **22 go into this first cost category. And all of** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 these things are the things that the Working**  **2 Group will need to decide upon.**  **3 And I am finished.**  **4 Yes, Mark, do you have a question?**  **5 MEMBER WEISS: Yes, going back to**  **6 my earlier question, does this take into**  **7 account what I would call collateral impacts**  **8 of tightening the home related to air**  **9 exchange, condensation, moisture, those sorts**  **10 of issues?**  **11 MR. WALKER: Yes, it does. So,**  **12 when analyzing the cost of implementing some**  **13 sort of energy-efficiency measure, it needs to**  **14 capture every cost associated with the**  **15 installation of that new design. It is not**  **16 literally the piece of foam that you stick to**  **17 it. It is also the system effects that**  **18 sticking in that piece of insulation has.**  **19 So, I think that the things that**  **20 you were talking about would be captured by,**  **21 need to be captured by this analysis, yes.**  **22 MR. HAGERMAN: This is Joe** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Hagerman.**  **2 And likewise, I think as we talk**  **3 about energy-efficiency measures and all the**  **4 analysis that we are going to do, you need to**  **5 bring all those technical points up. I mean,**  **6 I don't think that this group is trying to**  **7 recommend an end-product that would do harm to**  **8 the people that live in the product, right?**  **9 And that is why you all are here. You all are**  **10 experts in manufactured housing.**  **11 MEMBER LEVY: That was very good.**  **12 Can we go back to the previous slide just a**  **13 second?**  **14 MR. WALKER: Sure.**  **15 MEMBER LEVY: There was a sense to**  **16 be studied, done about 10 years ago, but I**  **17 suspect there is also going to be -- 20 years**  **18 ago, right -- I suspect the results will be**  **19 the same. And it looked at what changing**  **20 these values, what impact it had on the**  **21 U-value. So, which of these things are**  **22 important and by what amount?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 For example, if within a**  **2 reasonable range of discount rate, your very**  **3 first item, that discount rate could change**  **4 the use of o-value, depending on what we**  **5 choose, by something like 20 percent, just by**  **6 deciding what, you know, for us to decide what**  **7 the discount rate is, one view might be**  **8 different than another, and that would change**  **9 the use of o-value by 20 percent. That is**  **10 probably one of the biggest impacts.**  **11 What is not up here is the**  **12 inflation rate, which is probably buried into**  **13 some of these other factors. If we brought**  **14 that out, that could also be an important**  **15 factor.**  **16 But there are a couple, like the**  **17 cost of the measures, even the property tax**  **18 rate, the fuel escalation rate, which are the**  **19 most important ones. And I am suggesting that**  **20 that is where we focus our attention when we**  **21 have discussion about what these values should**  **22 be.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. WALKER: Great.**  **2 All right. So, I will move on to**  **3 the operating expenses. Operating expenses**  **4 are calculated on an annual basis. They are**  **5 discounted to the present year, so that they**  **6 can be balanced against the first cost.**  **7 The major operating expense is the**  **8 annual energy cost. That is what is being**  **9 affected by adopting different energy**  **10 efficiency measures or different codes. And**  **11 that energy cost is calculated with the**  **12 EnergyPlus results along with these EIA fuel**  **13 cost pieces of data. So, electricity prices,**  **14 natural gas, propane.**  **15 And then, it is possible that**  **16 there could be maintenance costs associated**  **17 with the usage of different energy-efficient**  **18 measures. I think this is another place for**  **19 discussion. This may or may not be**  **20 applicable. That is certainly a topic that**  **21 the Working Group will need to agree upon**  **22 during this process.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 And this is my final slide on LCC.**  **2 Some other assumptions. So, I guess when an**  **3 LCC is calculated, it is going to be**  **4 calculated on a very specific customer. It is**  **5 an analysis on an individual consumer. So,**  **6 that customer may have a very specific heating**  **7 and cooling equipment type, perhaps electric**  **8 resistance. They may use real estate rather**  **9 than personal property loans. They may have**  **10 purchased a single-section home versus a**  **11 multi-section. So, the LCC is calculated on**  **12 one particular set of those categories.**  **13 It can be interesting to aggregate**  **14 those categories. In order to do that, we**  **15 need to agree upon the percentage of customers**  **16 that use each of these types or that fall in**  **17 each of these categories. And that can**  **18 actually vary by climate zone, depending on**  **19 how much detail is necessary to specify some**  **20 of these things.**  **21 I think, in particular, the first**  **22 bullet has a lot of unknowns. I think there** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 is better data available on the types of loans**  **2 currently being used as well as the single and**  **3 multi-section shipments.**  **4 But all of these will be important**  **5 pieces of data to collect and agree upon**  **6 during this process.**  **7 So, if there are any more**  **8 questions, we can talk about them here.**  **9 Otherwise, I will hand the time back over to**  **10 somebody else.**  **11 (No response.)**  **12 All right. Well, thanks.**  **13 MEMBER CASKEY: Yes, John Caskey,**  **14 NEMA.**  **15 So, you are saying at some point**  **16 this group needs to agree upon those**  **17 percentages and different types of heating and**  **18 cooling systems and things like that. I mean,**  **19 do you have a proposal that you will offer the**  **20 group to say that, from your research, the**  **21 answer is "X" and just for this group to bless**  **22 it? Or how do you expect to proceed to get** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that answer?**  **2 MR. WALKER: I mean, I think that**  **3 is a possibility. I would kind of defer to**  **4 Joe on the direction that we take with that.**  **5 But it is certainly something that we could**  **6 think about.**  **7 Joe?**  **8 MR. HAGERMAN: Yes, I think our**  **9 normal course of action would be to ask the**  **10 group first, right, for a proposal. And then,**  **11 absent a proposal, we would go get the**  **12 information however we could, right. If the**  **13 industry says, "Yes, this is the shipment data**  **14 and here's what we see going in the homes," we**  **15 would use that wherever possible, if we could**  **16 see the source of everything.**  **17 Does that make sense?**  **18 MEMBER CASKEY: It makes sense,**  **19 but each of the manufacturers may have a**  **20 different answer to that --**  **21 MR. HAGERMAN: Sure.**  **22 MEMBER CASKEY: -- question. And** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I have thought, you know, when I have had to**  **2 do other research on other issues, I have gone**  **3 to EIA data and gone to other industry data**  **4 and found it fairly easily. I just don't want**  **5 the group to waste too much time or get bogged**  **6 down --**  **7 MR. HAGERMAN: Yes.**  **8 MEMBER CASKEY: -- with everyone**  **9 providing their own numbers and, then, trying**  **10 to aggregate that, as opposed to somebody**  **11 independent doing the research and coming back**  **12 and say, "I think `X' percent of propane, `X'**  **13 percent of electric resistance, `X' percent or**  **14 `Y' percent or heat pumps," or whatever.**  **15 I mean, it is up to the group. If**  **16 the group is happy with providing that data**  **17 and helping arrive at that answer, that is**  **18 great. If they want you to provide a**  **19 proposal, then that is fine with me, too.**  **20 MR. HAGERMAN: Yes, I just want to**  **21 stress again that this is a consensus group**  **22 for you, for all the members, right? I mean,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 we are trying to get this group of people to**  **2 come to consensus on these standards, right?**  **3 And DOE is here to help; we are just another**  **4 member at the table.**  **5 MR. RAMIREZ: One thing at least**  **6 that I am observing is that we have a lot of**  **7 technical people in the room, and I think the**  **8 little bit that I am observing already is that**  **9 it is easy to get bogged down by just certain**  **10 little components, right? And we are not, at**  **11 least the way I understand it, we are not**  **12 necessarily looking at and trying to go**  **13 component-by-component and trying to say that**  **14 this is exactly what we need to be doing. It**  **15 is in the context of an overall efficiency.**  **16 Is that accurate? It is the overall**  **17 efficiency?**  **18 MR. HAGERMAN: So, you should wait**  **19 until Eric talks, I think.**  **20 (Laughter.)**  **21 MS. HOFFMAN: Okay. Yes.**  **22 MR. HAGERMAN: It is kind of a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 complex thing here, right?**  **2 MS. HOFFMAN: Yes.**  **3 MR. HAGERMAN: There is the**  **4 individual efficiency of each measure and**  **5 each --**  **6 MS. HOFFMAN: Measure, yes.**  **7 MR. RAMIREZ: Well, there's**  **8 minimums, but overall we need to hit a certain**  **9 mark.**  **10 MR. HAGERMAN: And then, there is**  **11 an evolvement.**  **12 MR. RAMIREZ: Okay.**  **13 MR. HAGERMAN: So, it is a go**  **14 between the two.**  **15 MR. RAMIREZ: And it could be**  **16 daunting if you look at it. I don't know if**  **17 you ever heard the term "How do you eat an**  **18 elephant?" "One bite at a time." Right?**  **19 And I don't think that we are**  **20 going to be able to swallow this thing whole.**  **21 And I think that is some of the portion we are**  **22 looking at that Emanuel is going to be walking** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 through the solution later. And he started**  **2 off with a portion of it. Let's look at that.**  **3 And I think that goes to what you**  **4 are talking about, John, is that there is a**  **5 strawman. And I had to get really comfortable**  **6 with that term of strawman. I think of it**  **7 more like a straw house. We are going to get**  **8 to a beautiful home when we are done, right?**  **9 That initial straw house, is it going to**  **10 easily be blown down? And that is okay,**  **11 right? That is the purpose of it.**  **12 The whole idea is to get something**  **13 out there. So, that way, we can say, all**  **14 right, this is a good place to start talking.**  **15 Some of these pieces we could easily agree to,**  **16 but these other ones, fine, let's have a**  **17 discussion, right?**  **18 And then, we will revise it again.**  **19 There is a stick house, right? And then, we**  **20 get to the beautiful manufactured house at the**  **21 end that everyone is happy with, right?**  **22 So, with that, are there any** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 questions? Yes, go ahead.**  **2 MEMBER LUBLINER: So, I had a**  **3 question regarding the analysis. Could you go**  **4 back to the variables, that first slide? Yes.**  **5 So, in reality, what you have is a**  **6 distribution of each of these variables. You**  **7 have a distribution of people's discount**  **8 rates, maybe not the analysis period. You**  **9 have mortgage interest. The variables that**  **10 Emanuel was talking about are the most**  **11 important ones. There is a distribution.**  **12 I have seen from past abstract**  **13 analysis of appliances and things the way you**  **14 handle the distribution in the life-cycle cost**  **15 analysis is really important in terms of what**  **16 results you get. For example, do you just**  **17 take the average of each or do you provide**  **18 some sort of Monte Carlo, crystal-ball**  **19 analysis which I have seen used in the past**  **20 for standards?**  **21 What is the intent here? Are you**  **22 going to be doing just a simple averaging or** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 are you going to be doing what has been done**  **2 by other standards where you take the**  **3 distribution of each of the inputs and see**  **4 what the implications are?**  **5 It can be very helpful in**  **6 determining where the winners and the losers**  **7 are in terms of affordable housing that you**  **8 don't get necessarily when you do the**  **9 averaging. So, it is a question, what is the**  **10 data that we are going to use in terms of the**  **11 analysis approach?**  **12 MR. WALKER: Right. Well, I mean,**  **13 I have presented primarily here today on the**  **14 average value approach. I sort of began to**  **15 allude to the idea or the notion of customers**  **16 having different impacts that are on that last**  **17 slide.**  **18 I think this is something where**  **19 the Working Group can provide some input as to**  **20 whether or not you would like for time to be**  **21 spent pursuing the Monte Carlo approach, which**  **22 is something that I am aware of.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER LUBLINER: That would be my**  **2 personal preference because I think it shows**  **3 us more who the winners and the losers are,**  **4 and it might afford some problem-solving in**  **5 working things out.**  **6 MR. RAMIREZ: I'm a little**  **7 hesitant in asking this question because I**  **8 don't know how long the answer is. What is**  **9 the Monte Carlo approach?**  **10 MS. HOFFMAN: Winners and losers.**  **11 Go ahead.**  **12 MEMBER LUBLINER: So, I am not a**  **13 statistician, so correct me if I am wrong**  **14 here. But it is considering that all the**  **15 distribution of a variable, when you are**  **16 applying it to another variable, doing a life**  **17 cycle cost, and understanding that it is not**  **18 just the average discount rate, but a**  **19 distribution of discount rates that are, then,**  **20 applied to the distribution of fuel types.**  **21 And so, it is a process that gets**  **22 you a better understanding of where the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 winners and the losers are. And it has been**  **2 historically used, as I understand, for the**  **3 setting of appliance efficiency standards by**  **4 ASRAC. So, I am wondering if you are using**  **5 the same protocols in this Committee as we**  **6 have historically.**  **7 MR. RAMIREZ: And I think the**  **8 answer is let us know, right?**  **9 (Laughter.)**  **10 We all need to be on the same page**  **11 on what we are doing. Okay.**  **12 MS. HOFFMAN: Yes, we have an**  **13 ASRAC member representative as well. So,**  **14 John, if you want to address it now or later?**  **15 MEMBER CASKEY: My look may appear**  **16 that I am a little bit dumbfounded, and I am.**  **17 I mean, I agree that there is a spread of**  **18 answers for each of these terms that you are**  **19 talking about here. Certainly, the analysis**  **20 needs to take that spread into account. I**  **21 don't know that anybody here is prepared to**  **22 say what that spread looks like.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I am expecting you guys to know**  **2 what that spread looks like on each of these**  **3 variables or do the research to figure out on**  **4 mortgage interest rates, you know, what the**  **5 range is and what the median is, and,**  **6 basically, give us some insights on, well,**  **7 gee, we find that all the low-income people**  **8 are paying the 9 percent interest rate. And**  **9 if you do that, then nobody can afford these**  **10 houses.**  **11 I mean, I think we need to know**  **12 those parameters, but I am not sure what more**  **13 guidance, as the ASRAC person on the group,**  **14 could tell you.**  **15 (Laughter.)**  **16 MS. HOFFMAN: Sorry to put you on**  **17 the spot, but thank you.**  **18 MEMBER CASKEY: Well, that's okay.**  **19 MR. RAMIREZ: Mark, Robin has been**  **20 patient, but is it on this topic here?**  **21 MEMBER WEISS: Yes, it is.**  **22 MR. RAMIREZ: Okay.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER WEISS: I will let Robin go**  **2 first, though.**  **3 MEMBER ROY: Well, I have**  **4 something on two topics.**  **5 But, on the distribution, I think**  **6 it is very interesting, particularly for**  **7 manufactured housing. It is always**  **8 interesting in all the appliance and equipment**  **9 standard-setting processes to see if there are**  **10 some very large losers that are being**  **11 outweighed by very large winners, and a lot of**  **12 unaffected parties in the middle.**  **13 It helps, as a couple of folks**  **14 have said, it helps to think about, well, what**  **15 might we do a bit differently? How might we**  **16 target this better? So, it seems that if the**  **17 distribution is across different identifiable**  **18 populations, it is very useful.**  **19 I had a different question on the**  **20 heating fuel used. But this is such a**  **21 different topic. It fits within this. But I**  **22 think Mark has something which is germane to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the distribution.**  **2 MR. RAMIREZ: We will come back to**  **3 that. Thank you.**  **4 MEMBER WEISS: Yes, thank you.**  **5 I just have a problem with**  **6 terminology like winners and losers. And my**  **7 concern here -- and I started to express this**  **8 last week, and I have a feeling I am going to**  **9 be saying this more today -- my concern is**  **10 this concern becomes a dry exercise in**  **11 technology and technical matters.**  **12 Let's be honest here. I mean,**  **13 manufactured housing is designated in federal**  **14 law as affordable housing. The mission is to**  **15 increase the availability of affordable**  **16 housing under federal law.**  **17 Let's be honest about what we are**  **18 doing here with these numbers and all this**  **19 terminology and all the technical data. We**  **20 are potentially talking about excluding people**  **21 from the only type of housing they can afford,**  **22 and that is mostly lower-income people. And** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 we need to be cognizant of that at all times.**  **2 I have some data I brought with me**  **3 today. I mean, the average income for a**  **4 person owning, for a family owning a**  **5 manufactured home is $27,000 approximately.**  **6 That is only a few thousand dollars over the**  **7 2014 poverty level. Okay?**  **8 We need to be cognizant that we**  **9 are affecting people here and we are**  **10 affecting, unfortunately, primarily lower**  **11 income people, by increasing the cost**  **12 potentially of manufactured housing. And for**  **13 them, there is no alternative and there is no**  **14 life cycle.**  **15 MS. HOFFMAN: Okay.**  **16 MEMBER WEISS: So, I just want to**  **17 keep that human element in it.**  **18 MR. RAMIREZ: Thank you, Mark.**  **19 MEMBER DICKENS: May I add a**  **20 smaller -- this is Ishbel.**  **21 MR. RAMIREZ: I'm sorry, who is**  **22 this again? Oh, Ishbel.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER DICKENS: Ishbel Dickens.**  **2 If I could add a comment, I want**  **3 to thank Mark for those comments. I have**  **4 these concerns as well. I think it is valued**  **5 on the average income of people purchasing**  **6 manufactured homes. We want to make sure that**  **7 we include as many people as possible.**  **8 But, Mark, I also want to make**  **9 sure that they are buying an energy-efficiency**  **10 home. And I don't think that that is the gold**  **11 standard here. I see that as something that**  **12 is workable and as sensible as possible. I**  **13 think a lot of the questions have to speak to**  **14 that. I am really concerned with the other**  **15 things here, but I want people to have energy**  **16 efficiency homes. So, I am trying to look for**  **17 that compromise.**  **18 MS. HOFFMAN: I think you were**  **19 saying --**  **20 MEMBER SCHNEIDER: Could the phone**  **21 speaker restate that, please?**  **22 MS. HOFFMAN: Who's speaking,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 please?**  **2 MEMBER SCHNEIDER: It's Peter**  **3 Schneider from Efficiency Vermont.**  **4 I was just asking if you could**  **5 repeat what she said. I just couldn't**  **6 understand it.**  **7 MS. HOFFMAN: I got the impression**  **8 that Ishbel was saying that two factors are**  **9 being affordable, but also energy efficient to**  **10 keep it as you are operating the home. At**  **11 least that is what I heard. So, that there**  **12 are really two factors, to be able to purchase**  **13 it, but also to be able to keep it, which I**  **14 think that was what she was saying and has**  **15 said eloquently the last time as well.**  **16 MEMBER SCHNEIDER: This is Peter**  **17 Schneider from Efficiency Vermont, and there**  **18 is a bit of an echo. So, I apologize.**  **19 But I would echo what Ishbel said.**  **20 At least in the Northeast the current HUD**  **21 homes are really continuing the cycle of**  **22 poverty for the homeowners due to high energy** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 costs, durability issues, and I think indoor**  **2 air quality issues as well, from my**  **3 experience.**  **4 So, that's it.**  **5 MR. RAMIREZ: Thank you.**  **6 Robin?**  **7 MEMBER ROY: David, do you have**  **8 something on the distribution effects?**  **9 MEMBER TOMPOS: Well, there are**  **10 two conversational things here. If DOE could**  **11 just completely change the banking industry so**  **12 that they recognize energy efficiency, that**  **13 would make this a lot easier.**  **14 And my second point is to ask for**  **15 a break.**  **16 (Laughter.)**  **17 MS. HOFFMAN: Right. Thank you.**  **18 I was about to suggest that.**  **19 May I suggest a 15-minute break?**  **20 Oh, Robin, do you want to do it**  **21 now or --**  **22 MEMBER ROY: Oh, it is quick. It** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 is about the heating fuel.**  **2 MS. HOFFMAN: Okay.**  **3 MEMBER ROY: There was a table in**  **4 the PNNL analysis which laid out a set of**  **5 distributions across the climate zones and**  **6 across the types of heating fuel. It is Table**  **7 1-C.**  **8 And I was just curious about the**  **9 data. You used the microdata from the 2009**  **10 American Housing Survey. I was wondering what**  **11 kind of confidence you had that that reflected**  **12 both manufactured housing, as opposed to**  **13 general housing stock, and to new sales, as**  **14 opposed to the existing installs, which may or**  **15 may not be different.**  **16 MR. WALKER: I see you looking at**  **17 me. I will have to say that --**  **18 MEMBER ROY: Is this your stuff?**  **19 MR. WALKER: -- those assumptions**  **20 were done by PNNL, and I don't really have**  **21 knowledge of the underlying assumptions.**  **22 MR. HAGERMAN: This is Joe** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Hagerman, DOE.**  **2 So, I am not sure, you know, we**  **3 are going to trust this 2009 American Housing**  **4 Survey. That is our only kind of look into**  **5 that.**  **6 The manufacturers, you would**  **7 think, you would assume that they would know**  **8 more, especially since that is a good few**  **9 years old.**  **10 MS. HOFFMAN: Okay. I am going to**  **11 exercise my facilitator prerogative then and**  **12 suggest that we take a break.**  **13 (Whereupon, the foregoing matter**  **14 went off the record at 10:59 a.m. and went**  **15 back on the record at 11:18 a.m.)**  **16 MR. RAMIREZ: All right. We had**  **17 an additional member of the public, I guess,**  **18 join us. So, if you wouldn't mind, could you**  **19 introduce yourself before we get started here?**  **20 MR. MARTIN: Hi. I'm James Martin**  **21 with HUD's Office of Manufactured Housing**  **22 Programs.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAMIREZ: Okay. Thank you,**  **2 Jim.**  **3 MS. FREIMUTH: I'm Janet Freimuth.**  **4 I am from the DOE Office of Conflict**  **5 Prevention and Resolution.**  **6 MR. RAMIREZ: Thank you.**  **7 So, I think next on the agenda was**  **8 to have Eric go over the 2015 IECC stuff, and**  **9 he is going to send me a document here. Just**  **10 so the folks at home can see it as well, we**  **11 could put it on. Even though it is going to**  **12 be a quick reference, at least the folks at**  **13 home can see it or at their offices.**  **14 MEMBER LACEY: Okay. I am Eric**  **15 Lacey, Responsible Energy Codes Alliance.**  **16 Joe has asked me just to walk**  **17 through very briefly how the IECC works. I**  **18 know there are probably varying levels of**  **19 comfort with the International Energy**  **20 Conservation Code among this group. And so,**  **21 I was kind of struggling with how specific or**  **22 how general to make this discussion. And so,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 feel free, if you think this is too detailed**  **2 or not detailed enough, please stop me**  **3 throughout.**  **4 But I thought this was a really**  **5 important point or discussion to have because,**  **6 for whatever its reasons, Congress decided**  **7 that the starting point should be the latest**  **8 edition of the IECC. And rather than just**  **9 take the HUD baseline and apply a 10 percent**  **10 improvement, or whatever, they decided that**  **11 they wanted it to match as closely as feasible**  **12 and as cost-effective the IECC.**  **13 And so, I think some of the**  **14 questions that came up earlier were related to**  **15 this kind of clashing between two different**  **16 ways of calculating the energy efficiency of**  **17 a manufactured home. One way is based on the**  **18 use of o, which Emanuel Levy walked us**  **19 through, and I am going to talk a little more**  **20 about that.**  **21 And the other way is the way IECC**  **22 calculates it now. And I would point out that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the IECC used to use a U sub o calculation**  **2 several editions ago, but it got rid of it,**  **3 for a variety of reasons.**  **4 And so, I am going to walk you**  **5 through the different means of compliance**  **6 built into the IECC 2015 version and what**  **7 those elements are. I am hoping we will see**  **8 that maybe some things work for manufactured**  **9 housing; some things don't. But at least we**  **10 can all kind of understand how this works.**  **11 So, I created a handout, and I**  **12 have a bunch of copies, too, in case there**  **13 aren't enough there. Do you want these?**  **14 What this is is -- first, what**  **15 this isn't is this is not a recreation of the**  **16 code. It is not every detail, every**  **17 requirement that is in the code. It just a**  **18 really quick summary of what I see as the**  **19 three main compliance options that you**  **20 currently have in the IECC. And it is just to**  **21 kind of spur some discussion, and I think to**  **22 allow us to more effectively compare the IECC** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 compliance options with the U sub o**  **2 calculation that most of you are probably more**  **3 familiar with.**  **4 And so, running underneath the**  **5 IECC is kind of assumed base-case home. All**  **6 of these compliance options are kind of**  **7 natural outgrowths of an assumed home. It is**  **8 just kind of a common, typical construction**  **9 home in different climate zones. So, it is**  **10 some differences according to the climate**  **11 zones.**  **12 And then, from there, from that**  **13 kind of baseline, there are a variety of ways**  **14 of showing that you are energy-equivalent to**  **15 that baseline. So, the process of developing**  **16 the IECC is kind of twofold. One is kind of**  **17 deciding what that baseline is going to be.**  **18 And two is how many different options and**  **19 exceptions and methods can you use to get to**  **20 that kind of equivalent to that baseline. I**  **21 hope that makes sense.**  **22 So, there are three really key,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 main compliance options in the IECC and, then,**  **2 some suboptions within these. And so, first,**  **3 there is prescriptive. There's performance,**  **4 and there is the new Energy Rating Index. So,**  **5 I am going to kind of walk through these three**  **6 in turn.**  **7 First, the prescriptive path. And**  **8 this one I believe is by far the most --**  **9 prescriptive path or the different options**  **10 within the prescriptive path is by far the**  **11 most popular among builders. It is the**  **12 simplest option. It is also the least**  **13 flexible option. So, I think it is very**  **14 commonly used, and I will walk you through it.**  **15 There are kind of three different**  **16 ways, at least three different ways, of**  **17 meeting the prescriptive path. The**  **18 prescriptive path is, first, the R-value table**  **19 is the one that we have been talking about**  **20 this morning.**  **21 This is designed to be sort of**  **22 like a recipe. If I am a builder and I have** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 been building houses forever, I am going to**  **2 say, "Just tell me what the R-value of the**  **3 insulation needs to be, and I will put it in**  **4 the house. I will make this work." And so,**  **5 this is it. This is the recipe.**  **6 These are nominal R-values of the**  **7 components themselves. This is the R-value**  **8 that is printed on the insulation itself. For**  **9 windows, this is the U-factor that is on the**  **10 NFRC label.**  **11 And so, look, it's simple. It is**  **12 easy. These are kind of the baseline rules.**  **13 And a lot of builders build this way. When**  **14 the R-values change or the U-factors change,**  **15 you change the things you are buying or in**  **16 some cases you change the design of the home.**  **17 But this is kind of the fundamental baseline**  **18 set of requirements.**  **19 Now don't get too distracted by**  **20 the R-values. I know that maybe a 20 plus 5**  **21 or a 13 plus 10 -- I don't know how those work**  **22 in manufactured homes or some of the other** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 R-values. **2 Leaving those aside for a minute, 3 this was kind of designed for a stick-built**  **4 home, and it is kind of the simplest, most 5 straightforward path, but also the least**  **6 flexible. If you wanted to put in Climate 7 Zone 1, for example, if you wanted to put R11**  **8 insulation in the walls, this wouldn't allow 9 you to do it on average.**  **10 Now, if you want to have more 11 flexibility, there are other options here.**  **12 This is just the simplest. 13 The second option, scrolling down**  **14 here -- and I would also point out, too, that 15 it is not just the R-value table. There are**  **16 very specific instructions for the whole 17 assembly. There are some specific**  **18 instructions as to how to tighten the house. 19 There are exceptions related to fenestration.**  **20 You get a certain percentage of glazing area 21 that is exempt from these requirements.**  **22 There are other requirements like**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 duct tightness and air leakage tightness and**  **2 testing, lighting requirements. And there are**  **3 certain mandatory requirements that you meet,**  **4 no matter what. But kind of the fundamental**  **5 is you start with this R-value table and these**  **6 are the thermal envelope requirements.**  **7 Well, if you want some more**  **8 flexibility, you go to a U-factor alternative.**  **9 And this is a very similar to the R-value**  **10 table, except that rather than have the**  **11 nominal component R-values, these are the**  **12 assembly U-factors. The U-favor equivalent**  **13 table, rather than it just being the**  **14 insulating value of the piece of insulation,**  **15 it is the insulating value of the whole wall**  **16 or the whole window, the whole floor or the**  **17 whole ceiling.**  **18 And the advantage here is, as long**  **19 as the U-factor of the whole ceiling hits this**  **20 U-factor, it doesn't matter whether it is**  **21 varying, you know, thicker or thinner**  **22 insulation throughout. As long as the average** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 U-factor is this, then you have some**  **2 flexibility.**  **3 So, let's say, for whatever**  **4 reason, you want to put R11 on one wall and**  **5 R20 on the other three walls. I don't know**  **6 why you would do that, but you would go by the**  **7 average assembly values for those four walls.**  **8 And as long as it is no higher than these**  **9 U-factor numbers, you would comply.**  **10 And just like the R-value option,**  **11 there are requirements for window SHGC. There**  **12 are requirements for ducts, air leakage, duct**  **13 tightness, and so on, along with some**  **14 mandatory backstops. For example, on the**  **15 windows, you can't trade the windows all the**  **16 way down to nothing. If you live in Climate**  **17 Zone 5 through 8, up in the northern part of**  **18 the country, you couldn't put in a single**  **19 pane, aluminum frame window. There are**  **20 certain backstops that don't allow you to go**  **21 too far, but relatively-few backstops there.**  **22 So, that is the equivalent U-factor table** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 which is the R-value table with a little bit**  **2 more averaging flexibility built into it.**  **3 The third alternative here under**  **4 the prescriptive path is called the total UA.**  **5 And those of you that are familiar with DOE's**  **6 REScheck program are probably very familiar**  **7 with this. In the total UA, I am going to try**  **8 to explain the difference between a total UA**  **9 and a U sub o calculation. Emanuel is going**  **10 to stop me if I get it wrong.**  **11 But this is the direction the IECC**  **12 has gone. They have kind of gone away from**  **13 the use of o for a few reasons and gone more**  **14 toward a UA path.**  **15 Well, the way the total UA**  **16 alternative is recall the average U-factors**  **17 that I just talked about. What the UA does is**  **18 it takes the U-factors times the area and**  **19 comes up with a number. So, you take the**  **20 U-factor times area of all the walls, and that**  **21 gives you a number. Then, the U-factor times**  **22 the area of all the attic, the U-factor times** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the area of all the floor, the U-factor times**  **2 the area of all the windows, and you take**  **3 those numbers and add them up, and that is a**  **4 UA number.**  **5 Now the U sub o is a little**  **6 different. The U sub o takes the U-factors of**  **7 everything in the house and boils them down to**  **8 a single number, a single, I guess, U sub o**  **9 number; whereas, the total UA, the way the**  **10 total UA works is you are comparing one model**  **11 home against a proposed home.**  **12 So, if I am calculating the UA for**  **13 a home that has 2,000 square feet of floor**  **14 area, then my baseline home has 2,000 square**  **15 feet of floor area. And so, then, you are**  **16 calculating your model home and the baseline**  **17 home have the same assembly areas; they just**  **18 may have different U-factors. And as long as**  **19 the total UA is no higher than what the model**  **20 home would require, it passes. I didn't do**  **21 that right.**  **22 MR. RAMIREZ: The total of U of o?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER LACEY: UA. Let me see,**  **2 let me show you, I will show you a screen**  **3 capture I did of REScheck, which is the most**  **4 popular program. It is a free program DOE**  **5 produces that I think a lot of builders use.**  **6 And what you would do is -- let me**  **7 use the cursor here -- you put in the various**  **8 components of the building. You have ceiling,**  **9 floor, walls, and windows, basically. This is**  **10 how you come up with a thermal envelope.**  **11 And this is just a model that I**  **12 worked up. You put in what type of ceilings**  **13 and walls and windows, and so on, you use**  **14 here. And then, you put in the area of each**  **15 of those assemblies and, then, what your**  **16 insulation values are, whether it is an**  **17 R-value or a U-factor, and, then, your SHGC,**  **18 if it is the window.**  **19 And what this calculation does is**  **20 it multiplies the area times the U-factor,**  **21 actually, and comes up with a UA number. You**  **22 know, in this case it is a 56. And it adds up** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 al those UA numbers. And the maximum UA that**  **2 would be allowed by the IECC for this**  **3 configuration of the home is 352. As long as**  **4 my number is lower than that, then I pass.**  **5 Now how is this different from U**  **6 sub o? I messed this up the first time. I am**  **7 going to try again. And then, Emanuel can**  **8 correct me if I am wrong.**  **9 I will use window area as an**  **10 example. In here, if I am designing a home**  **11 with 15 percent glazing area, that is my**  **12 proposed home, the model home, the baseline**  **13 home that I am being compared against would**  **14 have the exact same percentage of glazing**  **15 area. It would have 15 percent. If I decide**  **16 to put in 20 percent, my baseline home would**  **17 have 20 percent. If I decided to ratchet it**  **18 down to 8 percent, the baseline home would**  **19 have 8 percent.**  **20 What the UA does is it neutralizes**  **21 those decisions. It says we are not going to**  **22 let that impact whether you are above or below** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 code. We are going to calculate the baseline**  **2 and your proposed home on the same set of**  **3 assumptions.**  **4 The Uo is a little different. The**  **5 U sub o, somewhere deep inside, is assuming a**  **6 base-case glazing area, and that stays the**  **7 same. Now it has been calculated into a total**  **8 U-factor number, but at the bottom of it there**  **9 is an assumed glazing area percentage.**  **10 And so, if I decide to put in a**  **11 lower glazing area percentage in my proposed**  **12 home, I would probably get a break on the**  **13 total U sub o number. And if I put in more**  **14 glazing area, I would have to come up with the**  **15 efficiency somewhere else. Is that fairly**  **16 accurate?**  **17 And the same would be true of any**  **18 other assembly area. We pick on glazing**  **19 because it is an obvious one. But if I design**  **20 a home with half of the ceiling area -- you**  **21 know, the ceiling might require R38 or R49 --**  **22 then I might get a break on my wall insulation** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 and floor insulation, depending on what the**  **2 baseline was.**  **3 And if there are questions about**  **4 that -- I am afraid I have probably confused**  **5 this more than I needed to.**  **6 MEMBER LEVY: This is Emanuel.**  **7 Eric, that is a good explanation.**  **8 I just wanted to add the point or one of the**  **9 points that I hear you making is that you can**  **10 get compliance with five different homes under**  **11 this UA procedure that have five different U**  **12 sub o values --**  **13 MEMBER LACEY: Yes.**  **14 MEMBER LEVY: -- for the same**  **15 location, the same climate, the same --**  **16 MEMBER LACEY: Yes, it is a**  **17 different way of calculating the energy**  **18 efficiency of the building. Now, you know, I**  **19 pointed to a weakness of the U sub o**  **20 calculation. And that is that a lot depends**  **21 on those assumed assembly areas. You know, if**  **22 you assume a high percentage of glazing, you** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 get away with, I think, weaker walls, weaker**  **2 attic, and everything.**  **3 But, if you assume too low a**  **4 percentage of glazing, you have design**  **5 restrictions. You know, it is going to be**  **6 really hard to put in a 10 percent or 12 or 14**  **7 percent glazing if your U sub o is so low that**  **8 functionally you just can't put the glazing**  **9 in. And so, it is hard to find that sweet**  **10 spot in the U sub o, preserving energy**  **11 efficiency and allowing enough design**  **12 flexibility to build the homes that people are**  **13 going to buy.**  **14 The UA has its own weaknesses, and**  **15 I will be upfront about them. One of the**  **16 weaknesses of the UA and the criticism about**  **17 it often gets is, well, doesn't this mean you**  **18 could build a home with unlimited glazing?**  **19 And that is the criticism of it.**  **20 In theory, you could. There are**  **21 other limiting factors. Windows cost more**  **22 than walls. And from a structural standpoint,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 you can't get away with a 100-percent glazed**  **2 home. That would be neat to see. And I**  **3 suspect that within manufactured housing there**  **4 are even more limitations as to the amount of**  **5 glazing area. You know, it has to at least**  **6 have a minimum of 8 percent, we heard.**  **7 Getting beyond 14 or 16 percent may present**  **8 some structural challenges.**  **9 And so, if you adopted a UA**  **10 approach, that is the criticism of it, is that**  **11 it does neutralize the glazing area. But,**  **12 then, the upside of that is it allows a little**  **13 more design freedom and it takes out this kind**  **14 of built-in gap or credit based on glazing**  **15 area that you would find in the U sub o.**  **16 Are there other questions?**  **17 MEMBER LUBLINER: Eric?**  **18 MEMBER LACEY: Yes?**  **19 MEMBER LUBLINER: If I could just**  **20 clarify it, if you take the overall UA of 344**  **21 and you take the sum of the gross area column,**  **22 and you take 344 divided by the sum of the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 gross area of the column, you get the Uo,**  **2 right?**  **3 MEMBER LACEY: Yes, I think that's**  **4 right.**  **5 MEMBER LUBLINER: With the**  **6 exception of the crossover duct, which is**  **7 something we don't need to get into right now,**  **8 but it is something that I want to be clear,**  **9 when you do the analysis, if the crossover, if**  **10 it is in the belly, whether it is being**  **11 considered in the Uo.**  **12 MEMBER LACEY: Yes.**  **13 MEMBER LUBLINER: The other thing**  **14 I wanted to point out, that the reason we see**  **15 a lot of builders using the prescriptive**  **16 approach is so you don't have to be dealing**  **17 with someone adds another sliding glass door**  **18 to the product, you know, they don't have to**  **19 go back and redo the calcs. They just build**  **20 to this.**  **21 And are there limits on the**  **22 glazing area in the prescriptive approach?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER LACEY: There's no limit on**  **2 glazing area, except that all the glazing has**  **3 to meet --**  **4 MEMBER LUBLINER: Meet a**  **5 certain --**  **6 MEMBER LACEY: -- meet a certain**  **7 U-factor and SHGC. And then, there are some**  **8 tradeoff maximums. You can't go completely**  **9 out.**  **10 MEMBER LUBLINER: Right, right.**  **11 Sure.**  **12 MEMBER LACEY: And so, like I**  **13 said, there are a few maximums put in there**  **14 for sensitive areas like windows, air leakage,**  **15 and so on, where you just can't completely**  **16 trade these things off, if that makes sense.**  **17 MEMBER LUBLINER: Thank you.**  **18 It certainly, from my perspective**  **19 -- and I'm not a manufacturer -- would**  **20 simplify your ability, if you were able to**  **21 lock into a good prescriptive path that you**  **22 used a metric client base, it would greatly** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 simplify that aspect of the special orders on**  **2 windows. And I don't know if that is a big**  **3 issue, but it came up in some experiences in**  **4 the Northwest.**  **5 Thank you.**  **6 MEMBER LACEY: Well, thank you,**  **7 and thanks for clarifying that.**  **8 Also, you will notice on this it**  **9 is not just all the U-factors. REScheck goes**  **10 through a number of other kind of checklists**  **11 and puts other requirements in there that are**  **12 required by the code. One of those is the**  **13 window SHGC, and the program actually kicks it**  **14 out if it is not compliant with some of these**  **15 other requirements.**  **16 I mentioned these earlier. You**  **17 have certain installation requirements for**  **18 insulation, some compression issues. You**  **19 know, those came up earlier. Your air barrier**  **20 has to be sealed. Or if you have an air**  **21 barrier, you have to seal the envelope to a**  **22 certain level. You have to have it tested for** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 level of air leakage. You have duct**  **2 insulation, pipe insulation, a few other**  **3 requirements, and we can go through those.**  **4 I would assume that, as we are**  **5 coming up with a strawman, if the strawman**  **6 kind of starts with the 2015 IECC, we would**  **7 want to make sure we have a complete list of**  **8 all those items that the IECC would require**  **9 that might not be accounted for in a U sub o.**  **10 You know, making sure that we at least start**  **11 there. And then, if any of them are just not**  **12 possible or don't work or are not applicable**  **13 to manufactured housing, you could cross those**  **14 off. But, as a starting place, I think it**  **15 would be useful to -- and I can help put this**  **16 list together, a list of the things the IECC**  **17 would require that are kind of outside of the**  **18 normal Uo calculation.**  **19 Are there any other questions?**  **20 Yes, Mark?**  **21 Oh, I'm sorry, it is the solar**  **22 heat gain coefficient, and it is a fraction of** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 one. It is a measurement of the amount of**  **2 heat that is allowed to pass through the**  **3 window assembly, you know, in simplest terms.**  **4 And so, at .25, for example, in**  **5 this thing that I worked up here is basically**  **6 only a quarter of the sun's heat is allowed to**  **7 go through the window assembly; a .5 would be**  **8 half of the heat of the sun, you know.**  **9 And again, that is not accounted**  **10 for in the U sub o calculation, but in**  **11 performance paths, and certainly in the IECC,**  **12 that is a requirement that has been in there**  **13 for a long time.**  **14 Okay. Yes, Emanuel?**  **15 MEMBER LEVY: Yes, I just want to**  **16 make one point. And I am not sure how this is**  **17 going to bear on the discussion.**  **18 But there is a parallel between**  **19 what you have just outlined in the UA**  **20 procedure and what Matthew talked about with**  **21 the life-cycle cost analysis. Because Matthew**  **22 was talking about a marginal analysis where** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 you look at each level of efficiency as a**  **2 marginal improvement. Going from R13, R19 in**  **3 the wall, for example, is a marginal**  **4 improvement to the wall. And you look at that**  **5 improvement and determine whether it is cost**  **6 effective. Whether it is 1 square foot or 100**  **7 square feet doesn't matter. You are looking**  **8 at a per-square-foot cost-effectiveness of**  **9 improving from one level of efficiency to the**  **10 next.**  **11 So, this is kind of analogous to**  **12 that because it doesn't care how big each**  **13 component is. It looks at each component and**  **14 it looks at the improvement of each component**  **15 and keeps looks at those relative to each**  **16 other.**  **17 So, this is actually more**  **18 consistent with life-cycle cost way of**  **19 thinking. Do you use the UA type of analysis**  **20 rather than U sub o.**  **21 MEMBER LACEY: Yes. Yes, that is**  **22 a really good point. You are right, it is** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 harder in a U sub o to determine what is cost**  **2 effective because it depends on the choices**  **3 you make. But this would break it down more**  **4 by component. That is a really good point.**  **5 All right. So, I hope I have**  **6 thoroughly confused you on the prescriptive**  **7 paths. And maybe you are already familiar**  **8 with how these all work.**  **9 I will talk about the other two**  **10 paths here. The next one up is the**  **11 performance path. Now, again, this has been**  **12 in the IECC for quite a while.**  **13 I mentioned at the beginning**  **14 everything kind of goes back to a baseline**  **15 reference home. And then, all of these**  **16 compliance paths are outgrowths of that.**  **17 What the performance path does is**  **18 it takes kind of a model home, similar to what**  **19 the UA path did, with whatever size dimensions**  **20 and assembly dimensions that you plug into it,**  **21 and it creates a baseline. Well, this goes a**  **22 little bit further than the total UA. What** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the performance path does is it takes the**  **2 total UA in there and kind of fills in the**  **3 assumptions for your baseline home, but it**  **4 also has assumptions for other things,**  **5 assumptions for your duct leakage, air**  **6 leakage, and some of these other things. So,**  **7 you can't really trade off in the total UA**  **8 path some of your system requirements. Some**  **9 of these things, you really can't do it with**  **10 the UA, but the performance path allows you to**  **11 trade among these components.**  **12 The way it does it is it says, as**  **13 long as the annual energy cost of the building**  **14 that results is no higher than the annual**  **15 energy cost of the baseline home, you pass.**  **16 And so, some builders like this path because**  **17 it provides a lot more flexibility. It takes**  **18 into consideration the orientation of the**  **19 home. That may be more difficult in the**  **20 manufactured home. In a stick-built home, how**  **21 you orient the house, what side you put the**  **22 windows on, can have a really big impact on** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 energy use. That is not really captured in**  **2 the other simpler tradeoff paths, but it is by**  **3 the performance path. It is more of a whole**  **4 building analysis. And so, this is more**  **5 complicated, but more flexibility.**  **6 Similar to the other paths in the**  **7 IECC, again, there are a set of requirements**  **8 that you need to meet. There are mandatory**  **9 requirements in there and there are other**  **10 requirements that aren't included on the table**  **11 that I flashed up there.**  **12 Another interesting thing, since**  **13 we were talking about fenestration area, I**  **14 thought I would throw this up there. There is**  **15 yet another approach to fenestration area that**  **16 I think this group should consider.**  **17 The way the performance path**  **18 treats fenestration area is it says we assume**  **19 in the base case the fenestration area of 15**  **20 percent. Of you go above that, if your design**  **21 home has 20 percent glazing, you have to make**  **22 the home as efficient as a 15 percent glazed** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 home would be. So, if you have to make up for**  **2 those savings if you go above 15 percent.**  **3 However, if you go below 15**  **4 percent, what you do is the assumed home**  **5 rachets that glazing area percentage down.**  **6 And what this tried to address was, if you set**  **7 an assumption of 15 percent glazing area, if**  **8 you in your proposed home dropped the glazing**  **9 area by 2 percent or 3 percent, there was this**  **10 additional credit that was there, this**  **11 additional gap that was commonly used to**  **12 weaken the efficiency of other parts of the**  **13 envelope.**  **14 So, this is the approach the IECC**  **15 has taken since 2006. And that is, you have**  **16 this moving glazing area target. It is kind**  **17 of your baseline is 15 percent, and it is that**  **18 way -- if you go up to 100 percent glazing,**  **19 you are compared against the 15 percent glazed**  **20 home. If you go below that, then it follows**  **21 whatever you are proposing. This is another**  **22 way, like I said, another way of addressing** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that.**  **2 As I mentioned, you have some**  **3 mandatory backstops. You can't completely**  **4 trade away the windows. The air leakage has**  **5 to be at a certain level, and so on.**  **6 I mentioned earlier that REScheck**  **7 contains a total UA compliance path built into**  **8 it. REScheck is DOE software. REScheck also**  **9 has kind of a truncated version of the**  **10 performance path in there. It doesn't have**  **11 all of the assumptions and all of the**  **12 flexibility, but it is kind of a performance**  **13 light approach, and builders do like that.**  **14 I would also mention a change in**  **15 the IECC that happened in 2009 and is carried**  **16 into the 2012 and 2015 codes is in the**  **17 performance path there is no real credit for**  **18 putting in efficient equipment, appliances,**  **19 and other things.**  **20 And kind of the logic behind this**  **21 was some of you may be familiar with NAECA,**  **22 the National Appliance Efficiency and** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Conservation Act, is that right?**  **2 The federal government sets**  **3 efficiency levels for a listed number of**  **4 appliances, including heating and cooling and**  **5 water heating appliances that are used in**  **6 homes. And when the federal government sets**  **7 a minimum efficiency level, states are not**  **8 allowed to require anything better than that.**  **9 So, if I lived in the State of**  **10 Vermont and I thought, you know, we should**  **11 require condensing furnaces, 95 percent**  **12 efficient natural gas condensing furnaces, I**  **13 am not allowed to do that. The only thing I**  **14 can specify as a requirement in the code is**  **15 the federal minimum, which happens to be at 78**  **16 percent efficient furnace.**  **17 And so, this created an issue in**  **18 earlier versions of the IECC where anytime you**  **19 included that assumption in your base case,**  **20 the federal minimum assumption, if everybody**  **21 was already putting in 90-percent or 92-**  **22 percent-efficient furnaces and they were being** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 compared against a 78-percent-efficient, there**  **2 was this big tradeoff gap, and the gap was**  **3 getting larger all the time.**  **4 And states weren't really allowed**  **5 to do anything about this. So, in 2009, the**  **6 equipment efficiency use was basically taken**  **7 out of that calculation to say we recognize**  **8 that, on average, much more efficient**  **9 equipment is being used. Rather than weaken**  **10 the overall efficiency of the performance**  **11 path, we are just going to remove that portion**  **12 from the calculation and remove that credit**  **13 from the calculation to make sure that the**  **14 rest of the building is still efficient.**  **15 I know this is a topic that was**  **16 hotly debated then, and it is still hotly**  **17 debated at the state level. But two-thirds of**  **18 the states have adopted a code that doesn't**  **19 allow equipment tradeoffs for single-family**  **20 homes for stick-built homes, and the code**  **21 currently doesn't allow it in the performance**  **22 path.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 Are there any questions about **2 that? 3 Yes, John?**  **4 MEMBER CASKEY: This is John 5 Caskey, NEMA.**  **6 I am still a little confused on 7 the first bullet. So, I sort of understand**  **8 part of it, but you said, thus, a proposed 9 home with 12 percent glazing is compared**  **10 against a standard reference home with 12 11 percent glazing. So, when that standard**  **12 reference home goes from the 15 percent to 12 13 percent, apparently, they are not being any**  **14 more lax on the other attributes in terms of 15 wall insulation or anything like that?**  **16 MEMBER LACEY: Right. Right. 17 MEMBER CASKEY: So, in essence,**  **18 this is better than the previous reference 19 standard at 15 percent. And it is sort of**  **20 like, if you want to do that, that is your 21 tough luck and you don't get any benefit for**  **22 doing that?**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 MEMBER LACEY: Yes. **2 MEMBER CASKEY: Okay. 3 MEMBER LACEY: Yes. I mean, the**  **4 way this used to work on the performance path 5 is there was a fixed percentage. It used to**  **6 be 18 percent. In the pre-2006 code you had 7 an 18 percent glazing area. And if you built**  **8 a home for whatever reason, for cost reasons 9 or design reasons, a home at 15 percent**  **10 glazing, that gap between 15 and 18 percent, 11 which was your assumed home, was actually**  **12 quite a bit of tradeoff room. And it was 13 being used to trade efficiency in other parts**  **14 of the envelope. 15 Now some would argue, well, you**  **16 are getting the efficiency from somewhere, 17 whether it is through reducing the glazing**  **18 area or improving the windows. But the 19 thought here was that you make your decisions**  **20 on glazing area percentage based on a number 21 of other factors. And whatever percentage of**  **22 glazing you include in the home, the idea is**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 to have an efficient home. And rather than**  **2 focus on setting that percentage at the right**  **3 percentage, they decided to just ratchet it**  **4 down if you went below 15 percent.**  **5 I hope I am doing that justice.**  **6 Again, it is another topic that has had a lot**  **7 of debate and still gets debated. You know,**  **8 every cycle there are proposals that --**  **9 MEMBER CASKEY: Your description**  **10 makes sense; the logic in doing that doesn't**  **11 make sense to me, but that is the way it goes.**  **12 MEMBER LACEY: Yes. Okay.**  **13 MR. RAMIREZ: Keith?**  **14 MEMBER DENNIS: Keith Dennis.**  **15 You were describing the reason why**  **16 they excluded the appliances from this path**  **17 and mentioned kind of the interaction with**  **18 what the states were doing with clients'**  **19 standards and the interaction between state**  **20 and federal standards.**  **21 So, is my understanding correct**  **22 that, if you had a performance path, and you** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 had a minimum requirement for a manufactured**  **2 house, it might come with, say, a certain type**  **3 of heating or cooling equipment. And then, a**  **4 state or, say, a utility would say, "We would**  **5 like to go above and beyond that with**  **6 appliances." And that is something that is**  **7 kind of the current practice or would be**  **8 allowed. And then, therefore, there would be**  **9 credit at that level.**  **10 I don't know if you would know**  **11 this, but from NAECA's perspective and from**  **12 compliance standard perspectives, are states**  **13 allowed to kind of ask for that higher level**  **14 or do they just have to incent it on a**  **15 voluntary basis? I know there are some**  **16 preemption concerns.**  **17 MEMBER LACEY: Yes, and I will**  **18 leave it DOE's attorneys to answer the**  **19 question that was raised earlier about whether**  **20 NAECA applies to manufactured housing.**  **21 MEMBER DENNIS: Uh-hum.**  **22 MEMBER LACEY: But how the states** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 dealt with this, you know, in the statute it**  **2 is very specific. If you are going to include**  **3 any kind of equipment specification in your**  **4 code, it has to be specified at the federal**  **5 minimum level.**  **6 There have been a couple of cases**  **7 where states have tried or localities have**  **8 tried to say, you know what? We want all of**  **9 our furnaces to be 90 percent efficient. And**  **10 that gets kicked out. That is a violation of**  **11 the statute.**  **12 Now there are ways around this.**  **13 States have figured out ways to sidestep**  **14 NAECA, and we can talk about some of those.**  **15 But just outright specifying a higher**  **16 efficiency piece of equipment is going to be**  **17 preempted and kicked out.**  **18 Does that answer your question?**  **19 MEMBER DENNIS: Well, I guess I**  **20 missed a little bit of the point on why**  **21 exactly that it was removed. You said it kind**  **22 of had some interplay between the states and** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the federal. And just if you could clarify it**  **2 a little bit, maybe I will get it the second**  **3 time.**  **4 MEMBER LACEY: Yes. So, I will**  **5 give you an example. In Wisconsin, a couple**  **6 of years ago there was a study run that showed**  **7 that 90 percent of the natural gas furnaces**  **8 being sold in Wisconsin were at least 90**  **9 percent efficient. So, 90 percent of them**  **10 were at least 90 percent efficient. And a**  **11 good percentage of those were 95 percent**  **12 efficient and above.**  **13 So, if you assume that 90 percent**  **14 of those furnaces in those homes are at 90**  **15 AFUE and better, and you compare that to what**  **16 would have been required in the code at 78**  **17 percent efficient, there is this huge gap**  **18 there.**  **19 Now, if Wisconsin or if any state**  **20 wants to move their energy code forward, they**  **21 are being hamstrung by having to include this**  **22 federal minimum standard in their code. So,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 one solution -- and we can debate about**  **2 whether it is -- I mean, it has been plenty**  **3 debated about whether it is the right or wrong**  **4 solution. One solution was to take that**  **5 calculation outs, to take that gap out by**  **6 removing the credit from the code.**  **7 Another solution might be to**  **8 rachet up the R-values that are required in**  **9 the building, up to a level where pro-energy**  **10 efficiency people would be satisfied that you**  **11 just couldn't trade away the insulation levels**  **12 below an acceptable amount. But, then, I**  **13 think the prescriptive will look really**  **14 different from what it looks like right now.**  **15 It might be kind of crazy.**  **16 So, the idea was, if the states**  **17 don't have control over this, to remove it**  **18 from the calculation. That is not to say that**  **19 it is anti-energy-efficiency. The equipment**  **20 is being put in for a variety of reasons.**  **21 There are incentives. It is what the market**  **22 demands. And so, this seemed to be the most** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 expedient way of taking care of that gap.**  **2 Okay. Go ahead. Mark had a**  **3 question.**  **4 MEMBER WEISS: No. No, not a**  **5 question, a point relating to this discussion**  **6 just now.**  **7 The HUD code standards are**  **8 preemptive. So, there is another issue here**  **9 of whether HUD winds up overlapping whatever**  **10 comes out of DOE. If that is essentially**  **11 parallel to the HUD code, then that becomes**  **12 preempted, whatever it is.**  **13 MEMBER LACEY: Yes, again, I would**  **14 defer that to DOE General Counsel to answer**  **15 those tricky questions anytime, and you don't**  **16 have to answer it now.**  **17 MS. VAIDYANATHAN: I am looking**  **18 into it. I am just understanding the issue**  **19 now. So, it is going to take me a little**  **20 while to get up-to-speed and get back to you**  **21 guys with an answer.**  **22 MEMBER LACEY: Okay.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Robin?**  **2 MEMBER ROY: Yes, Robin Roy.**  **3 I think there were a couple of**  **4 states that figured out a way to effectively**  **5 require higher -- they didn't actually require**  **6 higher-performance heating equipment, but they**  **7 effectively did by having tradeoffs. In**  **8 particular, I think the State of Washington is**  **9 an example of it, but whatever.**  **10 Really, I don't think we need to**  **11 play that game. I look forward to seeing what**  **12 General Counsel says here.**  **13 Our counsel at NRDC came to the**  **14 view that there was no restriction on DOE from**  **15 putting a requirement for NAECA-covered**  **16 products. The preemption restrictions on**  **17 states don't apply to the federal government**  **18 on itself.**  **19 But that is our understanding. It**  **20 would be good to see what the General Counsel**  **21 says about it. That doesn't mean that we**  **22 should be putting the standards on equipment** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 in this group or proposing them. It doesn't**  **2 mean we are prohibited from doing so.**  **3 I had a really different question**  **4 why I put this thing up for Eric. Back on,**  **5 for example, the first two tables you show**  **6 here --**  **7 MEMBER LACEY: Yes.**  **8 MEMBER ROY: -- we had this really**  **9 very interesting discussion earlier this**  **10 morning about some of the practical ability to**  **11 achieve assembly U-values based on -- well,**  **12 actually getting R30 out of an R30 bat or a**  **13 set of things you add up to it because of**  **14 compression, for example.**  **15 Is that explicitly considered in**  **16 IECC, some of those practical realities, or do**  **17 they still show up in site-built homes because**  **18 they have different dimensions or something?**  **19 MEMBER LACEY: Yes. The short**  **20 answer is yes. You probably couldn't get away**  **21 with compressing very much. There are**  **22 specific instructions on installation of** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 insulation and the amount of compression, and**  **2 even the limitation as to how much it can be**  **3 compressed and still claim that R-value.**  **4 That is a real issue. I think the**  **5 example that was raised earlier of the belly**  **6 insulation is going to be an interesting one**  **7 to look into because something like that might**  **8 fail the UA alternative, and it may also fail**  **9 the R-value requirement in the State or in the**  **10 IECC, because there are those limitations on**  **11 compression. But it is addressed.**  **12 I mentioned there is a whole**  **13 series of other requirements that apply to**  **14 these things. So, it is not just a table.**  **15 And that is one of those issues, is the amount**  **16 of compression that would be allowed in the**  **17 way it is constructed.**  **18 Does that sort of address --**  **19 MEMBER EZZO: This is Mark Ezzo.**  **20 Eric, can you hear me?**  **21 MR. RAMIREZ: Yes.**  **22 MEMBER LACEY: Yes.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER EZZO: Eric, can you**  **2 elaborate on that a little bit, your comment**  **3 about the prescriptive table and the**  **4 limitations on compression? Because I don't**  **5 see anything written in the IECC that gives me**  **6 any guidelines, parameters, et cetera, on how**  **7 much insulation can be compressed. Where**  **8 would I find in the code where it tells me**  **9 what those limitations are?**  **10 MEMBER LACEY: Can I maybe circle**  **11 back with you afterwards on that, rather than**  **12 flip through my code book?**  **13 MEMBER EZZO: Oh, it is in the --**  **14 MEMBER LACEY: Yes, you do have**  **15 the air-barrier installation and insulation**  **16 installation table in there, which is going to**  **17 be one limitation.**  **18 MEMBER EZZO: Right.**  **19 MEMBER LACEY: And there are some**  **20 other restrictions on that. But can I give**  **21 you maybe some section numbers right after the**  **22 presentation?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER EZZO: Sure.**  **2 MEMBER LACEY: Okay.**  **3 MR. RAMIREZ: Can you get that out**  **4 to everybody?**  **5 MEMBER LACEY: Yes, I can do that.**  **6 Yes.**  **7 Are there any other questions?**  **8 Okay.**  **9 MEMBER ROY: I have one. Also,**  **10 you said the prescriptive path has been the**  **11 primary means of compliance. Do you have a**  **12 sense of the breakdown between these two**  **13 different parts of this, options in the**  **14 descriptive path, which has been most heavily**  **15 relied on?**  **16 MEMBER LACEY: It is a good**  **17 question and it varies from state to state.**  **18 I have heard anecdotally upwards of 80 percent**  **19 of builders in some states will use the**  **20 prescriptive path and I have heard in other**  **21 states a lot of them -- Florida, for example**  **22 -- a lot of them go the performance path.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I don't have any hard data on how**  **2 this is nationally. I know DOE has released,**  **3 at least I have seen DOE numbers on the number**  **4 of REScheck runs that have been completed in**  **5 various states around the country, and the**  **6 numbers are actually quite big. The REScheck**  **7 is very widely used.**  **8 But, as far as a complete set of**  **9 numbers on what percentage is used in which**  **10 state, I wouldn't have that. I am not sure if**  **11 that is available.**  **12 I will say, anecdotally -- and NHP**  **13 might correct me if I'm wrong -- I think,**  **14 anecdotally, the prescriptive and totally**  **15 weight paths are the most popular means of**  **16 compliance on a national basis. But, anyway,**  **17 that is just based on what I hear going**  **18 through the states.**  **19 MEMBER LUBLINER: Yes, I concur.**  **20 I think in the Northwest region the vast**  **21 majority of builders, particularly production**  **22 builders, have been using prescriptive** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 approaches. And we worked with them to**  **2 develop a series of prescriptive paths that**  **3 work for them, and it provided simplicity.**  **4 And that is what they liked about it. And it**  **5 provided consistency. So, every time somebody**  **6 added a window, they didn't have to go back**  **7 and redo their analysis. And it is something**  **8 that the industry should think about in terms**  **9 of whether it is a benefit as we look forward**  **10 on these options.**  **11 Thank you.**  **12 MEMBER LACEY: Okay.**  **13 MR. RAMIREZ: Emanuel?**  **14 MEMBER LEVY: Yes, Emanuel Levy.**  **15 Just a couple of other**  **16 perspectives on the question. First, it**  **17 probably depends on where you are in the**  **18 country.**  **19 MEMBER LACEY: Yes.**  **20 MEMBER LEVY: Because the more**  **21 severe the climate, the more stringent the**  **22 requirements, the more likely it is that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 alternatives will be considered.**  **2 And the other maybe more pertinent**  **3 question for this group is, and particularly**  **4 the manufacturers, since modular homes have to**  **5 meet the IECC, what percentage of those are**  **6 going through performance compliance? And I**  **7 would suspect it is a higher percentage than**  **8 site builders.**  **9 MEMBER LACEY: I don't know.**  **10 Do any of you want to answer?**  **11 MEMBER SANTANA: Yes. Manny with**  **12 Cavco.**  **13 We have plants that also build**  **14 modular homes which are built to conventional.**  **15 And I don't know, I think 100 percent of those**  **16 homes do the REScheck. So, if we are going to**  **17 do prescriptive -- I don't think we do**  **18 prescriptive on any of them.**  **19 MEMBER LACEY: Now, just to**  **20 clarify, when you say you use REScheck,**  **21 REScheck has kind of two compliance options.**  **22 One is the total UA, which is kind of the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 default.**  **2 MEMBER SANTANA: Uh-hum, total UA**  **3 option.**  **4 MEMBER LACEY: Okay. And then,**  **5 the other is kind of a performance light.**  **6 MEMBER SANTANA: Right.**  **7 MEMBER LACEY: So, it is still --**  **8 MEMBER SANTANA: It is still a**  **9 total UA option.**  **10 MEMBER LACEY: Okay.**  **11 MEMBER SANTANA: And some of the**  **12 other manufacturers can also chime-in.**  **13 Does this excludes states like**  **14 California that have their own energy**  **15 requirements where REScheck won't work?**  **16 MEMBER LACEY: Yes.**  **17 MR. HAGERMAN: This is Joe**  **18 Hagerman, DOE.**  **19 I can say, to your question,**  **20 Robin, it is a question that we ask every time**  **21 we issue a code determination, which we have**  **22 to do after every IECC version that gets** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 released and ASHRAE version. And it is always**  **2 a question that goes into our assumptions,**  **3 right, that we always ask for input on, and we**  **4 never get any input on.**  **5 Nobody is recording what path the**  **6 different builders are going down. There is**  **7 no information on that.**  **8 MEMBER ROY: Yes, I can imagine**  **9 the frustration, but I think, actually,**  **10 Emanuel's refinement of the question is really**  **11 very interesting.**  **12 And, Manny, your response is very**  **13 interesting, too. We don't really care about**  **14 these site owners. We care about what the**  **15 folks who are making the modulars are doing.**  **16 And to the extent they represent the MH**  **17 industry, that is very, very interesting.**  **18 I would be curious, Mark, from**  **19 your membership, the extent to which -- it**  **20 would be great to take a poll of**  **21 manufacturers, housing manufacturers, and see**  **22 the extent to which they have familiarity with** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 this REScheck UA approach. Because, if your**  **2 members can do it and if the other folks can**  **3 do it, boy, that might actually be simplifying**  **4 for you all. It is worth taking a look.**  **5 MEMBER EZZO: This is Mark Ezzo at**  **6 Clayton.**  **7 Robin, to answer your question, I**  **8 will echo what Manny said. Any modular home**  **9 we build we run REScheck and we use the UA**  **10 alternative, if that helps.**  **11 MEMBER LACEY: So, there is some**  **12 familiarity with the program out there,**  **13 probably better than me using it.**  **14 I saw a hand up out in the**  **15 audience. Don, did you want to offer**  **16 something? Is that appropriate? Okay. Yes.**  **17 I thought maybe Don could clarify on the issue**  **18 of how many prescriptive, how many**  **19 performance --**  **20 MR. SURRENA: Don Surrena, NAHB.**  **21 It is my understanding that the**  **22 performance path is used more prescriptive in** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 areas where it has become more complicated to**  **2 comply with the energy code.**  **3 I have just sent an email to our**  **4 Economics Department. They do the studies and**  **5 the surveys. And if I get that information**  **6 back, I will be glad to share it.**  **7 But it is my understanding from**  **8 answering questions on energy efficiency, it**  **9 is less prescriptive, more performance, on how**  **10 it is being handled because, as you had said**  **11 earlier, a lot of the options for compliance**  **12 have been narrowed. And that narrowing of**  **13 options has made the performance and the total**  **14 UA at times more adaptable or usable to be**  **15 able to comply.**  **16 An example of how the differences**  **17 in efficiencies or in window area, if in a**  **18 certain area it required a foundation**  **19 insulation of whatever, and that was hard in**  **20 that area to get builders to do, they could,**  **21 then, trade that off for their window area or**  **22 their equipment efficiency and comply.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 Because those options are gone, they are now **2 going more to performance to get that done. 3 But if I have statistics that I**  **4 can share with you, I am more than glad to do 5 it. I may have overanswered your questions.**  **6 MEMBER LACEY: No, that's great. 7 MR. SURRENA: But thank you very**  **8 much. 9 MEMBER LACEY: Thanks, Don, and I**  **10 would really appreciate seeing the numbers on 11 prescriptive UA and performance because it**  **12 comes up a lot. 13 My perspective has always been**  **14 that a lot of the builders do use 15 prescriptive, but I include in prescriptive**  **16 the total UA. That is, I think, closer to a 17 prescriptive path than to total performance**  **18 where you might involve an energy rater or 19 something.**  **20 How am I doing on time? Are 21 people's stomachs grumbling? Because I can**  **22 talk about the ERI and kind of run through**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that quickly, and then, we can continue this**  **2 after lunch. I hate to stand in between us**  **3 and lunch.**  **4 MS. HOFFMAN: You are, though.**  **5 (Laughter.)**  **6 MEMBER LACEY: I know. It is my**  **7 favorite position on the speaking agenda.**  **8 MS. HOFFMAN: Why don't we do that**  **9 section, and then, we will adjourn and come**  **10 back and finish?**  **11 MEMBER LACEY: Okay.**  **12 MS. HOFFMAN: Okay.**  **13 MEMBER LACEY: Okay. I will run**  **14 through this. This is brand-new to the IECC**  **15 in 2015. If we had been talking about this a**  **16 couple of years ago, this wouldn't have**  **17 entered the discussion. But, because it is in**  **18 the latest edition of the IECC, I think the**  **19 group needs to consider this.**  **20 It is called the Energy Rating**  **21 Index. You may be familiar with the Home**  **22 Energy Rating System, HERS, that is a product** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 of RESNET.**  **2 And what it is, it is a**  **3 performance-based approach that involves a lot**  **4 more assumptions than the IECC would normally**  **5 allow. I said earlier that everything is kind**  **6 of a natural outgrowth of the baseline home.**  **7 All the other compliance options in the IECC**  **8 focus on the thermal envelope, the ducts, the**  **9 air leakage, and kind of that universe of**  **10 assumptions.**  **11 The Energy Rating Index includes**  **12 in that also heating, cooling, water-heating**  **13 equipment, appliances, lighting, and a few**  **14 other things, and calculates it a little**  **15 differently.**  **16 So, it is your baseline is much**  **17 broader and it involves a lot more things, but**  **18 there are still some critical backstops built**  **19 into this. So, the baseline for the Energy**  **20 Rating Index is an earlier version of the**  **21 IECC, the 2006 IECC. So, its baseline**  **22 assumption is actually a weaker version of the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 IECC, but had a few more tradeoffs and a few**  **2 more loopholes in it.**  **3 But it assumes that, if you build**  **4 a home to the 2006 IECC, you score 100 on this**  **5 scale. Now, when I say you build to the 2006**  **6 IECC, you are building to the federal minimum**  **7 equipment efficiencies. You are putting in a**  **8 non-ENERGY STAR refrigerator, a non-ENERGY**  **9 STAR clothes dryer, and all of your appliances**  **10 are basically the weakest that would be**  **11 permitted by law. And the 2006 IECC is your**  **12 thermal envelope baseline.**  **13 So, that is your scale, from zero**  **14 to 100, 100 being a 2006 IECC. Now you could**  **15 build a worse home, I guess, and the number**  **16 would be higher than 100, but kind of the**  **17 score is pegged to the 2006 IECC.**  **18 Now, when you do your calculation,**  **19 it is not based on the annual energy cost like**  **20 the performance path is in the IECC. It is**  **21 based on normalized, modified end-use loads,**  **22 a little different means of calculating this.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 And it includes all the energy used in the**  **2 building, including your equipment, your**  **3 appliances, and so on, and your lighting.**  **4 Now the 2015 IECC Energy Rating**  **5 Index has specified the EIR score or,**  **6 basically, the HERS score that you need to**  **7 achieve to show compliance. So, in order to**  **8 be compliant with this version of the IECC,**  **9 the Energy Rating Index number would have to**  **10 be somewhere in the low fifties, depending on**  **11 your climate zone.**  **12 And the other key thing to mention**  **13 here is, aside from meeting these specific**  **14 numbers or better than these EIR numbers,**  **15 there are backstops built in here. The**  **16 thermal envelope can be no worse than the 2009**  **17 IECC. It is not all the way up to the 2012 or**  **18 2015 IECC, but it can't be any worse than the**  **19 2009. That kind of limits you as to trading**  **20 away the wall to R0, for example.**  **21 There are certain mandatory**  **22 requirements in the IECCs that have to be met.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Your window you factor in SHGC can't be traded**  **2 beyond a certain amount. There are caps on**  **3 that. Your air leakage can't be beyond a**  **4 certain level, and so on. And then, the**  **5 scores have to be about this level.**  **6 And so, this is by far the most**  **7 flexible option in the IECC. It is also the**  **8 most complicated. But, even within this**  **9 option, you have some limitations on the**  **10 amount of trading off.**  **11 Are there questions about the**  **12 Energy Rating Index?**  **13 (No response.)**  **14 I wanted to see -- I had a few**  **15 notes at the end, but we have probably covered**  **16 all these.**  **17 I guess, just to kind of sum-up**  **18 here, I will go over a couple of things. You**  **19 know, some of the things the IECC doesn't do,**  **20 it doesn't tell you how big or small the house**  **21 can be. It doesn't penalize you for a larger**  **22 or smaller home. It doesn't tell you what** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 glazing area to have. It provides you a**  **2 variety of options that you can use to meet**  **3 the same baseline, that level of efficiency.**  **4 And all of the compliance options are designed**  **5 to be roughly equivalent. They aren't going**  **6 to be perfectly equivalent because you can use**  **7 different tradeoffs and different options.**  **8 The issue here is you do have a lot more**  **9 flexibility in here than you might have in**  **10 other systems.**  **11 And again, you have a list of**  **12 specific requirements that apply no matter how**  **13 you are building the home, under what**  **14 compliance option. And some of those I have**  **15 listed here.**  **16 And so, I guess I will leave it**  **17 there, and if there are questions, we could**  **18 answer them now or talk more after lunch. But**  **19 those are kind of the three main compliance**  **20 options in the IECC.**  **21 MS. HOFFMAN: Any questions now?**  **22 (No response.)** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Okay. Why don't we adjourn for**  **2 lunch, come back in an hour, and have the rest**  **3 of any questions on your presentation?**  **4 MEMBER LACEY: Yes.**  **5 MS. HOFFMAN: And then, go into**  **6 Emanuel's program. And hopefully, your slides**  **7 will arrive.**  **8 MEMBER LACEY: And just to kind of**  **9 close things out, I have another handout here**  **10 that shows the changes between the 2012 and**  **11 2015 IECCs. That came up a long time ago --**  **12 or a long time ago? -- a couple of weeks ago.**  **13 And I have my own notes on what**  **14 changed between those two codes. There is not**  **15 a lot, and especially not a lot that affects**  **16 manufactured housing. So, I will just hand it**  **17 around.**  **18 MR. RAMIREZ: Well, I will pass**  **19 those out at the door --**  **20 MEMBER LACEY: Okay.**  **21 MS. HOFFMAN: As you go to lunch.**  **22 MR. RAMIREZ: -- as you are going** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 out. And that way, if you want to look at it**  **2 over lunch, you can do that.**  **3 MEMBER LACEY: This is not an**  **4 official list. These are my notes. They may**  **5 be wrong, but I tried to capture and I tried**  **6 to highlight those that might have an impact**  **7 on manufactured housing.**  **8 MR. HAGERMAN: So, just for**  **9 everybody playing along at home and on the**  **10 phone, we will come back, we will reconvene at**  **11 1:15 Eastern time.**  **12 MS. HOFFMAN: Right.**  **13 (Whereupon, the foregoing matter**  **14 went off the record for lunch at 12:13 p.m.**  **15 and went back on the record at 1:22 p.m.)**  **16 MS. HOFFMAN: First, we want to**  **17 ask if there are any questions for Eric. And**  **18 by the way, thank you for your presentation**  **19 for Eric Lacey.**  **20 If there isn't then I think we**  **21 should move ahead to Emanuel's presentation.**  **22 We're looking forward to hearing the strawman.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Thank you.**  **2 MEMBER LUTER: One question for**  **3 Eric, please.**  **4 MR. RAMIREZ: Yes.**  **5 MEMBER LUTER: Rob at Lippert. I**  **6 had to step out of the call for awhile at**  **7 about 11 o'clock. Can you email me a copy of**  **8 your presentation? Or will that be added to**  **9 the docket?**  **10 MR. HAGERMAN: We can email you**  **11 right now the presentation he gave. And then**  **12 we also are going to add it to the docket, of**  **13 course.**  **14 MEMBER LUTER: That would be**  **15 great. Thank you.**  **16 MR. RAMIREZ: Okay, then with**  **17 that, Emanuel, do you want to come up here?**  **18 MEMBER LEVY: Thank you. Let me**  **19 just preface my comments by saying that the**  **20 intent of putting this presentation together**  **21 was to try to get our conversation focused on**  **22 at least from an initial draft standpoint what** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I thought might be the important issues that**  **2 we need to address as a committee to have all**  **3 the pieces of the term sheet that we need,**  **4 that are relevant to be on the term sheet.**  **5 So, what I -- and I also wanted to**  **6 suggest a structure for how we have our**  **7 conversation just going forward. So that we**  **8 not only get to all the items, but they're in**  **9 some kind of logical sequence that we can walk**  **10 through, and the first pieces affect the next**  **11 pieces, and so on and so forth.**  **12 And it also ties into all the**  **13 other conversations we've had thus far about**  **14 life cycle and about the IECC standard and**  **15 what that's all about.**  **16 So this has been called a**  **17 strawman. It's one way to structure our**  **18 conversations. I'm going to walk through kind**  **19 of the overall concept. And please stop me**  **20 and comment at any point.**  **21 This basically embodies a certain**  **22 kind of thinking, but it's only really a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 starting point for discussion. I want to**  **2 bring up the issues in such a way that they**  **3 lead to some path to come to consensus and to**  **4 move onto the next issue.**  **5 So I started off by trying to come**  **6 up with a couple of points. Mark?**  **7 MEMBER WEISS: I'm sorry, I don't**  **8 mean to interrupt. But one question. Who put**  **9 the strawman together?**  **10 MEMBER LEVY: I did.**  **11 MEMBER WEISS: Okay, thank you.**  **12 MEMBER LEVY: This comes from me**  **13 and it just reflects my views. And of course**  **14 there are other ways to structure this and**  **15 that's what we should be talking about too.**  **16 But I thought this was a starting**  **17 place and it was really intended to move us**  **18 forward to get the term sheet together**  **19 quickly.**  **20 So, I've started off by putting**  **21 together what I thought were a list of guiding**  **22 principles. The idea that this is not an** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 exhaustive list by any means. It is a couple**  **2 of items that I thought were important. I**  **3 wanted to float them out there to start a**  **4 conversation.**  **5 And I have three points up here**  **6 which I'll go over in one second. But before**  **7 we do that let me just say that then I divided**  **8 the rest of the discussion up into specific**  **9 areas that we might focus on that each of**  **10 which would have a piece of the term sheet.**  **11 And let me just mention those**  **12 quickly. And the idea is that we would**  **13 address each one of these areas individually,**  **14 that we would start off with a proposal on how**  **15 that section would be handled for discussion**  **16 and then we would together agree upon what**  **17 would be the meat of each of these sections.**  **18 And I divided up -- and again,**  **19 this comes somewhat from the Mind Map that we**  **20 worked on in the last session. It borrows a**  **21 lot of those pieces and reorganizes those into**  **22 some logical sequence. I thought it a logical** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 sequence.**  **2 And the proposal here is that**  **3 there should be seven major topics that we**  **4 talk about over the course of the next**  **5 sessions leading up to the term sheet.**  **6 All of these pieces would be**  **7 embodied maybe as separate sections in the**  **8 term sheet.**  **9 The first one is the thermal**  **10 requirements which brings into play the zone**  **11 map, the distribution of thermal requirements**  **12 across the country and how that divides up by**  **13 thermal zones.**  **14 The second -- and I'll be getting**  **15 into the first one as part of my presentation**  **16 today and start talking about some of the**  **17 specifics about that. We've already talked**  **18 about pieces of that thus far today.**  **19 The second is other economic**  **20 considerations. Coming back to a point you**  **21 made, Mark, earlier about what else comes into**  **22 play when we're thinking about the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 requirements that it go beyond life cycle**  **2 cost, or go beyond those things that are**  **3 easily quantifiable from the engineering**  **4 standpoint. What other economic**  **5 considerations bear on the thermal**  **6 requirements.**  **7 The third is additional energy**  **8 measures that are things like solar heat gain**  **9 coefficient or other factors that impact the**  **10 energy use but aren't maybe subject to --**  **11 aren't part of the thermal envelope and aren't**  **12 part of -- may not be subject to the life**  **13 cycle cost analysis.**  **14 The fourth is whole house**  **15 tightness and ventilation requirements.**  **16 The fifth is duct system**  **17 tightness.**  **18 The sixth one is performance path**  **19 option which is just another way to comply**  **20 with the standard.**  **21 And the last one is compliance and**  **22 verification, a topic I don't think we can not** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 cover because this impacts the requirements**  **2 themselves and what the specifics are of the**  **3 requirements.**  **4 So we may, in discussing these, if**  **5 this is a format that everybody's comfortable**  **6 with following we may find ourselves jumping**  **7 around a little bit, coming down to certain**  **8 points and then jumping back and reconsidering**  **9 some of the earlier decisions.**  **10 When we get to whole house**  **11 tightness we might, for example, want to**  **12 reassess how we approached the thermal**  **13 envelope. So there are some interactions here**  **14 that we do have to take into consideration.**  **15 But we follow this format generally and talk**  **16 back and forth as we saw fit.**  **17 So that's the overall concept.**  **18 Mind if I stop there and see if there are**  **19 comments or questions?**  **20 MR. RAMIREZ: I want to make sure**  **21 that the group, first of all, if they're okay,**  **22 if they're comfortable with this guideline.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Understanding that we may need to jump around.**  **2 And secondly, do you understand**  **3 the broad topics? Do you need clarity on the**  **4 broad topics before we move on? Because I**  **5 believe you'll probably get into each one a**  **6 little bit, correct?**  **7 MEMBER LEVY: I will.**  **8 MR. RAMIREZ: So, before we move**  **9 on is there any clarity that you need on the**  **10 broad topics? Yes.**  **11 MEMBER CASKEY: John Caskey, NEMA.**  **12 So where do the heating and cooling systems**  **13 and other things come into play? Are they**  **14 under one of these items?**  **15 MEMBER LEVY: Well, they might be**  **16 under several of these items. They're**  **17 embodied -- since we're not setting -- I guess**  **18 the premise here is that we're not going to**  **19 set requirements for the HVAC systems. We're**  **20 not going to suggest things that are beyond**  **21 NAECA requirements.**  **22 MEMBER CASKEY: Okay.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER LEVY: But those factors**  **2 play into the thermal requirements and other**  **3 elements of this.**  **4 They're not listed here because**  **5 we're not setting requirements for that.**  **6 We're not setting a term sheet for those**  **7 things.**  **8 MEMBER CASKEY: Okay. So the**  **9 other question relates -- thanks for that.**  **10 The other question, like where you have**  **11 thermal requirements that can be an absolute**  **12 requirement where you may not have a comment**  **13 relative to the installation practices to**  **14 accomplish that.**  **15 But then in dealing with like duct**  **16 system tightness it sounds like it's an**  **17 installation issue.**  **18 So are you going to break out, you**  **19 know, the basic features versus the**  **20 installation guidelines or other sort of**  **21 installation issues?**  **22 MEMBER LEVY: No, that's a good** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 point. And I haven't explicitly stated how**  **2 that works yet in here.**  **3 But you're right, under each one**  **4 of these we have requirements in terms of what**  **5 the U-value requirement is. But also how that**  **6 materially gets installed. We should talk**  **7 about those in parallel I suspect.**  **8 The other option is to have**  **9 another category about installation quality or**  **10 --**  **11 MEMBER CASKEY: Okay.**  **12 MEMBER LEVY: That may be easier**  **13 to deal with, actually.**  **14 MEMBER CASKEY: Yes, it seems like**  **15 going down the road it may be that you have**  **16 the actual requirements in one section, and**  **17 then maybe the installation recommendations or**  **18 guidelines or something like that would be**  **19 like a separate part of the document.**  **20 MEMBER LEVY: I think that's a**  **21 good addition.**  **22 I mean, we should talk about** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 installation quality as we're going through**  **2 these, keep notes of those, and then look to**  **3 incorporate those into an overall section**  **4 perhaps later on.**  **5 MEMBER CASKEY: Perfect. Thanks.**  **6 MEMBER SCHNEIDER: Just quickly.**  **7 Peter Schneider from Efficiency Vermont.**  **8 I just keep coming back to**  **9 thinking about the comprehensive approach to**  **10 a better home.**  **11 And just that if we're not talking**  **12 about where HVAC systems have come in regards**  **13 to, for instance, ductless mini-splits being**  **14 able to provide the cooling and heating needs**  **15 in these homes, heat pump water heaters,**  **16 offsetting cooling, dehumidification demands,**  **17 and also having all sorts of other benefits.**  **18 I'm just -- those can make a lot**  **19 of these other thermal requirements far more**  **20 cost-effective and easier to achieve, such as**  **21 getting ducts out of the envelope just as an**  **22 example. And so I feel like that should be** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 part of the conversation and we shouldn't, you**  **2 know, ignore it.**  **3 MEMBER LEVY: Yes, that's a good**  **4 point. And the question, Peter, is where does**  **5 that come in. Again, does that come into each**  **6 one of these discussions and we'll figure out**  **7 how to handle it later?**  **8 You know, when you're talking**  **9 about taking ducts out, that could be a**  **10 performance path discussion. It could be a**  **11 discussion under duct tightness, under the**  **12 duct tightness, or it could be up in the**  **13 thermal envelope.**  **14 Again, we could talk about changes**  **15 to this organization if there's better ways to**  **16 handle that, or we can just keep notes on that**  **17 as we go and figure out how to address that at**  **18 some point later.**  **19 Do you have a specific thought**  **20 about that, Peter?**  **21 MEMBER SCHNEIDER: No, no, that**  **22 sounds great just to deal with it as we go** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 along. I think it will make sense where those**  **2 fit in.**  **3 One other comment, and I think it**  **4 just came up a lot this morning was ultimately**  **5 all these restraints that the manufactured**  **6 housing industry keeps indicating in regards**  **7 to, you know, the heel on our truss is only**  **8 this tall, or our floor system is only this**  **9 deep.**  **10 And not only do I want to better**  **11 understand those constraints that they see**  **12 moving forward, but I also want to understand**  **13 why we can't think outside the box, and that**  **14 maybe some of the manufacturing practices and**  **15 strategies currently used are not ideal to**  **16 move forward with better homes in mind.**  **17 MR. RAMIREZ: Okay, thank you.**  **18 MEMBER LUBLINER: Yes, Mike**  **19 Lubliner. I just want to clarify too. Peter**  **20 was talking about water heating and heat pump**  **21 water heater technologies.**  **22 And it's unclear to me if that's** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 even the scope of our ASRAC rulemaking. And**  **2 if so, where would it fit here? That's kind**  **3 of in response to Peter.**  **4 And then I had a separate question**  **5 having to do with the labeling for the purpose**  **6 of the consumer, the energy efficiency level**  **7 of the home so the consumer can shop around**  **8 with a consistent yardstick.**  **9 And that also could tie into the**  **10 design of the HVAC, sizing of the HVAC system.**  **11 So I'm wondering whether we're looking to**  **12 reassess the current way that HUD does their**  **13 data plate and reinvent in a way that's more**  **14 useful to both the heating contractor and the**  **15 consumer.**  **16 MEMBER LEVY: I guess there was a**  **17 couple of questions in there.**  **18 One of them had to do -- might be**  **19 covered under "Additional Energy Measures."**  **20 But I think it would be good to get some**  **21 direction as to whether those things like hot**  **22 water heaters could be or should be part of** 

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### 1 this discussion. **2 Joe, do we look to you for 3 guidance on that?**  **4 MR. HAGERMAN: No, you're not 5 setting me up. You brought this question up**  **6 at least three times now? Yes, three times 7 today. And general counsel is going to look**  **8 into it. 9 MEMBER LUBLINER: Again, this is**  **10 Mike Lubliner. For the labeling thing 11 compliance and verification might be an**  **12 appropriate area. But it does overlap with 13 all of them as you've noted, Emanuel.**  **14 MEMBER LEVY: Thank you. I'm 15 trying to get into the discussion here. This**  **16 is just one organization so we'll try to have 17 enough arms on the Christmas tree to hang all**  **18 our bulbs. Literally and figuratively. 19 Okay. So I want to try to get**  **20 controversial right away because we need to 21 come to some resolutions about where we stand**  **22 on some issues that will have a rippling**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 effect through the discussions that we have.**  **2 So I put a couple of things up**  **3 here just to get the debate going. This is a**  **4 little bit different, I think, than the**  **5 version that's been passed around.**  **6 But I have three which I want to**  **7 suggest as guiding principles. This will help**  **8 us formulate what we're about in terms of what**  **9 direction we're moving in. I don't think we**  **10 have to spend a lot of time on this but I**  **11 wanted to just see the discussion by stating**  **12 a couple of things.**  **13 The first is that it's important**  **14 that cost and particularly life cycle cost be**  **15 taken into consideration.**  **16 But my own view is, and this is**  **17 kind of an evolving view, is that we should**  **18 start our conversation assuming that this**  **19 industry, the manufactured housing industry,**  **20 should meet the thermal requirements of the**  **21 2015 IECC.**  **22 I recognize this is going to be --** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 there should be a life cycle cost analysis**  **2 done that would supplement that, but that**  **3 would be the benchmark.**  **4 My own view is that that should**  **5 set the upper limit on energy efficiency and**  **6 the life cycle cost might be used to rein**  **7 those requirements back a bit. And I can**  **8 explain why I have that view.**  **9 But that's my proposition to throw**  **10 out as a first kind of guiding principle. And**  **11 I think it's an important place for us to**  **12 start dialogue because I know there's**  **13 different views around the table on that**  **14 point.**  **15 MEMBER LACEY: This is Eric. I**  **16 generally agree with that. I think that's a**  **17 good approach.**  **18 There may be cases, I don't know**  **19 what they are. There may be cases where going**  **20 more efficient might be cost-effective. And**  **21 I think the statute kind of allows for that.**  **22 If we identify during this process** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that, wow, there's a little more room where we**  **2 can go cost-effectively and get more efficient**  **3 we should be open to that.**  **4 But I do agree with where you set**  **5 that up as kind of the starting point.**  **6 MEMBER LEVY: Louie?**  **7 MR. HAGERMAN: This is Joe**  **8 Hagerman, DOE.**  **9 My only comment to this principle,**  **10 I think it's a good starting principle.**  **11 We're looking at the life cycle**  **12 costing for the entire building though, right?**  **13 That's what you're saying? You're not doing**  **14 the life cycle costing of each measure because**  **15 obviously there's integrated effects that come**  **16 out.**  **17 MEMBER LEVY: I think the short**  **18 answer to that is life cycle cost on a**  **19 marginal basis. We may be talking about two**  **20 different things.**  **21 I'm specifically talking about the**  **22 thermal envelope. I think most of our focus** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 thus far has been on the thermal envelope and**  **2 quantifying the costs and the benefits of**  **3 those measures.**  **4 As opposed to tightening the ducts**  **5 or reducing the air filtration of the house**  **6 which is very difficult to quantify from a**  **7 cost standpoint.**  **8 MR. HAGERMAN: So, what I'm trying**  **9 to convey is I think this group should come up**  **10 with energy efficiency measures as a package.**  **11 We're going to do ducts here, we're going to**  **12 do insulation here, et cetera, et cetera. And**  **13 then run the life cycle of that package.**  **14 They shouldn't do the life cycle**  **15 of just each individual measure. Right?**  **16 MEMBER LEVY: Well, just to make**  **17 sure we're talking about the same thing.**  **18 Matthew today gave a presentation.**  **19 And on his presentation he showed a chart and**  **20 there were different points on a curve.**  **21 When you go from point to point**  **22 that's where the way you typically do life** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 cycle cost analysis.**  **2 MR. HAGERMAN: Degrees?**  **3 MEMBER LEVY: You're doing a**  **4 marginal analysis. You're looking at the next**  **5 point to see whether relative to the last**  **6 point it's cost-effective. So, if that's what**  **7 you're talking about I would agree with that.**  **8 MR. HAGERMAN: So it's packages**  **9 though of different measures.**  **10 MEMBER LEVY: No.**  **11 MR. HAGERMAN: Each point could be**  **12 packages of different measures. We're not**  **13 looking at 12 different life cycle --**  **14 MEMBER LEVY: Yes, you're right.**  **15 MR. HAGERMAN: Okay.**  **16 MEMBER LEVY: But a package --**  **17 what you're really looking at, I think, is a**  **18 difference in life cycle cost value between**  **19 package A and package B.**  **20 MR. HAGERMAN: That's right.**  **21 MEMBER LEVY: And that may be only**  **22 the change of one item in that package.** 

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### 1 MR. HAGERMAN: Could be. Could **2 be. 3 MR. RAMIREZ: So, let me ask the**  **4 group. Let me see a show of thumbs. Are you 5 okay with that?**  **6 (Show of thumbs) 7 MR. RAMIREZ: Okay, go ahead.**  **8 MEMBER ROY: I'd have a hard time 9 explaining to my members why we wouldn't even**  **10 consider going to ticket-adopting measures 11 which delivered a better result than IECC**  **12 2015. 13 I think, as Eric says, there may**  **14 be a couple of things that show up that turn 15 out to be crazily cost-effective.**  **16 And this is sort of saying we 17 won't exceed the 2015 requirements. And I**  **18 just don't know why. 19 MR. RAMIREZ: No, I think what**  **20 that's saying is as a starting point. 21 However, as the discussion goes that may**  **22 happen. Is that?**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER ROY: That's not what that**  **2 sentence says.**  **3 MEMBER LEVY: No, Robin**  **4 interpreted exactly correctly.**  **5 MR. RAMIREZ: Okay.**  **6 MEMBER ROY: I just think as a**  **7 practical matter we won't find many cases that**  **8 we'd want to go beyond 2015 that make any**  **9 sense.**  **10 But if something jumps out as**  **11 really attractive it would be very hard to**  **12 explain why we didn't pursue it.**  **13 I'd have to also say for something**  **14 going beyond 2015 was really something to be**  **15 attracted you'd wonder why it wasn't in the**  **16 2015. Folks worked really, really hard to**  **17 that end.**  **18 I don't think it will help us in**  **19 anything. It will make it hard to explain**  **20 what our mission was.**  **21 MR. RAMIREZ: Mark?**  **22 MEMBER WEISS: You're calling for** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 a show of thumbs, what, just on the 2015 part**  **2 of this? IECC 2015? Or the entirety?**  **3 MR. RAMIREZ: No, that first part**  **4 over there, that first part of the sentence,**  **5 right? Where it says, "To the extent that the**  **6 parties' impact of energy features covered by**  **7 the standard can be quantified in terms of**  **8 energy impacts and cost. Decisions should be**  **9 based on life cycle cost criteria but not**  **10 exceed the IECC 2015 requirements." That**  **11 sentence right there.**  **12 MEMBER WEISS: Unfortunately I**  **13 can't divorce that from the rest of it. So,**  **14 I'll have some comments on the entirety of it**  **15 in a moment.**  **16 MR. RAMIREZ: Okay.**  **17 MEMBER CASKEY: So, just to make**  **18 sure I'm clear. So what I was looking for is**  **19 that when you offered this framework, you**  **20 know, moving towards this term sheet, I mean,**  **21 that's like our ultimate goal. That's what**  **22 we're trying to get to.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 And I understood that these**  **2 guiding principles would be related to -- that**  **3 would be like the introduction to this whole**  **4 term sheet that we would live by for this**  **5 whole process.**  **6 But then in the course of**  **7 answering a question you said well, really**  **8 we're just talking about -- and stuff like**  **9 that.**  **10 I think when Joe asked a question**  **11 I think your answer related to, well, really**  **12 we're primarily talking about the envelope.**  **13 So I'm hoping that these guiding**  **14 principles would be generic for the whole**  **15 process and not just related to the envelope.**  **16 Is that your understanding?**  **17 MEMBER LEVY: Yes, it's the whole**  **18 process. It may be that there's certain**  **19 things that we can't do life cycle cost**  **20 analysis on because certain parts of it can't**  **21 be quantified.**  **22 MEMBER CASKEY: Yes, that's fine.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER LEVY: Yes, okay.**  **2 MEMBER SCHNEIDER: This is Peter**  **3 Schneider from Efficiency Vermont. Just one**  **4 comment as an example.**  **5 In regards to exceeding IECC 2015**  **6 in two extreme climates, one being like New**  **7 Orleans, Baton Rouge area we evaluated sort of**  **8 a high-performance manufactured home down**  **9 there and the same up in Vermont.**  **10 But we found that ultimately we**  **11 did need to exceed IECC 2015 in a couple of**  **12 areas. And if we did we eliminated a**  **13 traditional HVAC system and we were able to go**  **14 with a ductless mini-split, significantly**  **15 reducing the complexity and cost of the**  **16 mechanical system and then also at the same**  **17 time increasing efficiency and allowing for a**  **18 much better thermal envelope as we removed all**  **19 those ducts from the system. So, again, that**  **20 comes back to this whole comprehensive**  **21 approach.**  **22 And to ignore the advancements in** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 mechanical systems these days and the benefits**  **2 of heat pumps is going to really skew this**  **3 life cycle cost analysis.**  **4 MR. RAMIREZ: Eric, you had**  **5 something?**  **6 MEMBER LACEY: Yes, I guess. I'm**  **7 a little confused because what you're showing**  **8 up there is not the same thing that I had in**  **9 front of me.**  **10 MEMBER LEVY: Yes, that's -- I**  **11 mentioned I changed that part.**  **12 MEMBER LACEY: Okay.**  **13 MEMBER LEVY: But mainly to get**  **14 this conversation going.**  **15 MEMBER LACEY: Yes. And I guess,**  **16 and I don't want to wordsmith it too much, but**  **17 I think I'd be more comfortable if it said**  **18 something like "starting with the 2015 IECC**  **19 requirements," or "based on" or something like**  **20 that. Rather than "not exceed." You know,**  **21 just to capture this idea.**  **22 And maybe it's only a couple of** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 things. Maybe a few more efficient light**  **2 bulbs would be more cost-effective, or**  **3 something like that. It might not be very**  **4 many things or anything. But just to leave**  **5 that open. Anyway, I'll leave it there.**  **6 MS. HOFFMAN: So, just to clarify,**  **7 you're saying your modification would be**  **8 instead of saying not to exceed, to be based**  **9 on as a possibility. Which could allow going**  **10 farther or whatever.**  **11 Okay, Manny had a comment. Oh,**  **12 okay.**  **13 MEMBER TOMPOS: I can go. Dave**  **14 Tompos.**  **15 I guess I have a little concern**  **16 about saying life cycle cost. We keep**  **17 bringing up this word "life cycle cost**  **18 analysis" but we haven't defined what that is**  **19 yet.**  **20 So for me to agree to that it's**  **21 very difficult to do until you tell me if it's**  **22 30 years, 50 years, 5 years and what that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 involves.**  **2 And then still keeping in mind**  **3 what we have, the second bullet point that we**  **4 aren't to yet, but that first cost.**  **5 To me it doesn't make a difference**  **6 if we go beyond 2015 or below it as long as we**  **7 all agree to what "affordable" is and define**  **8 that in this life cycle cost analysis.**  **9 Because I have a concern that if**  **10 we can -- if you say it's 30 years and we can**  **11 show that we add $5,000 to the price of the**  **12 home and they get that paid back over that 30-**  **13 year period, you know. As Mark showed earlier**  **14 the average income is, what was it, $26,000?**  **15 Somewhere in that range? Twenty-seven?**  **16 You add $5,000 to the price of**  **17 the house, they're never going to get in it in**  **18 the first place.**  **19 So, until we define what**  **20 affordability is or what that life cycle cost**  **21 analysis is it's hard to say, yes, we're going**  **22 to base our decisions on that.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAMIREZ: Manny?**  **2 MEMBER SANTANA: Yes. Manny with**  **3 Cavco.**  **4 I think that saying that we can't**  **5 exceed the 2015 requirements is a moot point**  **6 because that's part of what DOE's mandate is,**  **7 that we go to the IECC unless a more stringent**  **8 standard is more cost-effective.**  **9 So I understand that we have to**  **10 start somewhere and we have to have a cap of**  **11 sorts. So I think that statement is correct.**  **12 But we might just want to add not to exceed**  **13 the 2015 requirements unless more cost**  **14 effective. And then move onto the next point.**  **15 MR. RAMIREZ: The other**  **16 modification I was looking at was unless the**  **17 group by consensus agrees otherwise. Right?**  **18 Unless the group by consensus agrees**  **19 otherwise.**  **20 So if you all as a group say, yes,**  **21 in this area we do want to exceed the 2015**  **22 standard you all decide.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER DENNIS: This might just be**  **2 like a clarification for my benefit, but**  **3 having been through the IECC process everyone**  **4 gets up there and testifies on all these**  **5 different hundreds of code proposals. And**  **6 things kind of get ad hoc thrown in and thrown**  **7 out.**  **8 And when we're talking about**  **9 evaluating against that I guess is there --**  **10 we're just talking about that one life cycle**  **11 metric?**  **12 I mean, it seems to me that there**  **13 may be places where you go above it in one**  **14 spot, below it in another spot and then -- are**  **15 we all agreeing that there's one metric by**  **16 which you exceed or don't exceed the IECC**  **17 metric?**  **18 Because I could see a lot of**  **19 places where we might tweak things up or down**  **20 on different components. And I don't know**  **21 that there is one metric that you said we**  **22 exceed it or not, unless you really define** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 what that metric is.**  **2 And I don't know that there's any**  **3 real benefit to doing that. I mean, I guess**  **4 for life cycle cost you would just be -- you'd**  **5 have a variable that you're minimizing or**  **6 something.**  **7 So, maybe somebody could explain,**  **8 you know, what it means to not exceed IECC.**  **9 Does that mean in total in one specific**  **10 metric, or is it on different components, or**  **11 what?**  **12 MEMBER LEVY: I think we would be**  **13 saying that that would be the framework that**  **14 we would be working from.**  **15 We might later on as we get into**  **16 the specifics decide on a specific item to go**  **17 in a different direction.**  **18 But the concept here is that when**  **19 in doubt don't do anything more stringent than**  **20 the IECC 2015.**  **21 And let me just clarify one**  **22 comment that's been made about we should use** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 life cycle cost if it's more -- the**  **2 requirements might be more than or less than**  **3 IECC.**  **4 That's equivalent to saying let's**  **5 not use IECC where we can use life cycle cost.**  **6 Right? Do we agree about that?**  **7 I mean, basically we're saying**  **8 anything that can be subject to life cycle**  **9 cost should be subject to life cycle cost and**  **10 IECC 2015 doesn't have any real meaning.**  **11 MS. VAIDYANATHAN: This is Kavita**  **12 Vaidyanathan of general counsel at DOE.**  **13 I mean, I understand what I think**  **14 the group is trying to do, but the statute**  **15 requires you, the group -- for DOE to base the**  **16 requirement on the 2015 IECC, and then to look**  **17 at life cycle cost.**  **18 So the standard shouldn't look at**  **19 life cycle cost in the first instance. You**  **20 should look at the 2015 IECC. And then if**  **21 it's not cost-effective, then you can change**  **22 the requirement.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 So, I'm kind of -- I'm trying to**  **2 see if that's where you're going, or if you**  **3 guys are trying to flip the requirement and**  **4 look at life cycle cost in the first instance.**  **5 MEMBER LEVY: This is the problem**  **6 because IECC 2015 is not going to be the**  **7 bottom of that curve that Matthew showed.**  **8 So, it really is, you know, it's a**  **9 misleading parallel. It's apples and oranges,**  **10 really.**  **11 You're either going towards IECC**  **12 2015 or you're doing a life cycle cost.**  **13 They're two completely different items. The**  **14 fact that the statute put them together**  **15 doesn't mean that they belong together.**  **16 They're really two different ideas.**  **17 2015 was a consensus standard**  **18 based upon a number of people sitting around**  **19 the room making a judgment without economic**  **20 criteria in front of them.**  **21 We're trying to make a decision**  **22 about whether we should discard that and just** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 base our entire analysis on life cycle cost**  **2 decision-making.**  **3 MS. VAIDYANATHAN: Okay, so maybe**  **4 I don't understand. Can you not start with**  **5 the basis of 2015 and then show --**  **6 MEMBER LEVY: It doesn't really**  **7 matter. Ultimately Matthew will tell you it**  **8 doesn't matter where you start. You're**  **9 finding the minimum point. It doesn't matter**  **10 where you start on that curve, you're going to**  **11 find the minimum point.**  **12 And life cycle cost won't -- the**  **13 IECC 2015, that point, won't be even on that**  **14 curve probably in most cases. Because it has**  **15 a combination of measures some of which are**  **16 not cost-effective by definition.**  **17 MS. HOFFMAN: Mark?**  **18 MEMBER WEISS: With all due**  **19 respect I have to disagree with OGC. The**  **20 statute says, "Except in cases in which the**  **21 Secretary finds that the Code" - meaning the**  **22 IECC 2015 - "is not cost-effective or a more** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 stringent standard would be more cost**  **2 effective based on the impact of the Code on**  **3 the purchase price of manufactured housing and**  **4 on total life cycle construction and operating**  **5 cost."**  **6 I think that constraint goes to**  **7 evaluating each and every aspect of this from**  **8 both perspectives, from purchase price impact**  **9 and life cycle cost impact.**  **10 Otherwise, how are we going to**  **11 determine whether or not something other than**  **12 2015 IECC is more appropriate? I don't see**  **13 how you get around that analysis.**  **14 Whether you start with 2015 makes**  **15 no difference to me. But everything involved**  **16 with that has to be analyzed from both**  **17 perspectives.**  **18 Now, having said that and since**  **19 David kind of verged into it with his comments**  **20 my problem here is I can't divorce what you're**  **21 saying about 2015 as I indicated earlier,**  **22 IECC, from both of these statements, bullet** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 item 1 and 2.**  **2 As will come as a surprise to no**  **3 one, in my view the first consideration has to**  **4 be purchase price impact and then life cycle**  **5 impact. Because again, for somebody who is**  **6 excluded from the market there is no life**  **7 cycle.**  **8 So it concerns me when I see**  **9 language in here like tempered and if and when**  **10 it's demonstrated that such standards will**  **11 significantly reduce the -- I guess that means**  **12 the number of qualifying households.**  **13 You know, that effectively**  **14 requires somebody to prove a negative that,**  **15 you know, if you go forward and do some of**  **16 these things that it won't have an impact on**  **17 the number of people who can qualify. I just**  **18 think those two bullet items put the logic and**  **19 the economics backward.**  **20 And since the statute does not**  **21 indicate a preference for the order in which**  **22 these things are considered I think the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 logical thing to do and then the economically**  **2 realistic thing to do is to look at purchase**  **3 price impact and then temper that by life**  **4 cycle impact. So I would switch the order.**  **5 And that's not just a wordsmithing**  **6 issue, that's a substantive issue.**  **7 MR. RAMIREZ: Let me ask the**  **8 group. Is it substantive in the sense that we**  **9 need to know this in order to get structure to**  **10 our conversation? Right?**  **11 I mean, is there a way through a**  **12 strawman that we can put something forward**  **13 knowing that we're going to be looking at the**  **14 2015 IECC, we're going to be looking at LCC,**  **15 we're going to be looking at cost.**  **16 And I say cost purposely, not just**  **17 the purchase price but also just to live in**  **18 the house.**  **19 We're going to be looking at all**  **20 that so all that stuff is going to be in our**  **21 minds as we're looking through this data.**  **22 Is it essential to nail this down** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 in order to start having that discussion? To**  **2 look at a strawman?**  **3 MEMBER WEISS: I think we can look**  **4 at it in terms of --**  **5 MEMBER SCHNEIDER: This is Peter**  **6 Schneider from Efficiency Vermont.**  **7 MR. RAMIREZ: Peter, hold on one**  **8 second. Let Mark finish his comment.**  **9 MEMBER WEISS: I think we can**  **10 begin looking at concepts, but I think when**  **11 push comes to shove this issue has to be**  **12 resolved.**  **13 Timing, you know, I just don't**  **14 want to get too far down the road where**  **15 commitments have been made, votes have been**  **16 taken, and then all of a sudden somebody comes**  **17 back and says oh yes, what about this. And I**  **18 don't want to be that person.**  **19 MR. RAMIREZ: You mean like the**  **20 cost.**  **21 MEMBER WEISS: Yes. I think**  **22 that's a fundamental aspect and fundamental** 

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### 1 issue involved here. **2 And I think, you know, I don't 3 have a problem with looking at the other**  **4 elements of the strawman and talking about 5 them and so forth.**  **6 But I think one of the first 7 decisions that has to be made here is how we**  **8 are looking at these cost issues. 9 MEMBER ROY: I've got to say**  **10 Ishbel has been waiting to say something 11 apparently. I got an email from her. So, I**  **12 also have a comment but let her go if she's 13 available.**  **14 MR. RAMIREZ: Okay. Ishbel, are 15 you available?**  **16 MEMBER DICKENS: Can you hear me? 17 MR. RAMIREZ: Yes. You have to**  **18 mute your webinar, otherwise we're going to 19 get that feedback.**  **20 MEMBER DICKENS: It was somebody 21 at your place.**  **22 MR. RAMIREZ: Can you mute her?**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Or you could pick up the phone and try just**  **2 the phone versus the speaker phone.**  **3 MEMBER DICKENS: Okay, can you**  **4 hear me now?**  **5 MR. RAMIREZ: Yes, that's better.**  **6 MEMBER DICKENS: All right. So**  **7 I'm hearing myself echoing but hopefully**  **8 you're just hearing me once.**  **9 MR. RAMIREZ: Yes, no, it's much**  **10 better on this end.**  **11 MEMBER DICKENS: Okay. I think I**  **12 would agree with what Mark has been saying.**  **13 It's been difficult to follow the conversation**  **14 while I've been dealing with the technical**  **15 problems.**  **16 But I think the sentence around**  **17 the intent is to provide a positive economic**  **18 return to homebuyers is paramount.**  **19 There's no point in having**  **20 fabulously energy efficient homes if the**  **21 people that we're trying to serve aren't able**  **22 to purchase them.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 And I don't want to make that --**  **2 MR. RAMIREZ: Ishbel, I'm sorry,**  **3 we're -- can you back up a little bit just**  **4 because we weren't able to hear you there,**  **5 those last few words.**  **6 I'll tell you what. Let's try --**  **7 Ishbel, if you could try a couple of different**  **8 things.**  **9 Maybe, I don't know if there's a**  **10 way to pause the webinar, but let's get Peter.**  **11 Peter has been waiting as well. Let's get**  **12 Peter while we try to work out some of those**  **13 technical issues. Peter, you there?**  **14 MEMBER SCHNEIDER: Yes, thanks.**  **15 Okay, I was just sort of -- yes, I'm here.**  **16 Can you hear me okay?**  **17 MR. RAMIREZ: Yes.**  **18 MEMBER SCHNEIDER: Okay. Yes, a**  **19 response to Mark in part, but just a comment**  **20 to the group.**  **21 I think that we can speak about**  **22 the purchase price over and over again and** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that we'll be pushing a lot of folks out of**  **2 the ability of purchasing one of these homes**  **3 with improvements.**  **4 But I think in reality that would**  **5 not be the case. As we're showing in Vermont**  **6 with an improved mobile home replacement,**  **7 while there is a higher initial cost we now**  **8 have lenders providing traditional financing,**  **9 lower down payments, better lending ratio.**  **10 And if we continue to just**  **11 consider the current lending market for a**  **12 typical HUD-compliant home again I think**  **13 that's a bit shortsighted.**  **14 So I think we need to think**  **15 outside of this box of this is, you know,**  **16 ultimately how these homes are considered.**  **17 Whether it be private property loans with poor**  **18 terms and poor interest rates.**  **19 But if we provide and develop a**  **20 standard that a product that is equivalent**  **21 with a typical stick-built home, say, meeting**  **22 IECC 2015, you know, hopefully we can** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 collaborate with our lending partners and**  **2 begin to see far better terms that will allow**  **3 folks to get into homes that are at a higher**  **4 purchase price but that offer much lower**  **5 operating and maintenance costs.**  **6 And hopefully we're creating homes**  **7 that don't depreciate in value moving forward**  **8 but actually will hold their value or even**  **9 appreciate because of the features we included**  **10 in this new code.**  **11 MR. RAMIREZ: Okay. Ishbel, you**  **12 want to try one more time? Okay.**  **13 So, Mark -- I have Mark, Luby and**  **14 Robin.**  **15 MEMBER ROY: I think we must**  **16 continue to refer to the purchase price**  **17 because it's right there in the act.**  **18 And in the end it's a lot like the**  **19 Supreme Court's understanding of pornography.**  **20 We will have to see if we -- you know it when**  **21 you see it. And we may not know it as this**  **22 group what we want to put forward.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 We don't have a way to define**  **2 what's the balance between the purchase price,**  **3 the life cycle cost, the financing ability**  **4 which relates to the life cycle cost. We**  **5 don't have a way to define what the proper**  **6 blending of those things in some abstract way.**  **7 Let's take a look at some numbers.**  **8 Let's not drop any of these important pieces**  **9 of information off the analysis. There's no**  **10 reason to drop them off the analysis. It will**  **11 show up in the analysis you do. And when we**  **12 get back together in three weeks we'll have a**  **13 really good understanding of what kind of**  **14 tradeoffs we're talking about.**  **15 I think Peter's points are really**  **16 very, very interesting.**  **17 Let's see what the numbers add up**  **18 to. I think, Mark, your concerns are really**  **19 well-founded.**  **20 So let's take a look at some**  **21 numbers. If we can figure out what the**  **22 pornography is then we'll be really happy in** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 a few weeks. Is that a bad thing to say?**  **2 MR. RAMIREZ: No, and I think that**  **3 was my point is that we need to see something,**  **4 right? Okay.**  **5 So let's go to Mark and then Luby**  **6 and then we'll try Ishbel again.**  **7 MEMBER WEISS: Two things. First,**  **8 in response to Peter. Look, I'm not a finance**  **9 person but as I understand it the dearth of**  **10 financing for manufactured housing is not**  **11 driven by a lack of energy efficiency**  **12 features. There are a lot of other things**  **13 involved with that.**  **14 I'd also, I'd like to recognize**  **15 Mr. Surrena. He had some things he wanted to**  **16 say. If I -- I believe I can recognize him**  **17 to? Okay, thank you.**  **18 MR. SURRENA: Thank you, Mark.**  **19 Don Surrena, National Association of Home**  **20 Builders.**  **21 We're talking about manufactured**  **22 housing meeting the 2015 IECC. And for a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 doublewide house that can analogize and be**  **2 very similar.**  **3 But if you're looking to do the**  **4 same thing for a singlewide you've got design**  **5 constraints there that just won't work with**  **6 the 2015 IECC.**  **7 Again, doublewides, they're more**  **8 conventional in size, in style and in**  **9 construction. But for singlewides I've heard**  **10 no conversation that set a different criteria**  **11 or an allowance for the singlewide.**  **12 And I think if we get into this**  **13 too far you're going to have an issue with**  **14 singlewide manufacturers meeting the same**  **15 requirements that a doublewide would meet.**  **16 It in essence to me is going to**  **17 require two sets of criteria for you. And the**  **18 IECC, I've never heard it characterized as**  **19 being something that will add longevity to the**  **20 life cycle of a building, of a structure. It**  **21 will give you some efficiency, but it will not**  **22 add to the life and lower the maintenance cost** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 for that. That just does not happen. Thank**  **2 you.**  **3 MR. RAMIREZ: Okay. Luby?**  **4 MEMBER LUBLINER: Mike Lubliner**  **5 here. I'd like to stick to what's in the act**  **6 in terms of evaluating all the measures and**  **7 seeing -- using life cycle cost principal once**  **8 we've agreed to what the inputs to the life**  **9 cycle cost analysis should be and the**  **10 procedure for evaluating those inputs.**  **11 So, the chips are going to fall**  **12 where they may, you know. Whether we want to**  **13 say the I-codes is a good starting point.**  **14 We're going to find stuff that's below the I**  **15 codes.**  **16 We might find stuff that's above**  **17 the I-codes. For example, heat pump water**  **18 heaters might be cost-effective in the hot**  **19 South. And the I-codes is already looking at**  **20 water heating savings. This predicated on**  **21 some assumptions about what the authority DOE**  **22 has. But I'm just using that as an example.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I think it's crazy to sit here and**  **2 speculate until we do the analysis.**  **3 To Dave's point, I think that we**  **4 need to buy into a life cycle cost procedure.**  **5 You were more concerned about what the inputs**  **6 to that analysis was I thought, not the**  **7 procedure per se.**  **8 And then to Mark's points, I would**  **9 suggest that once we've done the analysis we**  **10 can look at where the cost-effective -- life**  **11 cycle cost-benefit that provides the maximum**  **12 benefit to the consumer.**  **13 And then we can look at the**  **14 demographics of the industry and determine**  **15 what percentage of people are priced out of**  **16 the market as a result of that. And then we**  **17 can tweak it if we think it's appropriate.**  **18 But what's going to happen in**  **19 actuality is we're going to find that if we**  **20 define, say, the affordable housing sector, X**  **21 percentage of the people in that sector are**  **22 going to benefit from higher energy standards** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 and Y percentage aren't.**  **2 So, are we saying -- Emanuel, when**  **3 you say significantly reduce, does this mean**  **4 that every homeowner -- that no homeowner in**  **5 the United States when we change these**  **6 standards can change in terms of the**  **7 qualification? No, people are going -- at the**  **8 lower end some of them are going to fall out.**  **9 What we also have to analyze is**  **10 how many is the industry going to pick up as**  **11 a whole.**  **12 What we've found in the Northwest**  **13 -- and we have published peer-reviewed**  **14 research that we would be happy to share, I**  **15 think I have shared it in my ANOPR comments --**  **16 is that when you produce a product with higher**  **17 insulation values you start to get buyers from**  **18 a higher market sector. And the actuality is**  **19 you may increase your sales in that sector.**  **20 And this is not a justification**  **21 for, you know, that we're going to be building**  **22 houses for richer people at the expense of** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 poor people.**  **2 But we're going to recognize that**  **3 when we change this it doesn't work all in one**  **4 way, that we do get growth and I believe we**  **5 get growth in the market at the higher end.**  **6 And those homes at the higher end**  **7 are more profitable to the industry, they**  **8 produce less defaults by definition. And so**  **9 I think that it will be important that we look**  **10 at what Mark wants to do. But we need to look**  **11 at it holistically and look at all the impacts**  **12 it has on the market and the industry, not**  **13 just the affordable housing sector.**  **14 I'd also like to say that the**  **15 information that could come out of this could**  **16 help guide policy people at HUD and DOE to**  **17 help stopgap with incentive programs like the**  **18 millions of dollars they put into ENERGY STAR**  **19 for this industry. Perhaps we need to be**  **20 focusing on taking those resources and using**  **21 them in the affordable housing sector, and not**  **22 spreading them across.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 So I think there's ways of doing**  **2 this but we really have to start with the life**  **3 cycle cost analysis.**  **4 So, to summarize. "Significant"**  **5 needs to be clarified. And I would say that**  **6 we don't stop at 2015. We see where the chips**  **7 fall. Thank you.**  **8 MR. RAMIREZ: Okay. Mark and then**  **9 Robin.**  **10 MEMBER WEISS: With all due**  **11 respect I think that formulation puts the cart**  **12 before the horse as I indicated earlier as to**  **13 the industry picking up demand.**  **14 You don't need a standard to pick**  **15 up upscale demand. If that demand were there**  **16 we'd have it now. People would pay for it.**  **17 Nothing's stopping them from doing that now.**  **18 MR. RAMIREZ: Robin?**  **19 MEMBER ROY: Robin Roy, but I'm**  **20 channeling Ishbel and an email from her.**  **21 She just wants to highlight that**  **22 we need to ensure homes are affordable -- I** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 think that's what Mark's been talking about**  **2 and a few of us -- while still providing**  **3 energy efficiencies.**  **4 She likes what Peter is saying and**  **5 hopes that he can provide some good examples**  **6 of how the model works and is affordable for**  **7 low-income people.**  **8 And p.s., she says, this is so**  **9 frustrating and p.p.s., she does not reference**  **10 pornography.**  **11 But I think that really is once**  **12 you get back to -- we don't need to go too far**  **13 down this. We need to get back to just going**  **14 onto the analysis we're going to have. Back**  **15 to your point.**  **16 MR. RAMIREZ: Well, you know, and**  **17 I really do want to get into the work that**  **18 you've done, that Emanuel has done.**  **19 And part of what I'm seeing**  **20 already as might be some difficulty is that**  **21 even though when you take this step by step**  **22 there is no just straight path. It's not** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 going to be logical and linear, it's going to**  **2 be messy.**  **3 Do we need a strawman, right,**  **4 where it's just an initial shot of a full term**  **5 sheet so that we need to bounce around a**  **6 little bit. We have some content there that**  **7 we could reference.**  **8 And I don't think that, at least**  **9 some of the slides that I saw from earlier, I**  **10 don't think that singlewide and doublewide is**  **11 missed here. I saw something referenced in**  **12 there about doublewide.**  **13 So when we're doing this, if we**  **14 have to distinguish between single and double**  **15 we'll do that at that time, right. If there**  **16 is a distinction in a certain standard.**  **17 MS. HOFFMAN: Yes. It's Eileen.**  **18 I just want to add that it sounds like we've**  **19 got a number of things.**  **20 The charter that this working**  **21 group has is very tough which is really**  **22 looking at the 2015 IECC standards. Also** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 looking at life cycle costs. Looking at a**  **2 number, a variety of things.**  **3 If you want to decide, those are**  **4 all of the things you've got to look at, what**  **5 goes into life cycle costs, how you will apply**  **6 the 2015 standards.**  **7 If we can get some general**  **8 understanding without perhaps weighting them**  **9 we can move onto seeing where the numbers go.**  **10 I'm just throwing that out.**  **11 MR. RAMIREZ: Okay, let's go to**  **12 Robin and then back to Mark.**  **13 MEMBER ROY: I actually do think**  **14 we heard one approach to these standards**  **15 earlier this morning from Eric that does**  **16 relate to the difference between singles and**  **17 doubles and that has to do with this UA.**  **18 It's an interesting approach. A**  **19 lot of familiarity in the industry. I'm**  **20 looking forward to hearing back from your**  **21 members, Mark, on their familiarity with it.**  **22 But that actually directly** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 addresses if we get the numbers for the**  **2 components right for the UA values then this**  **3 kind of all gets pretty nicely self-adjusting.**  **4 Does that make sense to anybody?**  **5 I actually think it works in a pretty good**  **6 way, but we can talk about that.**  **7 MR. RAMIREZ: All right. So, is**  **8 everyone okay then with not necessarily having**  **9 nailed down the guiding principles, right? As**  **10 long as we're looking at the numbers.**  **11 We're keeping in mind all these**  **12 concepts anyway, right? We're keeping in mind**  **13 the IECC 2015 life cycle cost and just cost in**  **14 general, right? Purchase versus maintenance.**  **15 Everyone is going to have that**  **16 stuff in their heads as we're going through.**  **17 So do you want to pick it up from there?**  **18 MEMBER LEVY: Yes. You know, I'm**  **19 feeling pretty good, actually, about what**  **20 we've done so far, that we're on the right**  **21 topics and these are the ones that are drawing**  **22 out the discussion.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 The one thing I want to mention is**  **2 I think we're debating now whether to change**  **3 the first principle to take out the last part**  **4 of the first sentence entirely. That's what**  **5 the debate is about.**  **6 Whether 2015 becomes the upper end**  **7 or not. Or we just go with life cycle cost**  **8 and see later how IECC '15 measures up.**  **9 MS. HOFFMAN: No, no offense, but**  **10 I think the DOE general counsel is weighing in**  **11 the other way. I mean, that's what I've been**  **12 hearing.**  **13 MR. RAMIREZ: Yes, I think the one**  **14 thing that I saw some folks bobbing their**  **15 heads on was that unless the group by**  **16 consensus agrees otherwise, right? No?**  **17 MS. HOFFMAN: No. What I heard --**  **18 maybe -- this is your elephant, okay? What I**  **19 heard was on the -- but not to exceed the IECC**  **20 2015 requirements unless they're more cost**  **21 effective. I heard that as a potential**  **22 amendment that Manny had suggested.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Yes, no, it's all right, but it**  **2 could also be in our own mandate too. I mean,**  **3 would that work?**  **4 MEMBER DENNIS: Does anyone object**  **5 to going above IECC on certain types of things**  **6 if it's cost-effective? Or are people just**  **7 confident that's not going to happen? Then**  **8 what's the problem with putting it in there?**  **9 MEMBER LEVY: Go ahead. Is**  **10 somebody on the line?**  **11 MEMBER LUTER: Rob with Lippert.**  **12 Just a couple of comments.**  **13 Based on Mark's reading of the**  **14 statute, I mean, we're talking about what**  **15 words mean, what "significant" means, what**  **16 "affordable" means.**  **17 The one constant that we know what**  **18 it means is the IECC 2015. This is what we're**  **19 tasked to start with. And as I understand the**  **20 statute in plain language it says base your**  **21 analysis on this, unless you can prove it's**  **22 not cost-effective.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Now, I think we're going to have**  **2 instances where it will be clear that it's not**  **3 cost-effective however we ultimately choose to**  **4 define cost-effectiveness.**  **5 But we'll have perhaps some other**  **6 instances where we're surprised at how cost**  **7 effective it is. And those will be the keys**  **8 for us to go farther.**  **9 We can't start with something more**  **10 stringent than the IECC because we don't know**  **11 what that is. We do know what the 2015 IECC**  **12 is though. And it's a benchmark.**  **13 So, what I might suggest is that**  **14 that sentence be changed to something like,**  **15 "Decisions should be based on life cycle cost**  **16 and criteria based on the 2015 IECC," period.**  **17 Then next sentence.**  **18 MS. VAIDYANATHAN: This is Kavita**  **19 Vaidyanathan of the DOE general counsel.**  **20 I just don't understand who you**  **21 can't just copy what's in the statute as your**  **22 guiding principle. And that would include** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 purchase price which Mark Weiss is concerned**  **2 about and the total life cycle cost.**  **3 MS. HOFFMAN: So, do we have**  **4 consensus on the statute?**  **5 (Laughter)**  **6 MS. HOFFMAN: Manny, are you**  **7 teasing or you mean that?**  **8 MEMBER LEVY: That sounds good.**  **9 MS. VAIDYANATHAN: Okay.**  **10 MEMBER LEVY: And you can put up**  **11 there. No problem. We can all agree to it.**  **12 But as a practical matter it's not**  **13 a way forward. When Matthew or whoever is**  **14 going to do the analysis sits down and does**  **15 the analysis he's not even going to look at**  **16 2015.**  **17 What he's going to do is he's**  **18 going to create just what Joe was saying,**  **19 packages of measures that are cost-effective.**  **20 He's going to create a curve, find out what**  **21 the bottom point is on the curve.**  **22 And that point is going to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 represent a certain package of measures. It's**  **2 not going to be -- he never has to look at**  **3 2015 to get there. Never.**  **4 MR. HAGERMAN: So, this is Joe**  **5 Hagerman. I think it's the best starting**  **6 place that he would use.**  **7 So he's going to hear from**  **8 everybody here as we go through what energy**  **9 efficiency measures that the industry would**  **10 have to move to meet the 2015. And he would**  **11 go run those measures through his life cycle**  **12 cost analysis and get a cost.**  **13 And then he'll give that back to**  **14 the group and the group's going to say, you**  **15 know, no, this doesn't work, or yes, this does**  **16 work.**  **17 So it's definitely a good starting**  **18 point. I mean, what other starting point**  **19 would you take?**  **20 MEMBER LEVY: Well, normally in**  **21 the way historically this has been done, it**  **22 was done in '92 and before that, when it was** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 a life cycle cost-based analysis.**  **2 You start with the least efficient**  **3 point and you just keep adding conservation**  **4 measures in order of cost efficiency until you**  **5 reach that point at which adding another**  **6 measure will give you a negative benefit. And**  **7 that point, that point that you've established**  **8 becomes your target.**  **9 And the IECC 2015 is kind of a --**  **10 it's an arbitrary number relative to that**  **11 process. It's not even going to fall on the**  **12 curve because probably that package of**  **13 measures which we call 2015 was developed in**  **14 a different sphere entirely, includes a**  **15 package of measures which have nothing to do**  **16 with in many regards to manufactured housing,**  **17 and there's no reason to believe that all the**  **18 measures in that package would be cost**  **19 effective.**  **20 So, it doesn't really enter into**  **21 the dialogue when you do a life cycle cost**  **22 analysis. It's a point you can look at, but** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 it's not going to fall on the curve. That's**  **2 my view.**  **3 MR. HAGERMAN: That could be.**  **4 MEMBER LEVY: So, you don't start**  **5 there, you don't end there, you just -- you go**  **6 through your LCC analysis and you look at it**  **7 later and say, gee, 2015 is not cost**  **8 effective. I think that's -- from my**  **9 experience that's the conclusion you'll come**  **10 to. So, putting IECC into the discussion just**  **11 confuses matters.**  **12 MR. RAMIREZ: I understand what**  **13 you're saying there.**  **14 Could it be done the other way**  **15 though? So, if 2015 is so expensive, right,**  **16 where it's just not going to be efficient,**  **17 what if you work backwards from there?**  **18 MEMBER LEVY: But it's kind of --**  **19 it's an arbitrary point that has no bearing on**  **20 the whole concept of life cycle cost analysis.**  **21 There's no basis for it.**  **22 MS. HOFFMAN: But Congress put it** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 in the statute. So you might want to humor**  **2 them a little and follow it. And try out how**  **3 2015 would work. And if it doesn't work, then**  **4 you've got the rest of your analysis. I'm**  **5 just saying can't we proceed on two fronts.**  **6 MR. BARBOUR: This is Ed Barbour.**  **7 As a practical matter what we'll do is we will**  **8 start with a package that meets the 2015 IECC.**  **9 And then we'll go plus or minus off of that.**  **10 And so we'll create the curves.**  **11 We have to address the statute for DOE, or at**  **12 least that's what we were thinking. If you**  **13 guys tell us otherwise, that's fine.**  **14 But we were planning to create,**  **15 just like PNNL has done, create different**  **16 measures and meet the different levels of the**  **17 IECC from 2006 I believe up to 2015. So we'll**  **18 have that point as Emanuel says.**  **19 I don't think anybody --**  **20 analytically we're not going to do anything**  **21 different whether we start at the end and add**  **22 incremental measures, or if we start at the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 2015 and work backwards and up.**  **2 MR. RAMIREZ: So there are going**  **3 to be overlays regardless of what we do.**  **4 MR. BARBOUR: Regardless what we**  **5 do we're going to have the same types of**  **6 analysis -- or let me rephrase that. Same**  **7 results and types of analysis. It's just one**  **8 package will be labeled 2015 IECC.**  **9 And whether it comes out cost**  **10 effective or not, we'll see. So I think**  **11 everybody's sort of in agreement, actually.**  **12 But, anyway.**  **13 MR. RAMIREZ: All right. Manny?**  **14 MEMBER SANTANA: Yes, this is**  **15 Manny with Cavco.**  **16 I feel like we're kind of going in**  **17 circles around here on the first sentence.**  **18 You know, Emanuel on his own**  **19 initiative, he came up with four sheets of a**  **20 proposal. But it's just that, it's a proposed**  **21 framework to give us some direction and give**  **22 us a little push in the right direction.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I suggest we let him just go**  **2 through it. Go through the whole thing in its**  **3 entirety. And then, you know, we might find**  **4 more important things to argue about a little**  **5 bit further.**  **6 MR. RAMIREZ: Thank you. Manny**  **7 pulled out the elbow there, right? All right.**  **8 All right, you have the floor back and you can**  **9 start scrolling through.**  **10 MEMBER LEVY: Okay. So, there are**  **11 two more points up here. I think we've kind**  **12 of talked about the second point already. And**  **13 there's a discussion about how important this**  **14 should be.**  **15 It has to do with making sure that**  **16 we're not creating roadblocks to**  **17 affordability. Obviously I think there's some**  **18 concurrence in the room about that. How that**  **19 plays out we can talk about.**  **20 And there will be other topics.**  **21 The third point in here is there will be other**  **22 topics that we'll talk about that we may not** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 have conclusive information about but we will**  **2 try to as much as possible lean on peer**  **3 reviewed scientific studies to substantiate**  **4 our points.**  **5 This is really an engineering**  **6 scientific endeavor that we're engaged in and**  **7 we're going to use the best research out there**  **8 to base our decisions on.**  **9 These are three points. There**  **10 probably can be 10 more. We may be adding**  **11 more as we go along.**  **12 So, given that we're doing a life**  **13 cycle cost analysis based -- starting with**  **14 IECC as the basis I wanted to identify what**  **15 the data needs were. And my proposal here is**  **16 that we would identify all the data needs.**  **17 And we don't have all the data at**  **18 the moment. We would assign responsibility**  **19 for getting that data, some of that data.**  **20 SBRA has volunteered to provide some of it.**  **21 But we'll need quite a bit of data to help the**  **22 contractors do their work that is outlined.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 So I try to list here a couple of**  **2 things that are inputs. And I think we should**  **3 talk about each one of these even briefly as**  **4 we go along.**  **5 The first one is -- these are all**  **6 data inputs to the life cycle cost analysis**  **7 and related analysis.**  **8 So the first point is the thermal**  **9 requirements. I think that's been done**  **10 already by DOE and PNNL. There may be some**  **11 additional analysis that we talk about in**  **12 terms of just understanding what that**  **13 requirement is for the IECC. Not just 2015.**  **14 Yes?**  **15 MR. HAGERMAN: So let me quickly**  **16 speak to that point. So I've already assigned**  **17 the window-to-wall ratio analysis to PNNL.**  **18 They said they were going to try to get us a**  **19 result back by tomorrow. So we should be able**  **20 to resolve that very quickly.**  **21 MEMBER LEVY: The typical window**  **22 area.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER WEISS: Yes, the**  **2 abbreviation, LCC. Can you just specify?**  **3 MEMBER LEVY: Life cycle cost.**  **4 Second point here is the cost for associated**  **5 building components. I don't know if you**  **6 pulled that up. There's a spreadsheet that**  **7 everybody has a copy of.**  **8 This addresses some of the**  **9 questions and comments and needs that were**  **10 discussed earlier today. And SBRA has**  **11 volunteered to provide some support in helping**  **12 do the analysis.**  **13 And this list of features might be**  **14 expanded. I think what we need is a pretty**  **15 clear understanding of how homes would be**  **16 built to get the various use of O-values that**  **17 are part of the analysis.**  **18 And what we're proposing is that**  **19 over the next couple of weeks we would**  **20 complete this table and any other data points**  **21 that need to be included in this table.**  **22 And that for each of the component** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 U-values, and Matthew in particular can weigh**  **2 in on this, we would describe how those**  **3 components are built today on average by the**  **4 industry.**  **5 And the way we would do that is we**  **6 would put together a list of materials and**  **7 products that typically go into the**  **8 construction of each one of these U-values for**  **9 each component, send it back to the**  **10 manufacturers and have them verify that that**  **11 is what they would do, or if it isn't, what**  **12 variation they would have on that.**  **13 And provide back to you what that**  **14 final construction looks like for each one of**  **15 the U-values and what the cost is per square**  **16 foot of each of those constructions. It's a**  **17 little different than I think the query that**  **18 you sent out.**  **19 But this is specific to making**  **20 sure it's clear how things are built and why**  **21 they are what they are, and what the cost is**  **22 that corresponds to those things. This seems** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 to me to be the critical piece of information**  **2 you need to do the LCC analysis. Does that**  **3 make sense?**  **4 MEMBER SANTANA: Manny with Cavco.**  **5 So, the U-values you have here for the**  **6 components, are those the same and what's in**  **7 the DOE analysis?**  **8 MR. HAGERMAN: Yes, I believe**  **9 those are copied from the 2015.**  **10 MEMBER LEVY: We copied the table**  **11 that PNNL had -- we copied the rows from the**  **12 table that PNNL had. And the same cities and**  **13 the same thermal zones.**  **14 MR. HAGERMAN: For units that**  **15 would meet 2015 IECC.**  **16 I have one question. So this**  **17 would be the average cost per square foot?**  **18 MEMBER LEVY: That's right. To**  **19 the customer.**  **20 MR. HAGERMAN: Could we not add**  **21 average and min and max? The two boundaries.**  **22 MEMBER LEVY: Yes.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. HAGERMAN: I mean, at some**  **2 point in time it would be nice to compare what**  **3 numbers get reported here to, say, some third**  **4 party source like RSMeans, as an example,**  **5 right?**  **6 MEMBER TOMPOS: Dave Tompos. So**  **7 are we expecting the manufacturers then to**  **8 come back and tell us that, hey, we can't**  **9 typically build a 0.034 floor system? Is that**  **10 our goal? I mean, that may be the results we**  **11 get back, correct?**  **12 MEMBER LEVY: It may be. I mean,**  **13 it may be that you have to build a 2 by 12**  **14 joist system and they would just weight it to**  **15 do that.**  **16 And half the manufacturers might**  **17 come back and say we would never do it. If we**  **18 had to do it this is what it would cost. Yes.**  **19 MR. HAGERMAN: This is Joe**  **20 Hagerman from DOE. So, that's a great**  **21 question.**  **22 And I think my recommendation** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 would be you give us a cost to do it the way**  **2 to meet this IECC level, and then you flag**  **3 things and say we can build it like this but**  **4 we have to get shipping. Like you brought up**  **5 the Connecticut issue. So flag that and**  **6 recommend what the highest U-value would be**  **7 that you wouldn't meet that constraint, right?**  **8 Does that make sense?**  **9 MR. RAMIREZ: That's an**  **10 alternative.**  **11 MEMBER TOMPOS: Dave Tompos again.**  **12 My concern is we just may not get a**  **13 representation of people shipping to**  **14 Connecticut or Massachusetts. There's not a**  **15 lot of people that ship to those states. Or**  **16 at least I don't think any that are on this**  **17 committee. I know Manny doesn't.**  **18 MEMBER SCHNEIDER: I missed --**  **19 what is the constraint for Massachusetts?**  **20 MEMBER TOMPOS: They have a**  **21 shipping height constraint of 13'6. And the**  **22 concern is if we add an additional, you know,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 4 inches to the floor height that we could run**  **2 into that.**  **3 MR. HAGERMAN: Right. So, this is**  **4 Joe Hagerman with DOE again.**  **5 MEMBER SCHNEIDER: Well, can I --**  **6 MR. HAGERMAN: I think if you just**  **7 -- Peter. Two seconds, Peter.**  **8 If you just flag that, right, and**  **9 then propose what a credible maximum value**  **10 would be to solve that. And we can have that**  **11 discussion.**  **12 But it's hard to have the**  **13 discussion if you don't flag it and**  **14 everything. Peter?**  **15 MEMBER SCHNEIDER: This is Peter.**  **16 I honestly think there needs to be a**  **17 subcommittee that is looking at the least-cost**  **18 path and the feasibility of achieving the IECC**  **19 2015 UA values. And really look at all these**  **20 different constraints that are being**  **21 suggested.**  **22 In Vermont we have the 13'6** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 requirement here and we're delivering homes**  **2 with 10-inch floor joists and 14-inch parallel**  **3 chord trusses and achieving R60 rooms and R43**  **4 floor systems.**  **5 So, you know, again it all comes**  **6 back to -- and we've got a 34-inch trailer.**  **7 So it all comes back to reworking the**  **8 methodology in the plants.**  **9 And maybe what's happening there,**  **10 while it may provide a constraint right now**  **11 needs to be changed to provide a better home.**  **12 MEMBER TOMPOS: Well, I'll just**  **13 comment to that. I mean, you can do that, but**  **14 now you're adding a hinged roof which involves**  **15 more cost, more setup time.**  **16 I mean, I'm all for it because I**  **17 get another four or five hundred dollars every**  **18 time I have to go out and inspect one of those**  **19 because it's not finished in the house. So**  **20 there's your additional cost that goes along**  **21 with that.**  **22 MEMBER SCHNEIDER: I just want to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 interrupt and just say there's no hinged**  **2 groove. This helm is done before it leaves**  **3 the factory. So it's a parallel chord truss,**  **4 the house is finished and we've got 7.5 to 8.5**  **5 foot cathedral ceilings. You know, with a**  **6 low-pitched roof, but it works just fine here**  **7 in Vermont so it's going to work just fine**  **8 anywhere else in the country.**  **9 MEMBER TOMPOS: Well, I think we'd**  **10 love to see those designs.**  **11 MR. RAMIREZ: Michael?**  **12 MEMBER LUBLINER: Yes, I think**  **13 that's why a subcommittee might be useful for**  **14 that discussion. I'd love to be involved in**  **15 that.**  **16 Where to start. Okay. I do think**  **17 that we really need to look at what you're**  **18 talking about, flagging those anomalies that**  **19 physically are technically challenging with**  **20 the existing processes you're using in the**  **21 factory.**  **22 You know, nobody likes change** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 except babies with lousy diapers. We need to**  **2 think out of the box about what are the**  **3 systems and solutions here that maybe are**  **4 going to afford some change to your industry.**  **5 I don't believe that we're going**  **6 to need to go to a 10-inch floor to achieve**  **7 those. I'm doing math in my head going I**  **8 think that we see it in 2 by 8. I'd like to**  **9 know what percentage of your homes go out with**  **10 2 by 8. I'd like to know what the costs going**  **11 to 2 by 8 are and the constraint that you may**  **12 have in certain shipping.**  **13 I also think that when we get into**  **14 a problem and we flag these things like 2 by**  **15 6 floor joists that you're not going to get**  **16 the true R30, a nominal R30 but not the true**  **17 R30 from the eye to the rim joist, that we**  **18 adjust.**  **19 We compensate for that and say,**  **20 okay, well, let's make an exception in the**  **21 standard for that. But I do think we really**  **22 need to get good cost data.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 And I have some significant**  **2 concerns, Manny, about just going with retail**  **3 cost data. I'd like to see a two-way street.**  **4 I've been talking with the**  **5 insulation manufacturers industries and the**  **6 window industry for many, many years. The way**  **7 we've costed things out is to get wholesale**  **8 pricing from them for insulation. Typically**  **9 it's a penny per R per square foot. Now,**  **10 maybe that's changed. Sometimes it's up to**  **11 1.2 cents R per square foot if it's high**  **12 density, or 15 or 21 in the walls.**  **13 We can take that. We can apply**  **14 the manufacturers' markups to that and see**  **15 what the profit and the retail costs are.**  **16 But I'd like to work it both ways.**  **17 It's not that I don't trust the information,**  **18 but I want to learn what went into that so**  **19 that we can evaluate it and feel comfortable**  **20 that we're voting that these costs are**  **21 representative of your maximum buying power**  **22 given that this is a code change.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 So, I'd like to also propose that**  **2 we try to get not just the retail cost, but**  **3 what the material costs to the manufacturer**  **4 is. And I'd be willing to sign any**  **5 confidentiality, non-disclosure agreements**  **6 here if that's necessary to do that.**  **7 But I think that that would be a**  **8 useful way of engaging the manufacturers like**  **9 Manville and Owens Corning and Dow to say we**  **10 need a belly blanket that's R22. We need a**  **11 high-density wall insulation that can go with**  **12 the eve. So, anyway, that's kind of my little**  **13 soapbox here.**  **14 I'm comfortable with the retail**  **15 data but I'd like to see the wholesale cost of**  **16 the materials and some indication as to what**  **17 the impact is on the production and labor as**  **18 well.**  **19 And whether the markups**  **20 assumptions that are used. You know, we**  **21 typically take the wholesale cost and multiply**  **22 by 2.2 and that seems to be what the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 manufacturers over the years we've worked with**  **2 say is what the retail pricing is. So I'd**  **3 like to see how that compares to what you get**  **4 from an aggregate feedback from the industry.**  **5 Thank you.**  **6 MR. RAMIREZ: Mark?**  **7 MEMBER WEISS: That issue is much**  **8 more complex than it might appear at first**  **9 blush because the maximum buying power of a**  **10 company like Clayton is going to be**  **11 substantially different from one plant**  **12 manufacturer putting out a much smaller number**  **13 of homes.**  **14 So, you have potentially an**  **15 extremely wide range of information that would**  **16 come into play there with competitive**  **17 considerations and just a plethora of factors**  **18 coming into that.**  **19 MEMBER LUBLINER: It would be**  **20 great to see that range. It would help to**  **21 understand the small manufacturers'**  **22 challenges.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER LEVY: So, that's number**  **2 two. The third item here is the baseline**  **3 building description.**  **4 You've seen this before. It was**  **5 part of the PNNL analysis.**  **6 This has some significance for**  **7 reasons that we've talked about. This would**  **8 be the baseline for doing the life cycle cost**  **9 analysis or the economic analysis we're**  **10 talking about.**  **11 And I want to just stop on this**  **12 point for a second. The first question is**  **13 whether these conditions, everybody agrees**  **14 that these conditions would be typical.**  **15 But also recognize that this is**  **16 just one set of parameters. A different set**  **17 of parameters would yield quite different**  **18 results.**  **19 If you had a singlewide as I**  **20 mentioned earlier with 7-foot side wall and a**  **21 cathedral ceiling and a scissor truss it would**  **22 yield different life cycle cost benefits** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 because the cost of insulating that home would**  **2 be different.**  **3 So, I'll get to looking at**  **4 outliers later or other conditions later. But**  **5 this, you need to start someplace and this is**  **6 one suggested place for starting the analysis.**  **7 MR. HAGERMAN: Joe Hagerman, DOE.**  **8 We're happy, so thank you. We're happy to add**  **9 to this. If you wanted to have a doublewide**  **10 with a cathedral, or a singlewide with a**  **11 cathedral we can make those models and they**  **12 can run all the analysis with those.**  **13 This is what we used. I believe**  **14 this is exactly what we used.**  **15 But those are just -- absent of**  **16 you telling me what the inputs and assumptions**  **17 should be this is what we came up with.**  **18 MEMBER LEVY: This probably -- go**  **19 ahead.**  **20 MEMBER SCHNEIDER: It's Peter. Is**  **21 this where we talk about insulation**  **22 installation grading?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER LEVY: We could. There's**  **2 no other place to talk about it so Peter, why**  **3 don't you go ahead.**  **4 MEMBER SCHNEIDER: Well, just,**  **5 again what that base case home looks like**  **6 after receiving the modeling. I had asked**  **7 what was the assumption for insulation**  **8 installation.**  **9 I haven't spent a lot of time in**  **10 manufactured plants, but I've watched a lot of**  **11 videos online of various manufacturers,**  **12 detailed videos of sort of start to finish**  **13 construction in the factory.**  **14 And being a RESNET energy rater**  **15 and spending a lot of time grading insulation**  **16 everything I've seen has been a grade 3.**  **17 And so as far as base case and**  **18 then looking at the benefits of actually**  **19 improving the insulation and getting a higher**  **20 grade again from a very cost-effective**  **21 approach to improving an envelope and an**  **22 effective R-value, I just want to make sure** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that that's represented in this study and**  **2 evaluation.**  **3 MEMBER LEVY: Does everybody know**  **4 what the conversation is about? Grading is a**  **5 way of evaluating how good the installation is**  **6 of the insulation material. If there are gaps**  **7 and voids.**  **8 If you put insulation into a**  **9 cavity, it doesn't completely fill up the gap.**  **10 That's a lower-grade installation.**  **11 Grade 1 usually means it's**  **12 perfectly put into the cavity and it's the**  **13 kind of coverage that you're expecting when**  **14 you get the material.**  **15 MR. HAGERMAN: Joe Hagerman, DOE.**  **16 We assumed a 1 in this analysis, perfect**  **17 insulation. Perfect installation of**  **18 insulation.**  **19 MEMBER SCHNEIDER: Yes, for the**  **20 base case, right? Or across the board, right?**  **21 MR. HAGERMAN: Across the board,**  **22 that is correct.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER SCHNEIDER: Yes. So, I**  **2 mean, again, this started for me years ago**  **3 when I started modeling the homes that I was**  **4 finding on dealer lots in Vermont to find out,**  **5 you know, if these were actually meeting the**  **6 overall U-value.**  **7 And I got into this grading**  **8 discussion with different manufacturers'**  **9 engineering departments about the heat loss**  **10 calculators and what they were factoring in.**  **11 But at the end of the day the**  **12 installation of insulation has a huge impact.**  **13 And we're talking about the truth is this is**  **14 grade 3 insulation installation from what I've**  **15 seen. And you get a significantly lower**  **16 effective R-value for what should be the base**  **17 case.**  **18 And if we're meeting IECC 2015 and**  **19 looking at this from a cost analysis**  **20 perspective, and again, also from a cost**  **21 perspective because there's -- it's not a real**  **22 big cost to spend a little bit more time** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 putting those baths in correctly or moving to**  **2 a fill insulation.**  **3 And then if you look at the**  **4 language which we talked about earlier today**  **5 and it was going to come up at some point.**  **6 But IECC 2015 does call out that there needs**  **7 to be good insulation installation.**  **8 And there's some language in there**  **9 that I'd like to see be even more defined, but**  **10 it's definitely called out. So I'd like to**  **11 see it different in the modeling.**  **12 MR. HAGERMAN: This is Joe**  **13 Hagerman, DOE. We could run the same type of**  **14 analysis that we're doing for the windows off**  **15 of the installation of the insulation as well**  **16 if that's something that the committee wants**  **17 to see.**  **18 MEMBER LUBLINER: I'd love to see**  **19 a little parametric evaluation of the**  **20 assumption of the grading on the insulation**  **21 and the impact it has in the life cycle cost**  **22 analysis.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I've been in many, many factories**  **2 over the years. The last factory I was in**  **3 with Robin we talked to one of the folks there**  **4 and we were looking at the ENERGY STAR homes**  **5 and with the non-ENERGY STAR minimum HUD**  **6 homes.**  **7 And we said, well, what about the**  **8 voids and compressions and the things that**  **9 you're supposed to deal with in ENERGY STAR.**  **10 And yes, we get to that, we actually fluff it**  **11 out and we cut and we pay attention to that.**  **12 And I said well, what about the**  **13 other HUD code homes, the ones that aren't?**  **14 Oh well, that's not part -- we don't have to**  **15 deal with that.**  **16 So this gets back to the proposal**  **17 that I made to the Consensus Committee in 2009**  **18 where I said we need to be more specific in**  **19 our quality assurance plans as to what we mean**  **20 about insulation installation quality.**  **21 So, I'd like to see the parametric**  **22 analysis to see how big of a deal it makes.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 And I'd also like to see in the**  **2 installation quality assurance plans the**  **3 specifics that were in that proposal, or**  **4 something that comes out of the committee.**  **5 I should point out again that that**  **6 proposal was rejected by the Consensus**  **7 Committee because the justification was that**  **8 DOE was going to address it. Well, we're DOE.**  **9 We're here. Are we going to address it?**  **10 Thank you.**  **11 MEMBER SANTANA: Manny with Cavco.**  **12 This might be a question for the IECC experts**  **13 in the room.**  **14 What does the IECC say about**  **15 insulation installation quality? Is there a**  **16 specific section on it that says?**  **17 MEMBER LACEY: Yes, there is**  **18 actually a table that's split up now into two**  **19 categories. It's Table R402.4.1.1. It's**  **20 called "Air Barrier and Insulation**  **21 Installation." And it has some general**  **22 guidance for how to install appropriately.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 And it's not quite as detailed as**  **2 the ENERGY STAR thermal barrier checklist.**  **3 And I mentioned earlier, and I**  **4 meant to follow up on this. There was a**  **5 question about compression. Does the IECC**  **6 account for compression.**  **7 And footnote A to the R-value**  **8 table does say that if you reduce, you know,**  **9 if the insulation when it's installed has been**  **10 compressed you need to make up for it, you**  **11 know, in simpler terms.**  **12 But the IECC does account for this**  **13 and does give some instruction. But this**  **14 might be a good example of an area where maybe**  **15 it's cost-effective to go a step beyond.**  **16 Maybe you use the ENERGY STAR checklist, or**  **17 maybe you, you know, incorporate some other**  **18 things that maybe aren't called out in the**  **19 IECC but that would be cost-effective and easy**  **20 to do and would provide some real benefits.**  **21 Does that answer your question?**  **22 MEMBER LUBLINER: So, there's also** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 some situations and opportunities here.**  **2 As I understand the grading, if**  **3 you take an R11 belly blanket and you put it**  **4 in the belly right now it's not in contact**  **5 with the underside of the decking, the floor**  **6 decking. That typically gets a really bad**  **7 grade.**  **8 Now, if we were going to be**  **9 filling the cavity now, at least from the I**  **10 joist to the rim then it is in total contact**  **11 and you're getting a better grading. So, not**  **12 only are you getting the R savings, but you're**  **13 also getting the improved quality assurance**  **14 that having the thicker insulation forces you**  **15 to get.**  **16 So I think that if we're going to**  **17 do that kind of assessment we need to look at**  **18 both the base case. You know, I don't want to**  **19 complication PNNL's life too much, but just**  **20 make sure that we look at what is the base**  **21 case grading and how does that grading change**  **22 if we go to IECC levels. Because it may buy** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 us some more savings and better practice.**  **2 The other thing I'd like to ask is**  **3 what the manufacturers of the insulation**  **4 believe when they produce something and**  **5 publish it under Federal Trade Commission**  **6 laws.**  **7 Is that what we're seeing in the**  **8 factory when we put an R11 in a belly and hang**  **9 it down 4 inches below the floor? I**  **10 personally don't think that was what the**  **11 intent that the test procedures looked at when**  **12 they stated that R-value. And that's of**  **13 concern to me.**  **14 There's other examples too that we**  **15 can get into. A 2 by 6 wall with an R11 in**  **16 the -- we're starting to see manufacturers**  **17 that have gone from putting R21 in a 2 by 6**  **18 wall to R11 to save a few dollars.**  **19 And what I would contend is that**  **20 you've changed the quality of the grading by**  **21 doing that. Because now you've allowed for a**  **22 big gap where air leakage is going to over-** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 impact the savings you're getting from the**  **2 thermal insulation.**  **3 So grading is an important thing**  **4 and that's all I'd like to say about it. We**  **5 should really consider it.**  **6 MEMBER TOMPOS: Dave Tompos. Just**  **7 to answer your question, Mike. The**  **8 manufacturers are reporting actual R-value,**  **9 not -- you know, if it's an R19 and it gets**  **10 compressed and they get an R18 they're**  **11 reporting on their FTC certificates R18. So**  **12 they do take all that into account.**  **13 MR. HAGERMAN: So, I just need a**  **14 little direction here. I offered to do the**  **15 study at different insulation installation**  **16 values. If the group wants that I'm happy to**  **17 do it. You're just going to have to tell me**  **18 what values.**  **19 MEMBER TOMPOS: Can I just ask a**  **20 question? If we're consistent among all**  **21 packages does it make a difference if you do**  **22 the assessment at grade 1, 2 or 3 if we're** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 consistent across the board?**  **2 MR. HAGERMAN: I have no idea to**  **3 be honest with you.**  **4 MEMBER LUBLINER: I guess that's**  **5 my point. I think if you buy into my point**  **6 that R11 in the belly is not a grade 1, but if**  **7 you went to an R21 in the belly at least in**  **8 the outrigger area with the R11 belly**  **9 insulation under it, now you're at -- I mean,**  **10 you're at a grade 1.**  **11 So, I'd like to see the study done**  **12 where you assume both scenarios. You assume**  **13 that the insulation presently is a grade 3 and**  **14 that you're going to a grade 1. And then also**  **15 apples to apples, grade 3 to grade 3, grade 1**  **16 to grade 1 in the base case and in the**  **17 analysis case. Does that make sense?**  **18 MEMBER TOMPOS: One of the**  **19 manufacturers may have to correct me. Dave**  **20 Tompos.**  **21 The current HUD, the way we do the**  **22 calculations, we factor in I'll say a fudge** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 factor of I think 10 percent to take care of**  **2 any possible gaps.**  **3 So we're, you know, if we go**  **4 straight to the code I think -- I think we're**  **5 doing more than we have to just to account for**  **6 any possible gaps in insulation.**  **7 MS. HOFFMAN: Joe asked a question**  **8 if the committee wanted them to do the**  **9 research in this area. Can we get a sense if**  **10 that's valuable for the committee?**  **11 MR. RAMIREZ: Let's see the thumbs**  **12 if you think there's some value there.**  **13 (Show of thumbs)**  **14 MS. HOFFMAN: Sort of sideways.**  **15 Oh. Okay, John, you said no so tell us why.**  **16 MEMBER CASKEY: I mean, I don't**  **17 know how to politically correctly say this.**  **18 I think we're getting sidetracked and I think**  **19 we're getting into too much analysis.**  **20 And I think it's, yes, we can, you**  **21 know, there's some difficulties out there**  **22 today in the current installation practices** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 and things like that. It sounds like the IECC**  **2 has some good stuff already embedded in there.**  **3 But it sounds like we're getting**  **4 into other agendas from my perspective. And**  **5 you know, I think the clock is ticking and**  **6 it's ticking pretty quick from my perspective.**  **7 And I'm not sure how we're going**  **8 to go from this discussion today to an end**  **9 result in whenever we're supposed to get it**  **10 done, by the end of September or whatever,**  **11 devoting this much time and attention to**  **12 whether there's a difficulty with the current**  **13 installation practice or whether there isn't.**  **14 So, that's just my two cents' worth.**  **15 MEMBER LEVY: Move on?**  **16 MR. RAMIREZ: Yes.**  **17 MEMBER LEVY: Okay. So, the next**  **18 question is what's our assumptions for doing**  **19 life cycle cost analysis.**  **20 And I think part of this**  **21 discussion may also be what kind of**  **22 sensitivity studies would we want to look at** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 for any one of these parameters.**  **2 So I try to list out as many of**  **3 the important items that the analytical team**  **4 will have to use in terms of doing their**  **5 analysis to make sure we explicitly talk about**  **6 them here.**  **7 The first one I've listed -- these**  **8 are in no particular order -- is period of**  **9 analysis.**  **10 We're doing a life cycle cost**  **11 analysis. Matthew explained how that works.**  **12 It's over some period of time that you're**  **13 accumulating costs and benefits.**  **14 And the question is what is that**  **15 time period. Historically it's sometimes been**  **16 used as the life of the home, the life of the**  **17 mortgage, the life of home ownership. All**  **18 those are legitimate places to start the**  **19 discussion.**  **20 I said 7 to 30 years because**  **21 that's -- 7 years is the average occupancy**  **22 period for the first homeowners in** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 manufactured homes. Thirty years is actually**  **2 the longest mortgage length that you'll get on**  **3 a industry loan now. And that's not typical.**  **4 More typical is probably 23. But that's kind**  **5 of the range of values. Just to throw that**  **6 open for discussion.**  **7 MR. RAMIREZ: Eric.**  **8 MEMBER LACEY: I think this is a**  **9 good list to start with. The one thing that**  **10 I would add here is something that Matthew**  **11 raised in his presentation and that is price**  **12 elasticity of demand. And only because this**  **13 issue keeps coming up.**  **14 I was looking back at the statute**  **15 and the statute doesn't say the standard shall**  **16 not increase the cost of the building by $1 or**  **17 by any amount.**  **18 I think if we came back with**  **19 something that showed that it was cost**  **20 effective but it cost $10,000 incrementally to**  **21 upgrade we'd all say that's a terrible idea**  **22 even if it is cost-effective. But is it okay** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 to raise the cost by $1 and what would the**  **2 effect be.**  **3 And I think that one thing that we**  **4 need to add to this is not that it's a -- I**  **5 don't think it's a straight line, you know, $1**  **6 would knock out 34 people or whatever.**  **7 I think there is -- we need to get**  **8 into the price elasticity of demand. At what**  **9 point does it start having an impact on which**  **10 populations and so on?**  **11 Because as far as I can tell from**  **12 the statute it doesn't prohibit us from**  **13 recommending something that would increase the**  **14 cost, the initial purchase price. It talks**  **15 about life cycle cost. It talks about**  **16 considering the impact on purchase price and**  **17 life cycle construction and operating cost.**  **18 All these things are tethered**  **19 together in my mind. You know, we can't just**  **20 isolate one and say, well, it fails this test,**  **21 therefore we can't suggest this.**  **22 But I think one thing that was** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 brought up earlier. And it's not going to be**  **2 part of the initial set of analyses I think.**  **3 But as we go on down, if we decide this**  **4 measure is going to increase the cost by $10,**  **5 you know, what is the real impact of that.**  **6 Are people really going to be**  **7 homeless if the cost increases $10. Or the**  **8 impact is $1,000 but the payback is six**  **9 months. I think some of that would be**  **10 helpful.**  **11 And I'm sorry, I don't have a**  **12 simple way of adding it to your list here**  **13 other than that I think, you know, price**  **14 elasticity has to come in at some point.**  **15 Maybe not in the first cut.**  **16 MEMBER LEVY: Eric, if it's okay**  **17 with you I've added it to the first bullet of**  **18 the "Other Economic Considerations."**  **19 MEMBER LACEY: You're way ahead of**  **20 me.**  **21 MR. RAMIREZ: That's a good**  **22 example of what I was talking about earlier,** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that as we're having this discussion we may**  **2 need to do exactly what you just did of jump**  **3 around to different points.**  **4 So when you're done running**  **5 through this I think you're doing an excellent**  **6 job of outlining some of the components that**  **7 we're going to need in here.**  **8 But I mean, we could have a**  **9 discussion as far as what could we do to get**  **10 more, especially in other areas. Okay? But**  **11 please continue.**  **12 MEMBER LEVY: The other thing.**  **13 Just to add to your comment, Javier. I think**  **14 we have to approach these -- we have to have**  **15 this discussion about each one of these, but**  **16 we have to have an action item at the end of**  **17 this, where are we going to go when we get**  **18 that information.**  **19 MS. HOFFMAN: And just in terms of**  **20 time frame I want to thank John for reminding**  **21 us we do have a deadline. So we're going to**  **22 see how we can do. But we're appreciative to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 all you're doing.**  **2 MEMBER LUBLINER: My comment on**  **3 the period of analysis. I think it really**  **4 does need to be the life of the home, not the**  **5 first buyer. Unless you're going to use a**  **6 salvage value or resale value after the 7th**  **7 year and promulgate the analysis to the 30th**  **8 year. Thank you.**  **9 MEMBER ROY: Robin Roy. And the**  **10 salvage value or resale value is very**  **11 complicated. Let's just do the life of the**  **12 home.**  **13 MEMBER DENNIS: Just a question.**  **14 Where does the length of the actual efficiency**  **15 measure come into play?**  **16 Like, say, for the life of a water**  **17 heater is what, I think 12 years instead of 30**  **18 years?**  **19 And this comes down to I guess**  **20 also the durability issue with the need to do**  **21 maintenance and all that type of expense.**  **22 MEMBER LEVY: I'm sorry, it's on** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the next page.**  **2 MEMBER DENNIS: Okay. So it's**  **3 lifetime of measures?**  **4 I mean because, again, I think for**  **5 our membership who ends up doing a lot of**  **6 retrofits on the durability of these measures**  **7 is a huge issue. And we'd like to see that be**  **8 an important part of the analysis.**  **9 MEMBER LEVY: We'll come back to**  **10 that.**  **11 MEMBER SCHNEIDER: Can you expand**  **12 on that just to see as far as what those are,**  **13 just to outline them now.**  **14 MEMBER LEVY: Let's come back to**  **15 that and let's handle this one and move on.**  **16 Any suggestions? Any proposals? Somebody**  **17 want to put something on the table?**  **18 MR. RAMIREZ: And you're not**  **19 locked in here. We're still building the**  **20 strawman here. Just because someone says**  **21 something doesn't mean you're locked in here.**  **22 MEMBER LEVY: Separately, we've** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 asked one of the lenders to give us their**  **2 assessment of some of these values from their**  **3 perspective. They obviously have a lot of**  **4 data.**  **5 So we'll have information about**  **6 things like average length of mortgage term**  **7 for chattel and real estate. We can predicate**  **8 it -- we can make the decision now to**  **9 predicate the period of analysis based on**  **10 that.**  **11 MEMBER LUBLINER: Do you have any**  **12 data on the percentage of people that pay**  **13 cash?**  **14 MEMBER LEVY: That's one of the**  **15 questions we've asked.**  **16 MEMBER WEISS: Sorry, Mark Weiss.**  **17 I think there's some information about that in**  **18 the American Housing Survey that we're**  **19 actually working up as part of what we're**  **20 doing.**  **21 MEMBER EPPERSON: And this is**  **22 Stacy. We will have this data. I think the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 chattel rates, the range on them might be a**  **2 little bit low here. But we'll have data for**  **3 that.**  **4 I would also say we might want to**  **5 look at this as just total APPROPRIATE so we**  **6 all points and fees. And even though you**  **7 begin to break out these points and fees.**  **8 One more item we might look at is**  **9 the average lot rent. Somewhere roughly I**  **10 think close to one-third of going into**  **11 communities and that's a significant total**  **12 housing cost too.**  **13 MEMBER LEVY: So, Stacy, your**  **14 committee is going to provide some guidance on**  **15 B, the loan parameters?**  **16 MEMBER EPPERSON: Yes, we'll do**  **17 that. Period of analysis we have not been**  **18 looking at in our committee.**  **19 MEMBER LEVY: Well, we can agree**  **20 on a number and then ask for sensitivity**  **21 studies off of that number.**  **22 This is an important -- this will** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 impact the UO value, so.**  **2 MR. RAMIREZ: The period of**  **3 analysis.**  **4 MEMBER LEVY: Not as much as other**  **5 factors, but yes.**  **6 MEMBER SANTANA: This is Manny**  **7 with Cavco. For period of analysis I would,**  **8 you know, if we talked about the range from 7**  **9 years to 30 years, you know, I'm not in the**  **10 financial side of things.**  **11 I think that the average length of**  **12 the loan has to play a huge factor. I'm more**  **13 of the -- in the group that thinks that the**  **14 life cycle cost should be the cost to the**  **15 first homebuyer as opposed to the life of the**  **16 structure.**  **17 MEMBER EPPERSON: This is Stacy,**  **18 Next Step.**  **19 Well, from a financial point of**  **20 view if we looked at it I think there are two**  **21 buckets, your chattel finance -- or personal**  **22 property and your mortgage financing.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 With mortgage I agree it should be**  **2 -- I would look at it as 30 years.**  **3 But if we're looking on the**  **4 chattel side we're probably looking at 15 to**  **5 20 years.**  **6 MEMBER LUBLINER: Again, I would**  **7 fundamentally disagree. From the limited**  **8 economics expertise I have if you're going to**  **9 use a 7-year life cycle cost it's not the life**  **10 -- then you don't call it life cycle cost.**  **11 But if you want to use a 7-year**  **12 then you need to evaluate the resale value**  **13 over the life.**  **14 And my example is I have a 2,600**  **15 square foot triplewide that I bought about 15**  **16 years ago.**  **17 And I can look up the energy**  **18 features in a chattel mortgage in NADA and**  **19 find that of all the things in the home that**  **20 depreciated the only thing that didn't**  **21 depreciate significantly were the energy**  **22 measures.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 And so I think that there is some**  **2 argument. And that's why I don't want to go**  **3 down that route. As Robin said, it gets very**  **4 complicated if you're going to look at 4**  **5 buyers over 30 years.**  **6 I think you're better off if it's**  **7 life cycle cost. My definition of life cycle**  **8 cost is the life of the home. So if we want**  **9 to call it something else, but let's not call**  **10 it life cycle cost if we're going to do it**  **11 over seven years and not include any sort of**  **12 resale or salvage value that home has after**  **13 seven years.**  **14 Next to the home next to it that**  **15 has none of those energy features. Is there**  **16 any value to those customers that are going to**  **17 buy that? Or is it exactly the same? I would**  **18 argue it's not. The home with the higher**  **19 energy after seven years is going to sell for**  **20 more.**  **21 But we could go down that road. I**  **22 would recommend we don't and we just define** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 life as the life of the home.**  **2 MEMBER WEISS: Mark Weiss, MHAR.**  **3 The fact of the matter is the person paying**  **4 the freight and the person making the purchase**  **5 decision is the first purchaser of the unit**  **6 with those features.**  **7 And when you talk about impact on**  **8 ability to qualify for a mortgage and all**  **9 these purchase price issues, it's the first**  **10 purchaser that you're dealing with.**  **11 MEMBER SCHNEIDER: This is Peter.**  **12 And I'd like to see the actual data on this,**  **13 but what my finding is in Vermont at least is**  **14 that even the folks that are in mobile home**  **15 parks but in manufactured housing in general**  **16 are staying in those homes a lot longer than**  **17 the average seven years.**  **18 And so just, I just would echo**  **19 what Michael said. I'd prefer not to go down**  **20 the road and look at one-third of the**  **21 homebuyers having chattel loans and looking at**  **22 a shorter life cycle.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I think that that gets too**  **2 complicated and the 30 years is more suitable**  **3 with the goal that hopefully as we're moving**  **4 forward we're looking at 30-year loans for all**  **5 of our homes because we're producing homes**  **6 that are of the same quality as our stick**  **7 built relatives.**  **8 And that we are ultimately slowly**  **9 moving our mobile home parks to ultimately**  **10 cooperative ownership, or non-profit ownership**  **11 where the banks have confidence in the**  **12 longevity of ownership.**  **13 MR. RAMIREZ: So, the Finance**  **14 Committee was going to provide numbers for --**  **15 at least initial numbers for which letters?**  **16 B, C and D.**  **17 MEMBER EPPERSON: Stacy, Next**  **18 Step.**  **19 Yes, we will be providing B, C, D,**  **20 F, we should look at taxes, and G. We have**  **21 not, but we'll add that to our list.**  **22 And we need to also look at lot** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 rent which is not identified.**  **2 MS. HOFFMAN: That would be a new**  **3 L?**  **4 MEMBER EPPERSON: Yes.**  **5 DR. SAWYER: Make it L.**  **6 MR. RAMIREZ: Oh, okay. It would**  **7 be block grant you said?**  **8 MEMBER EPPERSON: Lot rent.**  **9 MR. RAMIREZ: Lot grant.**  **10 MEMBER EPPERSON: Community rent.**  **11 MEMBER LACEY: I had a question**  **12 about the lot rent. Are there, and I'm**  **13 totally naive on this. Are there changes that**  **14 we're bringing about, or that we could bring**  **15 about in the energy provisions that would**  **16 affect the rent?**  **17 I'm trying to wrap my brain around**  **18 -- I understand that's part of the**  **19 consideration for financing and payback and**  **20 everything, but is there a possibility that we**  **21 could alter that somehow by a requirement that**  **22 we put on homes, or don't put on the homes?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 I'm trying to figure this out.**  **2 MEMBER EPPERSON: Right. Stacy**  **3 from Next Step.**  **4 I think what we're looking at here**  **5 is just affordability and housing cost. And**  **6 it's a part of manufactured housing cost.**  **7 When we look at an ability to pay,**  **8 if we're making a loan, with one-third of**  **9 these families roughly going into communities**  **10 generally on the finance side or the non**  **11 profit side we consider that as part of their**  **12 total housing cost.**  **13 MEMBER LEVY: So we've almost**  **14 successfully skirted the first point, period**  **15 of analysis.**  **16 So I want to put something on the**  **17 table. Let me just suggest what the rap is**  **18 against taking the life of the home for doing**  **19 a period of analysis.**  **20 And that is that you're**  **21 aggregating the benefits over some very long**  **22 period of time. And the little changes to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 your assumptions like fuel escalation rates**  **2 start to matter more.**  **3 If you set the life, again, I'm**  **4 just throwing it on the table to get the**  **5 conversation wrapped up here. If you set the**  **6 life as the life of the mortgage at least you**  **7 know that that's the period over which all the**  **8 payments are being made.**  **9 So that your costs are really**  **10 being aggregated over -- and you know what**  **11 those are because they're in the mortgage,**  **12 whatever your assumptions of the mortgage are.**  **13 So if you set that equal to your**  **14 period of analysis that's one way to think**  **15 about it. And you're projecting your costs**  **16 over that period of time which is going to be**  **17 somewhat less than the life of the home.**  **18 MEMBER TOMPOS: Dave Tompos. I**  **19 guess as a business owner when we look at**  **20 doing something. And we've done some energy**  **21 efficiency, we've done solar panels.**  **22 If I can't get a 5- to 10-year ROI** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 on that energy efficiency improvement we're**  **2 not going to do it. It doesn't make business**  **3 sense.**  **4 So, I guess in my opinion why**  **5 would we force consumers to do that if it**  **6 doesn't make good sense? So my opinion is it**  **7 needs to be a much shorter time frame.**  **8 MEMBER WEISS: Mark Weiss. Which**  **9 relates to the point I was going to make. Not**  **10 being a statistician, but obviously the longer**  **11 time period you have, the more speculative and**  **12 attenuated your assumptions become.**  **13 MEMBER SCHNEIDER: This is Peter.**  **14 Go ahead, Michael.**  **15 MEMBER LUBLINER: I was just going**  **16 to say what I learned about life cycle cost,**  **17 it's the life of the measure. It has nothing**  **18 to do with the loan. It has nothing to do**  **19 with the length of time, the period that**  **20 people are in the house.**  **21 If we want to do an economic**  **22 analysis using that approach we can. We can** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 do return on investment as long as we put in**  **2 the useful salvage value or resale value at**  **3 that point.**  **4 My analysis suggests that if you**  **5 do return on investment and you get the money**  **6 out of it that you put into it you're going to**  **7 be better than the stock market.**  **8 But I would suggest we not go down**  **9 that path and we stay with what Congress told**  **10 us to do and that's life cycle cost analysis.**  **11 If we have a situation where the**  **12 term of the loan is 15 years and the house is**  **13 going to last 30 years the analysis is over**  **14 the life of the home.**  **15 And I think that that's just --**  **16 it's going to be hard to defend that we did a**  **17 real life cycle cost analysis if we don't**  **18 assume the life of the home.**  **19 MR. RAMIREZ: All right. Let's go**  **20 to Robin, then Manny. I'm sorry, Robin.**  **21 Peter was going to jump in. Peter, go ahead.**  **22 MEMBER SCHNEIDER: I was actually** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 going to say almost the exact same thing.**  **2 Working for an energy efficiency utility in**  **3 Vermont that's exactly the definition that we**  **4 would follow.**  **5 And so I think that we would be**  **6 ultimately not fulfilling what we've been**  **7 asked to do if we weren't using the life of**  **8 that measure and started going towards the**  **9 term of the loan, or even the length of**  **10 ownership.**  **11 MR. RAMIREZ: Okay, thank you.**  **12 Robin?**  **13 MEMBER ROY: In year 15, if this**  **14 home lives to year 15 somebody is paying a**  **15 different utility bill if the measure was**  **16 installed. We don't know who that is. It**  **17 probably wasn't the first buyer, I understand,**  **18 but somebody is paying a different amount.**  **19 If we ignore that somebody is**  **20 getting that benefit we're ignoring an**  **21 important benefit. We're doing the wrong**  **22 analysis.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 So I take your point completely**  **2 that we need to understand the short tenure.**  **3 I think that shows up mainly though in the**  **4 price of mortgage or chattel loan. You're**  **5 doing your points over a short number of**  **6 years. There's something else that's funny**  **7 going on there.**  **8 But that measure is going to**  **9 continue to deliver somebody that we don't**  **10 know who it is a dollar savings for awhile.**  **11 They're not going to ignore it.**  **12 MEMBER SANTANA: Okay, so this is**  **13 Manny with Cavco. I'm going to have to**  **14 apologize for again my lack of understanding**  **15 of the financial aspects of this. I'm going**  **16 to need to be educated by you guys.**  **17 And I'm trying to articulate the**  **18 question as I go on so it's going to be a**  **19 ramble.**  **20 So the way that I understand it is**  **21 we're here to increase the energy efficiency**  **22 of HUD homes.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 So one of the points that was made**  **2 against adding energy efficiency measures is**  **3 that it's going to increase the purchase price**  **4 of a home.**  **5 So one of the counterpoints to**  **6 that is that although it may increase, or it**  **7 will increase the purchase price of a home**  **8 it's going to have a benefit to the homeowner**  **9 because it's going to lead to less cost to**  **10 operate the home.**  **11 And so we're trying to quantify**  **12 that by providing an analysis of it. And so**  **13 the life cycle cost may be the incorrect term**  **14 for it.**  **15 But my understanding of it is**  **16 we're trying to figure out just what benefit**  **17 it has over, you know, to include the**  **18 operating cost. That means that's the benefit**  **19 that it has to the initial purchaser. Because**  **20 the operating cost is going to offset the**  **21 burden of the higher purchase price.**  **22 So I don't understand what the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 resale value or the salvage, how that comes**  **2 into the equation.**  **3 MR. RAMIREZ: Do you want to**  **4 answer it? And then we'll get Keith and**  **5 Robin.**  **6 MEMBER LUBLINER: So, say I buy a**  **7 home that's ENERGY STAR and I buy a minimum**  **8 HUD code home, identical home. I live in it**  **9 for seven years and I sell it, both homes. Am**  **10 I going to get the same price for both homes?**  **11 I mean, one's got vinyl windows,**  **12 R30 in the floor. I mean, I would speculate**  **13 reasonable people would agree that I will be**  **14 able to sell the energy efficiency higher**  **15 package for more.**  **16 The question would become how much**  **17 more. If the price of electricity has gone up**  **18 in seven years I would speculate that that**  **19 value might even be more than what I paid for**  **20 it.**  **21 Now, there's a couple of ways we**  **22 can analyze it. Again, I recommended the life** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 cycle cost approach because that's what**  **2 Congress has suggested.**  **3 We could certainly do what ENERGY**  **4 STAR does and look at the -- also look at the**  **5 monthly, the first month you move in. How**  **6 much more increase in your mortgage payments**  **7 versus how much did it reduce your electricity**  **8 bill? That's another way of looking at it.**  **9 Another way of looking at it is**  **10 looking at how is that in terms of a return on**  **11 investment.**  **12 But any way you look at it, if you**  **13 don't do it over the life you have to assign**  **14 a value to the improvement that will be there**  **15 over the life of the home.**  **16 And as Robin said, if you discount**  **17 that you really haven't -- you haven't done**  **18 the life cycle cost analysis.**  **19 If we want to ask PNNL to do**  **20 return on investment, payback, first year**  **21 cash, first month cash flow and life cycle**  **22 cost and see how they all compare, great. But** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 what we've been asked to do here as I**  **2 understand by Congress is life cycle.**  **3 That was clearly defined in**  **4 testimony in Congress and I have that from**  **5 Senator Adams back when the act was '94. When**  **6 you guys argued about it it was what do we**  **7 mean by cost-effective. There's Senate**  **8 testimony that says it's lowest life cycle**  **9 cost.**  **10 That was, I think, reiterated by**  **11 Congress in 2008 in what they said here,**  **12 lowest life cycle cost. And I believe that's**  **13 the life of the home.**  **14 But if you want to do the other**  **15 analysis, you know, I just think it's going to**  **16 get in the way.**  **17 You can't do it just based on**  **18 seven years without some recognition of**  **19 salvage value because of the value. I would**  **20 say it's there from the higher efficiency**  **21 level. Thank you.**  **22 MR. RAMIREZ: Let's go to -- we** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 have Keith, Robin, Mark and then Stacy.**  **2 MEMBER DENNIS: I kind of just**  **3 have a question for the experts I guess also.**  **4 And I should know this because I deal with**  **5 this all the time.**  **6 But from an economic standpoint I**  **7 know that when we're looking at a lot of**  **8 efficiency standards from a national level we**  **9 look at discount rates for policy.**  **10 And I know that policy for**  **11 environmental purposes tends to be pretty low**  **12 because of -- for certain reasons.**  **13 But when you look at something in**  **14 more -- these types of terms where you're**  **15 actually looking at the opportunity cost for**  **16 this capital and that -- you have to say that**  **17 over time having someone delay a payback for**  **18 10-20 years when they would be using those,**  **19 that money to, say, buy groceries or something**  **20 like that when they're being forced to buy**  **21 something at a minimum standard, that**  **22 opportunity cost and discount rate that they** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 would use is going to be a lot higher. It**  **2 might be that they have a credit card with a**  **3 very high interest rate.**  **4 So, I don't know how those things**  **5 actually feed into this analysis. And I see**  **6 discount rate. They were just talking about**  **7 inflation rates and mortgage rates.**  **8 I would argue that the discount**  **9 rates for a, say, $5,000 payment to somebody,**  **10 a very small amount of money to get $5 a month**  **11 back for 30 years is going to be substantially**  **12 different than when you're looking at a**  **13 national policy for somebody to spend, say,**  **14 $20 extra on a DVD player.**  **15 So, I don't know if it's worth**  **16 discussion or not. But I'm the same way. I**  **17 wouldn't wait 30 years on a payback for**  **18 something in my house. I don't know that I'd**  **19 wait three or four years.**  **20 So, I know we're all kind of**  **21 working on a policy level, but from a**  **22 practical perspective on something like this** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 where it is affordable housing I think it's**  **2 worth it to take a kind of common sense**  **3 approach to what that actual discount rate**  **4 would look like, or what these decisions are**  **5 like. Because people do have to make those**  **6 decisions.**  **7 MR. RAMIREZ: Okay. Let's get**  **8 Robin, Mark and then Stacy.**  **9 MEMBER ROY: I completely agree on**  **10 getting the right discount rates -- or the**  **11 cost of funds, not the discount rates.**  **12 What I've seen DOE do in appliance**  **13 and equipment standards before has been pretty**  **14 smart. Because I worried about that myself.**  **15 For example, if it's a**  **16 refrigerator appliance, a refrigerator**  **17 standard they did some interesting work and**  **18 looked to see what fraction is credit card**  **19 purchase, what's cash. If it's cash, was that**  **20 cash otherwise going to be put into a savings**  **21 account, whatever.**  **22 Or they rolled it into a mortgage** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 in some fashion. Where was the money coming?**  **2 And so they did a pretty sensible job across**  **3 the spectrum of sources of funds. So it**  **4 wasn't a silly analysis.**  **5 So I presume they will do a**  **6 similarly appropriate analysis. I continue to**  **7 be quite interested in the distribution across**  **8 the purchasers group for the reason you point**  **9 out, the importance for affordable housing,**  **10 particularly for the less well off in society.**  **11 So that really is important to**  **12 look at the distribution, not just the**  **13 averages for this.**  **14 I continue to not see how we could**  **15 ignore that piece of equipment or a home will**  **16 continue to operate for 30 years and have an**  **17 energy impact in each one of those years.**  **18 I realize that in the 30th year**  **19 the implication for today's present value**  **20 under life cycle cost is quite small because**  **21 any discounting, it just gets smaller and**  **22 smaller over time, the impact in today's** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 dollars.**  **2 But it's a 30-year measure. It**  **3 may not go to the first buyer. It will go to**  **4 the second or third or fourth buyer. It's**  **5 going to go to somebody.**  **6 But to your point, and I kind of**  **7 missed it the first time. What you're really**  **8 concerned about is something which I don't**  **9 think a share a view with Luby on is that**  **10 there is a somewhat special consideration for**  **11 that first buyer.**  **12 And I think that's wrapped up with**  **13 this word "affordability" that we use. And**  **14 what Congress used was the word -- well, when**  **15 they define cost-effective there they said**  **16 life cycle cost and purchase price.**  **17 So I think it's really important -**  **18 - oh man, are we back to pornography? It's**  **19 important to bear both of those concepts in**  **20 mind.**  **21 It's not just the minimum life**  **22 cycle cost with the appropriate cost of funds** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 and discount rate. It's also the purchase**  **2 price. And we're going to have to come to**  **3 some view amongst us whether we share what is**  **4 a reasonable balancing with those.**  **5 And we see what the numbers tell**  **6 us. Is there a $5,000, $7,000 bump-up for a**  **7 set of measures that were cost-effective. But**  **8 we're going to have to think how painful is**  **9 that. That might be too painful.**  **10 What if it's a $500 bump-up? That**  **11 might be too painful toll. But maybe not.**  **12 And there's no way that we're**  **13 going to define what that tradeoff is here.**  **14 I think we'll have to look at the numbers.**  **15 MR. RAMIREZ: All right, so now we**  **16 have Mark, Stacy, Eric and David.**  **17 MEMBER WEISS: It's always risky**  **18 stepping outside your field so I do this with**  **19 trepidation. But and somebody can correct me**  **20 if I'm wrong.**  **21 But if the first purchaser can't**  **22 buy the home based on a seven-year life cycle** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 or whatever figure you attribute to that then**  **2 there is no resale to take advantage of a 30-**  **3 year life cycle. Is there?**  **4 That person is excluded and all**  **5 subsequent transactions are excluded too from**  **6 that person.**  **7 MEMBER EPPERSON: Stacy at Next**  **8 Step. I'd be remiss not to underscore the**  **9 mission at Next Step concerning sustainable**  **10 home ownership. For us that's defining life**  **11 cycle cost. And we do that for 30 years.**  **12 There is a twist here I just want**  **13 to point out though. We don't only look at**  **14 energy. We look at all aspects of getting the**  **15 house done right.**  **16 We exceed ENERGY STAR. We put it**  **17 on the strictest engineered permanent**  **18 foundation that you could put on the ground,**  **19 plus design the house for marketability in the**  **20 future.**  **21 I had to think long and hard would**  **22 I use that same measure if I were doing a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 single-section here in a community, not on a**  **2 permanent foundation that was a rectangular**  **3 box. I think I'd have to think long and hard**  **4 and seek data about that.**  **5 But I do want you to know for that**  **6 multi-section larger home and the way we**  **7 finance it we would do 30 years.**  **8 MEMBER LACEY: This is a difficult**  **9 question as you know.**  **10 I know we've been talking a lot**  **11 about what period of time do we need, or could**  **12 we justify before the upgrade costs are paid**  **13 back.**  **14 I want to flip that upside down**  **15 and talk about the opportunity cost of not**  **16 installing the measure that would have been**  **17 cost-effective if the payback period had been**  **18 longer.**  **19 Let's say we assume a one-year**  **20 payback period. The house is going to be**  **21 built very differently. It's going to be**  **22 built focused almost exclusively on initial** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 purchase price with probably very little**  **2 regard to the operating costs of the building**  **3 over the rest of its lifetime.**  **4 Now, it's a difficult question**  **5 because as has been mentioned before every**  **6 measure in the house might have a different**  **7 lifetime. Insulation in the wall may last 100**  **8 years according to the NHB.**  **9 Some of the other things -- they**  **10 publish an analysis, by the way, every few**  **11 years that tells how long they expect -- the**  **12 expected lifetime is from various components.**  **13 Now, I've run into this in other**  **14 fora before what is the life cycle cost.**  **15 Thirty years is kind of the industry standard.**  **16 And not because a house only lasts 30 years**  **17 and then falls apart, but it was kind of a**  **18 compromise between, well, the house might be**  **19 here for 100 or 200 years, but you have to**  **20 have some kind of near-term projection of when**  **21 you want things to kind of pay for themselves.**  **22 And the number 30 has popped up** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 over and over and over again. So I would**  **2 suggest that unless there's some other period**  **3 that's based on some real data that you think**  **4 Congress meant instead of 30 years when they**  **5 said life cycle, then we've got to stick with**  **6 what's common here.**  **7 But keeping in mind that by**  **8 shortening that under 30 years you're flipping**  **9 the preemption upside down and you're kind of**  **10 leaving on the table the potential higher**  **11 energy cost that could accrue over the**  **12 lifetime of the home after that period, that**  **13 payback period is over.**  **14 MEMBER TOMPOS: Well, I'm going to**  **15 hold some of my comments because I think we're**  **16 getting to an ELMO situation.**  **17 But I agree with Robin, I think we**  **18 need to get some numbers on the table so we**  **19 can see where they fall out. You know, we're**  **20 kind of just spinning our wheels here.**  **21 MR. RAMIREZ: Yes, that's what was**  **22 going through my head when Stacy was done. I** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 have an idea on that but I may choose to**  **2 embarrass myself with a smaller group than**  **3 publicly before I throw it out there. So I**  **4 probably explore that during the break.**  **5 MS. HOFFMAN: Right, I was going**  **6 to say we'll try some ideas during the break.**  **7 I think you were next though?**  **8 MR. RAMIREZ: Yes, so we have John**  **9 and then Robin, did you have one last comment**  **10 before the break?**  **11 MS. HOFFMAN: And then the break.**  **12 MR. RAMIREZ: Okay. So we'll do**  **13 John, we'll channel Ishbel and then take a**  **14 break.**  **15 MEMBER CASKEY: Okay, this is John**  **16 Caskey at NEMA. I think we're throwing out a**  **17 bunch of different terms here.**  **18 What I would love to be able to**  **19 see if I'm going to make some intelligent**  **20 decision over this whole process is, one, is**  **21 that I definitely think we need a 30-year life**  **22 cycle cost analysis. And that's basically** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 what we're obligated to do in support of DOE.**  **2 But in addition to that I would**  **3 like to know what the incremental first cost**  **4 is of those various options that we're talking**  **5 about.**  **6 And then at the same time I'd like**  **7 to know what essentially the delta, what the**  **8 operating costs are for each of the scenarios.**  **9 And from that I can calculate the delta**  **10 operating cost. And then from that I can**  **11 derive the simple payback by dividing the**  **12 incremental first cost -- or the operating**  **13 cost, the other way around, to find out how**  **14 many years it's going to take before I can pay**  **15 this back.**  **16 And then you can make informed**  **17 decisions on whether dealing with these low**  **18 income people that are trying to purchase**  **19 these homes, that then you can have some**  **20 assessment of, oh yes, it's likely that on**  **21 average they're going to be in there in seven**  **22 years. But most of these measures that we're** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 talking about relative to energy efficiency**  **2 are going to pay for themselves in five years.**  **3 So it seems like a good compromise and that we**  **4 would use that in addition to what the life**  **5 cycle cost analysis does.**  **6 But the other thing dialing with**  **7 your, you know, what's the value of the house.**  **8 You don't really need to deal with that.**  **9 If you do the life cycle cost**  **10 analysis, however, you do need to make sure**  **11 that you positively include the replacement**  **12 cost of the HVAC equipment and the water**  **13 heater and other things like that. Things**  **14 that have a shorter than 30-year lifetime you**  **15 need to factor in the cost of replacing that**  **16 over that 30-year period.**  **17 So, I mean that's from my**  **18 perspective how the whole analysis should be**  **19 done.**  **20 MR. RAMIREZ: Okay. Ishbel?**  **21 MEMBER ROY: Channeling Ishbel.**  **22 She surveyed her board and hears back that --** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 from one members who has lived in a home for**  **2 11 years, that that member happily pay five to**  **3 ten thousand dollars more to get a more energy**  **4 efficient home. So there's some interest**  **5 there. Anecdotal and helpful.**  **6 And as for lot rent it depends on**  **7 the private market. Most landlords won't care**  **8 whether the homes are energy efficient or not.**  **9 MEMBER SCHNEIDER: Yes, I don't**  **10 think lot rent is going to change at all. So**  **11 I'm not even sure that's even a question that**  **12 needs to be looked at any further.**  **13 But I was just looking at, you**  **14 know, for an example for Burlington in our**  **15 climate zone looking at the actual energy cost**  **16 of the HUD-compliant home. And again, this is**  **17 assuming the grade 1 insulation installation.**  **18 This would certainly be a higher**  **19 energy cost. And we've seen significantly**  **20 higher energy costs up here.**  **21 We also -- there was like $2.60**  **22 for propane whereas we had $4-plus price for** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 propane last year and that's what all of our**  **2 heating systems are. Up here we have all**  **3 unregulated fossil fuel for the most part.**  **4 But anyway, just year 1 even with**  **5 those assumptions that are not accurate, you**  **6 know, we're looking at a $1,000 savings year**  **7 one.**  **8 And you know, if you put you're**  **9 looking at a year and a half payback on that**  **10 additional down payment if that home is**  **11 $10,000 more.**  **12 So, just the idea that there's --**  **13 as far as what that initial investment is, you**  **14 know, not only is the payback of that initial**  **15 additional down payment a very short period**  **16 for that homeowner, but month one they are**  **17 going to have positive cash flow.**  **18 In this scenario they're looking**  **19 at just over $400 in mortgage and energy**  **20 costs, month one, compared to the HUD**  **21 compliant home where they're looking at**  **22 somewhere around $600, almost $700 a month.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 There's a huge difference in cash**  **2 flow on a monthly basis. So we have to look**  **3 -- in addition to the initial cost we need to**  **4 start looking at what those are other factors**  **5 look like for that homeowner such as cash flow**  **6 on a monthly basis and how quickly they get**  **7 that down payment back.**  **8 And up here, very quick when I**  **9 look at going from HUD to IECC 2015. For me**  **10 it's a no-brainer.**  **11 MR. RAMIREZ: Great, thank you.**  **12 MEMBER LUTER: Can I comment on**  **13 his comments, please?**  **14 MR. RAMIREZ: Who is it?**  **15 MEMBER LUTER: Very briefly. Rob**  **16 with Lippert. Peter, if all these advantages**  **17 are there for these homeowners what's keeping**  **18 them from buying these homes now? Are the HUD**  **19 builders telling them no. Or are they not**  **20 choosing I-code modulars?**  **21 MEMBER SCHNEIDER: Well, you can't**  **22 get -- well, we just don't have them, right?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 If you go to a manufacturer's dealer lot which**  **2 is where all these folks are going there isn't**  **3 even an ENERGY STAR home on their lot, alone**  **4 one that is beyond HUD-compliant.**  **5 So only the bare minimum is out**  **6 there. They don't know what is available.**  **7 And I will say it's all about**  **8 education, advocacy, outreach. And so we just**  **9 hired a project manager who's going to be out**  **10 there pounding the pavement trying to educate**  **11 everybody. You know, our park owners, the**  **12 folks that live in mobile home parks, the**  **13 people that live in manufactured homes on**  **14 private lands, going to home shows. There**  **15 just is not the education out there.**  **16 And there's also not the product.**  **17 It's like trying to go out and buy an**  **18 efficient car before we had efficient cars on**  **19 the lot. And right now there isn't anything**  **20 on the lot that reflects what we're talking**  **21 about and what I'm describing.**  **22 There clearly are the benefits but** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 we just don't have the product. And I think**  **2 that's what we're talking about today is**  **3 making that product available.**  **4 MEMBER LUTER: I think today we're**  **5 talking about making that product mandatory.**  **6 MS. HOFFMAN: I think it might be**  **7 time for that break. Do you have a concluding**  **8 comment, please?**  **9 MEMBER LEVY: It's more of the**  **10 same and I think Mark has the comment. Let's**  **11 do it after the break.**  **12 MS. HOFFMAN: Okay. Hold that**  **13 thought, okay? We'll come back in 15 minutes.**  **14 Thank you. You won't forget it, write it**  **15 down. Thank you.**  **16 (Whereupon, the above-entitled**  **17 matter went off the record at 3:29 p.m. and**  **18 resumed at 3:57 p.m.)**  **19 MR. RAMIREZ: Let's go ahead and**  **20 get started. Emanuel is going to go ahead.**  **21 Mark, you had a comment right before break?**  **22 MEMBER WEISS: Yes, actually two.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Just to address I think it was**  **2 Peter's point about what he's finding in**  **3 Vermont.**  **4 The fact of the matter is that any**  **5 consumer right now can get whatever they want**  **6 in terms of an energy package in a**  **7 manufactured home as long as it's physically**  **8 possible.**  **9 That stuff is available now. It**  **10 does not take a standard to get that.**  **11 Instead of the free choice**  **12 situation we have now essentially what we're**  **13 talking about is a one size fits all rule**  **14 which is the source of a lot of concern from**  **15 our perspective.**  **16 I had a question though to general**  **17 counsel. Is there a definition of life cycle**  **18 cost in the EISA statute?**  **19 MS. VAIDYANATHAN: Hi, this is**  **20 Kavita Vaidyanathan in the DOE general**  **21 counsel's office.**  **22 In reviewing the statute there is** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 no definition of life cycle cost. So we would**  **2 look to this Consensus Committee to provide a**  **3 reasonable definition and DOE can consider**  **4 that.**  **5 MEMBER WEISS: Okay. So a follow**  **6 up question to that. Is there any relevant**  **7 legislative history with respect to the**  **8 meaning of life cycle cost for EISA?**  **9 MS. VAIDYANATHAN: I'm not aware**  **10 of any.**  **11 MR. HAGERMAN: We can get you an**  **12 answer from general counsel's office but I**  **13 believe life cycle cost is one of the**  **14 requirements in all of our standards-making**  **15 activities. So we can give you that**  **16 definition.**  **17 MEMBER TOMPOS: Dave Tompos. I'm**  **18 sorry, Mark, are you done?**  **19 MEMBER WEISS: Well, my question**  **20 is directed to this specific statute. But if**  **21 you have anything you think is relevant I'd be**  **22 happy to see it.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER TOMPOS: Dave Tompos. You**  **2 guys have a lot of experience with energy**  **3 efficiency in appliances. Have you ever done**  **4 anything where the financing has to deal with**  **5 debt-to-income ratio?**  **6 MR. HAGERMAN: I'd have to ask**  **7 somebody to be honest with you.**  **8 MEMBER TOMPOS: Because I think**  **9 that's what the big difference here is in a**  **10 lot of the other committees that DOE has dealt**  **11 with as opposed to this one. That's kind of**  **12 -- we keep going back to that same issue is**  **13 that it's that initial cost and not allowing**  **14 that low-income potential homebuyer to get**  **15 into the home initially. So it's a little**  **16 different when you're talking about a DVD**  **17 player or a dryer or something like that.**  **18 MR. RAMIREZ: Emanuel, you want to**  **19 continue on here?**  **20 MEMBER LEVY: Yes. I just want to**  **21 make a couple of comments and then I think we**  **22 need to bring this to some kind of close on** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 the issue of period of analysis.**  **2 Just a couple of pieces of**  **3 information from our own experience of energy**  **4 efficiency measures which kind of I think**  **5 impact this discussion to some degree.**  **6 One, it's mainly through the**  **7 ENERGY STAR experience in building lots of**  **8 homes across the country we found that the**  **9 ENERGY STAR package seems to contribute**  **10 nothing to resale value.**  **11 I mean, that may change over time**  **12 and we may find 10 years from now that the**  **13 story is different for ENERGY STAR homes built**  **14 today. But the experience we have in the**  **15 field is kind of sobering from our standpoint**  **16 that it hasn't really contributed to resale**  **17 value. Sure, there are anecdotal examples to**  **18 the contrary, but that's been our experience.**  **19 And by the same token many people**  **20 in the industry who I've asked this question**  **21 of have said there's no -- they can't get an**  **22 increase in assessed value for the home as a** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 result of the ENERGY STAR package. Again, I**  **2 don't know how that plays into our discussion.**  **3 We can talk about it.**  **4 And the last thing, I just wanted**  **5 to kind of repeat something that Keith's**  **6 mentioned which is in a different perspective.**  **7 Going back to our discussion about**  **8 period of analysis. We are basically saying**  **9 that if the period of analysis is 30 years or**  **10 some lengthy time period and a homeowner**  **11 occupies the house for seven years they're**  **12 going to get negative value out of that**  **13 investment. And I think that's been mentioned**  **14 a couple of times.**  **15 Philosophically I think the**  **16 difference that we're talking about at the**  **17 table is the life cycle of the house or the**  **18 life cycle of the first buyer of the house.**  **19 Is the life cycle of all the homebuyers of the**  **20 house or just the first buyer?**  **21 So I think we need to bring this**  **22 to a head and give some guidance to the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 analytical team. So we need a motion I guess,**  **2 or some kind of suggestion.**  **3 MR. RAMIREZ: Eric.**  **4 MEMBER LACEY: This is Eric Lacey.**  **5 I just wanted to maybe suggest something. If**  **6 you're looking -- there are a lot of potential**  **7 assumptions here. And we could probably fight**  **8 all day along about, you know, where to do**  **9 this. But the analysis has to start**  **10 somewhere.**  **11 And there was a question raised**  **12 earlier about whether DOE has every done this**  **13 for various products, appliances and**  **14 everything.**  **15 Department of Energy Building**  **16 Energy Codes Program did a cost-effectiveness**  **17 analysis for the residential IECC 2012.**  **18 Now, I mentioned earlier the 2012**  **19 and 2015 are almost identical in my mind. I**  **20 don't know how DOE is going to determine this,**  **21 but in my mind they're very, very close in**  **22 terms of energy efficiency. And I think the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 cost-effectiveness is going to be the same**  **2 when we're talking about residential single**  **3 family homes.**  **4 Now, I recognize there are going**  **5 to be some differences between the stick-built**  **6 homes and manufactured homes.**  **7 But one thing that I liked about**  **8 what DOE did in these analyses is they went**  **9 out with an RFI and asked for a lot of input**  **10 on what kinds of assumptions to use.**  **11 Our organization provided a bunch**  **12 of ideas. The homebuilders provided a bunch**  **13 of ideas. A lot of people put information**  **14 into this process. And DOE published a**  **15 methodology with a lot -- most or all of these**  **16 assumptions that's available on their website.**  **17 And then they used this**  **18 methodology to calculate cost-effectiveness**  **19 for just about every state from going from**  **20 their current code to the 2009 and then to the**  **21 2012 version of the IECC.**  **22 And they broke it down in several** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 ways. They looked at the impact to first**  **2 cost. They looked at the life cycle cost**  **3 impact over a 30-year period. And they also**  **4 looked at the payback, the simple payback**  **5 period. And so they kind of broke it down.**  **6 They also did kind of like a**  **7 month-to-month analysis. At what month do you**  **8 start seeing a positive cash flow. I think**  **9 they're really helpful.**  **10 When we've gone around the states**  **11 talking about the IECC we always bring a copy**  **12 of that state's cost-effectiveness analysis.**  **13 In every case they found that they**  **14 paid back in shorter than -- I think shorter**  **15 than seven years or seven and a half years.**  **16 Most of them were much shorter than that.**  **17 So, I would encourage you to take**  **18 a look at this. And as you're filling in some**  **19 of these assumptions it might be easy to start**  **20 with what was used in this methodology as kind**  **21 of a strawman and say this is the discount**  **22 rate DOE used in the past. Do we agree with** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that? Is that close enough? Are we on both**  **2 sides of that or is it way off?**  **3 It might be a way to populate some**  **4 of these things, rather than just taking a**  **5 poll of what everybody says, or trying to find**  **6 it somewhere else.**  **7 I'm trying to kind of advance the**  **8 ball here with sufficient level of detail but**  **9 without getting bogged down in every single**  **10 issue.**  **11 Anyway, that's the suggestion. I**  **12 can send that website around and you can take**  **13 a look at these analyses and the methodology**  **14 if you're interested.**  **15 MR. RAMIREZ: Yes, please. Stacy?**  **16 Okay, Michael?**  **17 MEMBER LUBLINER: Yes, I just**  **18 wanted to respond to your comment about the**  **19 fact that you didn't see resale, some**  **20 anecdotal study you did.**  **21 Did you talk to the clients about**  **22 the NADA evaluation of ENERGY STAR in that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 assessment?**  **2 Because I have a longstanding**  **3 history with NADA of after our utilities**  **4 invested $100 million to build these homes**  **5 more efficient for many years. And when you**  **6 go into a home and it's got the ENERGY STAR**  **7 sticker and if you use the NADA you're getting**  **8 thousands back on resale.**  **9 So I'm not understanding if --**  **10 this is real stuff. It's in their -- if you**  **11 go and appraise a home using the NADA, and I**  **12 just did my home, and you add the energy**  **13 upgrades it's in the thousands. So I can't**  **14 understand why -- that's like real data, but**  **15 anecdotally you're not seeing that. I'm**  **16 trying to understand why there are two so**  **17 different.**  **18 MEMBER LEVY: I can explain that.**  **19 If you look in the NADA directory you'll see**  **20 our label too. And it has an assigned value**  **21 of $1,300 or something like that.**  **22 But when I go into the field and** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 talk to people who are actually selling the**  **2 homes they say we don't look at that. We**  **3 don't bother with that. I mean, it's there,**  **4 the information is available, but as a**  **5 practical matter it's not being used.**  **6 The Northwest is kind of a special**  **7 case because of the $100 million that's been**  **8 put into the program and a great job they've**  **9 done over the years of building up the brand**  **10 recognition of energy efficiency and**  **11 manufactured housing associated with that.**  **12 But take my word for it, that's**  **13 unusual and it's atypical of what's happening**  **14 in the rest of the country. And tell me if**  **15 you see the same thing, David and Emanuel, but**  **16 that's been my experience.**  **17 MEMBER LUBLINER: I guess my**  **18 follow-up on that is that I still would like**  **19 to know if this is available nationally and**  **20 your manufactured homeowners are selling 10**  **21 percent ENERGY STAR or whatever.**  **22 And some of them are using chattel** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 mortgages that could benefit by valuing this**  **2 extra $1,600, why aren't they doing it? It's**  **3 going to provide the value to the customer.**  **4 It's going to make it easier for them. Why is**  **5 that?**  **6 And when you have a big enough**  **7 statistical sample like the Northwest you**  **8 start to see that actually there is a**  **9 distinction that the market makes here.**  **10 And it's available throughout the**  **11 country. It's just that some haven't decided**  **12 to I guess use it. I don't know. I'm trying**  **13 to understand why is it that the sales people**  **14 and the retailers and the manufacturers aren't**  **15 promoting that to their chattel mortgage**  **16 customers as a way of better qualifying for a**  **17 manufactured home.**  **18 MR. RAMIREZ: John.**  **19 MEMBER CASKEY: John Caskey, NEMA.**  **20 This might be a little bit different resource**  **21 but this is from energy.gov, Office of Energy**  **22 Efficiency and Renewable Energy. Life cycle** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. 

### 1 cost analysis for sustainable buildings. **2 It says life cycle cost (LCC) 3 rules are promulgated in 10 CFR 436A, Life**  **4 Cycle Cost Methodology and Procedures, and 5 conforms to requirements in the National**  **6 Energy Conservation Policy Act and subsequent 7 energy conservation legislation as well as**  **8 Executive Order 13423. 9 The life cycle cost guidance and**  **10 materials assume discount rates and energy 11 price projections determined annually by**  **12 Federal Energy Management Program and the 13 Energy Information Administration.**  **14 So, it seems like a lot of the 15 stuff we need is already out there and has**  **16 already been, if you will, blessed by DOE. 17 And we just need to go back and look at the**  **18 resource and make sure we're assuming the 19 right numbers in our starting point.**  **20 MR. RAMIREZ: Which I think goes 21 back to what Eric had just talked about,**  **22 right? At least part of it is that there's**

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 potentially a strawman out there that we could**  **2 use as the basis.**  **3 But we could talk about that as**  **4 far as next steps, right? So, Emanuel, you**  **5 want to continue?**  **6 MEMBER LEVY: Yes. I agree,**  **7 there's a lot of information up here. For**  **8 example, I -- where that data, and there's a**  **9 link to some of the data you just mentioned,**  **10 John.**  **11 There are two or three items on**  **12 this list that are kind of subject to our**  **13 decision-making. And it's basically you lean**  **14 on the people who know the most about those**  **15 topics and make a decision as to what's**  **16 appropriate.**  **17 And period of analysis is one of**  **18 those. That's my only point.**  **19 And discount rate possibly is one**  **20 of those things too.**  **21 So I think we ought to focus our**  **22 attention on those and come to some conclusion** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 to give guidance to the team here. And then**  **2 we can move on and ask them to do sensitivity**  **3 studies. But we need to give some guidance**  **4 and move forward on them.**  **5 MEMBER ROY: I have a proposal for**  **6 A. Let's change it to two things: periods of**  **7 analysis and give it different names. A**  **8 seven years or whatever, life of first owner,**  **9 tenure of first owner. And B, 30 years or**  **10 whatever number we're going to throw in there.**  **11 Life of home. Maybe it's longer than 30**  **12 years.**  **13 And then great. Then we can go on**  **14 and look at the numbers as they come out.**  **15 MEMBER LEVY: So you want to do**  **16 two sets of analyses?**  **17 MEMBER ROY: And be clear in our**  **18 labeling of them, that one of them is the**  **19 tenure of the first purchaser and the second**  **20 is the life of the product we're talking**  **21 about.**  **22 MR. RAMIREZ: Everyone go with** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that? Let's see a show of thumbs.**  **2 MS. HOFFMAN: We'll hear from the**  **3 folks on the remote if there's a problem.**  **4 Okay. Did I miss any or was this agreeable?**  **5 Okay. Consensus. Hear hear. We did**  **6 something.**  **7 MEMBER LEVY: We didn't do**  **8 anything.**  **9 (Laughter)**  **10 MS. HOFFMAN: Thank you, Emanuel.**  **11 Moving right along.**  **12 MEMBER LEVY: Do we want to talk**  **13 about discount rate? Maybe we could start**  **14 this discussion by Matthew or Ed talking about**  **15 what discount rate and what its significance**  **16 is and what typically has been used in the**  **17 past and what might be appropriate.**  **18 MR. WALKER: So this is Matthew**  **19 Walker with Navigant. Yes, the discount rate**  **20 affects the value of the future cost savings,**  **21 particularly in this case associated with the**  **22 energy cost savings.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 A larger discount rate is going to**  **2 make the value of those savings less, a**  **3 smaller rate makes them larger. So a smaller**  **4 rate probably gives you the better chance of**  **5 offsetting the original housing purchase**  **6 price.**  **7 I can say from experience in other**  **8 of DOE's appliance rulemakings that the**  **9 discount rate is frequently and I think Robin**  **10 may have alluded to some of this.**  **11 It's usually an assessment of all**  **12 of the options that a customer or consumer has**  **13 for placing their money. So it's cash, it's**  **14 mortgages, it's consumer debt, those kinds of**  **15 things. And then a weighted average is often**  **16 done for kind of that middle of the road mean**  **17 estimate.**  **18 And sensitivities can be run**  **19 around different options, high and low, above**  **20 and below that.**  **21 MEMBER LEVY: So as a starting**  **22 point for discussion could we say the mortgage** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 rate might be a reasonable discount rate? Or**  **2 what would you suggest?**  **3 MR. WALKER: I think that could be**  **4 a starting point for discussion. So, a real**  **5 estate rate could be something like 5 or 6**  **6 percent. You might even have had that up**  **7 there. Yes, you did.**  **8 The other thing to think about is**  **9 that the consumers that are buying these**  **10 products may -- you may want to think about**  **11 the most expensive debt or investment type of**  **12 option they have available which it could in**  **13 some cases be credit card debt which is**  **14 frequently an extremely high number. It was**  **15 like 19 percent or something. So that could**  **16 be another almost sort of boundary case to**  **17 look at.**  **18 So, you know, the decision that**  **19 they're facing is do I pay down my 19 percent**  **20 debt that's just killing my financial health,**  **21 or do I buy a $1,000 more expensive home to**  **22 live in.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAMIREZ: At least for a**  **2 starting point talking about a mortgage.**  **3 MEMBER WEISS: I have some real**  **4 concerns with the last thing that was said**  **5 there. Based on I guess someone that has that**  **6 much credit card debt, should they be buying**  **7 a house, period? Let alone an energy**  **8 efficient home?**  **9 Isn't that why we're in the**  **10 situation we're in now with the meltdown and**  **11 almost -- I mean, I don't want to get into**  **12 that. But I have a fundamental disagreement**  **13 with using that based on the fact that we're**  **14 talking about affordable housing for people**  **15 that can afford the house.**  **16 And if they can't afford to pay**  **17 their credit card off every month**  **18 significantly then I have some real concerns**  **19 about that.**  **20 But again, you know, somewhere I'm**  **21 much more comfortable setting it to the**  **22 inflation rate, fuel inflation rate, because** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that's the one that's the uncertainty. And**  **2 that hinges.**  **3 If all of a sudden we have another**  **4 war and the prices go up or regulations that**  **5 impact the electricity use I would like to see**  **6 it tied to the fuel escalation rate. I think**  **7 it's more justifiable. But it's my own**  **8 opinion. Thank you.**  **9 MEMBER DENNIS: Yes, I mean I**  **10 think I'd like to say. Keith Dennis. I think**  **11 that the process that Robin described, that**  **12 that's what DOE normally does taking into**  **13 account the portfolio of what people usually**  **14 have in terms of debt and finance options at**  **15 hand seems more important than just using a**  **16 mortgage rate.**  **17 I know that the opportunity cost**  **18 for me in particular to spend on energy**  **19 efficiency would be much higher than my**  **20 mortgage rate which is very low.**  **21 So I don't think that that's**  **22 really -- it's a number that has to do with** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 how much you're financing your home for, but**  **2 I don't think it has a lot to do with**  **3 decision-making.**  **4 And I think the reality is that**  **5 the tradeoff is going to be in some cases**  **6 between a credit card and energy improvement.**  **7 In other cases it might be all cash which is**  **8 probably the other end of the spectrum.**  **9 And I think that a realistic**  **10 approach would be better than just kind of**  **11 picking a number because it's related to the**  **12 actual transaction.**  **13 MEMBER EPPERSON: Stacy, Next**  **14 Step. We represent a network of non-profits**  **15 that provide financial literacy, homebuyer**  **16 education and counseling.**  **17 The buyers that we are talking**  **18 about typically pay more for credit than maybe**  **19 buyers of site-built homes. It's just the**  **20 income level that they're at.**  **21 So if I'm thinking of opportunity**  **22 choices for them it's reasonable rather than** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 putting money like into the stock market and**  **2 that opportunity. Rather it's often paying**  **3 off debt. So I just want to do a reality of**  **4 what we see as a network.**  **5 MEMBER LACEY: Yes, sorry, I did**  **6 have something to say after all. I looked up**  **7 the methodology that DOE used on the**  **8 residential. And they just used the mortgage**  **9 rate as kind of a compromise I think between**  **10 the range of things you could use.**  **11 I mean, I recognize that what**  **12 you're talking about is what is an equivalent**  **13 investment with similar risks and what is**  **14 available and all that.**  **15 And they came to the conclusion**  **16 that this is a -- that investing in these**  **17 efficient options was an alternative**  **18 investment at a similar risk level and so they**  **19 just applied it the same rate that they did to**  **20 the mortgage. So anyway, that's one**  **21 suggestion I think that kind of hits the**  **22 middle** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. RAMIREZ: Okay. And I think**  **2 that that's where we ended up putting it on**  **3 there again as an initial position. Right?**  **4 Whether it's easier or not we'll see. But we**  **5 have the mortgage right there, so.**  **6 MEMBER LEVY: And it doesn't sound**  **7 like we have another counterproposal? Or we**  **8 do?**  **9 MS. HOFFMAN: The only thing I**  **10 heard was from Michael was the fuel inflation**  **11 rate.**  **12 MR. RAMIREZ: And the way I'm**  **13 looking at it is that that's not what we're**  **14 agreeing to ultimately, right? But at least**  **15 a place to start. So who knows, we may end up**  **16 back over there. We'll probably have to see.**  **17 MEMBER DENNIS: I would suggest, I**  **18 think that DOE normally does a couple of**  **19 discount rates in their analysis. They**  **20 usually -- I think they do three to seven.**  **21 I think there's an OMB circular**  **22 out there that actually requires a 7 percent** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 discount rate be used.**  **2 So, and I think in this case where**  **3 we're dealing with low-income that it would**  **4 make sense to look at a scenario with a higher**  **5 discount rate.**  **6 Just as a bounds to see what that**  **7 does have -- what effect it does have in the**  **8 out years.**  **9 So I think it would make sense to**  **10 have a range just from a review perspective.**  **11 But I don't feel strongly enough to hold**  **12 anybody up on it. It just seems to make**  **13 common sense to me.**  **14 MEMBER LEVY: So, if we do**  **15 something like this which we take the mortgage**  **16 interest rate as the discount rate and then do**  **17 a sensitivity analysis as a +/- minus rate.**  **18 Does that seem reasonable?**  **19 MEMBER DENNIS: Yes, I think**  **20 that's reasonable but. It comes out to make**  **21 huge differences I think we could revisit it.**  **22 If it doesn't make any difference. I think** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that sounds great.**  **2 MR. RAMIREZ: So let's look at**  **3 those thumbs if you're all right with that.**  **4 MS. HOFFMAN: No, he has a**  **5 question.**  **6 MR. RAMIREZ: Oh, I'm sorry.**  **7 MEMBER LACEY: Sorry, I don't mean**  **8 to belabor this, but 5 percent of the mortgage**  **9 interest rate, or 5 percent of -- so if the**  **10 mortgage interest rate is 5 percent you mean**  **11 --**  **12 MEMBER LEVY: Zero to ten.**  **13 MEMBER LACEY: I don't think you**  **14 need to go that broad, but okay.**  **15 MEMBER LEVY: Another number? I**  **16 mean, Stacy, what do you think the mortgage**  **17 interest rate is going to be for a chattel**  **18 loan?**  **19 MEMBER EPPERSON: There's a range**  **20 on it. It's double digits and it could range**  **21 all the way to 19 percent.**  **22 MR. RAMIREZ: So with those** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 averages that +/- 5 does sound like it's**  **2 probably within range then. So let's see**  **3 thumbs if you're okay with that for now.**  **4 All right, don't see any thumbs**  **5 down or hear any thumbs down. Oh, sorry.**  **6 Why?**  **7 MEMBER LUBLINER: I don't think**  **8 that we should be driving the national code**  **9 based on just the small sector that is using**  **10 chattel mortgages.**  **11 So I can't vote on this until I**  **12 know how we're going to analyze the discount**  **13 rate. Are we going to use a crystal ball,**  **14 multivariate analysis, or are we going to take**  **15 an average? So I can't vote on this because**  **16 it's going to have a huge impact based on what**  **17 analysis approach we use.**  **18 MR. RAMIREZ: Just to be clear,**  **19 this was not a final --**  **20 MEMBER LUBLINER: No, but you're**  **21 asking me why I'm putting my thumb down.**  **22 MR. RAMIREZ: Yes. So, what we're** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 doing here is just a starting point that we**  **2 could put some structure to this strawman.**  **3 Right now it's a bale of hay. So we want to**  **4 try to flow it into something. So that's why.**  **5 MEMBER WEISS: Just in response to**  **6 Mike talking about a small proportion for**  **7 chattel. I think this should be on the record**  **8 anyway.**  **9 The latest Census data that I'm**  **10 aware of indicates that 76 percent of**  **11 manufactured housing placements are chattel.**  **12 MEMBER LUBLINER: Again, so --**  **13 MEMBER LACEY: This is Eric. Some**  **14 of these issues and these numbers keep getting**  **15 tossed out. I'd really like to see what's**  **16 behind them. Because I'm wondering what's new**  **17 and what's been existing.**  **18 Because what we're talking about**  **19 is a standard. For new construction. And I'm**  **20 afraid some of the numbers being tossed out**  **21 there may involve more than just new**  **22 construction.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 But I just -- if you have any of**  **2 that information to share I'd really**  **3 appreciate seeing that.**  **4 MEMBER WEISS: Yes, that's Census**  **5 Bureau data and it was addressed in a**  **6 rulemaking by the Federal Housing Finance**  **7 Agency in last -- I believe 2010. But it's**  **8 something that we can look at.**  **9 MEMBER LUBLINER: It's Mike**  **10 Lubliner. So, in the Pacific Northwest a very**  **11 small percentage of the homes are chattel**  **12 mortgage. There's actually more in cash then**  **13 there are in chattel.**  **14 So four our region of the country**  **15 for the housing stock there get significantly**  **16 disadvantaged in the optimum energy efficiency**  **17 by using the assumption of chattel mortgage.**  **18 And I know that that is going to**  **19 create a lot of lost opportunities. It will**  **20 cause utilities to have to do things to**  **21 incentivize or carrots or sticks.**  **22 And I'd like to see us not just go** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 to the lowest common denominator, because it**  **2 has impact on the industry and particularly**  **3 our region of the country, California.**  **4 There was an article in the Wall**  **5 Street Journal about reinventing manufactured**  **6 house this week. Talked about the future in**  **7 the upper end, not the lower end.**  **8 And we're setting standards based**  **9 on chattel mortgages. And I just have some**  **10 significant concerns that that's going to**  **11 drive the analysis in a very non-optimum way**  **12 for the consumer in general.**  **13 I think the problem really is that**  **14 HUD and the lenders haven't recognized to**  **15 treat manufactured housing that's equivalent**  **16 to site-built with equivalent financing.**  **17 Thank you.**  **18 MR. RAMIREZ: Let's see Stacy,**  **19 then Kevin, then Mark. Keith, sorry.**  **20 MEMBER EPPERSON: I forgot to put**  **21 mine down too. But I will say that our**  **22 subgroup will pull this data. We have it.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER LEVY: So, we're okay with**  **2 this as written?**  **3 MR. RAMIREZ: Yes. I mean it was**  **4 greater than two-thirds. And again, it's not**  **5 a final position anyway so it's just a place**  **6 to start. So yes, we're good.**  **7 MR. HAGERMAN: So what is the**  **8 number? Are to 7, to 11? Or are we going to**  **9 research that more? Or what is --**  **10 MR. RAMIREZ: Well, we don't have**  **11 that. We're going to that channel number.**  **12 When we put all this together we'll have to**  **13 nail down all of this and then at some point**  **14 VTE and check for consensus to see if we have**  **15 final approval.**  **16 MEMBER CASKEY: Well, just to let**  **17 you know I'm looking at OMB Circular No. A-94**  **18 and that's just as Keith says. Peg's off the**  **19 7 percent rate for the discount rate. Just to**  **20 let you know.**  **21 MR. BARBOUR: The circular has**  **22 been around since 1992. And it's for benefits** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 to the federal programs, how to calculate the**  **2 life cycle cost.**  **3 MEMBER DENNIS: Yes, and you know,**  **4 I'll just mention that that is very national**  **5 number. And think that's what we have to use**  **6 for policy and for affordability.**  **7 Research shows that private**  **8 discount rates for efficiency can be a lot**  **9 here. And with research paper that says they**  **10 be 15 or 25 percent. So, I think that 5**  **11 percent looking 5 up and down has a**  **12 sensitivity on the mortgage wouldn't be**  **13 unreasonable just for info purposes. I don't**  **14 think that necessarily means any decisions are**  **15 going to be made off it.**  **16 It just goes to show if there's a**  **17 big indicator one way, people are concerned**  **18 about affordability, people are concerned**  **19 about the numbers we're using, it's just**  **20 helpful information to have.**  **21 MR. HAGERMAN: This is Joe**  **22 Hagerman. That's kind of my feeling too. Go** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 with this for the time being and we'll look**  **2 forward to seeing what Stacy's committee**  **3 provides everybody.**  **4 MEMBER LEVY: Okay, so we're good**  **5 on that? I just want to go back to B for one**  **6 second. I know Stacy's committee is going to**  **7 be working on this, but I want to encourage**  **8 you, Stacy. I know this is already a lot of**  **9 work to try to get this data.**  **10 But it would -- rather than freeze**  **11 this information in time as in what is it**  **12 today, we might look over the last five years**  **13 that we can get that determine and somehow**  **14 average it.**  **15 Because I do think it's**  **16 fluctuated. I mean you might even take 10**  **17 years, some longer period of time so that**  **18 we're not looking at an atypical period and**  **19 predicating the analysis on that.**  **20 Does that make sense?**  **21 MEMBER WEISS: Just a general**  **22 question for my edification. When did the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 first IECC come out?**  **2 MEMBER LACEY: This is Eric. The**  **3 IECC is the successor to the Model Energy Code**  **4 which has been published for a long time.**  **5 But I think the first IECC was**  **6 like 1998 or so. But it's the successor code**  **7 to the Model Energy Code which is referenced**  **8 in the 1992 Energy Policy Act.**  **9 MEMBER WEISS: What is the rate of**  **10 adoption by states?**  **11 MEMBER LACEY: Almost every state**  **12 has adopted a version of the IECC. They range**  **13 in terms of which edition they've adopted.**  **14 But yes, nearly every state has adopted it.**  **15 Some states can't adopt a**  **16 statewide mandatory code because they're home**  **17 rule. But of the states that are able to**  **18 nearly every state has adopted some version of**  **19 that.**  **20 MEMBER WEISS: Thanks.**  **21 MEMBER LEVY: Moving on. I think**  **22 C through F on this list are probably small** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 impacts. And we'll rely on Stacy. My**  **2 suggestion would be to rely on Stacy. I**  **3 suspect these will have very little influence**  **4 over the numbers we come up with.**  **5 And income tax deductibility. I**  **6 think the case could be made at zero but we**  **7 can talk about that if somebody feels**  **8 differently. That people who are buyers of**  **9 manufactured homes generally don't worry about**  **10 income tax deductibility of the mortgage.**  **11 I and J I think as John talked**  **12 about there's established sources for that**  **13 information that we can pull from. Anybody**  **14 else want to comment on those two areas?**  **15 Okay. Onto K. Other Economic**  **16 Factors. This is kind of a catch-all for**  **17 anything else that might go into the life**  **18 cycle cost analysis and not other economic**  **19 factors which we'll get to in a second. But**  **20 are there elements that we can quantify and**  **21 would be put into the life cycle cost**  **22 calculation?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Lifetime of measures is one that's**  **2 been discussed. Maintenance cost. I guess**  **3 I'm kind of asking for ideas about what those**  **4 things might be and how we would get at those**  **5 figures. Or are there examples of any of**  **6 these? Or we don't have to worry about it**  **7 now, we'll worry about it later?**  **8 MEMBER LACEY: First, just as**  **9 another plug for the DOE methodology there's**  **10 a summary table on page 25 of the PDF that I**  **11 sent to everybody that includes a lot of these**  **12 things.**  **13 But as for lifetime of measures, I**  **14 believe National Association of Homebuilders**  **15 publishes every few years an expected lifetime**  **16 of various home components. That might be a**  **17 good starting point.**  **18 I don't always agree with**  **19 everything in the report but it will give you**  **20 kind of an estimate of how many years a**  **21 natural gas furnace is expected to last versus**  **22 insulation versus a light bulb and all those** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 things. It might be one source of the**  **2 lifetime of the individual measures.**  **3 MR. RAMIREZ: What's that report**  **4 called?**  **5 MEMBER LACEY: I don't want to**  **6 bombard you with emails but I can probably**  **7 find it and circulate it around. I think it's**  **8 called "Expected Lifetime of Building**  **9 Measures" or something like that.**  **10 MR. RAMIREZ: Yes, if you could**  **11 forward that that would be great.**  **12 MEMBER LEVY: The last item I had**  **13 in here, and I'm not sure it actually will**  **14 play into the LCC analysis is the lot**  **15 community rent. Stacy, you're shaking your**  **16 head no.**  **17 MEMBER EPPERSON: I'll withdraw**  **18 it. I think it's not in the life cycle cost.**  **19 It's in an overall affordability because about**  **20 one-third of these homes are going into**  **21 communities.**  **22 And it's a unique housing** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 situation that you pay rent and loan. And we**  **2 don't have that anywhere else hardly in the**  **3 country.**  **4 MEMBER LEVY: Okay. Before we**  **5 move on I want to talk a little bit about**  **6 analysis in a moment. Is there any other**  **7 comments about the life cycle cost and what**  **8 will be done with this information?**  **9 MS. HOFFMAN: Before you do, just**  **10 a short. We had in our agenda public comment**  **11 or questions. And what I'd like to do is just**  **12 see if there is any from people listening or**  **13 people in the audience.**  **14 If there isn't we'll go on. Thank**  **15 you.**  **16 MEMBER LEVY: Okay. I just wanted**  **17 to mention here. What you see up here, this**  **18 analysis has now been now changed by events.**  **19 But it's -- the idea is pretty**  **20 much intact. And that is what we're doing**  **21 after we leave this room is we're providing**  **22 information back to DOE that they need to run** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 life cycle cost analysis on various cases and**  **2 bring information back to the committee for**  **3 evaluation.**  **4 We have a volunteer to provide**  **5 cost information. Others have volunteered,**  **6 Stacy and others to provide other economic**  **7 data. All that will be sent back in the weeks**  **8 ahead back to DOE and to their analysis team.**  **9 It's our understanding that the**  **10 next step in this process is that they will**  **11 take that information and they'll run cases,**  **12 different life cycle cost analyses of**  **13 different measures in different locations of**  **14 the country for different sets of variables**  **15 like different fuel types and those kinds of**  **16 things.**  **17 And perhaps, Matthew, you can talk**  **18 about what your plan is there if you have a**  **19 plan yet. And specifically what would be done**  **20 and what would come back to the committee.**  **21 But I think we should talk a**  **22 little bit about that so we have a pretty** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 clear understanding of what we'll get at the**  **2 end of that analysis period, what comes back**  **3 to the committee and what kind of information**  **4 we'll have to work with.**  **5 One thing I did want to mention,**  **6 and let me see, is that what we've done in the**  **7 past, and I assume we would be working towards**  **8 the same place in this analysis is the dual**  **9 life cycle cost analysis of enough cases so**  **10 that we know for any one location in the**  **11 country, states in particular, what level of**  **12 efficiency is cost-effective. In UO parlance**  **13 that might be the way the information, the**  **14 results are expressed.**  **15 This is from the last go-round on**  **16 the code update where at that time the**  **17 laboratory that was doing the analysis came up**  **18 with UO values that were determined to be**  **19 cost-effective for each state.**  **20 And here you can see the results.**  **21 Before they were graphed into zones.**  **22 So, if we're all in agreement that** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 this is what we're building towards. We're**  **2 getting all this information together to come**  **3 up with usable values, averages for states,**  **4 some kind of weighted average which takes into**  **5 account different kinds of buildings,**  **6 different fuel types, different cost**  **7 structures, different energy costs and all**  **8 those things combine to come up with one**  **9 figure for each state.**  **10 And then we would look at UO**  **11 values across state lines to find and put**  **12 together groups of states that are similar and**  **13 lump those into zones. That's what we did in**  **14 the last go-round.**  **15 And the HUD map today is a result**  **16 of taking a bunch of states like this,**  **17 grouping them together and then weighting the**  **18 UO values for each of the states based on the**  **19 shipments to the states to get a zone U value.**  **20 That was the process we went through.**  **21 So I'm putting this up there just**  **22 to make sure that we're in agreement as this** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 is the kind of information that we want and**  **2 this is where we'll be headed and this is the**  **3 process we want to follow.**  **4 MEMBER ROY: I think it's fine. I**  **5 also have a caveat that I'd also like to leave**  **6 open for the application of the UA approach**  **7 having heard back from the manufacturers about**  **8 their familiarity and interest and willingness**  **9 to go down that path which is using the IECC**  **10 and might provide you more flexibility and a**  **11 more harmonious factory floor over the years.**  **12 So I love the UO, it's great,**  **13 we're all familiar with it. But I think the**  **14 UA, I'd really like to hear how you guys think**  **15 about that before committing to going to a UO**  **16 based standard.**  **17 MEMBER SANTANA: Manny with Cavco.**  **18 So, we're not suggesting that the UO is the**  **19 only approach we're going to take. We're**  **20 suggesting it is the only approach we're going**  **21 to take?**  **22 MEMBER LEVY: No, no. I think** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Robin was brought it up. We can certainly go**  **2 to the UA approach. We can have a**  **3 prescriptive approach. We can have a very**  **4 prescriptive approach. And a performance**  **5 approach, or any combination we want to have.**  **6 Just like IECC does.**  **7 MEMBER SANTANA: You know, at the**  **8 risk of increasing our workload I think it's**  **9 a good idea to have a UO approach, and have a**  **10 prescriptive approach, and then have a UA**  **11 approach. I think that options, it provides**  **12 more efficiency.**  **13 MEMBER LUBLINER: So, when we you**  **14 guys the analysis in '74 -- I mean, '94 we**  **15 didn't have a lot of the multivariate analysis**  **16 tools available.**  **17 I think that we've learned based**  **18 on the way things came out that there was**  **19 significant lost opportunities by not having**  **20 that tool.**  **21 So I would strongly encourage that**  **22 any way of weighting this uses the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 multivariate crystal ball kind of analysis.**  **2 And we just don't do averages. I think we**  **3 would be going down the wrong path and a path**  **4 inconsistent with other ASRAC policy**  **5 approaches if we don't at least consider the**  **6 Monte Carlo multivariate analysis as we set**  **7 these standards. Thank you.**  **8 MEMBER LACEY: I'm sorry, I feel**  **9 like I'm doing a lot of talking today.**  **10 I have a question about the way**  **11 this was conducted back in 1992. I think it**  **12 was in the nineties, not the seventies.**  **13 Ninety-four.**  **14 At the time was there**  **15 consideration of the impact of air continuing**  **16 in all these zones? I know a lot has changed**  **17 and in the residential market air conditioning**  **18 use has become extremely prevalent. And I**  **19 would suggest that you should probably assume**  **20 that.**  **21 And I want to make sure that**  **22 whatever analysis you're doing, it's a UO does** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 it appropriately account for cooling costs**  **2 which would be impacted by an SHGC, maybe by**  **3 orientation or other factors.**  **4 I don't have all of your inputs in**  **5 front of me but I want to make sure that if**  **6 you're going to go down this route and try and**  **7 calculate an optimum UO that it also accounts**  **8 not just for heating costs but also cooling**  **9 costs. Is that all wrapped up in this?**  **10 MEMBER LEVY: Yes.**  **11 MEMBER LACEY: Okay, thanks.**  **12 MEMBER ROY: In one, where we say**  **13 -- first, I'd like to strongly support Luby's**  **14 suggestion of an analysis that gives you**  **15 distributions to look at. It's just much more**  **16 informative and helpful.**  **17 I suspect it's not that much**  **18 harder for the folks to go through. Perhaps**  **19 I'm wrong.**  **20 But in one when you say "and**  **21 energy types," can we make that a bit more**  **22 broad to say "and heating and cooling types?"** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 Maybe just heating types. Is that what really**  **2 we're getting at here?**  **3 Because I heard what Peter said**  **4 several times. Boy, does he speak strongly on**  **5 this heat pump world and this ductless world.**  **6 I'm not sure we want to make**  **7 standards that require it but I sure would**  **8 like to understand it more and see what's**  **9 underlying that.**  **10 I believe they looked at different**  **11 heating types at least in that first round of**  **12 stuff they sent out. So I suspect it's not**  **13 that much more work.**  **14 MEMBER LEVY: The point generally**  **15 is wrong now, but you're right.**  **16 I should have added before we left**  **17 this topic of other inputs I should have asked**  **18 Ed and Matthew whether there was other**  **19 information you'll need to do this analysis.**  **20 MR. WALKER: This is Matthew**  **21 Walker again with Navigant.**  **22 There is one big thing that I** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 think we should talk about which was up on one**  **2 of the first sections. Oh, I'm sorry, it's**  **3 not on this Word document. It was the**  **4 spreadsheet. In addition to the 2015 cost**  **5 data there also needs to be cost data**  **6 associated with a reference point which would**  **7 be likely a HUD minimum code style building.**  **8 Or at least the typical construction type**  **9 that's being sold right now.**  **10 I just wanted to be sure that that**  **11 gets into the data collection process.**  **12 Thanks.**  **13 MEMBER LEVY: If that's missing**  **14 from this list, Matthew, of all the component**  **15 U-values, if there's a level here that's**  **16 missing that would correspond to the HUD**  **17 minimum we can include it.**  **18 MR. WALKER: Okay. It's possible**  **19 I misunderstood the spreadsheet about -- I**  **20 guess I was envisioning a duplicate of what's**  **21 on the screen right now that's called, that's**  **22 titled "HUD" rather than "IECC 2015." Because** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 it's possible that Miami 1A wall factor of**  **2 0.088 would be a higher U factor for the HUD**  **3 minimum.**  **4 Is that -- am I off topic here?**  **5 MEMBER LEVY: Yes. You're off**  **6 topic. This is a U value for -- you can build**  **7 a wall that has an 0.088 U factor. And that's**  **8 just one option.**  **9 Right here we have two wall**  **10 options are on this list. One, there's only**  **11 one ceiling option. So we need to flesh this**  **12 list out to make sure that all the options**  **13 that we have here are -- that you could**  **14 possibly want to have are described here.**  **15 So, this list is not complete, but**  **16 it will have all of the options that are on**  **17 the PNNL analysis.**  **18 MR. HAGERMAN: This is Joe**  **19 Hagerman, DOE. I think maybe what he's asking**  **20 for is, and maybe you can answer it this way.**  **21 You give a cost, cost per square foot price,**  **22 right? And that's the incremental cost over** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 a HUD minimum?**  **2 MEMBER LEVY: No.**  **3 MR. HAGERMAN: Or is that just the**  **4 total cost?**  **5 MEMBER LEVY: I'm sorry, this**  **6 table wasn't complete. But what it should**  **7 have had is all the possible ways to insulate**  **8 each component. So everything from R11 in the**  **9 wall to R21, 24, whatever is the highest level**  **10 here.**  **11 We'll describe each one of those**  **12 in terms of how it's built and what the cost**  **13 is. And then you can take whatever**  **14 combination of measures you need for any one**  **15 zone that gets you to the HUD minimum as a**  **16 starting point. That's what we're looking**  **17 for.**  **18 MEMBER TOMPOS: Emanuel, Dave**  **19 Tompos from NTA. Are you asking -- is the**  **20 data, the cost data that you're getting, is**  **21 that the consumer cost or is that the**  **22 manufacturers' cost?** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER LEVY: Well, we were asked**  **2 to provide both. And also a range of values,**  **3 what kind of range of values we see in each**  **4 one of those components.**  **5 MEMBER EZZO: This is Mark Ezzo at**  **6 Clayton. I've got a question about these**  **7 component costs.**  **8 Mark Weiss brought up a question**  **9 earlier today about the difference in prices**  **10 that different manufacturers pay. How are we**  **11 going to capture that in all this?**  **12 MEMBER LEVY: So, Mark, what we've**  **13 been talking about is SBRA will pull together**  **14 the costs, put together an average, but also**  **15 express what the range of costs are that we**  **16 collect from the manufacturers.**  **17 MEMBER EZZO: Are you going to**  **18 have small manufacturers in the mix?**  **19 MEMBER LEVY: I think we need to.**  **20 MEMBER EZZO: That's the point,**  **21 yes. So, Mark, can we rely on you to maybe**  **22 help us select some of those manufacturers we** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 can get that data from?**  **2 MEMBER WEISS: I'll do what I can.**  **3 MEMBER EZZO: Okay.**  **4 MR. HAGERMAN: This is Joe**  **5 Hagerman. We can always add the RSMeans cost**  **6 which would be the retail cost.**  **7 We can always add a column that**  **8 takes costs from the RSMeans, the**  **9 construction, cost data book or whatever it's**  **10 called that gives you the cost that**  **11 contractors use when they bid a project. So**  **12 that gives you any clues on markup and**  **13 everything you said. It breaks it down. So**  **14 it would be a good, another data point to**  **15 consider.**  **16 MEMBER LUBLINER: Yes, I think I**  **17 mentioned this on the last meeting. It might**  **18 be useful to talk to an organization like**  **19 NAIMA and get a sense of what their margins**  **20 are for large builders versus smaller builders**  **21 to help address Mark's concerns in the point**  **22 that Mark Ezzo brought up.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 They are in a position to be able**  **2 to provide cost data with you without**  **3 violating their perception of collusion when**  **4 you ask one manufacturer.**  **5 But I would certainly want to**  **6 bring NAIMA in sooner than later and at least**  **7 figure out what they are comfortable sharing**  **8 -- in the way I'd love to check the assumption**  **9 of R per inch per square foot on volume to see**  **10 if that's applicable to smaller manufacturers**  **11 and larger manufacturers. Thank you.**  **12 MEMBER WEISS: For the court**  **13 reporter and for me what's NAIMA? What does**  **14 it stand for.**  **15 MEMBER LACEY: It's the North**  **16 American Insulation Manufacturers Association.**  **17 Is that what you're talking about?**  **18 MEMBER LUBLINER: That's correct.**  **19 MEMBER LACEY: I can ask for that**  **20 kind of information. I'm not sure they can**  **21 give out cost information. But I can**  **22 certainly try them.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MEMBER LUBLINER: Yes. I would**  **2 think just getting a sense of the percent**  **3 difference between a volume procurement and a**  **4 small procurement might be of interest to this**  **5 discussion. Thank you.**  **6 MR. RAMIREZ: We have less than 15**  **7 minutes here. Well, yes, Linda said we could**  **8 still go along with this but I want to save**  **9 some time to discuss next steps and also**  **10 tomorrow.**  **11 So, did you want to to on and ask**  **12 your question?**  **13 MEMBER LEVY: You know, let's not**  **14 another section I would say.**  **15 MS. HOFFMAN: I'd suggest the next**  **16 section would be tomorrow. But let's talk**  **17 about tomorrow.**  **18 Thank you, by the way. Thank you**  **19 very much.**  **20 MR. RAMIREZ: Okay. As far as**  **21 next steps. And you guys correct me if I'm**  **22 wrong, you guys coming from my Chicago. Don't** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 let me exclude the ladies, right?**  **2 But, where do we go tomorrow?**  **3 Emanuel still has some information that he**  **4 could review. But -- and we're creating some**  **5 ranges. But really it's more -- we're having**  **6 more value discussions versus actual content.**  **7 We need some numbers, right? We**  **8 need some data. We need to start plugging**  **9 some things in in order to have some real**  **10 discussion where we could start sometimes even**  **11 if what we call fa-meeti-ating, right?**  **12 Facilitating and mediating at the same time.**  **13 Well, we'll get some discussions and see what**  **14 we could do to nail down a term sheet.**  **15 So I don't know if we have enough**  **16 to have a full-day discussion for tomorrow.**  **17 But you all tell me if I'm wrong there and if,**  **18 what does that look like. Again, because**  **19 we're moving to some data. At least that's**  **20 what I'm sensing.**  **21 MEMBER LUBLINER: If I knew this**  **22 ahead of time I wouldn't be missing my** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 daughter's college graduation on Saturday**  **2 morning if I'd known we were leaving and could**  **3 adjourn early tomorrow.**  **4 I have some political issues in**  **5 marital bliss to justify this. I'd like to**  **6 get as much work done as we can in the time we**  **7 were allocated. But that's my own personal**  **8 preference.**  **9 I've already made my flight back**  **10 for Saturday so I'm going to miss it. I'd**  **11 like to make this useful time if I'm going to**  **12 miss it. Thanks.**  **13 MR. RAMIREZ: And that is a**  **14 question. So what are we going to do then?**  **15 We have some items that we can go through.**  **16 But I just don't know how much of it is going**  **17 to be useful.**  **18 MEMBER LACEY: This is Eric. We**  **19 talked about a lot of concepts. And some of**  **20 these, getting to a specific, the specific**  **21 requirements we probably need some more data**  **22 on.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 But tomorrow could we work on some**  **2 conceptual things. Like, for example, do we**  **3 want to have multiple compliance options is**  **4 something I kind of introduced here.**  **5 What might they look like? Would**  **6 you have a prescriptive path? A total UA?**  **7 Some kind of performance or ERI path and a U**  **8 of O? Or would you only have two of those.**  **9 That's something that I'd like to address at**  **10 some point.**  **11 And it wouldn't require, I mean,**  **12 you know, we can talk later about what the R**  **13 values could be. But if people are interested**  **14 in that kind of approach what would the**  **15 universe look like. That's one suggestion for**  **16 tomorrow.**  **17 MEMBER LUBLINER: I'd like to have**  **18 a discussion about the source of the data for**  **19 looking at fuel and equipment weighting. I**  **20 think that's going to be a big driver, what we**  **21 assume in different climate zones, the**  **22 percentage of electric furnaces, their heat** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 pumps, propane, natural gas. And the sources**  **2 of the information that we're presently**  **3 seeing.**  **4 I think that's a really -- as we**  **5 talked about the big driver being the term of**  **6 the analysis and the discount rate those**  **7 things too can have a big factor. So I'd**  **8 rather find out tomorrow that we don't have**  **9 enough data to know, or the data we have**  **10 there's disagreement on how accurate it is.**  **11 So maybe we should talk about that tomorrow.**  **12 MEMBER LEVY: And in a similar**  **13 vein, just off your point, Michael. The next**  **14 meeting after this meeting is just two weeks**  **15 away. Two weeks and the next week after that**  **16 is the next meeting.**  **17 I'm a little bit skeptical that**  **18 all this information is going to be able to be**  **19 brought together, provided to the contractor**  **20 and there will be enough results to make it**  **21 worthwhile to have a meeting.**  **22 So, I don't know what the dates** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 are but it seems like it's a little fast.**  **2 MR. RAMIREZ: We have September 9**  **3 and 10.**  **4 MEMBER LEVY: Right. So we have**  **5 two full weeks after tomorrow. Right, Labor**  **6 Day weekend.**  **7 MEMBER EPPERSON: This is Stacy.**  **8 I share that. Pulling the financial data will**  **9 be a little bit challenging. My friends in**  **10 the industry, this is something that hasn't**  **11 been widely available. So I think there would**  **12 be some time involved in getting it.**  **13 MR. RAMIREZ: All right. So then**  **14 it sounds like tomorrow we're going to have to**  **15 discuss, depending how that goes, if there's**  **16 value in keeping the 9th and 10th, or**  **17 scrapping that one to use that to gather more**  **18 information so that we could have a more**  **19 productive meeting on the 22nd and 23rd if I**  **20 understand you correctly.**  **21 So, we can nail that down**  **22 tomorrow.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 MR. HAGERMAN: So, this is Joe**  **2 Hagerman. We can always just decide tomorrow,**  **3 not today of course, that the 9th and 10th may**  **4 be just a couple of hour phone call and**  **5 webinar.**  **6 I mean, I don't want to miss the**  **7 opportunity to check in with the group and**  **8 lose the fast-forward momentum that I think**  **9 we're trying to provide here.**  **10 MS. HOFFMAN: And we'll be**  **11 continuing this framework tomorrow I guess**  **12 first thing, continue that.**  **13 Any other thoughts of topics you**  **14 want to make sure are discussed tomorrow?**  **15 Yes, mark.**  **16 MEMBER WEISS: At one point during**  **17 the discussion today there was an issue that**  **18 came up with regard to the states and**  **19 preemption and that sort of thing. And I**  **20 think OGC was going to try to get us something**  **21 on that.**  **22 I don't know if they can be** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 prepared to address that tomorrow so it's**  **2 something that would be of interest, if**  **3 possible.**  **4 MS. HOFFMAN: Is that possible for**  **5 tomorrow?**  **6 MS. VAIDYANATHAN: Yes, I will**  **7 have an answer to you by tomorrow.**  **8 MS. HOFFMAN: Okay. So we'll have**  **9 OGC also on the agenda.**  **10 MEMBER SCHNEIDER: This is Peter**  **11 from Efficiency Vermont. If there's no**  **12 additional discussion --**  **13 MR. RAMIREZ: I'm sorry, Peter,**  **14 can you mute your -- or pause your**  **15 GoToMeeting? Because we're getting an echo on**  **16 this side.**  **17 MEMBER SCHNEIDER: Is that any**  **18 better.**  **19 MR. HAGERMAN: Why don't you email**  **20 us, Peter, and we'll make sure that we talk**  **21 about that tomorrow.**  **22 MS. HOFFMAN: And while he's doing** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 that let's just get a process check. How is**  **2 this going? We heard from John Caskey, you**  **3 know, hey, we've got some deadlines. And**  **4 Manny said maybe we need a little more time.**  **5 And I think Robin said oh, we can do it. So**  **6 I just want a sense of how are you feeling so**  **7 far in terms of trying to get this done. Yes,**  **8 wishy-washy. All right.**  **9 I'm saying get it done and get it**  **10 done on time.**  **11 MEMBER ROY: I think it's okay. I**  **12 do recall a couple of weeks ago when we met we**  **13 asked if a bunch of numbers could be populated**  **14 to the best first guesses of the geniuses at**  **15 Navigant and PNNL.**  **16 I worry about losing momentum. I**  **17 realize it takes a long time to generate all**  **18 sorts of numbers. But to throw numbers in**  **19 gives for somewhat more concrete discussions,**  **20 even if they're pretty crummy placeholders.**  **21 Because then we flake off of those**  **22 and riff. I think we'll get a lot done on the** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 9th and the 10th if we have something like**  **2 what we asked for three weeks ago.**  **3 It would be very, very useful even**  **4 if we don't really believe it. And we're**  **5 going to do what we can. We're going to**  **6 update on the fly. We'll never get to the**  **7 deadline. That's may not a likely thing to**  **8 get the deadline but we'll certainly not get**  **9 there if we don't strive for it.**  **10 MR. HAGERMAN: So this is Joe**  **11 Hagerman, DOE. I totally agree with you. And**  **12 Matthew I kind of -- I think he updated you**  **13 previously about the status of the**  **14 spreadsheet.**  **15 And he's finished putting that**  **16 together largely. And so we can start doing**  **17 that. We can start populating just our gut**  **18 feel of costs. We can populate the annual**  **19 energy consumption numbers as well that we've**  **20 already generated. So we can at least take a**  **21 --**  **22 MS. HOFFMAN: Manny -- oh sorry.** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 And then Peter, we understand, can come back**  **2 on.**  **3 So, first Manny and then Peter.**  **4 MEMBER SANTANA: Manny with Cavco.**  **5 You know, I'm also concerned about the loss of**  **6 momentum. So it might be a little premature**  **7 but what if we -- even if we would decide to**  **8 not meet on the 9th, what if we schedule a**  **9 call every Friday just to keep this in the**  **10 front of everybody's mind? Even if it's only**  **11 a few hours, just to get a status check.**  **12 It's a good idea. Why don't we --**  **13 we'll think about it and discuss it tomorrow.**  **14 And who knows, maybe we'll have enough**  **15 material for a meeting in the first time in**  **16 September.**  **17 Peter, you are on now.**  **18 MEMBER SCHNEIDER: I just want --**  **19 working with folks on the phone with more**  **20 experience than myself.**  **21 MR. RAMIREZ: I'm sorry, Peter.**  **22 Let me pause you just because you just need to** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 speak up. There's no echo now but we need for**  **2 you to speak up.**  **3 MEMBER SCHNEIDER: Okay. So I**  **4 just wanted to request that the folks on the**  **5 phone with more experience than myself would**  **6 just hope to find those constraints they seem**  **7 to exist. With the manufacturing process, the**  **8 current thermal envelope specifications that**  **9 won't allow them to meet specific IECC 2015**  **10 criteria.**  **11 And then spend some time**  **12 troubleshooting that. You know, Michael**  **13 already indicated that there are some**  **14 strategies already being used to do that. And**  **15 I'd like to just really nail those down so**  **16 that doesn't become a burden later on.**  **17 MS. HOFFMAN: Did everyone hear**  **18 him?**  **19 MR. RAMIREZ: Yes, and I think,**  **20 Emanuel, that's what your going to be working**  **21 with them? Okay.**  **22 So, in assembling that information** 

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202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **1 it's not so much the difference between what's**  **2 physically possible and what's cost-effective.**  **3 Right? And those are some of the things that**  **4 you're going to be working with. Okay.**  **5 MS. HOFFMAN: And I think in terms**  **6 of -- don't cancel yet September 9 and 10.**  **7 Keep it in your book. We'll make a decision**  **8 tomorrow, okay? So maybe you want to get**  **9 Michael back, et cetera.**  **10 It's been a real pleasure. Any**  **11 last comments from anyone? I want to thank**  **12 our wonderful court reporter, and folks, Emily**  **13 and company, and our economist and general**  **14 counsel and all of you for giving your all.**  **15 And we look forward to seeing you bright and**  **16 cheery tomorrow at 9 o'clock. Thank you.**  **17 MR. RAMIREZ: Thanks, everyone.**  **18 (Whereupon, the above-entitled**  **19 matter went off the record at 5:00 p.m.)**  **20 21**  **22**202-234-4433 Washington DC www.nealrgross.com Neal R. Gross and Co., Inc. **Page 393** A $1 287:16 288:1,5 $1,000289:8 325:6

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This is to certify that the foregoing transcript

In the matter of:

Before:

Date:

Place:

was duly recorded and accurately transcribed under my direction; further, that said transcript is a true and accurate record of the proceedings.

----------------------- Court Reporter 441

Manufactured Housing Working Group

US DOE

08-21-14

Washington, DC