### 202-234-4433 Neal R. Gross & Co., Inc. Page 1 UNITED STATES DEPARTMENT OF ENERGY ENERGY EFFICIENCY AND RENEWABLE ENERGY ENERGY CONSERVATION STANDARDS FOR RESIDENTIAL DISHWASHERS, DEHUMIDIFIERS, AND COOKING PRODUCTS, AND COMMERCIAL CLOTHES WASHERS

COMMERCIAL CLOTHES WASHERS SUPPLEMENTAL NOTICE OF PROPOSED RULEMAKING (SNOPR) PUBLIC MEETING MONDAY NOVEMBER 16, 2009 The Public Meeting convened in Room 1E-245 in the Forrestal Building, 1000 Independence Avenue, S.W., Washington, D.C., at 9:00 a.m., Douglas Brookman, Facilitator, presiding,

PRESENT DOUGLAS BROOKMAN, Facilitator TIM BALLO, Earthjustice JAMES BATTAGLIA, Navigant Consulting DEBRA BRUNK, Association of Home Appliance Manufacturers ROBERT CARMICHAEL, Navigant Consulting BELINDA CARR, Energetics, Inc. LEAH COGSWELL, Department of Energy LANCE DeLAURA, Southern California Gas Company J.D. DONALDSON, White & Case TOM ECKMAN, Northwest Power and Conservation Council BRENDA EDWARDS, Department of Energy JOSHUA FORGOTSON, ICF International MARK FRIEDRICHS, Department of Energy LUKE HARMS, Whirlpool JERROD KAPPLER, General Electric JEFFREY KINGMAN, Navigant Consulting ELIZABETH KOHL, Department of Energy

### 202-234-4433 Neal R. Gross & Co., Inc. Page 2 PRESENT (CONT.) KELLEY KLINE, General Electric RON LEWIS, Department of Energy AMANDA LOWENBERGER, American Council for an Energy Efficient Economy PHILIP J. MANTHEI, Alliance Laundry Systems, Inc. EDWARD R. OSANN, Appliance Standards Awareness Project JUDITH REICH, Navigant Consulting GREGORY ROSENQUIST, Lawrence Berkeley National Laboratory DOUG ROSSIN, Navigant Consulting EVETTE R. TIPPETT, Entiepell Enterprise CONSTANTIN von WENTZEL, Navigant Consulting STEPHEN WITKOWSKI, Department of Energy

### 202-234-4433 Neal R. Gross & Co., Inc. Page 3 A G E N D A WELCOME ...................................5 OPENING REMARKS, INTRODUCTIONS, AND AGENDA REVIEW .............................5 Doug Brookman RULEMAKING OVERVIEW ......................10 Stephen Witkowski

COMMENTS FROM PARTICIPANTS ...............21 Doug Brookman ENGINEERING ANALYSIS .....................35 Constantin von Wentzel

ENERGY USE ANALYSIS, MARKUPS FOR EQUIPMENT PRICE DETERMINATION, AND LIFE-CYCLE COST ANALYSIS .................................77 Gregory Rosenquist SHIPMENTS ANALYSIS AND NATIONAL IMPACT ANALYSIS .................................81 Gregory Rosenquist TRIAL STANDARD LEVELS, CONSUMER SUBGROUP ANALYSIS, AND MANUFACTURER IMPACT ANALYSIS ................................117 Gregory Rosenquist Constantin von Wentzel UTILITY IMPACT ANALYSIS, EMPLOYMENT IMPACT ANALYSIS, ENVIRONMENTAL ASSESSMENT, REGULATORY IMPACT ANALYSIS ..............152 Gregory Rosenquist

DISCUSSION OF OTHER ISSUES ..............163 Doug Brookman NEXT STEPS AND CLOSING REMARKS ..........164 Stephen Witkowski ADJOURN

### 202-234-4433 Neal R. Gross & Co., Inc. Page 4 1 P-R-O-C-E-E-D-I-N-G-S 2 (9:00 a.m.) 3 MR. BROOKMAN: Good morning, 4 everybody. Welcome. Glad to see you. This 5 is the U.S. Department of Energy's public 6 meeting on Energy Conservation Standards for 7 Residential Dishwashers, Dehumidifiers, and 8 cooking products, and commercial clothes 9 washers. My name is Doug Brookman. We're 10 going to start off this morning with welcoming 11 remarks from Stephen Witkowski, Department of 12 Energy. 13 MR. WITKOWSKI: Good morning, 14 everyone. On behalf of the Department of 15 Energy, I want to welcome you to this public 16 meeting on the Commercial Clothes Washer 17 Supplemental Notice of Proposed Rulemaking, or 18 SNOPR. As with all these public meetings, 19 you're strongly encouraged to participate, 20 provide input, and to discuss the various 21 analyses that we go through in the rulemaking. 22 And I'll have a little bit more to say on

### 202-234-4433 Neal R. Gross & Co., Inc. Page 5 1 this in a minute, but welcome, and we're glad 2 you're all here this morning. 3 MR. BROOKMAN: Thank you, I'll 4 start over here to my left. These microphones 5 are all turned off. We can all practice 6 turning them on as we go around. Please say 7 your name, and organizational affiliation. 8 MR. OSANN: I'm Ed Osann, 9 Consultant on Energy and Water Efficiency. 10 I'm here today on behalf of the Appliance 11 Standards Awareness Project.

12 MS. LOWENBERGER: Amanda 13 Lowenburger with the American Council for an 14 Energy Efficient Economy. 15 MR. DONALDSON: Jamie Donaldson 16 with White & Case, a law firm in D.C. We 17 represent Alliance Laundry. 18 MR. MANTHEI: I'm Phil Manthei 19 from Alliance Laundry Systems. 20 MR. BALLO: Tim Ballo from 21 Earthjustice.

22 MS. BRUNK: Debra Brunk from the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 6 1 Association of Home Appliance Manufacturers. 2 MR. KAPPLER: Jerrod Kappler from 3 General Electric. 4 MS. KLINE: Kelley Kline from 5 General Electric. 6 MR. DeLAURA: Lance DeLaura with 7 Sempra Energy Utilities in Los Angeles. 8 MR. ECKMAN: Tom Eckman, Northwest 9 Power and Conservation Council. 10 MR. HARMS: Luke Harms, Whirlpool 11 Corporation. 12 MR. WITKOWSKI: Stephen Witkowski 13 with the Department of Energy, and Mr. Ron 14 Lewis will be sitting next to me. He stepped

15 out for a moment. 16 MR. VON WENTZEL: Constantin von 17 Wentzel, Navigant Consulting. 18 MS. REICH: Judith Reich from 19 Navigant Consulting.

20 MR. BROOKMAN: I'm not sure we 21 need to do that for every single -- go ahead. 22 MR. ROSENQUIST: Greg Rosenquist,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 7 1 Lawrence Berkeley National Laboratory. 2 MR. BROOKMAN: Thank you, please. 3 (Off mic introduction.) 4 MR. BROOKMAN: Who have I missed? 5 Please introduce yourself. 6 (Off mic introductions.) 7 MR. BROOKMAN: Thank you, did I 8 miss anybody? I think all of you received a 9 packet of information as you came in the door. 10 In there was a copy of the agenda. I'm going 11 to run through this very briefly. In 12 addition, there is a copy of the PowerPoint 13 slides that will be the basis for presentation 14 and discussion as the day goes on. 15 Following this brief agenda 16 review, we're going to have a rulemaking 17 overview from Stephen. And following that 18 overview, there's an opportunity for anybody 19 that wishes to do so, to make brief summary 20 remarks about issues that matter to them. 21 We'll do that for a short amount of time. 22 Then we'll go directly into the Engineering

### 202-234-4433 Neal R. Gross & Co., Inc. Page 8 1 Analysis. We'll break mid-morning, round 2 about 11:00 or so. Following the mid-morning 3 break, we'll have a description of Energy Use 4 Analysis, Markups for Equipment Price 5 Determination, and Life-Cycle Cost Analysis. 6 That ought to run us pretty close to lunch. 7 We'll break for lunch noonish, and 8 then unless we move into the Shipments 9 Analysis prior to lunch, we'll do Shipments 10 Analysis, and National Impact Analysis. And 11 following that, Trial Standard Levels, 12 Consumer Subgroup Analysis, and Manufacturer 13 Impact Analysis, and then go straight into 14 Utility Impact Analysis, Employment Impact 15 Analysis, Environmental Assessment, and 16 Regulatory Impact Analysis. 17 We'll take a break mid-afternoon, 18 round about 2:45 or so. And then following 19 the mid-afternoon break, or whenever we get 20 there, we will not tarry. We will go as 21 efficiently as possible. There's yet another 22 opportunity for people to raise additional

### 202-234-4433 Neal R. Gross & Co., Inc. Page 9 1 issues that are of concern to them, and get 2 that information into the record. We'll close 3 today with next steps and closing remarks. We 4 expect we'll adjourn today no later than 4:30. 5 That's the plan. 6 Questions and comments about the 7 agenda, as written? And, in particular, 8 anything that people wish to raise that 9 wouldn't be included in this agenda? Okay. 10 So, as a matter of consideration, I'd ask you 11 please, if you would, speak one at a time. 12 Please say your name for the record each time 13 you speak. You don't need to say your 14 organizational affiliation again, just say 15 your name. John will keep track of that. 16 This public meeting, there will be 17 a complete transcript of it available to you. 18 It will be posted on the EERE website within 19 say seven or ten days. Okay. Quickly, maybe 20 we'll have some clarification on that as we go 21 along. 22 I'm going to be cuing people to

### 202-234-4433 Neal R. Gross & Co., Inc. Page 10 1 speak by name as best I can. I also wish to 2 encourage follow-on comments. If you would 3 please keep the focus here, that is, turn off 4 your cell phones, turn them on silent mode, 5 and please keep your side bar conversations to 6 a minimum. These microphones actually work 7 pretty well, so we can hear you. In fact, if 8 you're not speaking, you can turn them off. 9 And if you would, please try to be 10 concise, share the air time. We'll try and be 11 as effective and efficient as possible today. 12 And I think that's all I have at this point. 13 Stephen Witkowski. 14 MR. WITKOWSKI: Okay. First of 15 all, I just want to make you aware that the 16 information on this SNOPR is available at this 17 website. We will try to get the presentation 18 material up there, today's presentation 19 material, as soon as possible after this 20 meeting. 21 The purpose of the meeting is to 22 invite comment on the proposed Energy

### 202-234-4433 Neal R. Gross & Co., Inc. Page 11 1 Conservation Standard Level TSL 3 for 2 Commercial Clothes Washers, referred to as 3 CCWs, of course, to present methodologies, and 4 characterize results for this rulemaking 5 analysis, including updates to the analysis 6 presented in the Supplemental Notice of 7 Proposed Rulemaking, referred to as an SNOPR, 8 to discuss specific issues related to each 9 analysis, to seek input from interested 10 parties on the methodologies, assumptions, 11 data sources and results from the analysis, 12 and to describe the next steps. 13 We strongly encourage comments and 14 participation from the attendees. 15 Participants are invited to provide summary 16 comments or statements. Participants are 17 invited to raise additional issues for 18 disclosure today. And please note that the th 19 SNOPR comment period closes December 9 ,

20 2009. 21 Very briefly, the chronology for 22 the statutory authority for this rulemaking

### 202-234-4433 Neal R. Gross & Co., Inc. Page 12 1 is, first of all, the Energy Independence and 2 Security Act of 2007, or EISA, as amended, to 3 prescribe standards for dishwashers, 4 dehumidifiers. 5 DOE is not proposing standards for 6 these because they are covered under EISA. 7 DOE published a final rule addressing energy 8 conservation standards for residential 9 electric and gas ranges, and ovens, and th 10 microwave ovens on April 8 , 2009. And the 11 proposed notice addresses, in part, the 12 requirements of Section 136 of the Energy 13 Policy Act. I'm not going to read all the 14 legalese. It's there in black and white, and 15 bold. 16 DOE actions on commercial clothes 17 washers, test procedures. The final rule for 18 commercial clothes washers, which adopted the 19 EPACT 2005 amendments to EPCA, requiring that 20 CCWs be rated according to the residential 21 clothes washer test procedure, which was th 22 published on October 18 , 2005.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 13 1 Energy Conservation Standards, 2 Notice of Availability of Framework Document th 3 published on March 27 , 2006. Advanced 4 Notice of Public Rulemaking, or ANOPR, th 5 published on November 15 , 2007. Technical 6 Support Document, Notice of Public Rulemaking, 7 or NOPR, and the SNOPR published in the th 8 Federal Register of November 9 , 2009, which 9 we're discussing at this meeting. And the 10 final rule is scheduled for publication in 11 January 2010. 12 MR. BROOKMAN: Ed Osann. 13 MR. OSANN: This is Ed Osann. 14 With regard to test procedures, the Department 15 currently has under review the test procedures 16 for residential clothes washers, and there may 17 be some revisions that come out of that review 18 process. Under the terms of EPACT 2005, will 19 those changes in the test procedure apply to 20 determinations of compliance with this 21 standard that is currently proposed for 22 commercial clothes washers?

### 202-234-4433 Neal R. Gross & Co., Inc. Page 14 1 MR. WITKOWSKI: Ron, would you 2 like to address that, since it's a compliance 3 issue, primarily? 4 MR. BROOKMAN: Ron Lewis. 5 MR. WITKOWSKI: Ron Lewis, excuse

6 me. 7 MR. LEWIS: I went up to make sure 8 we had somebody from General Counsel here that 9 could represent any requests for 10 interpretation, something that you want to 11 leave with them. But this is on the 12 commercial clothes washers, and right now I 13 don't want to intermix the two. It's a fair 14 question, and I expect that we'll have to get 15 an answer for you, but right now the focus is 16 on commercial clothes washers, and the things 17 that are represented here as far as test 18 procedures and everything are stand alone 19 right now. What we have in this -- referenced 20 in here, what's applicable is the topic for 21 today. So things that are yet to come, 22 changes that are yet to come, we can't really

### 202-234-4433 Neal R. Gross & Co., Inc. Page 15 1 address things that haven't been announced or 2 finalized, so I don't really want to 3 speculate, or talk about what may come. 4 MR. OSANN: Okay. Let me rephrase 5 the question then, because I'm not asking for 6 speculation about what might happen on the 7 substance of the revised test procedures. But 8 the question is, what test procedures will 9 commercial clothes washers be required to 10 employ to demonstrate compliance with the rule 11 that will be announced for commercial clothes 12 washers in January 2010?

13 MR. WITKOWSKI: That's the 14 commercial clothes washer test procedure. 15 MR. LEWIS: Right. 16 MR. WITKOWSKI: It's that simple. 17 MR. LEWIS: As far as a reference, 18 or -- do you want a specific citation of where 19 that is, or something - 20 MR. WITKOWSKI: If you want the 21 citation, I believe it's on our website. If 22 it's not, if you -

### 202-234-4433 Neal R. Gross & Co., Inc. Page 16 1 MR. BROOKMAN: The existing test 2 procedure. 3 MR. OSANN: The existing test 4 procedure. 5 MR. LEWIS: Right. 6 MR. OSANN: Okay. Thank you. 7 MR. WITKOWSKI: Again, on slide 5, 8 a little bit more chronology here. On October 9 2008, the NOPR proposed an amended Energy 10 Conservation Standards for certain products 11 and equipment, including commercial clothes 12 washers. That rulemaking was published as a 13 final rule in March 2009, well ahead of the 14 CCW statutory deadline of January 1, 2010. 15 Commercial clothes washers were 16 not among the products covered in the final 17 rule because of comments on the adequacy, and 18 the stated max-tech efficiency for top loading 19 CCWs led to three sample max-tech top loading 20 units being tested, none of which achieved the 21 efficiency standard stated by the 22 manufacturer. And DOE, in fulfilling its

### 202-234-4433 Neal R. Gross & Co., Inc. Page 17 1 obligation to develop an SNOPR based on the 2 new information, since the NOPR had been -- 3 was proposed - excuse me - since the NOPR had 4 proposed a TSL for top loading CCWs at that 5 max-tech level. This SNOPR presents the 6 revised analysis, and proposes new standard

7 levels for comment. 8 Slide six shows the EPCA direction

9 for DOE to follow. The seven factors that we 10 consider when setting Energy Conservation 11 Standards. For Factor number one, economic 12 impacts on consumers. The analysis includes 13 life-cycle cost analysis, and manufacturer 14 impact analysis. For factor two, lifetime 15 operating cost savings - I'm sorry - we have 16 the life-cycle cost analysis. For factor 17 three, total projected energy savings, the 18 analysis is a national impact analysis. For 19 factor four, impact on utility performance, 20 the analyses are both the screening analysis, 21 and the engineering analysis. Factor five, 22 impact on any lessening of competition, the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 18 1 analysis is a manufacturer impact analysis. 2 Six, a need for National Energy Conservation. 3 Again, it is a National Impact Analysis, 4 excuse me. And then seven, other factors that 5 the Secretary considers relevant, which can 6 include environmental analysis - excuse me - 7 environmental assessment, utility impact 8 analysis, and employment impact analysis. 9 Slide number seven, selection of 10 proposed standards. DOE considered five trial 11 standard levels, or TSLs, beginning with the 12 most efficient level, TSL 5, and worked down 13 to the level where the benefits of the 14 potential standards outweigh the burdens. DOE 15 tentatively concludes that at TSL 5 and TSL 4, 16 the benefits of energy savings, economic 17 benefits, and emissions reductions would be 18 outweighed by the potential for 19 disincentivizing consumers to purchase high 20 energy front loading CCWs, and the large 21 capital conversion cost that could result in a 22 substantial reduction in manufacturer's INPV.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 19 1 2 DOE tentatively concludes that TSL 3 3 saves a significant amount of energy, and is 4 technologically feasible, and economically 5 justified. At TSL 3, DOE tentatively 6 concludes that the potential adverse impacts 7 on one low-volume manufacturer, and, 8 therefore, the potential adverse impacts on 9 the CCW market competition would be minimized. 10 DOE has also taken into consideration the 11 Department of Justice's review of the 12 standards proposed in the October 2008 NOPR; 13 that is, competitive impacts are discussed in 14 more detail in the manufacturer impact 15 analysis section of this presentation. 16 Slide eight, the proposed amended 17 Energy Conservation Standards for commercial 18 clothes washers, TSL 3, we have two product 19 classes for top loading washers, 1.6 modified 20 energy factor, 8.5 water factor. For front 21 loading, 2.0 modified energy factor, and a 5.5

22 water factor.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 20 1 Now, before we go into your 2 comments, I'm going to skip ahead to slide 3 ten, so that I won't have to come up again for 4 one slide, and this will follow-through. And 5 then we can open up the session for comments. 6 And this is just a summary of the issues 7 which DOE seeks comments on. These are SNOPR 8 Issues 1-7. I'll skip ahead here. 9 One, whether the method of loading 10 clothes washers, or any other characteristic 11 commonly associated with traditional top 12 loading, or front loading clothes washers are 13 features within the meaning of 42 USC 14 6295(0)(4) in EPCA, and whether the 15 availability of such feature or features would 16 likely be affected by eliminating separate 17 classes for these equipment types previously 18 established by DOE. 19 Two, the revised Energy Efficiency 20 Levels, including the revised max-tech level 21 for top loading CCWs. Issue three,22 technological feasibility of the proposed max### 202-234-4433 Neal R. Gross & Co., Inc. Page 21 1 tech CCW, including washing and rinsing 2 performance measures for CCWs, and population 3 data for water heating CCWs. Issue four, the 4 determination of short and long run price 5 elasticities of demand and cross-price 6 elasticities for top loading versus front 7 loading CCWs, and use -- CCWs in use versus 8 front loading CCWs, excuse me. Issue five, 9 the determination of manufacturer impacts, 10 including the effects of manufacturer tax 11 credits and competitive concerns. Issue six, 12 determination of environmental impacts. And, 13 Issue seven, the newly proposed Energy 14 Conservation Standards. 15 So, at this time, we welcome 16 remarks, and interested parties are requested 17 to please present. 18 MR. BROOKMAN: Thank you. Every 19 now and then, people submit a request to speak 20 at this time in advance. We don't want that 21 to hold anybody back. Anybody that wishes to 22 make brief summary remarks at this point,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 22 1 would be welcome to do so. Who would like to 2 start? Phil. 3 MR. MANTHEI: Phil Manthei, 4 Alliance Laundry Systems. J.D. Donaldson from 5 White & Case, and I will both make comments at 6 this point in time. 7 Alliance Laundry System has 8 participated in good faith offering relevant 9 data, technical data, financial data, 10 manufacturing facility site examination. An 11 enormous effort has been mounted by Alliance 12 Laundry, and we're just a very small company, 13 to provide DOE with data. Significant 14 resources have been devoted to gather data 15 through testing and estimating, et cetera. 16 DOE's max-tech top loading 17 commercial clothes washer is inappropriate for 18 a minimum standard. There is no true hot 19 water provided by the max-tech model, and 20 we've measured 112 degrees, which 120 and 21 greater is considered hot water. So, the 112 22 is considered warm water. Also, we measured

### 202-234-4433 Neal R. Gross & Co., Inc. Page 23 1 the warm water setting. It measures 73 2 degrees, which is cold, anything less than 80 3 is cold water. 4 Users of commercial clothes 5 washers who believe they are paying for hot 6 water should be allowed to get hot water, just 7 the same as residential clothes washer users 8 can. Rinsing is minimal with only three spray 9 rinses in spin mode, consisting of 10 approximately three gallons each, instead of 11 the typical complete submersion clothes load 12 to allow sand, or heavy sediment and suds 13 trapped between layers to be properly

14 evacuated. The GE model WNRD2050G has 15 received almost no acceptance by the industry16 based on comments of Alliance's top 20 multi17 housing customers. 18 I know DOE says that they've 19 observed, they believe that the GE model is as 20 rugged as other residential commercial units 21 on the market. However, those are residential 22 commercial clothes washers. This is a

### 202-234-4433 Neal R. Gross & Co., Inc. Page 24 1 commercial clothes washer, not a residential 2 clothes washer rulemaking. 3 DOE has failed to consider the 4 welfare effects of adversity affecting 5 apartment residents' ability to clean clothes 6 versus residential clothes washing machines. 7 DOE's belief is flawed that all 8 manufacturers can achieve a top loading 9 minimum standard, MEF of greater than or equal 10 to 1.6, and a water factor less than or equal 11 to 8.5. Alliance's long-term bank covenants 12 currently limit borrowing to 19.2 million, as 13 shown in our recent SEC 10Q filing. In 14 addition, the credit facility must be th 15 refinanced before January 27 , 2011, where 16 tightened credit interest terms are likely. 17 ALS estimates investment of 18.4 18 million to achieve the proposed top loading 19 standard based on DOE's max-tech model 20 designated as GE model WNRD2050G. 21 Even if funds were available to 22 ALS, which is yet to be determined upon future

### 202-234-4433 Neal R. Gross & Co., Inc. Page 25 1 refinancing, for a dramatic redesign of its 2 commercial top loading clothes washers costing 3 more than two times our normal capital 4 expenditures, and regardless of the method 5 used to calculate the financial payback, such 6 an expenditure could never be justified, and, 7 therefore, would never be approved for funding 8 by our investors for a product that does not 9 meet our customers' minimum requirements. 10 DOE's proposed commercial clothes 11 washer standard places 292 union laborers in 12 the Ripon, Wisconsin plant at risk of losing 13 their jobs. For DOE's SNOPR, 150 are 14 attributed to the commercial clothes washer, 15 and the remainder, 142, are associated with 16 companion commercial clothes dryer, with an 17 additional 40 non-production jobs. 18 MR. DONALDSON: Hopefully, 19 everyone had a chance to pick up the slides 20 that Alliance Laundry provided. 21 MR. BROOKMAN: J.D., please say 22 your name.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 26 1 MR. DONALDSON: Sorry. J.D. 2 Donaldson, White & Case. We represent 3 Alliance Laundry. Hopefully, the folks here 4 got an opportunity to pick up the slide 5 presentation that Alliance has provided for 6 this SNOPR. 7 They summarize the points that 8 Phil has walked through. I want to walk 9 through two other of the points. The first is 10 -- the first that I'd like to cover appears on 11 page 3. This is the second point, and this 12 deals with, DOE has asked the Department of 13 Justice's Anti-Trust Division to analyze the 14 effects of the proposed standard on 15 competition. For those of you who don't know, 16 the Anti-Trust Division is the expert agency 17 on keeping things competitive so that 18 consumers benefit. 19 There is a letter from the DOJ 20 that's attached to the end of Alliance 21 Laundry's slide presentation. And the DOJ 22 found that there was a very real risk that the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 27 1 proposed standard could not be met by at least 2 one commercial washer manufacturer. 3 MR. BROOKMAN: Pardon me, J.D. So, 4 now that people have these slides, you're 5 referring to page 3. Is that what you said? 6 MR. DONALDSON: I'm referring to 7 page 3 of the slide presentation. 8 MR. BROOKMAN: Okay. Let's see if 9 we can find that. Okay? Please proceed. 10 MR. DONALDSON: So, the DOJ found, 11 and the full text of the letter is attached at 12 the very end of this presentation. It's the 13 last page of that letter. 14 MR. MANTHEI: And to the SNOPR, as

15 well.

16 MR. DONALDSON: The DOJ found that 17 there was a very real risk that the proposed 18 standard would result in one of the 19 manufacturers not being able to meet it, 20 therefore, forcing it out of the business. 21 Here, the low-volume manufacturer sells 22 approximately half of the commercial clothes

### 202-234-4433 Neal R. Gross & Co., Inc. Page 28 1 washers in the United States. It's really 2 only considered the low-volume manufacturer 3 because it doesn't sell anywhere near the 4 number of residential machines that the other

5 two manufacturers do. 6 DOJ's concern is that the exit 7 here would leave only two manufacturers left 8 in the CCW business, which could lead to 9 higher prices. As you can see from the 10 letter, DOJ concluded that, and I quote, "To 11 maintain competition, the DOE should consider 12 keeping the existing standard in place for top 13 loading CCWs." That's from the U.S. Expert 14 Competition Agency. 15 The second point I want to cover 16 appears on pages 6 and 7 of the slides. And, 17 essentially, what that is, is -- I would 18 submit that it wouldn't make any sense to 19 impose an efficiency standard, if the standard 20 would prevent commercial clothes washers from 21 working well. The purpose of a clothes washer 22 is to clean your clothes, but there's been no

### 202-234-4433 Neal R. Gross & Co., Inc. Page 29 1 showing that the current standard, as it's 2 currently embodied in the GE machine, does a 3 good job of cleaning clothes.

4 We know that the current 5 commercial clothes washers do a good job of 6 cleaning clothes, however, using the current 7 standard. It's kind of like requiring that 8 light bulbs only use a certain amount of 9 electricity. That's great if they only use a 10 certain amount of electricity, but it really 11 doesn't do much good if they don't light up a 12 room. So, I would submit that the standard, 13 any standard that wouldn't do a good job 14 cleaning clothes would be an arbitrary and 15 capricious one. 16 MR. BROOKMAN: Okay. Thank you. 17 Additional comments here at the outset? Let's 18 let Phil follow-on. Please, go ahead. 19 MR. MANTHEI: Yes. I'd like to 20 summarize here. So, in summary, we believe 21 that GE machine is not an appropriate model 22 for the commercial laundry market. We believe

### 202-234-4433 Neal R. Gross & Co., Inc. Page 30 1 that DOJ's recommendation to keeping the 2 existing standard in place for top loading 3 commercial clothes washer is the appropriate 4 course of action. And in the spirit of 5 cooperation, and with a mind to continually 6 improving overall energy efficiency, we could 7 support the following standards, an MEF of 8 1.42 or less, I mean, or greater, and a water 9 factor of 9.5 or less for the top load. And 10 the MEF greater than or equal to 2, and water 11 factor of 5.5 or less for the front loading. 12 MR. BROOKMAN: Okay. Thanks for 13 those summary remarks. Tim Ballo. 14 MR. BALLO: Tim Ballo, 15 Earthjustice. We submitted some detailed 16 comments on the last iteration of the NOPR on 17 why we believe the Department is not required 18 to adopt separate product classes. The 19 product class issue is a key one for the 20 efficiency advocates. 21 We believe that the sensible 22 standard is to adopt a strong unitary standard

### 202-234-4433 Neal R. Gross & Co., Inc. Page 31 1 that applies to both top loading, and front 2 loading washers. If the Department determines 3 that it cannot do that because of impacts to 4 the manufacturers, impacts on competition, not 5 that we agree with the extent of the impacts 6 the Department feels there would be. We 7 believe those impacts are overstated, to some

8 extent. 9 If the Department determines that 10 it has to adopt a standard that preserves top 11 loading washers in the market, we are 12 particularly concerned about issues like the 13 cross-price elasticity of demand, the impact 14 that a stronger standard for front loaders 15 that also preserves a market niche for top 16 loaded washers would have, and would 17 ultimately recommend, again, only if the 18 Department really believed that it cannot 19 adopt a strong standard that would apply to 20 all washers, a standard that would apply a 21 single standard to all products, that top load 22 washers would be able to meet, such as the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 32 1 1.60 MEF that I believe the Department 2 proposed. 3 Again, we don't like this, but if 4 the Department really believes that the 5 competition and manufacturer impacts are 6 unacceptable, that that would be an 7 alternative for the Department to consider. 8 MR. BROOKMAN: Did you want to say 9 anything about water factor? 10 MR. BALLO: The Department 11 proposed, I think, 8.5, and, again, we think 12 1.60 and 8.5, if that's the way it has to come

13 out. 14 MR. BROOKMAN: Thank you. Debra.

15 MS. BRUNK: Debra Brunk from AHAM. 16 First, I just want to thank DOE for offering 17 the supplemental Notice of Proposed Rulemaking18 on commercial clothes washers, and for re19 evaluating the max-tech, and the proposed MEF 20 and water factor levels for top load 21 commercial clothes washers. 22 Two points, and I will make

### 202-234-4433 Neal R. Gross & Co., Inc. Page 33 1 comments on these later, as well, but AHAM 2 does support the proposed MEF and water factor 3 levels that DOE has put forward for front 4 loading commercial clothes washers, and we do 5 support the two separate product classes, one 6 for top load, and one for front load 7 commercial clothes washers. And I know that 8 that's a comment later, and I will get into 9 more details at that point. Thank you. 10 MR. BROOKMAN: Thank you. Other 11 comments here at the outset? Okay. Yes, Ed.

12 MR. OSANN: Ed Osann for ASAP. I 13 think even the most cursory reading of the 14 Supplemental NOPR indicates that a lot of the 15 analysis is driven by the Department's concern 16 for their view of a precarious position 17 presented by the low-volume manufacturer. We 18 remain somewhat unconvinced that the numbers 19 are as stark as contained in the revised 20 manufacturer's impact analysis, and perhaps we 21 can get into that a little later this

22 afternoon.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 34 1 But given the potential benefits 2 of a standard, a stronger standard, and the 3 relatively narrow costs that would be incurred 4 to meet the standard, this is really a case 5 that cries out for a different solution than 6 the one the Department has presented in this 7 Supplemental NOPR. 8 I noted that Alliance here today 9 pointed out that the Department of Justice, 10 the Anti-Trust Division, is responsible for 11 keeping things competitive, so that consumers 12 benefit. And I think that is actually pretty 13 apt, because, ultimately, Anti-Trust law is 14 not simply about the protection of companies. 15 It's about the protection of consumers. And 16 we have hundreds of millions, actually, 17 billions of dollars of potential savings to 18 consumers that may be forfeited by a standard 19 that is not as strong as it should be. 20 MR. BROOKMAN: Okay. Thank you. 21 Additional comments? We're going to move into 22 the analysis, then. Okay. Let's do that.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 35 1 The first analysis area is Engineering 2 Analysis. Constantin. 3 MR. Von WENTZEL: Good morning. 4 I'm here to talk about the Engineering 5 Analysis. And, as you can see, the purpose is 6 to characterize manufacturer cost efficiency 7 relationships, to evaluate design options, and 8 improve -- and also to do a sensitivity 9 analysis to look at current material prices. 10 We looked at two commercial clothes washer 11 equipment classes. And for the NOPR, the 12 industry supplied two data points, and we 13 supplemented that with relevant information 14 and data from manufacturers in confidential 15 interviews. And for the SNOPR, we revised the 16 top loader max-tech efficiency level, and 17 adjusted the prices to 2008 dollars. 18 When evaluating and establishing 19 Energy Conservation Standard, DOE divides 20 covered products or equipment into classes, 21 typically by type of energy use, capacity, or 22 other performance-related features. And for

### 202-234-4433 Neal R. Gross & Co., Inc. Page 36 1 the ANOPR commercial clothes washers were 2 analyzed as a single product class, and for 3 the NOPR, and for the SNOPR, they were 4 analyzed in two. And you can see some of the 5 precedents that were mentioned here, EPCA, the 6 Resident Clothes Washer Rulemakings, as well 7 as the CEC Commission petition waiver denial. 8 As you may recall, the California 9 Energy Commission made a petition to DOE for a 10 separate efficiency standard for California 11 that was denied by DOE on three grounds. 12 Number one, DOE felt that it did not have the 13 statutory authority to issue a final rule 14 within the date that was requested. They also 15 felt that -- DOE also felt that CEC had not 16 established an unusual or compelling reason, 17 as in water interests. And the third reason 18 was, is that it could lead to the 19 unavailability of top loading clothes washers 20 in California. And just I think it was two th 21 weeks ago, the 9 Circuit Court of Appeals 22 reversed the Department of Energy's denial,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 37 1 and remanded the petition for further 2 proceedings. That was too late for us to 3 consider, so we await further resolution on

4 that. 5 So, for the SNOPR, DOE tentatively 6 concluded that top loading vertical axis 7 commercial clothes washers provide unique 8 utility, and maintained that the axis of 9 access is a feature pursuant to EPCA. So, we 10 have two equipment classes under 11 consideration, top loading and front loading, 12 and DOE is willing, however, to reconsider its 13 previous conclusions as part of this 14 rulemaking. 15 If a single equipment class were 16 to be established, DOE would give considerable 17 weight to the potential adverse effect of a 18 single standard to competition in the 19 commercial clothes washer market. And DOE 20 does not intend to set a standard that would 21 produce significant adverse effects on 22 competition.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 38 1 So, we come to Issue number one.

2 Ed? 3 MR. OSANN: Excuse me. This is Ed 4 Osann. Was that last comment in the slide 5 deck anywhere? 6 MR. BROOKMAN: It's the final 7 bullet on slide 15.

8 MR. Von WENTZEL: It's the last 9 one. The order is the other way, so you start 10 at the bottom, and you go to the top, and then 11 you go over to the next page. 12 MR. BROOKMAN: Somehow, the slides 13 got inverted. Do you see it?

14 MR. OSANN: Yes. 15 MR. BROOKMAN: Okay, thank you. 16 MR. Von WENTZEL: Okay. So, this 17 brings us to the number one -- the first 18 issue, I should say, not the number one issue 19 per se, which is with regard to equipment 20 classes. DOE invites comment on whether the 21 method of loading clothes washers, and you can 22 see all the further definitions there, whether

### 202-234-4433 Neal R. Gross & Co., Inc. Page 39 1 DOE, basically, should maintain two equipment

2 classes or one.

3 MR. BROOKMAN: I would note that 4 we're talking about slide 16 here, and it's 5 kind of -- it's counter intuitive that we need 6 to move up to move to the next slide, but 7 please do find the comment question there, so 8 that you can respond. Debra.

9 MS. BRUNK: Debra Brunk from AHAM. 10 As I noted earlier, I wanted to make some 11 comments on the two product classes for 12 commercial clothes washers. As I noted 13 earlier, AHAM supports two product classes for 14 this product. EPACT allows DOE to establish 15 different product classes, and that has been 16 noted in this SNOPR, as well as the NOPR. 17 Something else that isn't talked 18 about very much is that the law directs DOE to 19 create "certain categories, classes of 20 products, depending upon their energy use or 21 performance characteristics." 22 We did a lot of analysis for the -

### 202-234-4433 Neal R. Gross & Co., Inc. Page 40 1 - I think it was the ANOPR piece of this 2 rulemaking, and noted that top and front 3 loading commercial clothes washer 4 efficiencies, there's a clear distinction. 5 That's a bimodal distribution between these 6 two product classes, and, therefore, we 7 believe that that is a distinction between the 8 energy use of these two types of products.

9 Another concern that we have that 10 we believe supports the two product class 11 approach is, you take a look at, again, this 12 bimodal distribution, or the MEF and water 13 factor proposed by DOE for the front load 14 product class. This is beyond the capability 15 of a traditional, or even a non-traditional 16 top load style washer. And our concern is 17 that if DOE moves forward with a single18 product class, you kind of end up with a lose19 lose situation. You end up with a product 20 class that a top load style product could not 21 meet, but you end up with a MEF and water 22 factor that is pretty easy to achieve with the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 41 1 front load style. So, on one end, your -- it 2 just doesn't make a lot of sense, which is why 3 we believe that the two product classes is the 4 best way to go. 5 In this way, you continue to 6 conserve energy and water with the front load 7 units. And you are also conserving water with 8 the top load units, energy and water, with the 9 top load units, albeit at a different level, 10 or on a different basis. 11 So, again, those are our points to 12 support the two product classes that DOE has 13 proposed for commercial clothes washers. 14 MR. BROOKMAN: Thank you. Tim

15 Ballo. 16 MR. BALLO: Tim Ballo with 17 Earthjustice. Just briefly, to AHAM's point 18 that a distinction in energy use between two 19 products would justify a separate product 20 class, that seems sort of at odds with what 21 the entire EPCA program is designed to do 22 here. Whenever two examples of a product use

### 202-234-4433 Neal R. Gross & Co., Inc. Page 42 1 different amounts of energy, the whole idea is

2 that a standard would weed out the ones that 3 use too much energy. 4 I think what that's getting at is 5 in 6295, I think it's P, rather Q(1)(a), 6 products that consume a different kind of 7 energy, the Department is empowered to adopt a 8 distinct product class for such products. 9 That would be a situation where say some 10 washers used natural gas instead of 11 electricity to power the motor that spins the 12 agitator, I guess. That's clearly not the 13 situation here. 14 The Department has been concerned 15 all along with 6295-04, which is a mandatory 16 provision, providing that DOE cannot set a 17 single standard if that single standard would 18 eliminate certain features from the market 19 that are substantially different than the 20 features that exist in that market presently. 21 We believe that we've already made 22 the case that top loading and front loading,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 43 1 method of loading is not a feature, that even 2 if the Department could somehow determine that 3 it is a feature, that top loading was a 4 feature, that front leading is substantially 5 the same as top loading, as the statute, the 6 plain language says, and that even leaving 7 those issues aside, a strong standard would 8 not eliminate top loading washers from the

9 market. 10 And, again, this is where the CEC 11 case is very much on point, because the court 12 determined that DOE can't look at just the 13 market today. It has to look at what the

14 market would be when the standard takes 15 effect. In this case, I think that's 2012. 16 DOE would have to find by preponderance of the 17 evidence that the strong standard would 18 eliminate top loaders from the market in 2012. 19 We believe that's not the case that that that 20 would happen as the existence of very 21 efficient top loading washers in the 22 residential market shows.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 44 1 As to the last issue on whether 2 the equipment classes should be the same 3 between commercial clothes washers, and 4 residential clothes washers, we don't see the 5 need for DOE to decide that issue in this 6 rulemaking. We think there is some 7 differences between these two markets, and 8 regardless of whatever the Department does 9 here, it should reconsider that issue in the 10 residential clothes washer rulemaking. 11 MR. BROOKMAN: Thank you. Kelley. 12 MS. KLINE: Hi, Kelley Kline from 13 GE. We just wanted to really reiterate, and 14 we agree with AHAM's comments on the 15 importance of DOE maintaining the two, or 16 having the two separate product classes. We 17 think DOE has the ability to do that, given 18 the important differences between the 19 products. 20 In addition to what Debra 21 outlined, we would just note that we think 22 consumer preference is a big question, and

### 202-234-4433 Neal R. Gross & Co., Inc. Page 45 1 real preference issues with top loads versus 2 front loads, in addition to cycle time, and 3 cost to consumers, we think are all very 4 important differentiators, which counsel in 5 favor of maintaining the two different product

6 classes. 7 MR. BROOKMAN: Okay. Thank you. 8 Yes, please, Luke.

9 MR. HARMS: Luke Harms. I would 10 just reiterate what both AHAM and GE just 11 indicated. And also add that, in addition to 12 the impact on the consumer, there is also an13 impact on the route operators, the multi14 housing complexes, in which most of them have 15 specialized in one product class, front load, 16 or top load, so there's a major reinvestment 17 required for those companies who have invested 18 in one platform versus the other, with 19 technical training, and also with parts 20 inventories and those sorts of things. So, 21 there's a major interest in maintaining two 22 product classes.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 46 1 In addition, there's also -- it's 2 also consistent with energy standards for 3 refrigeration, which has separate classes for 4 side-by-side, top freezer, and bottom freezer. 5 MR. BROOKMAN: Okay. Thank you. 6 Let me go to Ed, and then I'll come back. 7 MR. OSANN: Ed Osann, ASAP. I'd 8 just point out with regard to the route 9 operators, there's a single product class now. 10 They're operating in a one product class 11 environment today, and managing the issues 12 that you identified. 13 MR. BROOKMAN: Phil. 14 MR. MANTHEI: Phil Manthei, 15 Alliance Laundry Systems. We delivered to the 16 Department the same comments that we made at 17 the residential clothes washer hearing or 18 framework meeting in September, and, 19 basically, we support, of course, the two 20 classes. The points that we point out here, 21 of course, are that EPCA allows for that. 22 Basically, the top loading door design has

### 202-234-4433 Neal R. Gross & Co., Inc. Page 47 1 allowed consumers to choose the lowest cost 2 design between the two classes. Basically, 3 it's impossible to put a front loading door on 4 a vertical axis clothes washer, which I know 5 we keep dancing around the issue, but when 6 we're talking about top loading, we're really 7 talking about vertical axis, we're talking 8 about horizontal axis with front loading. So, 9 they're really the two design concepts. 10 In my comments here, when you 11 start looking at the cost difference between 12 top loading and front loading door, the top 13 loading is pretty easy. You've got a piece of 14 sheet metal, and you've got some very simple 15 hinges, and that's it. On a front loading 16 door, it gets much more complicated. There's 17 glass that's very costly. It has to be 18 treated to withstand the temperature, and 19 impact resistance, very sophisticated lock 20 system to keep the door locked, very big hinge 21 system because people have a tendency to want 22 to jar the door, and abuse it, especially in a

### 202-234-4433 Neal R. Gross & Co., Inc. Page 48 1 commercial environment. And then we have the 2 issue of the ability to stoop down for people 3 to get the clothes out of the washer, and so 4 what has developed is manufacturers have 5 developed pedestals to put the clothes washers 6 on. In the retail market, these pedestals 7 sell from $199 to $250. If you look at the 8 retail price, at Best Buy it's $250. If you 9 add that on to the cost difference between a 10 top load and a front load, there's at least 11 $500 difference. Top loading is undeniably a 12 feature for consumers because of its low cost. 13 Convenience is another feature 14 inherent to the top loading. We talked about 15 the ability to stoop down versus not having to 16 stoop down. Certainly, top loading washers 17 are more convenient than front loading 18 washers. In fact, the front loading washer, 19 most of them are locked during the cycle. 20 Therefore, if you interrupt the cycle to add a 21 forgotten garment it has to drain the water 22 out, and allow the lock to open. It's just

### 202-234-4433 Neal R. Gross & Co., Inc. Page 49 1 not as convenient. 2 The other thing is, if you look at 3 the latest additional of Consumers Report, I 4 guess it was the February 2009 edition, and 5 really read it, the biggest thing that they 6 talked about with front loaders is, the front 7 loader cycle times are getting longer. Many 8 take more than 90 minutes per load. If you 9 look at the top loading clothes washers, the 10 cycle times are generally 30 to 85 minutes. 11 It's very apparent that a top loading door 12 location is associated with providing 13 consumers with your expected good washing 14 performance, and a convenient washing cycle 15 time of around 55 minutes, instead of 115 16 minutes. 17 MR. BROOKMAN: Thank you. Tim. 18 MR. BALLO: Tim Ballo, 19 Earthjustice. Just very quickly to respond to 20 something that Whirlpool mentioned. The 21 separation in EPCA of refrigerators by method 22 of access, side-by-side versus top and bottom

### 202-234-4433 Neal R. Gross & Co., Inc. Page 50 1 doors was codified by Congress as two distinct 2 standards, Congressionally enacted standards. 3 And, in fact, Congress actually enacted a 4 single standard for all commercial clothes 5 washers, so I don't think that what Congress 6 chose to do for refrigerators, that it speaks 7 to all issues that DOE is confronting today. 8 MR. BROOKMAN: Thank you. We've 9 got a lot of response on these issues. Any 10 additional comments before we move on?

11 MS. TIPPETT: I have one.

12 MR. BROOKMAN: Yes. Please use 13 the microphone and say your name. 14 MS. TIPPETT: My name is Evette 15 Tippett. 16 MR. BROOKMAN: Would you say who 17 you represent? 18 MS. TIPPETT: I'm from Entiepell 19 Enterprise. 20 MR. BROOKMAN: Thank you. 21 MS. TIPPETT: Okay. You're 22 welcome. And I was just -- have a question

### 202-234-4433 Neal R. Gross & Co., Inc. Page 51 1 about are you looking to the future with 2 washing machines with the possibility of them 3 being operated by solar energy? 4 MR. BROOKMAN: Okay.

5 MS. TIPPETT: And how would that

6 affect - 7 MR. BROOKMAN: Let me see if 8 anybody wishes to comment on that. Constantin, 9 can you?

10 MR. Von WENTZEL: We based the 11 current analysis on clothes washers that are 12 currently available in the market. As to 13 solar powered clothes washers, I'm not sure 14 that would be a covered product, because the 15 energy source would not be our traditional 16 energy source, but I think we'd have to leave 17 that to General Counsel for clarification. 18 Sorry. 19 MR. BROOKMAN: Do you want to try 20 that now, or do you want to -

21 MS. KOHL: Sure. 22 MR. BROOKMAN: Please say your

### 202-234-4433 Neal R. Gross & Co., Inc. Page 52 1 name, Betsy. 2 MS. KOHL: Hi, this is Betsy Kohl 3 with DOE General Counsel's office. Part of 4 the problem is the definitions in the statute, 5 when they talk us setting energy efficiency 6 standards, is for energy sources like oil, and 7 natural gas, and not solar. So, there 8 wouldn't really be any statutory authority for 9 us to look at making solar products more 10 efficient. 11 MS. TIPPETT: Does that mean if 12 you have a -

13 COURT REPORTER: You have to come 14 to the microphone if you want to be on the

15 record.

16 MS. TIPPETT: Does that mean that 17 if there is a washing machine that is produced 18 for solar, then it wouldn't be under any kind 19 of statutory regulations or anything?

20 MS. KOHL: Correct. Yes. 21 MS. TIPPETT: So, it would just -- 22 are you considering regulating that, though,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 53 1 finding a standard for it?

2 MS. KOHL: No. For the reasons 3 that I mentioned, we don't have the statutory 4 authority to regular a solar product, and try 5 and make it more efficient, which is the 6 purpose of EPCA. 7 MS. TIPPETT: Okay. Thank you. 8 MR. BROOKMAN: Thank you. So, 9 final comments on this cluster of issues 10 before we move on. Yes, Ed.

11 MR. OSANN: Ed Osann. Some of the 12 speakers have -- manufacturers have supported 13 the two product class distinction as a 14 workable approach to commercial clothes 15 washers, but the analysis indicates that the 16 standard proposed for front loaders is already 17 met by almost 97 percent of the front loaders 18 on the market. Seldom, if ever, has DOE 19 proposed a standard that has such low impact 20 on the marketplace, and that suggests that 21 there are some difficulties in going forward 22 with two product classes here, and attempting

### 202-234-4433 Neal R. Gross & Co., Inc. Page 54 1 to achieve substantial savings in the front 2 loader part of the market. 3 MR. BROOKMAN: Okay. Phil. 4 MR. MANTHEI: I think -- this is 5 Phil Manthei, Alliance Laundry Systems. I 6 think that it's indicative of the fact that 7 we've reached the end of the line. You have 8 to have water, and you have to have energy to

9 clean clothes. And we're at the end of the 10 line. 11 MR. BROOKMAN: You've gone as far 12 as you can go.

13 MR. MANTHEI: We have. The 14 product is now -- it's not going to be able to 15 wash clothes. That's the point. 16 MR. BROOKMAN: Thank you. Okay. 17 Then, I'm going to queue Constantin. Let's 18 keep going. 19 MR. Von WENTZEL: Okay. Looking 20 at the efficiency levels, and, in particular, 21 at the max-tech top loading efficiency level, 22 the max-tech efficiency level for top loading

### 202-234-4433 Neal R. Gross & Co., Inc. Page 55 1 commercial clothes washers was taken from the 2 California Energy Commission website, or I 3 should say the database on that website. And 4 for the NOPR, DOE proposed setting a standard 5 at that max-tech efficiency level for top 6 loading clothes washers, commercial clothes

7 washers. 8 At the NOPR meeting, Alliance 9 Laundry Systems stated that it had purchased 10 such a max-tech clothes washer, and that this 11 clothes washer had not achieved the stated 12 efficiency standards. And Alliance also 13 mentioned a number of inconsistencies 14 regarding the labeling of that unit. 15 As a result, DOE tested a sample

16 of three clothes washers of the same model 17 type in independent laboratory, and the tested 18 efficiency did not match the stated or the 19 rated efficiency of the clothes washer, so 20 this sample of three clothes washers achieved 21 a 1.63 MEF, versus a 1.76 MEF, and 8.4 water

22 factor versus 8.3 water factor.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 56 1 Even though the max-tech energy 2 efficiency levels had to be revised, this 3 model is still the max-tech model on the 4 market, even with this downward revision. So, 5 for the SNOPR, DOE has revised the max-tech 6 efficiency level for top loading clothes 7 washers, and the revised level represents what 8 DOE believes the max-tech clothes washer can 9 actually achieve, given the tolerances and 10 repeatability of the test procedure. And that 11 new max-tech efficiency level is the same as 12 the next efficiency level down from the NOPR 13 max-tech energy efficiency level, so that

14 would be 1.6 and 8.5 water factor. 15 That brings us to the revised 16 efficiency level chart. As you can see, we've 17 got four TSLs here, or, excuse me, four18 efficiency levels here, and the revised max19 tech energy efficiency level for top loaders 20 is at efficiency level 2. And we now invite 21 comments on these revised energy efficiency

22 levels.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 57 1 MR. BROOKMAN: And we're referring 2 to slide 18 here. Yes, Lance. 3 MR. DeLAURA: This is Lance 4 DeLaura with Southern Utilities. I guess my 5 question, given all the discussion that we've 6 had so far is, at this revised level, can 7 manufacturers comply with this revised

8 standard? 9 MR. MANTHEI: I think our opening

10 comments - 11 MR. BROOKMAN: Phil Manthei. 12 MR. MANTHEI: Phil Manthei, 13 Alliance Laundry Systems. I think our opening 14 comments suffice. 15 MR. BROOKMAN: Thank you. Any

16 other comments here? Tom. 17 MR. ECKMAN: Tom Eckman. Since 18 the testing revealed that the max-tech level 19 didn't satisfy what the advertised MEF and 20 water factor were for that particular machine, 21 has DOE entertained testing on both the H-axis 22 and V-axis other levels to see whether,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 58 1 particularly towards the top end, we're 2 actually getting the performance, as 3 advertised? 4 MR. BROOKMAN: Constantin, you 5 want to go to Kelley next with -- Kelley, go

6 ahead. 7 MS. KLINE: Kelley Kline with GE.8 I just wanted to note there, that was GE max9 tech model that was referenced. We've asked 10 DOE for some further information on their 11 testing. We want to explore that further, 12 because that data doesn't agree with our own. 13 So, we are looking into the testing results, 14 and, obviously, we'll correct any issues, if 15 we find them on our end. But we want to 16 explore that further in terms of what may be 17 some differences in the test methodology, or 18 things like that. 19 MR. BROOKMAN: Or interpretation, 20 or something. 21 MS. KLINE: Yes. Thank you. 22 MR. BROOKMAN: Okay. Can you

### 202-234-4433 Neal R. Gross & Co., Inc. Page 59 1 respond to -- Ron Lewis. 2 MR. LEWIS: In this SNOPR, we 3 considered the information that we collected 4 at the NOPR stage where there is question of 5 data, and we tested that, but we have no plans 6 of doing further testing on this right now. 7 MR. BROOKMAN: Ron, since you have 8 the microphone there, Tom is asking about the 9 H-axis.

10 MR. ECKMAN: Have those been

11 tested?

12 MR. BROOKMAN: Yes. 13 MR. LEWIS: I think the rulemaking 14 right now includes everything that we intend 15 to include in it, but we've gathered more 16 information now. But with anything we've 17 collected, and the testing that's been done to 18 date, and the engineering analysis that was 19 done originally, I believe that we're moving 20 forward with what we have. 21 MR. BROOKMAN: So, you see, once 22 again, referring to slide 18, the revised

### 202-234-4433 Neal R. Gross & Co., Inc. Page 60 1 efficiency levels, and DOE might even comment 2 on what's here on the page. No additional 3 comment. Okay.

4 MR. Von WENTZEL: Shall I move on?

5 MR. BROOKMAN: Yes. 6 MR. Von WENTZEL: Okay. So, DOE 7 looked at the technological feasibility of the 8 max-tech top loader commercial clothes washer. 9 DOE noted that it is currently only marketed 10 to on-premise laundry facilities. It is based 11 on a residential vertical axis clothes washer 12 platform that has a traditional agitator in 13 it. It's got four manually set water levels, 14 and most commercial clothes washers have three 15 or less. It has five wash programs, most 16 commercial clothes washers have fewer than 17 that. And it had, in our testing, relatively 18 low wash water temperatures, and it achieved 19 those, apparently, through some feedback, so 20 those were very consistent. Had use of spray 21 one system, and DOE was not able to observe 22 any proprietary technologies in that platform.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 61 1 The market acceptance of this particular 2 model is -- which depends on wash performance3 is still unknown. And suitability for non4 institutional use, i.e., laundry mats, is also 5 unknown. And DOE received some comments that 6 front loading commercial clothes washers with 7 electric heaters used in some part of the 8 northern United States or Canada would perhaps 9 not be able to meet the proposed front loading

10 standards. 11 So, DOE invites comments on the12 technological feasibility of the proposed max13 tech top loading commercial clothes washer, as 14 well as wash and rinse performance 15 measurements for commercial clothes washers 16 and population data for water heating 17 commercial clothes washers.

18 MR. BROOKMAN: Ed Osann. 19 MR. OSANN: Yes. I'd like to ask 20 why a product that is not marketed to, and not 21 present in either of the two principal 22 segments of the commercial -- of the market

### 202-234-4433 Neal R. Gross & Co., Inc. Page 62 1 for covered commercial clothes washers, that 2 is, laundromats and multi-housing laundry 3 rooms, why this is a suitable platform for 4 consideration in the CCW proceeding, and 5 products that have a growing round of market 6 acceptance and operating experience in the 7 residential market are not suitable platforms 8 for consideration in this analysis? 9 On-premise laundry is a market 10 area, and a pattern of usage that is distinct 11 from laundromats and multi-family laundry 12 rooms. So, if we can go to a different venue 13 to look at a platform that's present in that 14 market, and its operating characteristics, why 15 can't we go to the residential market and look 16 at products that are available there, and 17 their operating characteristics? I think that 18 DOE is not confining itself, clearly not 19 confining itself to products that are present 20 in the laundromat and multi-housing market 21 segments of covered products today. 22 MR. BROOKMAN: Go ahead, Lance.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 63 1 MR. DeLAURA: Could I just add on 2 to that? I think the other piece that's 3 missing is, when these products are assessed, 4 and the comment is made that it's unclear, 5 maybe they will be durable, or whether they'll 6 have the longevity for commercial use, it 7 seems like DOE would want to test for that, 8 not just for the efficiency, but test for the 9 durability. 10 MR. BROOKMAN: Okay. Can someone 11 respond to Ed's question? 12 MR. Von WENTZEL: Constantin von 13 Wentzel here. I believe there is -- 14 manufacturers in their literature do not 15 appear to make as much -- I guess, as much of 16 a distinction between institutional versus 17 multi-family home, versus laundromat 18 applications for their clothes washers that 19 would indicate clearly that a clothes washer 20 is only good for institutional use. Do you 21 see my distinction? I don't see - 22 MR. OSANN: No, I'm not following

### 202-234-4433 Neal R. Gross & Co., Inc. Page 64 1 it.

2 MR. WITKOWSKI: I am not aware of 3 where DOE has received this different -- any 4 comments concerning this differentiator 5 before. So, in that respect, I think we would 6 have to look at it as speculative, until we 7 receive more than just an opinion. 8 MR. BROOKMAN: Thank you, Stephen. 9 MR. OSANN: If I could follow-up? 10 MR. BROOKMAN: Let's let -- okay, 11 go ahead, Ed. Yes. 12 MR. OSANN: As was noted by Lance, 13 the question of the distinctive nature of the 14 commercial clothes washer market has always 15 been presented to stakeholders as 16 characterized by the need for durability, and 17 resistance to the potential for overloading 18 and misuse. If you think about the two 19 sectors of the commercial -- of the market for20 covered products, being laundromats and multi21 housing laundry rooms, in both cases, those 22 are operated by -- the machine is being loaded

### 202-234-4433 Neal R. Gross & Co., Inc. Page 65 1 and used by the general public, or residents,

2 or whatever. 3 In the case of on-premise laundry 4 facilities, the machine is being loaded and 5 used by employees, by employees with 6 supervisors. So, there's a big, big 7 difference to be drawn there. And my point is 8 that if you can go outside of the laundromat 9 multi-housing portions of the commercial 10 clothes washer market to look for examples of 11 platforms to evaluate for their suitability 12 for use as covered products, then you're 13 overlooking the elephant in the middle of the 14 room if you're not also looking at residential 15 products that have characteristics that are 16 worth evaluating, and have operating 17 experience, and production experience. 18 MR. BROOKMAN: Okay. 19 MR. Von WENTZEL: My only response 20 would be that every manufacturer we spoke to 21 that evaluated the use of non-traditional 22 vertical axis clothes washers in a commercial

### 202-234-4433 Neal R. Gross & Co., Inc. Page 66 1 setting indicated that the primary reason that 2 these units had not been marketed and were not 3 being planned on being marketed was their lack 4 of tolerance for overloading, which, 5 apparently, is very common in a commercial 6 clothes washer application. So, that's why 7 these kinds of residential technologies were - 8 - are not currently found in the commercial 9 clothes washer market, and as best as we can 10 tell, will not be found in the commercial

11 clothes washer market for the foreseeable

12 future. 13 MR. BROOKMAN: Additional 14 questions or comments? Yes, Tom. 15 MR. ECKMAN: I'd like some 16 clarification on the bottom line comment 17 there, where some of the proposed commercial 18 clothes washers with electric water heat 19 wouldn't comply. Can you expand on why that 20 is? 21 MR. BROOKMAN: Maybe you can 22 explain what that is, first, Constantin.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 67 1 MR. Von WENTZEL: Sure.

2 MR. ECKMAN: Are those 3 supplemental heaters in the water, in the

4 clothes washer?

5 MR. Von WENTZEL: That's correct. 6 I'll start a little bit, and then I'll let 7 Phil continue, because he's a much better 8 expert on this than I, because his company 9 actually makes that clothes washer. 10 It's my understanding that in some 11 areas of the United States, and Canada, the 12 ground water temperatures are so low that by 13 the time you get the water into the clothes 14 washer, the line having run through the 15 foundation, or whatnot, the water simply isn't 16 up to temperature to get an acceptable wash 17 performance. And, therefore, some of these 18 front loading commercial clothes washers are 19 available with cal rods that heat up the water 20 to whatever the desired end temperature is. 21 But I'll let Phil continue, because, as I 22 said, he's the expert.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 68 1 MR. MANTHEI: Phil Manthei, 2 Alliance Laundry. Yes, we make a front loader 3 with a heater. Basically, the heater adds 4 additional energy compared to if you test it 5 without a heater. So, it's an adder, so it's 6 going to use more energy. Basically, what 7 happens, of course, in the front loader, 8 especially these as we get down to the water 9 factor of so low, the amount of water that 10 comes in is six, seven gallons. You know, the 11 first three gallons may be at 50, 60 degrees. 12 It's not going to -- when you select hot. 13 It's not going to be 135 or 120, or even 100. 14 So, now when you dump that into a tub, 15 especially most of the manufacturers have 16 stainless steel tubs, now the heat goes into 17 the steel. You've got clothes in there. The 18 clothes absorb some of the heat, and then as 19 you're tumbling, it's going to continue to 20 absorb into the product. I mean, people that 21 are thinking of getting hot water, they're not 22 washing in hot water. So, in climates where

### 202-234-4433 Neal R. Gross & Co., Inc. Page 69 1 our company exists, we live, when it's 20 2 below zero, that water that's coming into your 3 clothes washer is very, very cold, the first 4 couple of gallons. And when you're talking 5 about product that only uses six or seven 6 gallons to fill on your wash, you've got to

7 have a heater.

8 MR. BROOKMAN: Tom. 9 MR. ECKMAN: Can I follow-up on 10 that? It seems to me we have a different 11 condition there than the test procedures. 12 MR. MANTHEI: No, the test 13 procedure accounts for this. 14 MR. ECKMAN: It accounts for inlet 15 water temperature?

16 MR. MANTHEI: It accounts for 17 heating electrically. 18 MR. BROOKMAN: As an additional 19 aspect of the -

20 MR. MANTHEI: Yes. The test 21 procedure allows testing and recording all of 22 the energy, the hot water heating energy, and

### 202-234-4433 Neal R. Gross & Co., Inc. Page 70 1 all of the machine electrical energy, so the 2 electrical energy is accounted for and the 3 heater when you record the machine energy. 4 MR. ECKMAN: The question I am -- 5 well, I guess I'm asking DOE, in the standard 6 test procedure, is there minimum inlet water 7 temperature that's used?

8 MR. MANTHEI: Yes. 9 MR. ECKMAN: And what is that 10 temperature? 11 MR. MANTHEI: It is 60 degrees, 12 plus or minus, I believe 5, for - 13 MR. BROOKMAN: That's Phil 14 speaking. 15 MR. MANTHEI: I'm sorry. Phil 16 Manthei. 17 MR. BROOKMAN: That's okay. 18 MR. ECKMAN: So, it's not 35 19 degrees, or 40 degrees, it's 60.

20 MR. MANTHEI: No. Correct. So 21 the issue is, we are designing it for use by 22 people that actually have those other

### 202-234-4433 Neal R. Gross & Co., Inc. Page 71 1 conditions.

2 MR. ECKMAN: I understand that. 3 I'm just saying for the test procedure, which 4 would qualify the machine for compliance with 5 the standard, you're using 60 degree water. 6 MR. MANTHEI: Right. Being heated 7 75 degree, to 135 is where we control the

8 thermostat on the heater. 9 MR. ECKMAN: Right. So, that 10 activation would be based on a 60 degree inlet 11 water temperature.

12 MR. MANTHEI: Correct.

13 MR. ECKMAN: For the test 14 procedure, and for the rating requirements.

15 MR. MANTHEI: Correct. 16 MR. ECKMAN: So, I don't see how 17 it would not comply at 60. If it complies at 18 60, the fact that it has to activate the cal 19 rod at 40 is an application separate from the 20 test procedure.

21 MR. MANTHEI: You have to - 22 MR. ECKMAN: I understand, but the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 72 1 testing and rating starts at 60 degrees. In 2 the application, they may get 40 degree water, 3 but that would not affect the rating of the 4 machine. It would affect the consumption on 5 that site. 6 MR. BROOKMAN: In a testing 7 laboratory. 8 MR. ECKMAN: But not in - 9 MR. MANTHEI: Comparing a machine 10 without a heater to one with a heater, you 11 have to test the cycle that uses the most 12 energy. You have to activate the heater 13 cycle. 14 MR. ECKMAN: With an inlet water 15 temperature of 60. 16 MR. MANTHEI: Yes. And it will 17 use more energy than a machine that does not

18 have a heater. 19 MR. ECKMAN: Not arguing that. 20 MR. MANTHEI: Oh, I thought you

21 were.

22 MR. ECKMAN: No.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 73 1 MR. BROOKMAN: Okay. Thanks, 2 Phil. That's helpful, that practical 3 experience. So, we're still looking for 4 additional comments on the features listed in 5 19, and particularly, you can see that the 6 Department is quite specific in the way 7 they've laid this out. So, any additional 8 specificity, I think would be helpful. 9 Okay. No additional comments. 10 Then we're going to move on. Okay. Thank 11 you, Constantin. Gregory Rosenquist. 12 MR. ROSENQUIST: Good morning,13 everyone. I'm here to talk about the Life14 Cycle Cost and Payback Period Analyses that 15 were conducted for the Supplemental NOPR. 16 For the most part, the methods and 17 inputs that were used were, basically, the 18 same as what was used for the NOPR. So, what 19 I'll be doing here is, basically, reviewing 20 all those methods and pointing out when data 21 was updated. 22 The Life-Cycle cost and Payback

### 202-234-4433 Neal R. Gross & Co., Inc. Page 74 1 Period Analysis is actually composed of three 2 parts, the energy and water use 3 characterization, markups for determining 4 equipment prices, and the life-cycle cost and 5 payback period analysis, itself. 6 On the energy and water use 7 characterization analysis, its purpose is to 8 develop the energy, and water savings you get 9 from these various standard levels. Those, in 10 turn, are coupled with energy and water 11 prices, so it gives you energy and water costs 12 savings due to these various standard levels. 13 The purpose of the markups 14 analysis is to first determine how the 15 equipment is distributed from the manufacturer 16 to the end user, and then to determine how to 17 markup those manufacturing costs from the 18 engineering analysis into consumer equipment 19 prices. And the life-cycle cost and payback 20 period analysis, it's designed to determine 21 the LCC savings and payback periods from the 22 standard levels that are analyzed.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 75 1 The approach used for the energy 2 and water use characterization is based on 3 taking per cycle energy and water use values 4 at the baseline of various standard levels, 5 and multiplying them by the usage of the 6 product. DOE confined its approach to only 7 two product applications, multi-family and 8 laundromats. Based upon data from the 9 Consortium for Energy Efficiency, this is the 10 overwhelming -- the overwhelming majority of 11 commercial clothes washers are in these two 12 applications. 13 DOE reviewed various studies and 14 determined a wide range of usage patterns. 15 For the purpose of multi-family, that range 16 was from 1 to 10.9 cycles per day, with an 17 average of 3.4 cycles per day. That 18 translates roughly into around 1,200 cycles 19 per year. For laundromats, the range is from 20 3 to 8 cycles per day, with an average of 6 21 cycles per day, which is roughly around 2,100 22 cycles per year.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 76 1 As I mentioned before, the purpose 2 of the markups analysis is to figure out how 3 the equipment is actually distributed from the 4 manufacturer to the end user. DOE, again, 5 focused on two product applications, 6 laundromats and multi-family housing. That's 7 because data from, again, the Consortium for 8 Energy Efficiency indicated that the 9 overwhelming majority of washers were sold to 10 these two applications. 11 For the market going to 12 laundromats, you have a manufacturer selling 13 to a distributor, who in turn sells to a 14 laundromat. For multi-family housing, you 15 have a manufacturer selling to a route 16 operator, who leases the equipment to the 17 multi-family property owner. 18 DOE, for purposes of determining 19 equipment prices, based the equipment prices 20 only on the distribution chain that involved 21 distributors and laundromats. The assumption 22 is that the prices coming out of that analysis

### 202-234-4433 Neal R. Gross & Co., Inc. Page 77 1 were representative of the prices that you2 would get from a route operator in multi3 family housing situation. 4 DOE determined overall baseline 5 markup of 1.93, that is for baseline washer 6 use, that markup to convert it from a 7 manufacturing cost into a consumer equipment 8 price. And for incremental changes in the 9 manufacturing cost due to a standard, DOE used 10 a 1.59 markup to convert that into incremental 11 change in a consumer equipment price.

12 MR. BROOKMAN: Ed Osann. 13 MR. OSANN: Question. Was this 14 characterization of the market based entirely 15 on the CE's study from the `90s? Is there any 16 indication in the market today that any -- the 17 manufacturers are making direct sales to large 18 routes, or sophisticated property management 19 firms that might be able to manage their own 20 equipment? 21 MR. ROSENQUIST: We had this out 22 for comment at the NOPR stage, and didn't

### 202-234-4433 Neal R. Gross & Co., Inc. Page 78 1 receive any additional data indicating that. 2 MR. OSANN: Okay. 3 MR. BROOKMAN: You think there may

4 be a class of consumers here that would not be 5 represented in these channels. 6 MR. OSANN: Right. Potentially -- 7 yes.

8 MR. BROOKMAN: Yes. 9 MR. OSANN: Large direct 10 purchasers. 11 MR. BROOKMAN: Do you wish to

12 comment?

13 MS. TIPPETT: Yes.

14 MR. BROOKMAN: Please use the 15 microphone. Say your name again. 16 MS. TIPPETT: Evette Tippett. I 17 was asking the gentleman to repeat the 18 question, the statement that he had just made 19 about the property management, and the leasing 20 of the machines. 21 MR. BROOKMAN: Okay. Do you want 22 to repeat that?

### 202-234-4433 Neal R. Gross & Co., Inc. Page 79 1 MR. OSANN: My initial question

2 was to the DOE consultant about whether -- 3 about the origin of the -- where the diagram 4 of the distribution channels came from, 5 whether it was based upon a 10-year old study 6 by the Consortium for Energy Efficiency, or 7 some other source. And the answer was that it 8 came from the study from the Consortium for 9 Energy Efficiency. And my follow-up question 10 was whether DOE has discerned -- run across 11 any information since then that there may be 12 direct sales by manufacturers to large 13 property owners, or managers directly, not 14 through a distributor, or through a route 15 operator. 16 MR. BROOKMAN: Okay. Tom Eckman. 17 MR. ECKMAN: Tom Eckman. Looking 18 ahead on slide 35, which says the shipments, 19 it seems to be zero amount of fluctuation over 20 periods of time, looking like there are cycles 21 of replacements. Do you know whether the CE 22 data was taking sort of a longitudinal look at

### 202-234-4433 Neal R. Gross & Co., Inc. Page 80 1 what that mix between route operators and 2 distributors were, whether that was a point in 3 time? 4 MR. ROSENQUIST: It was, 5 basically, a point in time. That study was, 6 as Ed pointed out, was conducted in 1998, so 7 it was representative of the market at that 8 time. 9 MR. ECKMAN: For that year? 10 MR. ROSENQUIST: For that time, 11 yes. For that year.

12 MR. ECKMAN: Well - 13 MR. ROSENQUIST: The prior two 14 years to 1998 - 15 MR. ECKMAN: Prior two years. 16 MR. ROSENQUIST: -- when that 17 report was released.

18 MR. ECKMAN: Because there's a 19 fair amount of differential in sales. It seems 20 to me longitudinal data may be more 21 respective. It's hard to know whether that 22 reveals anything or not, but there's clearly a

### 202-234-4433 Neal R. Gross & Co., Inc. Page 81 1 sale cycle going on there that's fairly 2 significant year to year. I don't know 3 whether that's economics, or whether it's 4 replacement of machines that got all - 5 MR. ROSENQUIST: It's basically -- 6 when you see that cycle like that, it's due 7 to replacement of machines. 8 MR. ECKMAN: Yes, but is it -- if 9 you're looking at two years, is it -- who's 10 replacing the machines? Is it multi-family or 11 route operators, or what? 12 MR. ROSENQUIST: Right. The 13 distinction between route operators and 14 laundromats wasn't made in the shipments 15 analysis. 16 MR. BROOKMAN: So, we can delve -- 17 we can go deeper into this when we get to 18 that slide, but I want you to keep pressing on 19 with your presentation, Greg. 20 MR. ROSENQUIST: Okay. This slide 21 talks about the approach that was used to 22 conduct the life-cycle cost and payback period

### 202-234-4433 Neal R. Gross & Co., Inc. Page 82 1 analysis. Again, the purpose of the analysis 2 is to determine the impacts to consumers, so 3 the analysis is done from that perspective. 4 The life-cycle cost is the 5 combination of the first cost, that is the 6 total install cost, plus the lifetime 7 operating expenses, future lifetime operating 8 costs are discounted to the present year using 9 a discount rate. 10 The analysis is implemented in a 11 Excel spreadsheet for transparency purposes, 12 and then an add-in called Crystal Ball is used 13 to be able to do a Monte Carlo simulation. 14 What we do there is characterize many of the 15 inputs to the analysis with probability 16 distributions to capture the uncertainty and 17 variability in those inputs. So, the analysis 18 then, the Monte Carlo simulation approach, 19 generates a distribution of life-cycle cost 20 savings for each standard level, as well as 21 the distribution of payback periods for each

22 standard level.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 83 1 So, there are many, many inputs 2 that go into the life-cycle cost and payback 3 period analysis, and this slide starts with 4 the energy and water prices. For electricity 5 prices, DOE captured regional variability at 6 13 regions, the nine census divisions in four 7 large states. DOE relied on information from 8 the Energy Information Administration Form 861 9 data that provides sales and revenue for 10 electric utilities serving commercial 11 customers. DOE derived an average electricity 12 price for each utility by simply dividing the 13 revenues by their sales. And then because the 14 data also provides number of customers 15 supplied by the utility, DOE could come up 16 with a customer weighted average electricity 17 price for each of the 13 regions. 18 For natural gas prices, DOE again 19 captured regional variability for the 13 20 regions. Here, DOE used EIA's natural gas 21 monthly which provides state level monthly gas 22 prices, and DOE used population data to come

### 202-234-4433 Neal R. Gross & Co., Inc. Page 84 1 up with population weighted average gas prices 2 for each of these 13 regions. Water and waste 3 water prices were based upon data from 4 Raftelis Consultants, and the American Water 5 Works Association. They produce every three 6 to four years water and waste water rate 7 survey. This data doesn't include as many 8 utilities as the EIA data, so the analysis was 9 limited to only providing our regional 10 variability at the four census region level. 11 Future energy prices were 12 forecasted with data from the 2009 Annual 13 Energy Outlook, and, again, this is one point 14 where there was an update from what was done 15 for the NOPR. DOE used the most recently 16 available Energy Outlook to forecast future 17 energy prices. And water and waste water 18 prices were forecasted based on historical 19 data in the Consumer Price Index for National 20 Water Prices, using that historical data from 21 1970 to 2008, it forecasted a historical trend 22 based upon a linear extrapolation.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 85 1 Next are the installation costs. 2 DOE used data from the RS Means Mechanical 3 Cost Data Book to establish the installation 4 cost of installing the commercial clothes 5 washer at the site. This cost did not vary 6 with the efficiency level of the clothes 7 washer. DOE determined annualized repair and 8 maintenance costs based upon a function that 9 was equal to one-half the consumer equipment 10 price, divided by the equipment lifetime, so 11 repair and maintenance costs were a direct 12 function of the equipment price. This 13 algorithm was used by DOE in past standard 14 rulemakings. 15 Discount rates were used to, 16 again, convert future operating cost expenses 17 to a present value. DOE based the discount 18 rates on the finance cost of purchasing 19 commercial clothes washers. And DOE used a 20 weighted average cost of capital technique to 21 establish the debt and equity of firms that do 22 purchase commercial clothes washers. The

### 202-234-4433 Neal R. Gross & Co., Inc. Page 86 1 weighted average value turned out to be a 5.7 2 percent real. Equipment lifetimes were based 3 upon various sources, primarily those from 4 Appliance Magazine and past DOE technical5 support documents. The lifetime for multi6 family was longer than that for laundromats, 7 simply because in multi-family settings, it's 8 not used as frequently as in a laundromat. 9 And DOE characterized lifetimes with rival 10 distributions. 11 The last input into the LCC and 12 payback period analysis are the equipment 13 cited in the base case, that was the case 14 without standards. So, DOE wants to try to 15 capture those consumers or end users who are 16 already purchasing more efficient clothes 17 washers than the baseline level in order to 18 avoid overstating the benefits from a 19 particular standard level.

20 The data that was used was data 21 from the California Energy Commission's 22 database, the February 2009 version. And that

### 202-234-4433 Neal R. Gross & Co., Inc. Page 87 1 database only provides the number of models 2 available, so this data, these percentages are 3 represented by each efficiency level, and not 4 based upon the actual shipments into the 5 market. But, again, model availability. 6 MR. BROOKMAN: On the retail 7 floor. Is that what it is? Pardon me, not 8 retail. Yes, but available -- yes, okay. I'm 9 with you. Okay. 10 MR. ROSENQUIST: And this presents 11 the average LCC savings versus installed cost 12 only for the multi-family application. And, 13 again, on the Y axis LCC savings, on the X 14 axis is the installed cost. It shows how the 15 efficiency levels impact both of those things 16 for both top loaders, and front loaders. And 17 you can see quickly here that there's only one 18 efficiency level that actually results in 19 increase in life-cycle costs. All the other 20 efficiency levels for the other product 21 classes, for all the product classes result in 22 life-cycle cost savings.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 88 1 So, at this point, I'll stop and 2 see if there's any additional comments on 3 anything I've gone over for the energy and 4 water use characterization, the markups, or 5 life-cycle costs and payback period analysis.

6 MR. BROOKMAN: Lance. 7 MR. DeLAURA: Mine is more of a 8 customer satisfaction question. Looking at 9 the chart, the equipment assignment in the 10 base case, going back to one of the 11 manufacturer's comments, it looks like the 12 higher energy efficiency, the highest energy 13 efficiency, the market share is quite low for 14 top loaders. Is there any data on the 15 satisfaction of customers that are using these 16 high efficient machines? I heard the comment 17 earlier that it wouldn't be possible to get 18 the clothes clean, or you might not be getting 19 the hot water in the clothes to get the 20 desired effect. Do we know anything about

21 that? 22 MR. ROSENQUIST: I don't believe

### 202-234-4433 Neal R. Gross & Co., Inc. Page 89 1 DOE has collected specific data on that, with 2 the exception of talking to manufacturers. I 3 don't know if Constantin, you have any 4 specific information on that? 5 MR. Von WENTZEL: Constantin von 6 Wentzel here. I believe one of the primary 7 issues is that there is no standard precluding 8 poor rinse performance in the United States, 9 so, therefore, there's no way for DOE to 10 assess cleaning performance for any clothes 11 washer. And I don't believe that there is a 12 single standard available on -- from any 13 resource on the planet at this time. They're 14 all proprietary.

15 MR. DeLAURA: And that's the 16 second part of my question. I'm assuming 17 manufacturers probably would not share the 18 information of customer satisfaction related 19 to the various products at the efficiency 20 level. That goes without saying. 21 MR. BROOKMAN: Thank you. Tom. 22 MR. ECKMAN: In other rulemakings,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 90 1 DOE has been able to get market share based on 2 product sales, as opposed to just listings. 3 Why was just the CE directory used here, 4 instead of actual product sales? 5 MR. ROSENQUIST: Again, because 6 that data was not made available to the 7 Department by the industry. 8 MR. ECKMAN: Was a request made? 9 MR. ROSENQUIST: Yes, the request

10 was made. Yes. 11 MR. BROOKMAN: So, a lot of 12 information here in these slides. Additional

13 comments about what's here? Ed Osann. 14 MR. OSANN: Just to follow-up on 15 that. The last data on unit shipments that 16 was received from AHAM was -- the last year 17 was of actual unit shipments was 2006, or

18 2005? 19 MR. ROSENQUIST: I think it was 20 2006, but I would have to double check on

21 that. 22 MR. OSANN: And a request was

### 202-234-4433 Neal R. Gross & Co., Inc. Page 911 made2 MR. ROSENQUIST: A request was 3 made at the time we first started the 4 rulemaking, which was back at that point, back 5 at that time. And this rulemaking has been 6 going on since 2006. 7 MR. OSANN: Right. 8 MR. BROOKMAN: Okay. Seems like 9 now would be not a bad time to take a break. 10 Let's take a short break. It's now by my 11 watch 10:46, so let's resume at 11. 12 (Whereupon, the proceedings went 13 off the record at 10:48 a.m., and went back on 14 the record at 11:06 a.m.) 15 MR. BROOKMAN: Let's begin. We're 16 back with Greg. 17 MR. ROSENQUIST: Okay. Returning 18 to the floor diagram, next I'll be going over 19 the national impact analysis, and again, what 20 I'm doing is just a brief overview because 21 really there really wasn't much changed for 22 the SNOPR compared to the NOPR. So, again,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 92 1 just a quick review of what was done in terms 2 of the shipments analysis and the national 3 impact analysis. 4 The purpose of the national impact 5 analysis is, one, to develop shipments

6 forecasts for both the base case -- that's the 7 case without standards -- and the standards 8 case -- that's the cases where you have 9 standards implemented. 10 The national impact itself 11 generates national energy savings resulting 12 from these different standard levels, and also 13 national economic impacts, and that's 14 evaluated in terms of what's called the net 15 present value, which I'll explain a little bit

16 later. 17 For the shipments analysis, the 18 approach starts off with estimating shipments 19 to the base case. Again, that's the case 20 without standards, and shipments forecasts are 21 conducted from the assume effective date of 22 the standard, which is 2013, over a 30-year

### 202-234-4433 Neal R. Gross & Co., Inc. Page 93 1 time period out to 2043. 2 The model accounts for shipments. 3 The shipments model that we developed 4 accounts for shipments to the new construction 5 market and also accounts for replacements. 6 DOE does a calibration for the 7 shipments model by looking at historical 8 shipments data. So the model produces 9 historical forecasts, what I like to call back 10 casts. Compare that to the historical 11 shipments data and any discrepancies and 12 allocate it to another market segment. 13 And for the case of commercial 14 clothes washers it's called non-replacements. 15 What DOE found is that rental units are being 16 converted to townhouses and condominiums, and 17 so there's no longer that need for common area 18 laundry facilities like there once was. So 19 some of these commercial clothes washers that 20 were once replaced are no longer being 21 replaced. 22 The substitute are actually

### 202-234-4433 Neal R. Gross & Co., Inc. Page 94 1 consumers buying washers for that unit that 2 they are living in, residential washers. 3 After the base case shipments are 4 forecasted, then the standard case shipments 5 are forecasted. It uses primarily the same 6 data as for the base case shipments, with the 7 exception that DOE takes into account the 8 purchase price increase and the operating cost 9 savings, and factor that into how it affects 10 the base case shipments. 11 To do that, DOE developed relative 12 elasticity price of demand based upon 13 historical price, product price, efficiency 14 and shipments data for residential appliances. 15 DOE relied on residential data because there 16 were no specific data to commercial clothes

17 washers. 18 This elasticity was developed and 19 shown to be that purchase prices have the most 20 dominant effect on the impact to shipments. 21 One thing DOE did not do for this 22 analysis is develop a cross-price elasticity

### 202-234-4433 Neal R. Gross & Co., Inc. Page 95 1 of demand to study the interaction between the 2 top loading and the front loading markets. 3 One thing DOE did do as well in terms of 4 developing a relative price elasticity demand 5 is figure out how that price elasticity would 6 change over time, and based upon the 7 literature showing that for consumers of 8 automobiles, they became less sensitive to 9 that initial jump in purchase prices. Does 10 had the price elasticity become more inelastic 11 over time. 12 For consumers that forego a 13 purchase of a new washer, DOE assumed that 14 that consumer would instead purchase a used 15 washer, and in doing that, DOE again did not 16 analyze the cross-price elasticity between the

17 used clothes washer market and the new clothes

18 washer market. 19 So this leads us to the next issue 20 for which DOE seeks public comment on, and 21 that's how DOE conducted its standards case 22 shipments forecast, and each of these four

### 202-234-4433 Neal R. Gross & Co., Inc. Page 96 1 items address what I just got done explaining 2 in terms of how DOE developed its shipments' 3 impacts for the standards. 4 The first one pertains to the 5 development of the relative price elasticity 6 of demand, the issue here being that DOE used 7 data from residential appliances and applied 8 it to the commercial clothes washer market. 9 So DOE is looking for comment on whether or 10 not that's an appropriate thing to do. 11 The second one has to do with the 12 fact that DOE assumed that this elasticity 13 became more inelastic over time, again, based 14 upon consumer purchase decisions over 15 automobiles. Again, DOE is looking at whether 16 or not it's appropriate to have that 17 elasticity become more inelastic over time. 18 The third one has to do with the 19 cross-price elasticity of demand. Again, DOE 20 did not develop such a cross-price elasticity 21 between the top loading and front loading 22 market. So DOE could not analyze the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 97 1 interactions between those two markets. 2 For example, if the price for top 3 loaders went up higher than front loaders, DOE 4 explicitly an account for how that interaction 5 may take place. 6 And then finally, as I mentioned 7 before, DOE assumed that consumers foregoing a 8 clothes washer purchase would instead buy a 9 used clothes washer, but in doing that, DOE 10 did not develop a cross-price elasticity for

11 the used market versus the new market. 12 So at this point I'd just like to 13 point out to folks to determine whether or not 14 they have any input at this time on any of 15 these issues.

16 MR. BROOKMAN: Tom Eckman.

17 MR. ECKMAN: Tom Eckman. 18 Greg, did you look at the 19 elasticity results of this and compare that 20 with the results of the shipments model that 21 was produced as part of the residential 22 rulemaking in '99?

### 202-234-4433 Neal R. Gross & Co., Inc. Page 98 1 MR. ROSENQUIST: No, we did not. 2 I mean, that analysis was done specifically 3 for residential clothes washer data, and we 4 felt this time was to try to take a more 5 broader look over more appliances, to try to 6 get, I guess, a better feel for how it might 7 occur for commercial clothes washers 8 considering that we didn't have data 9 specifically for commercial clothes washers. 10 MR. ECKMAN: Because as I recall, 11 that model has built in some cross-elasticity 12 at least with used units and the substitution 13 effect that might occur from that. 14 MR. ROSENQUIST: Okay. 15 MR. ECKMAN: So it would be worth 16 at least looking to see whether you see 17 similar kinds of ranges of effects there. 18 And the second part of the 19 question, if I can follow up here, is again, 20 looking ahead at Slide 35, those pulses as we 21 were talking over the break may be drive more 22 by multi-family housing starts than by

### 202-234-4433 Neal R. Gross & Co., Inc. Page 99 1 replacements, and so it would be worthwhile 2 looking into whether or not the price 3 elasticity is driving the market or just plain 4 housing starts, which are the dominant 5 variable in the equation rather than price. 6 MR. BROOKMAN: Thank you. 7 I'm thinking that probably the 8 department should issue CEU credits for 9 economists on this slide. 10 (Laughter.)

11 MR. BROOKMAN: But don't let me 12 deter you. Keep going. 13 MR. ECKMAN: As a recovering 14 economist, Doug. 15 (Laughter.) 16 MR. BROOKMAN: Almost totally 17 recovered by now, remembering why I'm no 18 longer an economist. 19 These are some rather detailed 20 questions. I'd like to really get into as 21 much probing as possible on these. 22 Ed, you had a comment? Please.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 100 1 MR. OSANN: With regard to the 2 third item, although you have indicated that 3 DOE did not develop a specific -- did not 4 attempt to actually model this cross-price 5 elasticity of demand between top loading and 6 front loading washers, it is a concern, and it 7 was mentioned. It was identified as a concern 8 and a factor in the selection of the TSL. The 9 Federal Register notice indicates that DOE is 10 concerned, for instance, at TSL-5 that 11 significant numbers of potential consumers of 12 front loading commercial washers would choose 13 to purchase a less efficient top loading unit 14 instead. 15 Doesn't this simply underscore, in 16 effect, the interchangeability between top 17 loading and front loading washers in a 18 commercial setting, the fact that this 19 interchangeability could be so broad and 20 substantial that it would actually facilitate 21 potential recapture of market share by less 22 efficient, but less expensive top loaders?

### 202-234-4433 Neal R. Gross & Co., Inc. Page 101 1 I mean, the real distinction here 2 is a price point, isn't it, rather than any 3 specific consumer utility? 4 MR. ROSENQUIST: Well, that was 5 the reason why, one of the reasons why DOE 6 backed off from TSL-5, for example, is their 7 sensitivity or concern or uncertainty over 8 whether or not increasing the standard for 9 front loaders would actually cause consumers 10 to start purchasing top loaders, less 11 efficient top loaders instead. 12 So I don't know if that answers 13 your question directly, but I wanted to 14 basically state that was one of the reasons 15 DOE gave. 16 MR. OSANN: Well, let me convert 17 that from a question to an observation, that 18 the fact that this looms so large in DOE's 19 thinking, that it influences the selection of 20 the TSL in the final analysis suggests that 21 there is a considerable amount of 22 interchangeability that's recognized between

### 202-234-4433 Neal R. Gross & Co., Inc. Page 102 1 top loaders and front loaders, and that a 2 consumer in the market for a new replacement 3 machine could select one or the other. 4 And we think that this underscores 5 the preference to maintain or the 6 recommendation that we and others have made to 7 maintain a single product class for these 8 products. 9 MR. BROOKMAN: Okay. Thank you. 10 I believe we have received comment 11 on at least the top three issues. Anybody 12 wish to weigh in on the acquiring used top 13 loading machines? Did anybody comment on that 14 yet? 15 MR. ECKMAN: My comment on that 16 was that the residential model that was used 17 in the '99 rulemaking had used as one of the 18 potential options that the consumer might 19 revert to if prices increased. 20 MR. BROOKMAN: Okay. Thanks, Tom. 21 Thank you. 22 Okay. So final comments on this

### 202-234-4433 Neal R. Gross & Co., Inc. Page 103 1 series of issues, on Slide 34 before we move

2 on? 3 (No response.) 4 MR. BROOKMAN: Okay. 5 MR. ROSENQUIST: So this slide 6 summarizes the results for two specific 7 standard levels, one for top loaders, one for 8 front loaders, to show what sort of impact the 9 standards do have on the base case shipments

10 forecast. 11 The base case shipments forecasts 12 are in the blue, and the standard case are in 13 that purplish color. 14 For top loading washers, what 15 we're looking at is the standard level with 16 1.60 MEF and the 8.5 water factor, and you can 17 see that has fairly appreciable impact on 18 shipments. As I said before, in the relative 19 price elasticity that we're using, the most 20 dominant effect is purchase price, and the 21 price increase to go from the baseline level 22 to this standard level is on the order of

### 202-234-4433 Neal R. Gross & Co., Inc. Page 104 1 around $200. So that's why you're seeing

2 that's sort of an effect. 3 For front loading washers what 4 we're looking at is the 2.0 MEF 5.5 water 5 factor, standard level, and again, that has a 6 very minimal pricing increase. So the 7 standards case shipments are virtually 8 identical to that for the base case.

9 MR. BROOKMAN: Lance. 10 MR. DeLAURA: I just wanted to get 11 a finer cut on those numbers in your charts. 12 What does that mean in actual numbers? It's 13 kind of hard to tell with the scale that 14 you've got there, especially on the top

15 loaders. 16 MR. ROSENQUIST: Yes, the top, 17 it's about seven percent drop in shipments.

18 MR. DeLAURA: And what does that 19 mean in real units? 20 MR. ROSENQUIST: Well, what we're 21 saying there is about it looks like 140,000 22 units.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 105 1 MR. DeLAURA: Thank you. 2 MR. ROSENQUIST: Okay. This last 3 slide for the national impact analysis talks 4 about the general approach that's used to 5 conduct the analysis. I first want to 6 emphasize that national impact analysis 7 generates national energy savings over the 8 time period from the assumed effective date of 9 2013 out for 30 years to 2043. 10 The same thing is done for the 11 economic impacts, again, looking over that 12 same analysis period of 2013 to 2043. 13 The National MPV consists of the 14 difference in the increases in national 15 equipment cost and the national operating

16 costs. 17 As I have mentioned before, the 18 base case already incorporates the penetration 19 of more efficient products into the market, 20 and what's done in the standards case is to 21 characterize how standards affect equipment 22 efficiencies by using what's called a roll-up

### 202-234-4433 Neal R. Gross & Co., Inc. Page 106 1 scenario, and this table gives you an example 2 of how that roll-up scenario is used by DOE. 3 This is for front loading clothes washers. 4 I want to point you to the base 5 case to reestablish what the existing base 6 case distribution is. Three, point, five 7 percent is at the baseline level, almost 74 8 percent, and it's down Level 2, and almost 23 9 percent is down Level 3. 10 Using the example of standard 11 Level 2, what happens under the roll-up is 12 that that 3.5 percent of the market rolls up 13 into the standard level we're analyzing, that 14 is, standard Level 2, causing 78 percent of 15 the market now being represented by that 16 particular standard level. 17 Under the roll-up, efficiency

18 levels above the standard level we're 19 analyzing are not affected. They remain 20 unchanged. So that 23 percent of the market 21 at standard Level 3 remains 23 percent when 22 we're looking at the standards case.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 107 1 So what this table summarizes are 2 what happens with the roll-up scenario for 3 each of the five standard levels that were 4 analyzed, and when you match up those 5 distributions with the actual efficiency 6 results in shipment weight and modified energy 7 factors and instrument weighted water factors, 8 which you can see in the table. 9 So those efficiencies then are 10 used to characterize the equipment performance 11 that comes into the market as dictated by the 12 shipments model, and then the associated costs 13 in energy uses of that equipment are based 14 upon inputs from the LCC analysis. The LCC 15 analysis gives us the per unit total installed 16 cost, energy consumption, repair and 17 maintenance cost, and those values are 18 effectively -- those per unit values are 19 effectively multiplied by the shipments to 20 come up with the national costs and energy 21 consumption and water consumption. 22 So that's the national impact

### 202-234-4433 Neal R. Gross & Co., Inc. Page 108 1 analysis. There is no slide asking for 2 additional comment, but certainly I'll take 3 any additional comment at this time for 4 shipments or the national impact analysis.

5 MR. BROOKMAN: Tom Eckman. 6 MR. ECKMAN: Yes, I think it's 7 probably an overstatement to say this is 8 shipment weighted data. What you have is 9 model availability data for the distributions, 10 not shipments. 11 MR. ROSENQUIST: That's correct. 12 MR. ECKMAN: So I think we should 13 characterize it that way, and there is 14 considerable uncertainty whether that 15 represents anywhere close to shipments. So 16 I'm a bit concerned that this analysis is 17 pretty shaky relative to that in terms of what 18 the sales weighted efficiency really is. We 19 don't really know what it is today, and we 20 certainly don't know what it's going to be 21 anything like this in the future. That's one

22 comment.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 109 1 And the second comment, I think 2 given that uncertainty it would be at least 3 useful to think about both a roll-up and a 4 market shift scenario so that you look that if 5 this distribution is actually what we have, 6 that we get a similar distribution of market 7 shares going forward, that the market shifts 8 doesn't just roll forward to a truncated 9 distribution. 10 So I would think we can show both 11 of these in this case, given that we don't 12 really have sales data. 13 MR. BROOKMAN: Thank you, Tom 14 Additional comments on national 15 impact analysis? Ed. 16 MR. OSANN: I have two. One is I 17 wanted to, since we've come back to the 18 subject of shipments versus models, I just 19 wanted to clarify a point from the morning, 20 from the session before the break, and that is 21 DOE made a request, one request, perhaps more 22 than one request to AHAM for shipment

### 202-234-4433 Neal R. Gross & Co., Inc. Page 110 1 information, and that request was not 2 fulfilled; is that correct? 3 MR. ROSENQUIST: Yes, we made a 4 request to the industry for shipments broken 5 out by efficiency level. 6 MR. OSANN: Shipments broken out 7 by efficiency level. 8 MR. ROSENQUIST: Yes. 9 MR. OSANN: The other point I 10 wanted to raise here on the national impact 11 analysis goes to the presumed split between 12 the share of the market for covered products 13 going to laundromats versus the share of the14 market for covered products going to multi15 housing where the distinctive use 16 characteristics result in a life cycle cost 17 analysis of significant differences between 18 the two due to the shorter lifetime of the 19 laundromat units and their higher usage 20 levels, which present greater savings 21 opportunities for those machines. 22 ASAP and others raised concern on

### 202-234-4433 Neal R. Gross & Co., Inc. Page 111 1 the previous NOPR that the split was based 2 upon a ten year old or actually over a ten 3 year old estimate developed by a nonprofit, 4 the Consortium for Energy Efficiency, of 85 5 percent multi-housing and 15 percent

6 laundromat. 7 And we highlighted for DOE in 8 comments that Alliance holding half of the 9 market share here was estimating in their 10 annual reports that the North American market 11 for those two sectors was more of a ratio -- 12 rather than 85-15 was more in a ratio of 60-40 13 the other way, and this is sales, not units. 14 So it's dollars that were being reported. 15 But these were being reported in 16 Alliance's annual reports. I believe these 17 are Sarbanes-Oxley compliant annual reports. 18 They're estimates of the North American

19 market. 20 And the response in the Federal 21 Register notice to that comment seemed to be, 22 well, we're sticking with the CEE report.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 112 1 It's better than more recent information from 2 one company. 3 This seems like a pretty big miss

4 for DOE 5 MR. BROOKMAN: Are you suggesting 6 that DOE can take those bits of information 7 you just supplied and do a different 8 interpretation? 9 MR. OSANN: Well, clearly there 10 should be some sensitivity analysis done to 11 see how a different mix of product share, 12 laundromat versus multi-housing, would affect 13 the -- how it would flow through the analysis. 14 We had some off-line discussion here today 15 during the break about to what extent it would 16 affect shipments. It's not clear how it might 17 affect shipments. 18 It clearly affects the national 19 impact analysis because the laundromat 20 machines present much greater savings 21 opportunities. 22 MR. BROOKMAN: Let's see. Greg,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 113 1 do you have any comment on this? 2 MR. ROSENQUIST: Well, what Ed 3 said is exactly right. I mean, that was the 4 response that was in the supplemental NOPR. 5 But I would personally like to get more 6 comment from the industry themselves as to 7 whether or not they feel that split is 8 representative. That is the 85 percent-15 9 percent split 10 MR. LEWIS: Doug.

11 MR. BROOKMAN: Yes. 12 MR. LEWIS: Can I just -- 13 MR. BROOKMAN: Ron Lewis. 14 MR. LEWIS: This just highlights 15 at every one of these meetings, every one of 16 these rulemakings when we start off, the whole 17 purpose we're starting off with a framework 18 document to say we're starting a rulemaking 19 and we're going to be doing a lot of analysis, 20 and we start right then asking for data, 21 asking for shipments, asking for cooperation 22 from industry so we can do the analysis and

### 202-234-4433 Neal R. Gross & Co., Inc. Page 114 1 get it as accurate as possible. 2 Those requests that we make, this 3 has been going on now since early 2006. We've 4 had a pre-NOPR or ANOPR. We have a NOPR. We 5 have an SNOPR. We published assumptions, 6 approaches. We've had public meetings. In 7 trying to get information from people that 8 would be helpful to get this right, this is 9 not like the first meeting we've had. This is 10 not like the first dialogue. 11 And the difficulties that we have 12 of coming up with precise answers when we've 13 got data points here and there and not a lot 14 of information makes it very difficult for us. 15 Ed, I agree in spirit that, you 16 know, things would be much better if we had 17 more current information and we had more 18 information. We go through this on every 19 single rulemaking, of starting off and asking 20 for input. If our authority and out mission 21 is to set efficiency standards, that becomes 22 important in distinguishing between products

### 202-234-4433 Neal R. Gross & Co., Inc. Page 115 1 on an efficiency basis. 2 We really need cooperation, and 3 the input is really important to us. We can't 4 go out and speculate or sometimes we're 5 looking for what we can find in the absence of 6 a lot of data, and one of the things that we 7 have the least impact on doing is coming up 8 with the shipment data, which is not something 9 that's generally in the public purview. 10 So this is not the rulemaking 11 that's underway, and some of these same 12 participants are involved in other ones. We 13 need cooperation and we need data early if 14 we're going to get it right to do the 15 analysis. 16 So I don't disagree, Ed. It would 17 have been better if we had more information or

18 a lot.

19 MR. BROOKMAN: J.D.

20 MR. DONALDSON: J.D. Donaldson 21 with Y.M. Case. 22 I was just going to say to the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 116 1 extent that Mr. Osann is summarizing the 2 annual reports of Alliance Laundry, that 3 information is publicly available, and it 4 speaks for itself. 5 MR. BROOKMAN: Okay. Thank you. 6 Yes, Tim. 7 MR. BALLO: Tim Ballo, Earth 8 Justice. 9 Just a quick follow-up. To the 10 extent the department is frustrated with the 11 data manufacturers provided us, I just want to 12 remind the department of 42 U.S. Code 6299 13 gives the department very broad authority to 14 subpoena information that it believes is 15 necessary to develop these standards. 16 MR. BROOKMAN: Thank you.

17 Ed.

18 MR. OSANN: Just to follow Ron's 19 point, I just want to point out that I was 20 raising an issue that we have raised, we 21 raised in previous comments. We placed into 22 the record the information that Alliance had

### 202-234-4433 Neal R. Gross & Co., Inc. Page 117 1 made available in public filings, and the 2 response is, frankly, a nonsubstantive 3 response in the Register notice indicating how 4 comments were responded to. It's really not a 5 substantive response. 6 MR. LEWIS: Okay. 7 MR. BROOKMAN: Well, let's press

8 on then. 9 MR. ROSENQUIST: So that brings us 10 to the end of the national impact analysis, 11 and also to the end of the revisions to the 12 analysis that were connected for the NOPR. So 13 now we're talking about the trial standard 14 levels and how they're selected. 15 The purpose of selecting trial 16 standard levels is to come up with a set of 17 candidate standard levels from each of the two 18 product classes so that one set of levels can 19 be analyzed in the national impact analysis, 20 the manufacturer impact analysis, the utility 21 and environmental impact analyses, and the 22 employment impact analyses.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 118 1 Again, as I said, each TSL, each 2 trial standard level, consists of a candidate 3 standard level from each product class. So 4 what I'm going to do now is just summarize 5 what each of the five trial standard levels 6 are for commercial clothes washers. 7 The first TSL, TSL-1, represents 8 the efficiency levels from each class that 9 requires the least design change, and that's 10 the candidate standard level, the first 11 candidate standard level from each one of 12 those product classes. 13 TSL-2 is trying to come up with a 14 TSL that represents a large fraction of the 15 market beyond the baseline level, and what 16 that means is moving up the standard level for 17 front loaders to the next one while keeping 18 the standard levels for top loaders at the

19 same level as for TSL-1. 20 The purpose of developing TSL-3 is 21 to come up with a pair of candidate standard 22 levels from each class that minimizes the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 119 1 price difference between the two product 2 classes. What that resulted in was keeping 3 the candidate standard level the same for 4 front loaders as for TSL-2, but moving up the 5 standard level for top loaders into the next

6 level. 7 That next level for top loaders is 8 actually the max-tech level, 1.60 MEF with an

9 8.5 water factor. 10 TSL-4 simply increments the front 11 loading clothes washer, front loading standard 12 level to the next one, to the next standard 13 level, and TSL-5 represents the mass tech 14 efficiency levels for both product classes. 15 And this table summarizes the 16 efficiency levels for top loaders and front 17 loaders that correspond to each of the TSLs 18 that were considered. Based upon a seven 19 percent discount rate, the range of NPVs for 20 these TSLs go from $.01 billion to just over 21 half a billion dollars. So all of the TSLs 22 yield positive net present values. That is

### 202-234-4433 Neal R. Gross & Co., Inc. Page 120 1 benefits to the country. 2 The next step in the analysis is 3 the consumer subgroup analysis. 4 MR. BROOKMAN: Thank you, Greg.

5 Ed Osann. 6 MR. OSANN: On Slide 39 where you 7 have the range of net present value, is it 8 correct that if there were to be, in fact, a 9 richer mix of laundromat machines into the 10 hole, that the NPV number at the high end 11 would be greater? 12 MR. ROSENQUIST: Yes, yes. The 13 NPV for all the TSLs would be greater. 14 MR. OSANN: Okay. Thank you. 15 MR. ROSENQUIST: Again, the reason 16 being that in laundromats the commercial 17 clothes washers are used more frequently, used 18 more heavily than a multi-family setting. So 19 the amount of energy and water use, and that's 20 the amount of energy and water savings that 21 you can get from a standard would be greater. 22 So back to the chevron diagram and

### 202-234-4433 Neal R. Gross & Co., Inc. Page 121 1 on to the consumer subgroup analysis. The 2 purpose of this analysis is to try to identify 3 any particular subgroups that may be 4 disproportionately impacted by the standards 5 that DOE is looking at. 6 For this analysis, for commercial 7 clothes washers, DOE identified two subgroups, 8 small businesses and those consumers that 9 don't use municipal water and waste water. 10 DOE conducted the analysis by refining the LCC 11 spreadsheet that was used for the general 12 population, and the output of LCC savings and 13 simple payback periods for the standard 14 levels, and DOE determined that the LCC 15 savings and simple payback period don't really 16 change that significantly from the general 17 population. That is, the results are 18 basically the same. 19 So on that I'll turn it over back 20 to Constantin von Wentzel to talk about the 21 manufacturer impact analysis. 22 MR. BROOKMAN: We're making good

### 202-234-4433 Neal R. Gross & Co., Inc. Page 122 1 progress. We are, in fact, ahead of schedule, 2 but I expect we'll keep going until at least

3 noon before we break for lunch. 4 MR. VON WENTZEL: Okay. As you 5 can see, the manufacturer impact analysis, the 6 purpose is to assess the impacts of standards 7 on commercial clothes washer manufacturers; to 8 identify subgroups of manufacturers that might 9 be differentially impacted versus the rest of 10 the industry, and in this rulemaking we 11 identify one low volume manufacturer in 12 particular that would be disproportionately 13 affected by any efficiency standard because it 14 derives so much of its income from commercial 15 clothes washers relative to its competitors; 16 and to examine the impact of cumulative 17 regulatory burdens on the industry as a whole. 18 Our method consisted of analyzing 19 the industry cash flow and net present value 20 through the use of the government regulatory 21 impact model, or GRIM; to interview 22 manufacturers in order to refine the inputs

### 202-234-4433 Neal R. Gross & Co., Inc. Page 123 1 into the GRIM; and to assess the impacts on 2 the subgroups as well as qualitative issues.

3 And for the SNOPR the GRIM was 4 updated for 2009 base year with the results 5 being expressed in 2008 dollars, and based on 6 some comments that we received at the NOPR 7 meeting, we also reviewed the impact of 8 manufacturer tax credits. 9 As you can see here, there are 10 three phases for the MIA, and here are the 11 updated INPV results, that is, industry net 12 prevent value results, by TSL level, and there 13 are two different scenarios that were 14 considered. One was the preservation of gross 15 margin percentage markup with base case 16 shipments, and the other one was the 17 preservation of gross margin percentage markup 18 with price elasticity of demand shipments. 19 And the trial standard under 20 consideration here is TSL-3. So the net 21 impact on the industry is projected to be 22 either, depending on which scenario you're

### 202-234-4433 Neal R. Gross & Co., Inc. Page 124 1 using, between 7.8 and 11 percent, and that 2 would correspond to 1.6 water factor -- excuse

3 me -- 1.6 MEF and an 8.5 water factor for the 4 top loaders and a 2.0 MEF and 5.5 water factor

5 for the front loaders. 6 Specific to the manufacturer 7 production tax credits, the level of tax 8 credits and the eligibility requirements have 9 changed a little bit over the years, but the 10 bottom line is that only one manufacturer in 11 the United States qualifies for them under the 12 rules for commercial clothes washers, which is 13 to say that they actually manufacture the 14 product in their own facility and the product 15 is manufactured in the United States. 16 And basically the way that it 17 works is that it's a function of how many 18 additional washers, high efficiency clothes 19 washers you sell over the previous years. So 20 you don't earn any credits unless you can 21 actually increase your shipments of high 22 efficiency clothes washers.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 125 1 So as we stated, only one 2 manufacturer qualified for these tax credits

3 and that was the low volume manufacturer. Its 4 two competitors either source product that 5 would qualify in terms of the energy 6 efficiency. They either source it from 7 another manufacturer or they source it from

8 abroad. 9 Most of the tax credits, as noted 10 here, actually occur or the benefit thereof 11 occurs outside the period that would be 12 affected by these standards, and the level of 13 benefit was somewhat lower than what other 14 advocates here have stated or were projecting. 15 There is one slight update to this 16 due to the LVM actually publishing its latest 17 10Q fairly recently. We were projecting that 18 they would derive a $400,000 production tax 19 credit in 2009, and it turns out that they 20 were actually able to exceed that, and we're 21 now projecting a tax credit as high as one 22 million dollars.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 126 1 It does not materially impact the 2 impact on the manufacturer of these tax 3 credits, but it is a slight update that I 4 wanted to share with the group. 5 So the total income from producer 6 tax credits for the LVM thus would not be the 7 $2.8 million as projected on page 47. It 8 would be approximately 3.4 based on our latest 9 projections. 10 Yes, Mr. Osann.

11 MR. BROOKMAN: Mr. Osann. 12 MR. OSANN: Yes. How do you get 13 the -- working with the appendix from the TSD, 14 Appendix 13(c) that addresses the federal 15 production tax credit, there's an estimate for 16 2007 through '09 in there, and you're revising 17 2009 to be up to a million dollars.

18 MR. VON WENTZEL: Yes. 19 MR. OSANN: Okay. That would seem 20 to total close to five million, maybe four and 21 three-quarters million altogether through 2009 22 without regard to 2010.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 127 1 MR. VON WENTZEL: This 2.8 million 2 might be -- excuse me. This 2.8 million was 3 for 2008. I apologize. So the total actually 4 would have been higher than that. You're 5 absolutely correct. So if the total projected 6 benefit was on the order of four and a half 7 million dollars, it would not be around five 8 million dollars. That's correct.

9 But I don't have the total number 10 in front of me here. Doug, do you recall the 11 total tax credit? 12 MR. BROOKMAN: If you do, use the 13 microphone. Maybe you can search for it while 14 we continue.

15 MR. VON WENTZEL: Yes. 16 MR. BROOKMAN: Yes, okay. 17 MR. OSANN: And if I can follow 18 up, are you estimating that there will be no 19 credit available to the low volume 20 manufacturer based on 2010 production? 21 MR. VON WENTZEL: Our projection, 22 and that's all it is, is a projection because

### 202-234-4433 Neal R. Gross & Co., Inc. Page 128 1 we're not the low volume manufacturer, is that 2 because of the structure of the tax credits, 3 the fact that you only get a tax credit for 4 increasing your marginal production of high 5 efficiency clothes washers, we believe that 6 they are reaching the limit of how many 7 additional high efficiency clothes washers 8 they can sell. 9 What actually will happen in the 10 marketplace is completely up in the air. All 11 we can do is use the best data that we can put 12 together.

13 MR. OSANN: Just to be sure I 14 understand you, you believe they're reaching a 15 limit on what they can sell or what they can 16 produce? 17 MR. VON WENTZEL: My 18 understanding, well, only the manufacturer 19 would know whether they are reaching either of 20 those limits. I can't -- 21 MR. OSANN: But I'm asking about 22 the DOE assumption with regard to 2010.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 129 1 MR. VON WENTZEL: the DOE 2 assumption is that if they wanted to increase 3 production they could increase production. 4 MR. OSANN: And you're assuming 5 that they're not. 6 MR. VON WENTZEL: I'm assuming or 7 I should say we're assuming that they're not 8 going to be able to sell additional units 9 beyond what they're already selling now. 10 Therefore, they wouldn't get that additional 11 benefit, but what will actually happen depends 12 on so many factors that we can't control. 13 MR. OSANN: is there an analysis 14 of any type to support that estimate of a cap 15 on machines that would qualify for the 16 production credit? 17 MR. VON WENTZEL: Well, the 18 analysis is based on what the low volume 19 manufacturer has published in its 10Q and 10K 20 statements in terms of its past performance 21 under these various production tax credit 22 programs.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 130 1 MR. OSANN: There's a forward 2 looking statement about sales for 2010? 3 MR. VON WENTZEL: No, there's not. 4 MR. OSANN: Okay. 5 MR. VON WENTZEL: What I'm saying 6 is the assumptions are based on previous 7 statements made by the low volume manufacturer 8 in its securities documentation. 9 MR. OSANN: So the previous sales

10 data? 11 MR. VON WENTZEL: Correct, 12 previous sales data in conjunction with what

13 we have been told are the current market 14 shares for front loading and top loading

15 clothes washers. So unless that market share 16 were to change, it's unlikely that the number

17 of clothes washers that the LVM could sell 18 that would qualify would actually increase 19 significantly. 20 MR. BROOKMAN: Okay.

21 MR. VON WENTZEL: Shall I 22 continue?

### 202-234-4433 Neal R. Gross & Co., Inc. Page 131 1 MR. BROOKMAN: Yes, continue. 2 Tom, do you want in? 3 MR. ECKMAN: Yes. It would seem, 4 given that information, is that affecting what 5 the distribution of the shipment efficiencies

6 are then? It seems to me that we have 7 evidence that higher efficiency equipment is 8 the bigger share of the market or a growing 9 share of the market if it's increasing their 10 tax credit each year. 11 MR. VON WENTZEL: To you -- sorry.

12 Go ahead. 13 MR. ECKMAN: I just -- since we 14 don't have shipments data, the presumption is 15 that whatever was in the CEC directory is 16 biased to the low side. 17 MR. VON WENTZEL: Well, I would 18 qualify that a little bit because we did 19 update our analysis using the latest shipments 20 data that we got from manufacturers in our 21 manufacturer impact interviews.

22 MR. ECKMAN: But not the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 132 1 efficiencies. 2 MR. VON WENTZEL: It included 3 efficiency in an indirect sense because we 4 were told that the market share for vertical 5 versus horizontal axis has shifted to 70-430 6 mix from the 80-20 that was in the pre-NOPR. 7 So our analysis does include that shift from 8 80-20 to 70-30 at present. 9 MR. BROOKMAN: Okay, yes. 10 MR. VON WENTZEL: And Greg. 11 MR. BROOKMAN: Yes, Greg, please. 12 MR. ROSENQUIST: That is also 13 reflected in the shipments analysis. 14 MR. BROOKMAN: Thanks, Greg. 15 Keep going, Constantin. 16 MR. VON WENTZEL: Okay. As has 17 been mentioned before there was a -- the 18 Department of Energy received a letter from 19 the Department of Justice regarding the 20 proposed efficiency level in the NOPR, which

21 was 1.6 MEF and 8.3 water factor for 22 commercial clothes washers that are top

### 202-234-4433 Neal R. Gross & Co., Inc. Page 133 1 loading, and we've gone over this statement a 2 couple of times, but one of the things that 3 bears perhaps a reminder is that we have at 4 least two manufacturers who are very close to 5 the proposed efficiency standard. For 6 instance, the low volume manufacturer 7 currently manufactures a product at 1.55 MEF 8 with an 8.6 water factor, which is very close 9 to 1.6 MEF, 8.5. 10 So at this point DOE invites 11 comments on the determination of manufacturer 12 impacts, including effects of manufacturer tax 13 credits and competitive concerns. 14 MR. BROOKMAN: I'm looking over 15 there toward Doug. I think you're still 16 digging for that, right? Have you got it? 17 Come up to the microphone.

18 MR. VON WENTZEL: You need to come 19 to the microphone. 20 MR. BROOKMAN: And say your name

21 for the record.

22 MR. ROSSIN: The 2.8 that was

### 202-234-4433 Neal R. Gross & Co., Inc. Page 134 1 pointed out, that's for including 2007, sorry, 2 2008 and 2009 combined. 3 MR. VON WENTZEL: Okay. 4 MR. ROSSIN: So with the 5 additional that the department is estimating, 6 it would go to 3.5.

7 MR. VON WENTZEL: So for 2008 and

8 2009. 9 MR. ROSSIN: Right, correct. 10 MR. VON WENTZEL: Okay, but the 11 total would still be around -- would therefore 12 bump up to around five million; is that

13 correct?

14 MR. ROSSIN: That total that I 15 just mentioned is what is counted in the 16 analysis. 17 MR. VON WENTZEL: Okay. 18 MR. ROSSIN: So the outside, 19 there's additional numbers. Do you want the

20 whole number? 21 MR. VON WENTZEL: Maybe we'll just 22 answer Ed's question. We'll just work through

### 202-234-4433 Neal R. Gross & Co., Inc. Page 135 1 it over lunch and we'll give him his answer 2 then. We can get it after lunch. 3 MR. BROOKMAN: Okay. Ed.

4 MR. OSANN: Then do I understand 5 that the production credits received for 2007 6 production were not included in the analysis? 7 MR. ROSSIN: Doug Rossin. 8 They fall outside the base year. 9 MR. VON WENTZEL: The base year is 10 the date that the standard becomes effective.

11 MR. BROOKMAN: So what's the -- 12 MR. ROSSIN: So 2008 and on gets

13 counted. 14 MR. BROOKMAN: Right. Thank you. 15 that's the clarification we wanted. Okay. 16 Thank you. 17 Okay? 18 MR. OSANN: No, I'm not 19 understanding that at all. 20 MR. BROOKMAN: You think 2007 21 should be included in the base year? 22 MR. OSANN: This is base year for

### 202-234-4433 Neal R. Gross & Co., Inc. Page 136 1 what purpose? 2 MR. VON WENTZEL: Base year for 3 the effective date of the standard. When we 4 -- and, Doug, correct me if I'm wrong -- we

5 start from the date that the standard or the 6 final rule gets published, correct? That's 7 when we start counting? 8 MR. ROSSIN: It depends on the 9 rulemaking. For this rulemaking it's starting 10 out 2009, sorry, base case. Base case year 11 extended starts from 2009 and on, but we 12 calculated the tax credits beginning in 2007 13 up until an estimated 2010, but like we were 14 saying, that's counted in the analysis in

15 2009.

16 MR. BROOKMAN: You needed to 17 project from something.

18 MR. ROSSIN: Yes. 19 MR. BROOKMAN: Right.

20 MR. VON WENTZEL: In terms of the 21 impact on the net present -- 22 MR. ROSSIN: -- 2008 projections

### 202-234-4433 Neal R. Gross & Co., Inc. Page 137 1 or the estimates are not counted for that

2 INPV.

3 MR. VON WENTZEL: You need to 4 credit a base year for the INPV calculation,

5 correct? So base case versus the standards 6 case, and so we've now moved up to 2009. 7 MR. BROOKMAN: Okay. Thanks, 8 Doug. Okay. 9 Yes, Tim. 10 MR. BALLO: Tim Ballo with 11 Justice. 12 The department stated that it will 13 review its position on product class issue. 14 If the department adopts a, as we recommend, 15 strong standard that applies to all clothes 16 washers, that would move the market toward a 17 higher modified NG factor. 18 Hopefully the department will look 19 at the tax credit projection for 2010. 20 Presumably manufacturers aren't going to 21 suddenly start producing the more efficient 22 washers in 2013. They will likely ramp up

### 202-234-4433 Neal R. Gross & Co., Inc. Page 138 1 production over time. 2 One other point. On the impact on 3 competition, I don't know if anyone from DOJ 4 is here. Hopefully DOJ and DOE will review 5 that issue very carefully. 6 We think that the impact is likely 7 overstated. These are products for which 8 there are very similar, analogous products 9 available in the residential market. Even if 10 a manufacturer exited this market it would be 11 very likely that any adverse impact on 12 competition would persist for only a short 13 time because there are very low barriers to 14 entry for one of the more diverse population 15 of residential clothes washer manufacturers to 16 modify their machines to enter the commercial 17 market if there is, in fact, a lack of 18 competition. 19 MR. BROOKMAN: Thank you. 20 MR. MANTHEI: Phil Manthei, 21 Alliance Laundry Systems. 22 I would like to make a few

### 202-234-4433 Neal R. Gross & Co., Inc. Page 139 1 comments because this is a very important 2 area. I know you alluded to that we have a 3 model that's very close to the standard that's 4 been proposed in the top loading side. I've 5 told you before in these rulemakings that that 6 is not an appropriate model. It is not 7 accepted universally by our customers. It was 8 done to provide a model that customers could 9 get an Energy Star rebate for and CEE rebates

10 for. 11 Not all customers will use that 12 model. That model uses a technique for 13 rinsing that consumer or customers will not 14 all accept. 15 Okay. On the front load washer 16 side, again, driving by Energy Star, CEE -- 17 actually it was CEE -- we developed and took 18 away water basically to achieve a Tier 3 on

19 the CEE level front load clothes washer. It's 20 probably right at the edge of what's 21 acceptable for clothes washing in the 22 commercial market.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 140 1 One of our competitors, when we 2 open the clothes washer that it sells at Tier 3 3, after the first wash the interior of the 4 load is not even wet with water. 5 We've got stop. This is crazy. 6 MR. BROOKMAN: Okay. Thank you. 7 So we have these two slides here, 8 our DOJ review and manufacture of production 9 tax credits still available for comment. Ed.

10 MR. OSANN: I have several 11 comments on the manufacturer impact analysis. 12 MR. BROOKMAN: Okay. 13 MR. OSANN: Is this the right 14 place for that? 15 MR. BROOKMAN: Yes, this is the 16 right place, I think, and shortly we'll pause

17 for lunch. 18 MR. OSANN: Are we at Slide 49? 19 MR. BROOKMAN: No. Well, actually 20 I guess we are at Slide 49. Yes, we are.

21 MR. VON WENTZEL: Yes. 22 MR. OSANN: In Chapter 13 of the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 141 1 TSD on the manufacturer impact analysis, 2 there's a discussion of the impact on the low 3 volume manufacture of various issues, and 4 there is considerable discussion of a scenario 5 where the low volume manufacturer shifts all 6 production to front loaders. Presumably this 7 is either because of -- perhaps because of a 8 single product class or because that is set at 9 a standard that only a front loader can meet 10 or perhaps because the low volume manufacturer 11 doesn't have confidence that products that 12 must meet the top loader standard can 13 effectively be sold in the market, and we've 14 heard more about that today, in fact, just a 15 moment ago. 16 Either way, there's an analysis of 17 the impact on the low volume manufacturer of 18 shifting production entirely to front loading

19 format. 20 There a couple of questions that 21 come to mind. This is clearly an important 22 issue, the effect on the low volume

### 202-234-4433 Neal R. Gross & Co., Inc. Page 142 1 manufacturer, but it seems as though that DOE 2 has set up a strawman hypothesizing that this 3 scenario would be addressed through the 4 development of a new greenfield site, and then 5 identifying the costs and the impacts of new 6 greenfield site to produce 100,000 units. 7 There's no indication in the TSD 8 as to why this kind of a transitional issue 9 where the manufacturer already has 25 percent, 10 headed towards 30 percent of production in a 11 front loading format, and under this scenario 12 he's withdrawing from the top loading market, 13 would need to build a new plant in a 14 greenfield location to address this rather 15 than winding down to loading production and 16 winding up front loading production. 17 And the effect of this is not 18 inconsequential. The cost components, the 19 capital cost components, for instance, are 20 assumed to include out of a total of $54 21 million -- I'm reading from TSD, page 13-26 -- 22 of a total of $54 million fully 40 percent of

### 202-234-4433 Neal R. Gross & Co., Inc. Page 143 1 that is a new building, over $20 million as 2 contrasted with tooling and equipment costs. 3 And so not only do you have a much 4 larger up front expense, but the effect of the 5 building make the depreciation of this more 6 attenuated. It extends the depreciation of 7 the whole package a considerable amount 8 because depreciation on buildings is not as 9 rapid as on equipment. 10 So from a financial standpoint it 11 makes it much more burdensome for the

12 manufacturer to understand. 13 MR. BROOKMAN: So can you restate 14 your question? 15 MR. OSANN: One question is: 16 what's the basis for the assumption that a 17 shift to full front loader production would 18 involve a greenfield manufacturing facility at

19 all? 20 MR. BROOKMAN: Thank you. 21 MR. VON WENTZEL: Well, the basis 22 of that would be a visit to the manufacturing

### 202-234-4433 Neal R. Gross & Co., Inc. Page 144 1 site, and realization that the current front 2 loading manufacturing line is shoe-horned into 3 a facility; that there is virtually no shared 4 component between the V axis and the H axis, 5 and that, therefore, if you were to increase 6 your production by a factor of four-fold or 7 three and a half-fold depending on how much of 8 the market you retain, you would actually 9 probably have to build an addition to the 10 facility to accommodate that additional

11 demand. 12 MR. OSANN: Even though under this 13 stipulated scenario top loader production is 14 ceasing?

15 MR. VON WENTZEL: As I've stated 16 before, top loaders and front loaders share 17 almost no parts. Therefore, whether you 18 produce a million parts -- well, I shouldn't 19 say a million. The facility was originally 20 built to produce 400,000 top loaders, give or 21 take, and about 25,000 front loaders. So 22 whether you're producing 100,000 top loaders

### 202-234-4433 Neal R. Gross & Co., Inc. Page 145 1 or 50,000 top loaders or 25,000 top loaders, 2 you still need to maintain and use all of the 3 same equipment that you needed at a higher 4 production capacity. 5 It's not as if you can just take 6 Lego style blocks out and say, "Oh, I've got 7 all of this additional room now." That's not 8 how manufacturing works. 9 So in order to actually 10 accommodate a much higher production level on 11 the front axis -- excuse me -- horizontal 12 axis, you would actually have to add 13 significant capacity to that existing facility

14 to accommodate that. 15 MR. BROOKMAN: Phil, I thought you 16 wanted to chime in here.

17 MR. MANTHEI: No. 18 MR. BROOKMAN: Okay. 19 MR. MANTHEI: He said it very

20 well. 21 MR. BROOKMAN: Okay. 22 MR. MANTHEI: Excuse me. Phil

### 202-234-4433 Neal R. Gross & Co., Inc. Page 146 1 Manthei, Alliance Laundry Systems. 2 You can't turn one thing off one 3 day and start the other in the same building. 4 You have to keep producing the top loaders at

5 the same rate because that's what the

6 customers want.

7 There's no room to shoe-horn as 8 Constantin said. 9 MR. BROOKMAN: Okay. Thank you.

10 Ed. 11 MR. OSANN: Yes, I've got an 12 additional question, and that is in addition 13 to these hard capital costs, there's also an 14 R&D expense that I believe is in the vicinity 15 of $10 million that's projected for this. Why 16 is there any R&D at all involved in scaling up 17 production of a product that currently 18 represents 25 to 30 percent of the product, of 19 the unit shipments?

20 MR. VON WENTZEL: As the TSD 21 mentions elsewhere, this scenario included the 22 projection that a transition to a single

### 202-234-4433 Neal R. Gross & Co., Inc. Page 147 1 product class -- excuse me -- equipment class 2 market would require the manufacturer, the low 3 volume manufacturer, to actually come up with 4 a lower cost horizontal axis clothes washer to 5 compete with its much higher volume 6 competitors. 7 If you recall, the competitors 8 have to shift their entire production of top 9 loading commercial clothes washers to H axis. 10 It would have required them to only increase 11 their H axis production by a factor of 12 approximately five percent because the 13 commercial clothes washer market is so small. 14 On the other hand, the low volume 15 manufacturer being a low volume manufacturer 16 would have to increase its front loaders' 17 production by a factor of like three and a 18 half or 350 percent. 19 And, further, in discussions with 20 manufacturers we discussed that there was a 21 very real possibility that once you create a 22 market disruption by requiring all route

### 202-234-4433 Neal R. Gross & Co., Inc. Page 148 1 operators to cease buying top loaders, and the 2 reason for which they stopped buying top 3 loaders is -- let's just leave that aside. It 4 could be people are not satisfied with the 5 wash performance. Manufacturers may decide 6 that they can't sell equipment at those 7 efficiency ranges and get acceptable wash 8 performance. 9 Whatever it is, you create a 10 market disruption, and that market disruption 11 could allow competitors to come in much more 12 easily than they currently can. 13 We had a comment earlier about how 14 residential clothes washer manufacturers that 15 currently do not operate in the commercial 16 market could very easily make the transition 17 of their residential products over to 18 commercial. If that was true, I believe we 19 would see more competitors, but we don't. 20 There are high switching costs. 21 There is a lot of inventory that these route 22 operators have accumulated over the years.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 149 1 There's a lot of institutional knowledge as to 2 how to maintain, overhaul and run these

3 clothes washers. 4 When you create a market 5 disruption, those switching costs start to go 6 away, and you could see a need or we project a 7 need for a lower cost horizontal axis clothes 8 washer that does not employ, for instance a 9 stainless steel tub as a current LVM design

10 does. 11 That takes a lot of money, and in 12 discussions with clothes washer manufacturers 13 as to the cost of developing a new horizontal 14 axis clothes washer platform, all of them were 15 in agreement that the cost would be around $10 16 million to do so. 17 And it's not just because of the 18 engineering resources required, which is part 19 of it, but because you have to go through 20 extensive in-field testing to actually verify 21 the performance, reliability, et cetera, all 22 of the factors that your consumers expect of

### 202-234-4433 Neal R. Gross & Co., Inc. Page 150 1 you and of your products before they can 2 release the product to market. 3 MR. BROOKMAN: So your comments 4 are based on the data that you have

5 accumulated.

6 MR. VON WENTZEL: Correct. 7 MR. BROOKMAN: Okay. So then 8 additional comments on manufacturer impacts 9 and questions? Yes, Lance. 10 MR. DeLAURA: Thank you. 11 Just a question about the moisture 12 content and the clothes that I heard a little 13 while ago. I'm assuming that DOE is following 14 up on those issues. I'm not taking a position 15 one way or another, but you know, there's a 16 factoid that's laid out. I'm assuming DOE is 17 following up on that and can verify it one way 18 or another that with the lower water content 19 that there is a moisture problem in the

20 clothes. 21 That's a question.

22 MR. LEWIS: We noted that that

### 202-234-4433 Neal R. Gross & Co., Inc. Page 151 1 input has been given today, and we will take a 2 look at it. The design of washing machines in 3 trying to minimize, in some aspects that's a 4 plus of having sort of the cost reduced, so 5 how you weigh that once you find out what the 6 moisture content is, it's still open to 7 discussion on whether that's a plus or a minus 8 because it has got several attributes. 9 MR. BROOKMAN: Thanks, Ron. 10 Phil, please. 11 MR. MANTHEI: Phil, I think you're 12 misunderstanding here. We're talking about 13 the moisture content at the end of the first 14 wash. The clothes are supposed to be wet. 15 The clothes have never gotten wet. 16 MR. LEWIS: Thank you for that 17 clarification. I didn't understand that when 18 you first gave it. 19 MR. BROOKMAN: Okay, okay. Thank 20 you. 21 So I'm wondering where we are. I 22 think most of us are due for lunch, and though

### 202-234-4433 Neal R. Gross & Co., Inc. Page 152 1 I do want to make sure we provide an 2 opportunity to get additional comments or 3 questions related to manufacturer impacts up 4 to slide 49 where we are now. 5 Okay. So let's pause then. It's 6 now 12:15. We're hoping to lock this room, 7 and you can leave your computers, and we'll

8 return at 1:15. 9 (Whereupon, at 12:14 p.m., the 10 meeting was recessed for lunch, to reconvene 11 at 1:15 p.m., the same day.) 12 MR. BROOKMAN: Okay. We will 13 resume. We are on slide 50, and proceeding 14 with Gregory. 15 MR. ROSENQUIST: Okay. Welcome 16 back, everyone, from lunch. I'm going to pick 17 it up at the Utility Impact Analysis, and 18 carry us through to the end, to the Regulatory 19 Impact Analysis. 20 So, this is quickly summarizing 21 what was done on the Utility Impact Analysis. 22 Again, its purpose is to investigate how

### 202-234-4433 Neal R. Gross & Co., Inc. Page 153 1 standards impact electricity and gas sales. 2 And for the electric utility industry, how it 3 affects the installed generation capacity.

4 The methods that's used take the 5 National Energy Savings results on the 6 National Impact Analysis, input it into the 7 Energy Information Administration's National 8 Energy Modeling System, also called NEMS. 9 It's tailored specifically for appliance 10 standards, and given the names NEMS BT, the BT 11 standard for building technologies. 12 What we do with this model is we 13 run a reference case. That's the case without 14 standards, and then input the National Energy 15 Savings to see how these various outputs are 16 affected by the standards; namely, how 17 electricity and gas sales are affected, and 18 the installed generation capacity is affected. 19 So, the output is just what I 20 said. In addition to that, it also provides 21 some of this information by region. And for 22 commercial clothes washers, the impact to the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 154 1 electric utility industry is very, very small. 2 It's only from five to 12 megawatts in the 3 year 2014. That's primarily because we're 4 talking about a product that has shipments of 5 around 200,000 units per year. There's just 6 not much in the way of commercial clothes 7 washers in the building stock in the U.S. 8 Does anyone have any questions 9 about the Utility Impact Analysis? Okay. If 10 not, I'll move on to the next, which is the 11 Employment Impact Analysis. And its purpose 12 is to determine that indirect impacts from 13 standards to employment in the U.S.; indirect, 14 in that changes in consumer's operating costs, 15 for example, are perpetuated through the rest 16 of the economy by using this spreadsheet model 17 called ImSET, ImSET standing for Impact of 18 Sector Energy Technologies, again, to analyze 19 how these changes on the consumer side 20 propagate themselves through the rest of the 21 economy affecting employment elsewhere in the 22 economy.

### 202-234-4433 Neal R. Gross & Co., Inc. Page 155 1 I want to emphasize that the 2 Manufacturer Impact Analysis assesses the 3 direct impacts to the manufacturers of this 4 product. This analysis looks, again, at the 5 indirect impacts of standards to the U.S. 6 economy. 7 For this analysis, we did see a 8 change in employment, but very, very tiny. 9 So, you can't really say that it's 10 significant, that the net increase in jobs 11 created by this standard is all that much, 12 because when measured against the overall 13 employment in the U.S., it's on the order of 14 .001 percent, so it's extremely small. And I 15 don't know if the department has less 16 certainty whether or not these actual job 17 gains will occur, because of that, because of 18 the size of the increase. 19 Does anyone have any questions 20 about the employment impact analysis? Okay. 21 Moving right on, then we'll go into the 22 Environmental Assessment. And its purpose is

### 202-234-4433 Neal R. Gross & Co., Inc. Page 156 1 to estimate the environmental impacts of the 2 standards, primarily in the form of reduced 3 power plant emissions, reduced airborne 4 emissions of carbon dioxide, NOx, mercury, and 5 sulfur dioxide. DOE also looks at how 6 emissions at the site are affected, because 7 commercial clothes washers use heated water 8 that's generated from gas water heating. They 9 also account for energy savings at gas dryers. 10 So, again, DOE looks at how carbon dioxide11 and NOx are affected by the standards from on12 site emissions, as well. 13 The method for estimating the 14 power plant emissions, again, using the same 15 model as used for the Utility Impact Analysis, 16 and that's the National Energy Modeling 17 System, or NEMS. 18 Again, so the output from this 19 analysis, again, is to generate these 20 reductions in CO2, reductions in NOx, 21 reductions in mercury, and also looking at 22 possible reductions in SO2. Now, for SO2,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 157 1 since there have been caps on SO2 since 2 effectively 1990, due to Clean Air Act 3 amendments, standards are -- do not affect SO2 4 emissions from power plants, but what DOE does 5 look at is whether or not the standard does 6 affect the allowance price of SO2, because 7 there is a market for SO2 in the U.S. 8 Another thing that DOE did for 9 this rulemaking, which we also did for the 10 NOPR, was to monetize the value of the 11 emission reductions for carbon dioxide, NOx, 12 and mercury. And this leads to the next 13 issue, which is just seeking any comment on 14 the analysis that was performed to estimate 15 these emissions impacts, as well as monetizing 16 those emission impacts.

17 MR. BROOKMAN: Ed Osann.

18 MR. OSANN: Yes. You used the 19 NEMS model to calculate the reduction of power 20 plant emissions. How do you calculate the 21 reduction in on-site emissions where gas 22 appliances are used?

### 202-234-4433 Neal R. Gross & Co., Inc. Page 158 1 MR. ROSENQUIST: You know, from 2 doing a literature search, there's emission 3 factors, essentially, for fossil fuel burning 4 equipment in the residential and commercial 5 building sectors. I, unfortunately, can't 6 cite to you off the top of my head what those 7 sources are, but I can certainly get that 8 information to you. 9 MR. OSANN: Is that in the TSD? 10 MR. ROSENQUIST: Yes, it's in the

11 TSD. 12 MR. BROOKMAN: Okay. Other 13 comments or questions related to the 14 Environmental Assessment? 15 MR. ECKMAN: Just one question on

16 the NEMS model. 17 MR. BROOKMAN: Yes, please. 18 MR. ECKMAN: Tom Eckman. Greg, 19 does the NEMS model generate the heat rates at 20 the margin? Is that what you're using? 21 MR. ROSENQUIST: Yes. Yes. 22 MR. ECKMAN: The new additions are

### 202-234-4433 Neal R. Gross & Co., Inc. Page 159 1 the dispatch at the margin is what the heat

2 rates - 3 MR. ROSENQUIST: Yes, and that's 4 what's used to convert the site energy savings 5 to source energy savings. And then that's 6 what gets input into the model to estimate the 7 emission impacts. 8 MR. ECKMAN: So, it's not the 9 average of the existing fleet, it's the -- 10 it's what's being dispatched at the margin - 11 MR. ROSENQUIST: Right. Right. 12 It depends. You know, I haven't really looked 13 at the -- coal fired power plants, as well as 14 gas fired power plants are affected by the 15 standard according to NEMS, so some emission 16 savings are also coming from coal fired power 17 plants. I guess it if was a more peaky end 18 use, where maybe gas fired power plants are 19 used to provide that power, for example, maybe 20 in the case of air conditioning, you'd see 21 more of the emissions coming solely from gas 22 fired power plants. But, in this case, it is

### 202-234-4433 Neal R. Gross & Co., Inc. Page 160 1 also coming from coal. 2 MR. BROOKMAN: Tim. 3 MR. BALLO: Tim Ballo, 4 Earthjustice. Just to clarify a couple of 5 things on the Environmental Assessment. You 6 have an estimate for water savings in billions 7 of gallons. I assume that's at the machines 8 themselves, and not at the utilities. 9 MR. ROSENQUIST: Yes, it's the 10 waste water savings, but yes, at the site. 11 Exactly. How much water that is used by that 12 plant actually goes back down the drain. 13 MR. BALLO: There's also a little 14 bit of discussion in the Environmental 15 Assessment of the impacts of reductions in 16 waste water use. I don't think there's 17 anything on the impact of reductions in 18 natural water consumption. Is there a 19 rationale for that? 20 MR. ROSENQUIST: Yes. The 21 National Energy Savings -- the National Impact 22 Analysis estimates the water savings from the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 161 1 standards, so -- just to clarify, what we also 2 estimate the waste water savings from the 3 standards, as well. That is -- again, like I 4 said before, how much water is used by the 5 plant that gets drained. And virtually all 6 the water that's used by the appliance also 7 gets also into the drain, as well. Some of 8 the water gets into the clothes, is retained, 9 and then it evaporated, either in a dryer or 10 hanging the clothes on the line, or something 11 like that. 12 MR. BROOKMAN: Additional comments 13 on these? Questions? Okay. 14 MR. ROSENQUIST: And now on to the 15 last analysis, which is the Regulatory Impact 16 Analysis. And its purpose is to investigate 17 non-regulatory alternatives to mandatory18 energy efficiency standards. And the non19 regulatory alternatives that were analyzed 20 included consumer rebates, commercial customer 21 tax credits, voluntary efficiency targets, 22 that is Energy Star, manufacturer tax credits,

### 202-234-4433 Neal R. Gross & Co., Inc. Page 162 1 replacements programs, and bulk government 2 purchases. Think of that as a program 3 administered by the Federal Energy Management 4 program, that last item. 5 What's done is the inputs into the 6 National Impact Analysis spreadsheet model are 7 modified in order to analyze each one of these 8 options. And what's generated, again, is 9 similar to what's generated from the National 10 Impact Analysis; that is, national energy 11 savings, and the present value due to each one 12 of these non-regulatory alternatives. 13 In all cases, the non-regulatory 14 alternatives do not yield as much in the way 15 of energy savings, and economic impact as the 16 mandatory efficiency standards. 17 MR. BROOKMAN: Questions and 18 comments on Regulatory Impact Analysis? No. 19 Okay. 20 MR. ROSENQUIST: And this brings 21 us back to the issues which DOE has identified 22 in the Supplemental NOPR for which it wants

### 202-234-4433 Neal R. Gross & Co., Inc. Page 163 1 public comments. These are the same issues 2 that you saw at the beginning of the day in 3 the morning. I'm not going to go ahead and 4 repeat them. 5 MR. BROOKMAN: I'm glad you left 6 it on this slide. This is good. Everybody 7 can take a chance to look at the key issues 8 that DOE was seeking comment on. And then we 9 can roll this straight into your closing 10 remarks, additional issues that people wish to 11 raise. Okay. So, now it's the opportunity 12 for people to raise -- individuals to raise 13 any other issues. Tim. 14 MR. BALLO: Tim Ballo, 15 Earthjustice. We heard a lot about the 16 adverse impacts to the low-volume manufacturer 17 of both the front loading standard, and the 18 top loading standard, the ones that DOE 19 proposed. I think I explained our position at 20 the beginning, that to the extent that DOE is 21 particularly concerned about adopting the 1.06 22 MEF standard for machines, the low-volume

### 202-234-4433 Neal R. Gross & Co., Inc. Page 164 1 manufacturer, I understand, produces a yield 2 of 1.55 MEF. The department has only analyzed 3 a couple of possible TSLs, and it might be 4 helpful to see what adopting the standard of 5 1.55, what the economics of that would be, and 6 what the impacts for the low-volume 7 manufacturer would be, if there's time between 8 now and when this rule comes out. 9 MR. BROOKMAN: Okay. Thank you. 10 Other comments here as we're moving towards 11 closing. I think everybody is aware of that. 12 This is the opportunity for people to raise 13 any additional comments, or to briefly 14 summarize. Okay. I guess I see nothing 15 additional. Tom, you have something? 16 MR. ECKMAN: Yes, just in the way 17 of summation. I think there's frustration 18 around our side of the table on the efficiency 19 side, seeing something in the range of 100 20 million to 500 million plus, and that's a 21 conservative estimate given in terms of net 22 present value benefit on the table for

### 202-234-4433 Neal R. Gross & Co., Inc. Page 165 1 consumers. 2 And having the weight of the 3 decision rest of a $50 million investment to 4 fix the problem. And I would just say I'm 5 frustrated by that equation, and would there 6 would be some other answer to that problem, 7 when consumers have a two to one, or a five to 8 one benefit, or ten to one benefit, at least, 9 and we can't get past the $50 million cost. 10 MR. BROOKMAN: Are you offering 11 anything that's not in the record that would 12 help the department - 13 MR. ECKMAN: It seems to me in the 14 regulatory options discussion, a resolution of 15 that problem, some exploration of options to 16 address that problem, to mitigate that hurdle 17 to get passed that -- so we get those 18 benefits. And those are not including the 19 environmental benefits that we're trying to 20 seek here. It seems to me there ought to be 21 some effort made beyond simply listing what 22 those options are, some exploration of those

### 202-234-4433 Neal R. Gross & Co., Inc. Page 166 1 options in a serious way. 2 MR. BROOKMAN: Okay. Ed Osann. 3 MR. OSANN: Yes, I agree with 4 Tom's remarks. I think the -- I'm struck by 5 the potential savings that DOE has identified, 6 recognizing that the savings are probably 7 significantly understated due to the flawed 8 assumptions regarding the mix between machines 9 in the laundromat sector, and machines in the 10 multi-housing sector. The savings are likely 11 to be considerably greater. And it does seem 12 as though those savings are too much to walk 13 away from. 14 We recognize that the 15 consideration for the low-volume manufacturer 16 is an important consideration for DOE. It's 17 one that the department has a statutory 18 obligation to perform, and for good cause. 19 But we remain unconvinced that the financial 20 implications of a stronger standard than is 21 recommended are as dire as the department has 22 -- would lead us to believe, based on the

### 202-234-4433 Neal R. Gross & Co., Inc. Page 167 1 analysis that it's placed in the record. 2 I do have a question for DOE at 3 this point, and that is, do you believe that 4 under current law, you have the authority to 5 set in this rulemaking a standard that would 6 go into effect in two tiers, at two different

7 dates? 8 MR. BROOKMAN: Betsy. 9 MS. KOHL: Sorry. This is Betsy 10 Kohl from DOE. It's very -- EPCA uses 11 different language formulations for basically 12 product on that issue. We've wrestled with it 13 before for different products, so we can 14 certainly take a look at that, but I don't 15 know off the top of my head. 16 MR. BROOKMAN: Okay. Thanks for 17 the question. 18 MS. OSANN: That may be one way to

19 address the conundrum that DOE seems to be 20 facing, particularly if it can provide a bit 21 more time to -- for some of the capital 22 finance issues of the low-volume manufacturer

### 202-234-4433 Neal R. Gross & Co., Inc. Page 168 1 to resolve themselves. They are dealing with 2 debt issues, and rolling over their debt 3 facility, and a bit more time might provide a 4 useful bit of accommodation. 5 MR. BROOKMAN: Okay. Thank you. 6 Additional closing remarks, 7 summary statements? Okay. 8 So, then, from my perspective, I 9 thank all of you. We had a very productive day 10 today, many good issues raised. I'd ask you 11 at the back of your packet, there's an 12 evaluation form. Please take one minute to 13 fill it out. The department reads them 14 carefully, and I'll turn it back for closing 15 remarks to Stephen Witkowski. 16 MR. WITKOWSKI: Okay. Very 17 quickly, I just would like to direct you to 18 page 61, how to submit your comments, and the 19 time frame. These have to be in by December th 20 9 of 2009. Please submit them as given on 21 page 61. On behalf of DOE, I'd like to thank 22 you all for attending and participating, and

### 202-234-4433 Neal R. Gross & Co., Inc. Page 169 1 we look forward to additional submitted 2 comments by the closing date. Thank you. 3 MR. BROOKMAN: Thank you. Safe 4 travels, everyone. 5 (Whereupon, the proceedings went 6 off the record at 1:40 p.m.)

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CERTIFICATE

This is to certify thac the foregoing transcript. in the matter of: Commercial Clothes Washers Crr^hl6h6-f r'l \T^f i no af Drnnnca^ Rulemaking (SNOPR) Douglas Brookman, Faci litator

Date: November 16, 2009

Place: wasnJ.ngEon, uu Before:

ranr6c671t-< fh6 a forement ioned

t-rmar,rri t- i na



### NEAL R.GROSS COURT REPORTERS

AND TRANSCRIBERS 1323 RHODE

ISLAND AVE., N.W. WASHtNGTON, D.C. 20005-3701 f r r ' 1 I : n d . ' . \ m n l o f o n r n n o o d i n . r < ^ f J - h a matter, as reported and reduced to