Market & Tech, Screen

Engineering 
2

Market & Tech, Screening, and Engineering An

Methodology Manufacturer Interviews Industry Research

Determine cost of

applying design

options

Aggregate

Conversion Cost to

Industry

Determine Available

Efficiency

Improvements

Model Industry‐wide implementation of design

options at each EL

Select Design Options

[Market & Tech / Screening Analysis]

Average Incremental

MPC Per Unit Sold

Costs at Each 

Efficiency Level

Model Industry Market Pricing

and Economics

Average Incremental MSP

Markup 

Analysis

M

B
3

Market & Tech and Screening Analysis

Manufacturer

Interviews Industry Research

Determine cost of

applying design

options

Aggregate

Conversion Cost to

Industry

Determine Available

Efficiency

Improvements

Model Industry‐wide implementation of design

options at each EL

Select Design Options

[Market & Tech / Screening Analysis]

Average Incremental

MPC Per Unit Sold

Model Industry Market Pricing

and Economics

Average Incremental MSP

M

B
4

Initial Technology Options to Improve Efficienc An initial list of technology options were gathered ba

industry research and direct stakeholder input

• NOTE: This list is not screened for technological feasibility,

practicability to manufacture, impacts on product utility or 

to consumers, or Impact on health and safety

 The Available Technology Options are listed below, a

explained in detail in the following slides:

• Improved surface finish

• Improved hydraulic design

• Reduced running clearances

• Reduced mechanical friction in seals

• Reduced volumetric loses (removal of thrust balance holes

Market and Technology Assessment
5

Details on Technology Options Improved Surface Finish

• Improved Casting Techniques

- Investment, Die, Lost Foam, etc.

• Surface polishing or honing

• Surface coating or plating

 Improved Hydraulic Design

• Impeller and/or volute may be redesigned to a higher 

using modern computer aided design and analysis me

 Reducing Running Clearances

• Reducing running clearances may reduce leakage and 

in the pump, thus increasing efficiency.

Market and Technology Assessment
6

Details on Technology Options (Continued) Reduced Mechanical Friction in Seals

• Seal friction is a parasitic load on the pump. Reducing 

directly may improve efficiency of the pump.

 Reduced volumetric loses (removal of thrust balance 

• Thrust balance holes use part of the pumped flow to e

that the pump is dynamically balanced. Reducing this 

flow can result in improved efficiency.

Market and Technology Assessment
7

Screening AnalysisPurpose: Screen out technology options that DOE will not con

the engineering analysis for commercial and industri

Method: DOE evaluates the technology options presented in t

previous slides based on the following criteria:

• Technological feasibility

• Practicability to manufacture, install and service o

commercial scale at the time compliance with an

standards would be required

• Impacts on product utility or available to consum• Impact on health and safety
8

Screening AnalysisScreened Out Technologies: Reduced Running Clearances

• Any significant reduction of running clearances will directly reduc

reliability of a pump.

 Reduced Mechanical Friction in Seals

• Seals require mechanical friction to work properly. Reducing frict

result in impaired seal performance and leaks.

• Higher‐end, lower friction material combinations are available, bu

efficiency gains are not significant.

 Reduced volumetric loses (removal of thrust balance holes)

• Thrust balance holes are used to reduce wear on rub surfaces and 

Removal of these holes would require the pump to be redesigns i

reliable form.

 Surface coating or plating

• Industry has voiced concerns over the reliability and durability of 

when used in clean water applications.
9

Design Options to Improve Efficiency There are three remaining design options to improve pump eff

However, each design option may be applicable only to a certa

market (more detail in the following slides).

• Hydraulic Redesign Options

- Hydraulic Redesign

- Hydraulic Redesign w/Change to

Advanced Casting Technique

(Investment, Die, Lost‐Foam, etc)

• Surface Finish Improvement Options

- Surface Polishing of Impeller and/or

volutes

Market and Technology Assessment

Source: http://www.p
10

Hydraulic Redesign Options Hydraulic Redesign

• Impeller and/or volute geometry may be redesigned to a higher e

using modern computer aided design and analysis methods.

• Applicability restrictions:

- None

 Hydraulic Redesign w/ Change to Advanced Casting Technique

• Impeller and/or volute may be redesigned to a higher efficiency u

computer aided design and analysis methods.

• Impeller is also cast using advanced techniques, such as die, inves

lost foam casting, creating a smoother, lower‐friction, surface fini

- Advanced casting technique will in general add conversion cost, but w

MPC.

• Applicability restrictions:

- Bronze and stainless steel impeller only

- Must currently be sand cast.

Market and Technology Assessment
11

Surface Finish Improvement Options Surface Polishing of Impeller and/or Volutes

• Impeller and/or volute may be hand polished or machine polishe

finish, which results in reduced friction

• Applicability restrictions:

- Cast Bronze and Stainless steel only

- Likely to be used only for small efficiency gaps, since hydraulic redesi

otherwise be used to achieve all of the required efficiency gain

Market and Technology Assessment
12

Additional Considerations Model Dropped from the Market

• Manufacturers have indicated that many low performing, low sale

pumps will be dropped from the market if they do not pass a stan

may be replaced with existing models from other brands owned b

manufacturers.

• Applicability restrictions:

- None

Market and Technology Assessment
13

Purpose Determine incremental changes in Manufacturer Se

(MSP) at each proposed efficiency level.

 The cost‐efficiency relationship is a key input for the 

downstream rulemaking analyses:

• Life‐Cycle Cost and Payback Period Analysis

• Manufacturer Impact Analysis

• Employment Impact Analysis

Engineering Analysis
14

Engineering Analysis

Manufacturer

Interviews Industry Research

Determine cost of

applying design

options

Aggregate

Conversion Cost to

Industry

Determine Available

Efficiency

Improvements

Model Industry‐wide implementation of design

options at each EL

Select Design Options

[Market & Tech / Screening Analysis]

Average Incremental

MPC Per Unit Sold

Model Industry Market Pricing

and Economics

Average Incremental MSP

M

B
15

Engineering AnalysisEfficiency Improvements: Hydraulic Redesign Hydraulic design is the main driver when it comes to determini

efficiency.

• Differing hydraulic designs are what differentiate the most efficie

on the market from the low efficiency products on the market.

 Given enough time and money (discussed in the next section), 

can theoretically be brought to max‐tech efficiency.

 Industry consensus is that manufacturers will target an efficien

MEI/PER 40 for any proposed standard less than or equal to M

• For standard levels above MEI/PER 40, they will target the actual 

level.

 Note that some manufacturers may choose to switch to an advanced casting te

part of their hydraulic redesign. These redesigns will also target MEI/PER 40 (o

depending on EL) but costs will be considered separately.
16

Engineering AnalysisEfficiency Improvements: Surface Finish Impro HI 20.3‐2010 provides guidance on the efficiency that can be g

improving surface finish. These improvements are defined as a 

a pump’s Specific Speed (Ns).

 The improvements on

this chart represent a

change from a sand cast

surface to a polished,coated, or investment

cast surface.

Source: HI 20.3‐2010, Figure 20.3h

Available at www.pumps.org
17

Engineering Analysis

Manufacturer

Interviews Industry Research

Determine cost of

applying design

options

Aggregate

Conversion Cost to

Industry

Determine Available

Efficiency

Improvements

Model Industry‐wide implementation of design

options at each EL

Select Design Options

[Market & Tech / Screening Analysis]

Average Incremental

MPC Per Unit Sold

Model Industry Market Pricing

and Economics

Average Incremental MSP

M

B
18

Engineering AnalysisCosts: Hydraulic Redesign up to MEI/PER 40 HI conducted a survey on the all‐inclusive Conversion Costs req

redesign a pump to meet a standard level of MEI 40

• Costs were specified for generic 1, 50, and 200 HP pumps

• Cost were applicable to all ESCC, ESFM, IL, RS‐V, and VT‐S equipm

 Hydraulic Redesigns not expected to impact MPC

Average Cost, per model, to

Hydraulically Redesign a Pump to

Meet MEI/PER 40

Class

AVG BEP

Shaft HP

(For Ref Only)

AVG Cost

ESCC/

ESFM 27.7 HP $209,065

Inline 24.4 HP $206,893

ESCC, ESFM, IL

[50 HP]

[1 HP]
19

Engineering AnalysisCosts: Hydraulic Redesign up to MEI/PER 40
20

Engineering AnalysisCosts: Hydraulic Redesign Beyond MEI/PER 40 Due to increases in design and test labor costs, redesigns beyond the MEI 40 level will cos

manufacturers more to complete

 Manufacturers were surveyed on the cost to redesign to MEI 70, but there is insufficient d

aggregate and characterize the market

 Instead, the EU Lot 11 preparatory study on Cost of Redesign to manufacturers was levera

the additional cost to go beyond MEI 40.

• EU manufacturers submitted data indicating it will cost 1.6x more to redesign a model to M

• After discussion with HI, we have adjusted this multiplier to 1.8x, to account for the increa

for smaller manufacturers. We believe that 1.8x is representative of the increase from M

1.8x

Per‐Model Redesign

Costs Increases

Linearly from MEI 40

to MEI 70
21

Engineering AnalysisCosts: Hydraulic Redesign w/ change to Advanced  The HI redesign survey specifically categorized costs related to Patterns and To

200HP

o Costs represent a blend of all casting methods used in the market (Sand, Die

 Industry research suggests advanced casting tooling are 2.4x the cost of sand c

that advanced casting methods make up 60% of the market.

 With this data we can extrapolate the additional cost incurred by switching to A

Pattern and Tooling Costs

Pump Size

(1800 RPM)

HI Survey Tooling Cost

(Actual Industry

Average)

Advanced Casting

Tooling Cost

(Estimated)

Sand C

(E

1 HP $44,329 $57,820 $

50 HP $51,280 $66,887 $

200 HP $72,862 $95,037 $

% Of Survey Cost ‐ 130% 
22

Engineering AnalysisCosts: Hydraulic Redesign w/ change to Advanced  An increase of 30% to the tooling costs translates to a 7% increase over 

average total hydraulic redesign cost.

Hydraulic Redesign Cost (HRD)

Pump Shaft

HP at BEP

HI Survey HRD

Cost

(Actual Indst

Avg)

Additional Adv.

Tooling Cost

HRD w/ Change

to Adv. Casting

(Estimated)

1 HP $188,752 $13,491 $202,243

50 HP $228,252 $15,607 $243,859

200 HP $268,203 $22,175 $290,378

Average, per Model, HRD Cost

Class HI Survey HRD Cost Additional Tooling Cost HRD w/ Change to Advanced Casting 

ESCC

ESFM $209,065 $14,648 $223,713 

Inline $206,893 $14,503 $221,396 

ESCC, 

ESFM, IL

+

+ =

=

+

+

+

=

==
23

Engineering AnalysisCosts: Surface Polishing Surface polishing was determined to cost approximately 45% of the f

impeller cost for End Suction and Inline pumps.

• These are either purchased part or labor costs, and impact the M

 Finished impeller costs were trended based on aggregated manufactu

data

Shipment‐Weighted Average

Cost to Polish or Coat an

Impeller

Class

AVG BEP Shaft

HP

(For Ref Only)

AVG

Cost

ESCC/

ESFM 27.7 HP $46

Inline 24.4 HP $50

Shipment-Weighted

Average Cost for 

ESCC, ESFM, IL
24

Engineering AnalysisSummary of Engineering Costs

Model Weighted Average Cost

Sh

W

Ave

≤ MEI 40 ≥ MEI 70 A

Class Hydraulic Redesign Cost Hydraulic Redesign w/ Adv. Casting Hydraulic Redesign Cost Hydraulic Redesign w/ Investment Casting Impe

ESCC/

ESFM $209,065 $223,713 $376,317 $402,683 

Inline $206,893 $221,396 $372,407 $398,513 
25

Engineering Analysis

Manufacturer

Interviews Industry Research

Determine cost of

applying design

options

Aggregate

Conversion Cost to

Industry

Determine Available

Efficiency

Improvements

Model Industry‐wide implementation of design

options at each EL

Select Design Options

[Market & Tech / Screening Analysis]

Average Incremental

MPC Per Unit Sold

Model Industry Market Pricing

and Economics

Average Incremental MSP

M

B
26

Overview of Methodology For each equipment class, the engineering analysis will attempt to mo

redesign choices that will be made by the industry when faced with va

efficiency levels (ELs).

 Our cost model will start with the total number of pump models failin

EL, and will then assign design options to each failure, based on mark

direct industry research.

Engineering Analysis

All Models in the Equipment Class

# Passing Models # Failing Mod

# Hydraulically

Redesigned

# Hydraulically

Redesigned w/change to

Investment

Chosen Efficiency 

Level

Industry Research & Model 

Distribution

# Models Dropped and

not Redesigned
27

Overview of Methodology For each equipment class, the engineering analysis will attempt to mo

redesign choices that will be made by the industry when faced with va

efficiency levels (ELs).

 Our cost model will start with the total number of pump models failin

EL, and will then assign design options to each failure, based on mark

direct industry research.

Engineering Analysis

All Models in the Equipment Class

# Passing Models # Failing Mod

# Hydraulically

Redesigned

# Hydraulically

Redesigned w/change to

Investment

Chosen Efficiency 

Level

Industry Research & Model 

Distribution

# Models Dropped and

not Redesigned
28

Detailed Methodology: [ESCC/ESFM 2/4 Pole] & [IL 2/Engineering Analysis

# Failing Models from HI/NEMA BIS Survey

Remove Models Dropped & 

Not redesigned

# Models Requiring Redesign

# Fabricated

SS Models # Investment or Die Cast Models # Sand Cast M

Hydro

Redesign Hydro Redesign

Not Eligible to be Polishe

Hydro

Redesign

Hydro Redesign

w/Investment

* Sand Cast, Ns < 1200, and can meet the EL

standard by surface finish improvement only
29

Detailed Methodology: [ESCC/ESFM 2/4 Pole] & [IL 2/Engineering Analysis

# Failing Models from HI/NEMA BIS Survey

Remove Models Dropped & 

Not redesigned

# Models Requiring Redesign

# Fabricated

SS Models # Investment or Die Cast Models # Sand Cast M

Hydro

Redesign Hydro Redesign

Not Eligible to be Polishe

Hydro

Redesign

Hydro Redesign

w/Investment

* Sand Cast, Ns < 1200, and can meet the EL

standard by surface finish improvement only
30

Determining Number of Pump Models Not Redesigned For many failing models in our pump database, the manufactu

choose to not redesign the pump, dropping that model from th

 Common reasons for this decision include:

• Low sales, leading to poor business case for a redesign

- Many pumps in the database have zero sales

• The company may already have a hydraulically overlapping, pass

that it can leverage

- Often time produced by a different brand within the same company

 Based on direct industry

research, we estimate

60% of failing models

will be dropped at lower

ELs, tapering down to40% at higher ELs.

Engineering Analysis
31

Summary of Additional Model Inputs Model inputs can be broken down into two categories:

1. Statistical

o Inputs based on primary data sources such as the Navigant/LBNL s

HI/NEMA BIS survey. Key data‐driven inputs are listed below.

• Total # of models

• Total # of shipments / # of shipments failing

• Statistical Distributions of HP, Flow, Ns, etc.

2. General Industry Research

o Inputs based manufacturer interviews, market data, independent d

with manufacturers, and estimates provided by HI and other indus

• % of models dropped from market and not redesigned

• Current breakdown of Sand Cast impellers vs Advanced Cast 

• % of models that are fabricated stainless steel

• % of market that will switch from sand casting to investment/

• % of eligible pumps that will be polished, rather than redesig

Engineering Analysis
32

Summary of Inputs for ESCC/ESFM and ILEngineering Analysis

ESCC/ESFM Inli

Total Models* 2,050 

Total Shipments 215,498 50,4

% Models Dropped at PER 10 60% 6

% Models Dropped at PER 40 40% 4

% of Casting Invest/Die Cast 60% 6

% of Castings Sand Cast 40% 4

% of Castings switched to Invest/Die Cast 10% 1

% of Models Fabricated Stainless Steel 7.4% 0

% of Pumps Eligible** to be Polished 60% 6

% Eligible Pumps Polished 50% 5

* Currently Scaled up by shipments. Awaiting updates from HI/NEMA BIS survey.

** Sand Cast, Ns < 1200, and can meet the EL standard by surface finish

improvement only
33

Summary of Results: ESCC/ESFM PumpsEngineering Analysis

Per‐Model Redesign

Options

PER

10

PER

25

PER

40

PER

55

P

Total # Models Failing 205 512 820 1127 

Of Those that are Failing Models

% Models Dropped 60% 50% 40% 40% 

# Models Dropped 123 256 328 451 

# Models Req. Redesign 82 256 492 676 

Of Those that Will be Redesigned

# Pumps Polished 2 8 15 20 # Pumps Hydro

Redesign only 72 225 432 594 

# Pumps Hydro

Redesign w/ Change to

Advanced Cast

8 24 46 63 
34

Summary of Results: Inline PumpsEngineering Analysis

Per‐Model Redesign

Options

PER

10

PER

25

PER

40

PER

55

P

Total # Models Failing 74 185 296 406 

Of Those that are Failing Models

% Models Dropped 60% 50% 40% 40% 

# Models Dropped 44 92 118 163 

# Models Req. Redesign 30 92 177 244 

Of Those that Will be Redesigned

# Pumps Polished 1 3 6 8 # Pumps Hydro

Redesign only 26 80 154 212 

# Pumps Hydro

Redesign w/ Change to

Advanced Cast

3 9 18 24 
35

Summary of Results: ESCC/ESFMEngineering Analysis

Shipment‐Weighted Results PER 10 PER 25 PER 40 PER 55 P

Total # Shipments Failing 15,510 38,889 73,738 92,207 10% Total Shipments Failing 7% 18% 34% 43% 

% Failing Shipments Polished 3.0% 3.0% 3.0% 3.0% 

# Shipments Polished 465 1,167 2,213 2,767 

Summary of Results: Inline

Shipment‐Weighted Results PER 10 PER 25 PER 40 PER 55 P

Total # Shipments Failing 8,730 16,945 21,815 26,917 3% Total Shipments Failing 17% 34% 43% 53% 

% Failing Shipments Polished 3.2% 3.2% 3.2% 3.2% 

# Shipments Polished 283 549 707 872 
36

Engineering Analysis

Manufacturer

Interviews Industry Research

Determine cost of

applying design

options

Aggregate

Conversion Cost to

Industry

Determine Available

Efficiency

Improvements

Model Industry‐wide implementation of design

options at each EL

Select Design Options

[Market & Tech / Screening Analysis]

Average Incremental

MPC Per Unit Sold

Model Industry Market Pricing

and Economics

Average Incremental MSP

M

B
37

Method For each equipment class and EL, the industry shipments weighted av

polish an impeller is multiplied by the number of shipments that will f

polished impeller. This creates the total aggregate incremental cost fo

industry.

Engineering Analysis

# Shipments Polished

Average Incremental

MPC Per Unit Sold

Aggregate

incremental cost for

the industry

Divide by Total Number 

of Failing Shipments

Shipment weighted

average cost to polish

a unit

Multiply
38

Results: Incremental CostsEngineering Analysis

All Efficiency Levels

Average

Incremental MPC

per Failing

Shipments

Average Shipment

MPC (Pump Only)

Aver

Percen

ESCC/ESFM $1.36 $477 IL $1.60 $673 Total $1.45 $514 
39

Engineering Analysis

Manufacturer

Interviews Industry Research

Determine cost of

applying design

options

Aggregate

Conversion Cost to

Industry

Determine Available

Efficiency

Improvements

Model Industry‐wide implementation of design

options at each EL

Select Design Options

[Market & Tech / Screening Analysis]

Average Incremental

MPC Per Unit Sold

Model Industry Market Pricing

and Economics

Average Incremental MSP

M

B
40

Method: Aggregate Industry Conversion Cost For each equipment class and EL, the adjusted industry average redes

multiplied by the number of models requiring each redesign. This cre

aggregate conversion cost for the industry.

Engineering Analysis

# Models Hydraulically

Redesigned

Aggregate Conversion Cost

to Industry

Cost per Model to Hydraul

Redesign

Account for Cost Sharing 

Between Shared Model 

Platforms 

ADJUSTED Cost per Mode

Hydraulically Redesign

Multiply
41

Engineering Analysis

# Models Hydraulically

Redesigned

Aggregate Conversion Cost

to Industry

Cost per Model to Hydraul

Redesign

Account for Cost Sharing 

Between Shared Model 

Platforms 

ADJUSTED Cost per Mode

Hydraulically Redesign

Multiply

Method: Aggregate Industry Conversion Cost For each equipment class and EL, the adjusted industry average redes

multiplied by the number of models requiring each redesign. This cre

aggregate conversion cost for the industry.
42

Engineering AnalysisAccounting for Redesign Cost Sharing BetweeShared Model Platforms  Because ESCC/ESFM and 2/4‐Pole pump models sha

significant hydraulics and hardware, we do not expecmodel in the database to incur the cost of a full hydr

redesign.

 To account for these shared costs we quantified:

1. Statistics on Shared Platforms

 Number of Hydraulically Identical ESCC/ESFM 

models

 Number of 2‐ and 4‐pole pumps sharing the 

model name

2. Allocation of Shared Redesign Costs
43

Engineering AnalysisStatistics on Shared Platforms

ESCC & ESFM Combined Inline

Unique

Model

“Duplicate”

Model

Unique

Model

“D

Pump Type: ESCC vs ESFM 54% 46% N/A 

Pump Speed: 2‐Pole vs. 4‐Pole 77% 23% 80% 

Allocation of Shared Redesign Costs

Percent of Original Redesign Cost Attribut

“Duplicate” Model

ESCC/ESFM

(Type)

2/4 Po

(Speed

Redesign, Prototype & Initial Test 50% 50%

Pattern, Tooling 34% 66%

Testing 75% 75%Marketing 100% 100%Total

(Weighted Average by Cost Category)

59% 68%
44

Determining the Per Model Cost Adjustment: ESCC/ESEngineering Analysis

# Failing Models At Each Efficiency Level

Unique Models

ESCC vs. ESFM

54%

“Duplicate” 

ESCC vs. 

46%

“Duplicate”

Models

2/4‐Pole

23%

“Duplicate”

Speed

68% of Cost

Unique Models

2/4‐Pole

77%

Unique Models

2/4‐Pole

77%

Unique Models

100% of Cost

“Duplicate” Type

59% of Cost

12%

of Population

42%

of Population

35%

of Population

PopulationStatistics

CostSharing

Sum the Product of Each Category

Per‐Model Redesign Cost Adjustment:

75%
45

Determining the Per Model Cost Adjustment: InlineEngineering Analysis

# Failing Models At Each Efficiency Level

Unique Models

2/4‐Pole

80%

“Du

Unique Models

100% of Cost

“Du

6

PopulationStatistics

CostSharing

Sum the Product of Each Ca

Per‐Model Redesign Cost A

94%
46

Engineering Analysis

# Models Hydraulically

Redesigned

Aggregate Conversion Cost

to Industry

Cost per Model to Hydraul

Redesign

Account for Cost Sharing 

Between Shared Model 

Platforms 

ADJUSTED Cost per Mode

Hydraulically Redesign

Multiply

Method: Aggregate Industry Conversion Cost
47

Results: Conversion CostEngineering Analysis

Aggregate Conversion

Cost to Industry

($MM)

Efficiency Level

PER 10

($MM)

PER 25

($MM)

PER 40

($MM)

PER 55

($MM)

PER 7

($MM

ESCC/ESFM $12.6 $39.3 $75.5 $145.3 $237IL $5.6 $17.4 $33.5 $64.4 $105Total $18.2 $56.4 $109.0 $209.7 $343

Aggregate Conversion as a

Percent of Revenues

(Pump Only Revenues)

Efficiency Level

PER 10

($MM)

PER 25

($MM)

PER 40

($MM)

PER 55

($MM)

PER 7

($MM

ESCC/ESFM 9% 29% 55% 106% 173% IL 11% 36% 69% 132% 216% Total 10% 30% 58% 112% 184% 
48

Summary The preceding analysis clearly indicates that convers

significantly outweigh any incremental costs arising f

small percentage of polished pumps

 As such, only conversion costs due to hydraulic redes

be passed on to the LCC and downstream analyses

 The next section will discuss the how the baseline M

established analytically.

 The section following that will discuss how the conve

costs derived in this section may be applied to the ba

MPC.

Engineering Analysis
49

Engineering Analysis

Manufacturer

Interviews Industry Research

Determine cost of

applying design

options

Aggregate

Conversion Cost to

Industry

Determine Available

Efficiency

Improvements

Model Industry‐wide implementation of design

options at each EL

Select Design Options

[Market & Tech / Screening Analysis]

Average Incremental

MPC Per Unit Sold

Model Industry Market Pricing

and Economics

Average Incremental MSP

M

B
50

Introduction This section of the engineering analysis takes a mark

approach to modeling the base case MPC, MSP, and Efficiency Relationship.

 This market‐based approach relies on detailed manu

supplied sales and performance data.

• Data represents approximately half of the End Suction 

market, by shipments

• Data collected under non‐disclosure confidentiality ag

and can only be shared in the aggregate forms presen

analysis.

Engineering Analysis
51

Source DataManufacturers supplied the following source data dire

Navigant and LBNL.

For each model in their catalogue:

• Model Name/Number

• DOE Pump Type

• ANSI/HI Pump Type

• Number of Stages

• Motor Speed

• Net Sales Revenues ($)

• Unit Volume (Shipments)

• Flow, Head, Efficiency, and Shaft HP at BEP, 50% BEP, 75% 

110% BEP

• Motor Costs

• Markups• Percent of Shipments sold with Motors

Engineering Analysis
52

Scaling Parameter In order to model MSP over the full range of products offered 

manufacturers, a scaling parameter, or parameters must be ch

 The efficiency relationship has already been determined to be 

Flow (Q) and Specific Speed (Ns), so it makes sense to work w

two parameters.

 Not wanting to develop a complex three‐dimensional polynom

relationship, (as is done with efficiency) we decided to work w

normalized factor:

• Ns/Q ‐‐ which works quite well

 Normalizing for motor speed, with a base RPM of 1800, we ge

• (Ns/Q) x (n/1800)

 Taking the Log() of this factor and shifting it by one unit on the 

allows for easy power series regression, resulting in:

• Log[(Ns/Q) x (n/1800)] + 1

Engineering Analysis
53

 Please note, a small value of Log[(Ns/Q) x (n/1800)] + 1 represents a p

pump, while a large value of the parameter represents a physically sm

 For reference, the following chart shows the rough relationship betwe

Shaft HP (Normalized to 1800RPM) and Log[(Ns/Q) x (n/1800)] + 1

Engineering Analysis
54

 We can take a quick look at how this parameter performs by divid

Revenues by Unit Volume to get a per‐unit cost, and then plotting 

Log[(Ns/Q) x (n/1800)] + 1.

• Noting that this is for rough assessment purposes only, as these repr

cost, including motors, and some models did not always ship with m

Engineering Analysis
55

Method: Model Pump Cost without Motor1. Calculate the Per‐Unit MSP for each model

a. Divide Total Revenues by Total Units

2. Estimate the actual motor cost for each model in the database

a. Estimate motor HP as 120% of BEP required shaft HP

b. Use manufacturer‐specific motor cost curves to estimate actua

3. Create Adjusted Motor Cost by taking into account markup and p

pumps not sold with motors

a. Multiply baseline motor cost by manufacturer‐specific markup

b. Multiply marked‐up motor cost by manufacturer‐specific perce

shipments sold with motors, to account for some pumps not be

motors.

4. Find Pump‐Only MSP by subtracting Adjusted Motor Cost from P

5. Average the Pump‐Only MSP over discrete ranges of the scaling 

Log[(Ns/Q) x (n/1800)] + 1

6. Regress on these average Pump‐Only MSP in each range

Engineering Analysis
56

Inline MSP Model Results Please note the following:

• 2‐Pole and 4‐Pole speed pumps were evaluated as one pop

‐ Scaling factor corrects for speed and represents physical size

Engineering Analysis
57

Engineering Analysis

Average Pump‐Only MSP in each range

Log[(Ns/Q) x (n/1800)] + 1 Average MSP per Model [No Motor]

0.90 $3,1261.20 $2,0051.50 $1,5141.80 $1,1662.10 $8752.40 $8122.70 $792

Population Average $1,383

Inline Results: Model Pump Cost without Moto
58

Engineering AnalysisInline Results: Model Pump Cost without Moto
59

We can evaluate the average performance of the MSP model by s

well the model predicts MSP, on average, for all 287 models that 

shipments.This result indicates that the model, on average slightly under pre

a model, given its Flow, Specific Speed, and Motor Speed.

Engineering Analysis

Average Percent Error ‐0.5%

Average Error ‐$12

Inline Results: Model Pump Cost without Moto
60

Visually we can see how well the model recreates our sample ma

per‐unit cost data.

Engineering Analysis
61

Brief Review of End Suction MSP Res Please note the following:

• ESCC and ESFM were evaluated as one population due to s

and pricing

• 2‐Pole and 4‐Pole speed pumps were evaluated as one pop

‐ Scaling factor corrects for speed and represents physical size

Engineering Analysis
62

Engineering AnalysisEnd Suction Results: Model Pump Cost withou
63

Visually we can see how well the model recreates our sample ma

per‐unit cost data.

Engineering Analysis
64

Finding and Applying the Baseline Co

Efficiency Relationship

Engineering Analysis
65

Introduction: Baseline Cost‐Efficiency Relation Based on industry research, we have found the follo

• MPC does not change appreciably with efficiency

- Hydraulic design is the prime factor in determining a pump’s 

- Hydraulic design does not appreciably affect the the materia

costs.

• For individual manufacturers, MSP does not change with e

- Individual Manufacturers do no carry tiered product lines, n

target higher markups for specific higher efficiency models.

• Many other design factors significantly influence MPC and 

- Durability, reliability, etc.

 A cost‐efficiency relationship may exist in the overa

a manufacturer’s pricing correlates to their relative in the market

• The following analysis will investigate this

Engineering Analysis
66

Finding and Applying the Baseline Cost‐Efficiency Rela The cost model developed on the previous slides represented 

per‐model MSP of a pump at a given Log[(Ns/Q) x (n/1800)] + 

• This is an efficiency‐independant MSP, and can be translated to a

model, simply by backing out the appropriate industry average m

 In this cost model, we can evaluate each pump to see how mu

less than the average it costs

 We can then look to see if there is a relationship between an M

premium and efficiency.

 For this analysis, efficiency is represented by a pump’s failing P

 Therefore we can group shipments by C‐value ranges (efficien

how the price premium varies.

See next slide for results

Engineering Analysis
67

Inline Results: Baseline Cost‐EfficiencRelationshipEngineering Analysis
68

Engineering Analysis

% Pumps

Failing (PER)

C‐Value

[PER]

Average Per‐

Model Cost

Premium

88% 121.5 ‐3.5%67% 124.5 2.5%41% 127.5 0.6%21% 130.5 5.3%11% 133.5 0.8%

6% 136.5 ‐12.5%

4% 139.5 ‐30.8%

Inline Results: BaselineCost Efficiency
69

Engineering Analysis

% Pumps

Failing

(PER)

C‐Value

[PER]

Average

Per‐Model

Cost

Premium

Smoothed

Results

88% 121.5 ‐3.5% 1.9%

67% 124.5 2.5% 1.9%41% 127.5 0.6% 1.9%21% 130.5 5.3% 1.9%11% 133.5 0.8% ‐2.4%

6% 136.5 ‐12.5% ‐12.5%4% 139.5 ‐30.8% ‐30.8%

Inline Results: Cost

Efficiency Smoothed for

Analysis
70

 A third‐order polynomial was fit to the cost premium vs. C‐value rela

this relationship was applied to the baseline model, to create an MSP relationship.

 Visually we can see how well the model recreates our sample manuf

unit cost data.

Engineering Analysis

Visualizing MSP with Cost‐Efficiency
71

Engineering Analysis

ESCC/ESFM Cost Efficiency

 The End Suction available data are not suitable for t

previous cost‐efficiency analysis

• 70% of the pumps in our database are sold with moto

compared to 93% of inline pumps

• This creates too much variability when estimated the 

per‐unit MSP without motor cost

 The Inline cost‐efficiency results were mapped to th

Suction population

• Inline and End Suction pumps are similar in construct

often considered subsititutes in the marketplace

• Market and pricing dynamics should be similar.
72

Engineering Analysis

% Pumps

Failing (PER)

C‐Value

[PER]

Smoothed

Results

91% 119.50 1.9%77% 122.50 1.9%53% 125.50 1.9%28% 128.50 ‐2.4%

11% 131.50 ‐12.5%

3% 134.50 ‐30.8%

Baseline Inline results were

mapped to the End Suction

Baseline

End Suction Results:

Baseline Cost Efficiency
73

 A third‐order polynomial was fit to the cost premium vs. C‐value rela

this relationship was applied to the baseline model, to create an MSP relationship.

 Visually we can see how well the model recreates our sample manuf

unit cost data.

Engineering Analysis

Visualizing MSP with Cost‐Efficiency
74

Summary Based on market data:

o The bottom 20% to 30% of models show a strong MSP vs. 

relationship, with less efficient models costing less.

o Beyond this, the cost‐efficiency relationship is flat, with m

pumps cost no more than less efficient pumps.

 MPC is independent of efficiency

o In the standards case, the new markups will be applied to 

model that is identical to the baseline model that was just 

This creates the cost‐efficiency relationship for the standa

o Because the standards case will rely on changes in markup

than changes in MPC, the markups in the base case will be 

from the markups in the standards case – this differs from rulemaking process – but is necessary given the structure 

industry

Engineering Analysis
75

Engineering Analysis

Manufacturer

Interviews Industry Research

Determine cost of

applying design

options

Aggregate

Conversion Cost to

Industry

Determine Available

Efficiency

Improvements

Model Industry‐wide implementation of design

options at each EL

Select Design Options

[Market & Tech / Screening Analysis]

Average Incremental

MPC Per Unit Sold

Model Industry Market Pricing

and Economics

Average Incremental MSP

M

B
76

GoalDetermine MSP based on the assumption that manufac

can increase their markup to recover portions of the cocosts that result from standards. MSP = MPC x Manufacturer Markup

 Determine manufacturer markup scenarios that refle

industry’s ability to pass on conversion cost

Pricing & Markups

Side NoteMarkup = MSP / MPC

Gross Margin = (MSP ‐ MPC) / MSP

Markup = gross margin / (1 ‐ gross margin)
77

Manufacturer Markup ScenariosChange in manufacturer markup reflects the industry’s 

increase prices to recover conversion cost investments Lower Bound

• Minimal cost recovery

• Manufacturers are not able to raise prices due to market fa

• Minimal change in end‐user pricing

 Upper Bound

• High cost recovery

• Manufacturers are able to increase MSP

• Maximum increase in end‐user pricing

Pricing & Markups
78

Manufacturer Markup Scenarios Lower Bound

• Minimum recovery: manufacturers maintain their existing

manufacturer markup

 Upper Bound

• Full cost recovery over all units: manufacturers recover con

costs by increasing the manufacturer markup on all equipm

• Full cost recovery over redesigned units: manufacturers rec

conversion costs by increasing the manufacturer markup o

failed pumps that require redesign

Pricing & Markups
79

Key Drivers MPCs Conversion costs Baseline markup Baseline MSPPricing & Markups
80

Markup Manufacturer Markup = MSP/MPC Annuity Calculation

• Conversion cost = Σ (annual payments x discount factor)•

 Increased Cost Calculation

• Annual Payment / Annual Shipments = Increased cost per u

 Revised Markup Calculation

• Revised Markup = (baseline MSP + Increased cost) / MPC

Pricing & Markups
81

Baseline MSP

Pricing & Markups

Equipment Category MSP

ESCC + ESFM $677.77

IL $984.74

RS‐V TBD

VT‐S TBD
82

Baseline Markup

Pricing & Markups

Equipment Category Markup

ESCC + ESFM 1.34

IL 1.44

RS‐V 1.38

VT‐S 1.35
83

Upper Bound Scenarios

Market Pricing & Markups

ESCC + ESFM Cost Recovery Over Redesigned Shipments Cost Recovery Over 

PER Standards Markup Standards MSP % MSP Increase Standards Markup Standar

MSP 

10 1.51 $761.68 12% 1.35 $683.825 1.55 $782.35 15% 1.38 $696.640 1.55 $783.67 16% 1.41 $714.050 1.62 $821.07 21% 1.45 $735.155 1.66 $840.79 24% 1.48 $747.570 1.79 $903.70 33% 1.57 $791.985 1.78 $900.96 33% 1.61 $816.3

IL Cost Recovery Over Redesigned Shipments Cost Recovery Over A

PER

Standards

Markup

Standards

MSP

% MSP

Increase

Standards

Markup

Standard

MSP

10 1.59 $1,084.94 10% 1.45 $991.95 25 1.62 $1,109.63 13% 1.47 $1,007.240 1.62 $1,111.20 13% 1.50 $1,028.050 1.69 $1,155.87 17% 1.54 $1,053.255 1.72 $1,179.42 20% 1.56 $1,068.070 1.83 $1,254.54 27% 1.64 $1,121.085 1.83 $1,251.27 27% 1.68 $1,150.2
84

Engineering Analysis

Manufacturer

Interviews Industry Research

Determine cost of

applying design

options

Aggregate

Conversion Cost to

Industry

Determine Available

Efficiency

Improvements

Model Industry‐wide implementation of design

options at each EL

Select Design Options

[Market & Tech / Screening Analysis]

Average Incremental

MPC Per Unit Sold

Model Industry Market Pricing

and Economics

Average Incremental MSP

M

B
85

Average Incremental MSP (Markups) Used in t For the LCC, we looked at a scenario in which the industry reco

of the required conversion costs over 30 years with a discount 

10.15%.

• This results in an annual value of additional revenue that must be 

• We distributed this value across shipments of pumps that failed t

standard.

 A percentage increase is applied to the base MSP for each ship

failed model:

Engineering Analysis

PER 10 PER 25 PER 40 PER 55 PER 70 P

Inline 13% 15% 16% 24% 33% End Suction 12% 13% 14% 21% 28% 
86

Summary The engineering analysis has completed the followin

• Modeled aggregate conversion costs expected across the in

• Modeled MPC for the industry

• Modeled the baseline case markups and MSP Model

• Modeled the standards case markups and MSP Model

 These models are passed on as the inputs to the LCC 

as well as other downstream analyses.

Engineering Analysis
87

Appendix
88

Additional Slides

Manufacturer Impact Analysis
89

Financial Metrics

GRIM Input Definition 

E

Income Tax Rate Corporate effective income tax paid (percentage of earnings before taxes, EBT) 

Discount Rate Weighted average cost of capital 

Working Capital Current assets less current liabilities (percentage of revenues) 

SG&A Selling, general, and administrative expenses (percentage of revenues) 

R&D Research and development expenses (percentage of revenues) 

Depreciation Amortization of fixed assets (percentage of revenues) 

Capital Expenditures

Outlay of cash to acquire or improve capital assets

(percentage of revenues, not including acquisition or sale of business

units)

Cost of Goods Sold Includes material, labor, overhead, and depreciation (percentage of revenues) 

Manufacturer Impact Analysis
90

Annuity Calculation

 PV(A) is the value of the annuity at time=0. It is the conversion 

announcement year.

 A is the value of the individual payments in each compounding 

 i equals the interest rate that would be compounded for each p

time

 n is the number of payment periods

Manufacturer Impact Analysis