UNITED STATES OF AMERICA DEPARTMENT OF ENERGY

**PUBLIC MEETING**

**ENERGY CONSERVATION STANDARDS FOR RESIDENTIAL CLOTHES DRYER AND ROOM AIR CONDITIONERS** 

U.S. Department of Energy 1000 Independence Avenue, SW Washington, DC 20585 Room SE-098

Tuesday March 16, 2010

Chair: Doug Brookman Department of EnergyExecutive Court Reporters (301) 565-0064 2 **Participants Identified:** Jennifer Amann ACEEE Tim Ballo Earthjustice James Battaglia Navigant Consulting Brice Bowley General Electric Debra Brunk Association of Home Appliance Manufacturers Lane Burt NRDC John Cymbalsky DOE Appliance Standards Lance DeLaura Sempra Energy Utilities Rebecca Duff ICF International, representing Energy ... Tom Eckman Northwest Power and Conservation Council George Gallenhurst General Electric Sean Gouw Southern California Edison Elizabeth Joyce Energy Solutions PG&E Mohammed Khan Department of Energy Jeff Kingman Navigant ConsultingExecutive Court Reporters (301) 565-0064 3 Betsy Kohl DOE General Counsel Alex Lekov Lawrence Berkeley National Laboratory Dave Liss Northeast Energy Efficient Partnerships Amanda Lowenberger American Council for an Energy Efficient Economy Shawn Mackay Whirlpool Corporation Phil Manthei Alliance Laundry Systems Joanna Mauer Appliance Standards Awareness Project Wayne Myrick SHARP Betsy Kohl DOE General Counsel Ted Pope Energy Solutions representing PG&E Judith Reich Navigant Consulting Mike Rivest Navigant Consulting Gregory Rosenquist Berkeley National Laboratory Steve Rosenstock Edison Electric Institute Celia Sher General Counsel DOE Lois Starkey Manufactured Housing Institute Christopher StoneExecutive Court Reporters (301) 565-0064 4 Intertek Meg Sullivan DOE Jennifer Tiedeman DOE Constantin von Wentzel Navigant Consulting Meg Waltner NRDC Detlef Westphalen Navigant Consulting Mack Whitten Northwest Power and Conservation Council Stephen Witkowski DOE Appliance StandardsExecutive Court Reporters (301) 565-0064 5 **I N D E X**

**AGENDA ITEMS** PAGE Welcome, Mr. Witkowski 6 Opening Remarks, Introductions and Agenda Review, Mr. Brookman 8 Rulemaking Overview, Mr. Witkowski Comments from Participants, Mr. Brookman 14 Engineering Analysis, Ms. Reich 16 Engineering Analysis for Room Air Conditioners, Mr. Westphalen 63 Energy Use Analysis, Markup for Equipment Price Determination and Life-Cycle Cost Analysis, Mr. Lekov 82 Shipments Analysis and National Impact Analysis, Mr. Lekov 136 Trial Standard Levels and Preliminary Manufacturer Impact Analysis, Mr. Lekov and Mr. von Wentzel 147 Manufacturer Impact Analysis, Mr. Kingman 171 Utility Impact Analysis, Employment Impact Analysis, Environmental Assessment, Regulatory Impact Analysis, Mr. Lekov 174 Discussion of Other Issues, Mr. Brookman Next Steps and Closing Remarks, Mr. Witkowski 181Executive Court Reporters (301) 565-0064 6

P R O C E E D I N G S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 9:00 a.m. MR. BROOKMAN: Good morning, everybody and welcome. So glad you could join us this morning. Stephen Witkowski is going to start us off with welcoming remarks. OPENING REMARKS, INTRODUCTIONS AND AGENDA REVIEW MR. WITKOWSKI: Good morning, everyone. Can you hear me? Is this on? Okay. I want to thank you to this public meeting today on Energy Conservation Standards for Residential Clothes Dryers and Room Air Conditioners, to go over and discuss a preliminary activities and analysis. I also would like to introduce a new member of the DOE team, John Cymbalsky over here, who is taking over the duties that Ron Lewis had and we're very happy to have John here and looking forward to his direction. Just a couple things very briefly, DOE is trying to reduce the length of some of these meetings, and it affects me directly today. It won't affect the other people so much at this meeting, but as you know, we normally start out where I go through a six or seven page overview of the rulemaking process. Since almost everyone here has heard this about 15 to 20 times, IExecutive Court Reporters (301) 565-0064 7 already see the smiles in the background, and it usually means that after ten minutes we have to wake people up and then get into the meat of the meeting. So I'm not going to cover that today. We'll assume that it's here in the presentation and you're all welcome, at your leisure, to look at it in the future if you want to. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 On that note, welcome, and I'll turn it over briefly again to Doug. MR. CYMBALSKY: Thank you, Steve, and welcome everybody. This is my first public meeting, and my twelfth day on the job, so it's been a busy time. Just a little bit about myself. Before here, I worked at EIA for 20 years, and at EIA I was involved with the forecasting and the analysis, so this is a little bit different, and I'm thinking the reason they may have hired me is because my legacy at EIA was that I was never sued, either successfully or otherwise. And I'm here to sort of ward off the litigious ghosts of appliance standards past I think. I'm going to do my best to keep us on track. I know we've had some issues in the past. The good news about our time line, we're going to announce a final rule in the next couple of weeks on heating products, and that's going to be water heaters, directExecutive Court Reporters (301) 565-0064 8 heating equipment, and pool heaters, should be in the next 15 days we'll have a final rule. We're on track to do that. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 So everyone, send your lawyers back home. We're okay. We're going to make the deadline. And with that, welcome to the meeting, and hopefully it'll be productive. MR. BROOKMAN: Thank you, John. It's our tradition to give everyone a chance to introduce him or herself. If you'd say your name and organizational affiliation. This will not all be captured in the recorded public record, but we've got a -- when you registered, we got a full listing of who's here in the room. So I'll start over here. Your name and organizational affiliation. And these microphones, if you want to use them, the good old green LED light needs to be on. SELF-INTRODUCTIONS MS. JOYCE: Elizabeth Joyce, Energy Solutions, representing PG&E. MR. BALLO: Tim Ballo, Earthjustice. MR. ROSENSTOCK: Steve Rosenstock, Edison Electric Institute. MS. MAUER: Joanna Mauer, Appliance Standards Awareness Project.Executive Court Reporters (301) 565-0064 9

MR. BURT: Lane Burt, NRDC. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. WALTNER: Meg Waltner, NRDC. MR. DeLAURA: Lance DeLaura, Sempra Energy Utilities. MR. GALLENHURST: George Gallenhurst, General Electric. MR. MACKAY: Shawn Mackay, Whirlpool Corporation. MS. BRUNK: Debra Brunk, Association of Home Appliance Manufacturers. MS. KOHL: Betsy Kohl, DOE General Counsel MR. CYMBALSKY: John Cymbalsky, DOE Appliance Standards. MR. WITKOWSKI: Stephen Witkowski, DOE Appliance Standards. MR. BROOKMAN: Please stand up. MR. KINGMAN: Jeff Kingman, Navigant Consulting. MS. REICH: Judith Reich, Navigant Consulting. MR. WESTPHALEN: Detlef Westphalen, Navigant Consulting. MR. LEKOV: Alex Lekov, Lawrence Berkeley National Laboratory. MR. MANTHEI: Phil Manthei, Alliance LaundryExecutive Court Reporters (301) 565-0064 1 0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Systems. MR. BOWLEY: Brice Bowley, General Electric. MR. WHITTEN: I'm Mack Whitten, Northwest Power and Conservation Council. MR. POPE: Ted Pope, Energy Solutions representing PG&E. MR. LISS: Dave Liss, Northeast Energy Efficient Partnerships. MR. GOUW: Sean Gouw, Southern California Edison. MS. LOWENBERGER: Amanda Lowenberger, American Council for an Energy Efficient Economy. MR. BATTAGLIA: James Battaglia, Navigant Consulting. MS. DUFF: Rebecca Duff, ICF International, representing Energy ... MR. KHAN: Mohammed Khan, Department of Energy. MS. SULLIVAN: Meg Sullivan, DOE. MS. SHER: Celia Sher, General Counsel, DOE. MS. AMANN: I'm Jennifer Amann, ACEEE MR. BROOKMAN: Thank you. Anybody else? Did we miss anybody? So glad you could make it here this morning, and we're almost at an on-time start. AGENDA REVIEWExecutive Court Reporters (301) 565-0064 1 1

1 2 3 MR. BROOKMAN: I'm going to do a very brief agenda review. As you came in, you received a packet that included the agenda, the slide presentation, and the Federal Register notice for today's meeting. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Immediately following this agenda review, we're going to have a Rulemaking Overview, by Steve Witkowski, and immediately following that there's an opportunity for anybody who wishes to do so, to make brief summary of remarks citing issues that are of key interest to you. Brief summary of remarks, an opportunity, an open forum for that. Immediately following that, we'll go straight into the engineering analysis. How many of you are new to these proceedings? Not many. So then most of you now know that the bulk of -- all the content in the presentation is in your packet, in the form of PowerPoint slides, and the Department has also taken the initiative to cue you to specific questions that they'd like to see addressed. So to the extent that you do that, that's very helpful to the Department. Following the engineering analysis, around about eleven o'clock or so, we'll take a break and then we'll continue with the engineering analysis. We'll take a lunch break around about noon-ish, maybe a little after noon.Executive Court Reporters (301) 565-0064 1 2

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Following that, energy use analysis, markups for equipment price determination, life cycle cost analysis, shipments analysis, national impact analysis, trial standard levels, and preliminary manufacturing impact analysis. We'll take a break mid-afternoon, and the manufacturing impact analysis, and you can see a whole host of other analyses, utility impact, employment impact, environmental assessment, and regulatory impact. There's another opportunity late in the day just before we close for people to raise other issues that they wish to raise, things you don't think you've covered sufficiently, things that the Department needs to hear at this stage in the process. So there's that opportunity for you to do that, and then we'll have a few next steps and closing remarks. And that's what we've planned for the day. So questions and comments on the plan? Any particular -- any issues that people need to raise that wouldn't fit into the proposed agenda? Okay. So I ask your consideration, what has emerged, I think, as good manners during the span of these years, it applies, please speak one at a time. If you'd say your name for the record. You don't need to say your organizational affiliation every time. WeExecutive Court Reporters (301) 565-0064 1 3

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 know you're here, just say your name so it's clear who's speaking. I'm going to be cuing people to the extent I can. Speak, and I also encourage follow-on comments. So sometimes that enlivens and enriches the discussion. There will be a full transcript of this meeting today, and that will be made available on the EERE website. More on that later. If you could try to be concise, please share the air time. There's lots to be said, I'm certain, about this issue today, and if you keep the focus here, please turn your cell phones on silent mode. If you need to have a sidebar conversation with a friend or someone next to you, keep it very brief. These microphones work pretty well. We can hear you. It might even show up on the record, you never know. And you need to turn on the microphone, on and off. I think they're -- you can leave it on, so if you're going to comment a lot, that's great. I think that is it. I think that's all that I need to cover at this point. Questions and comments here at the outset? Steven Witkowski. MR. WITKOWSKI: Well, we're skipping the overview, as I mentioned, so we're moving right to the comments from the participants.Executive Court Reporters (301) 565-0064 1 4

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: You don't have to do any overview at all? Okay. So then this is an opportunity for people to raise issues that matter for them. Yes, Lane. COMMENTS FROM PARTICIPANTS MR. BURT: Lane Burt, NRDC. NRDC is a national environmental, non-profit, representing 1.3million members and on-line activists. And in the runup to this rulemaking, we commissioned Ecos Consulting to dig into clothes dryer efficiencies, specifically. And this report is in final draft form and we are happy to make it available to the Department for the purposes of this rulemaking. The report had some initial findings that are very interesting. Actual measured efficiencies for clothes dryers varied between 17 and 85 percent across the models tested. And as such, the report finds serious concerns with the Department of Energy's test method for clothes dryers, mainly the assumptions on field use factor, and the ending of the test with five percent remaining moisture content, rather than allowing the sensors to actually perform their job. So one of the major questions that we would like to raise at the outset is what is the process for updating the test procedure? What are DOE's thoughtsExecutive Court Reporters (301) 565-0064 1 5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 on the test procedure? And one other comment is that Ecos also found significant impact on heating and cooling energy use in this paper, and we would like to encourage the Department to explore that today. MR. BROOKMAN: Thank you. Okay. Are there comments at the outset? Yes, Debra Brunk. MS. BRUNK: Debra Brunk. I just want to first of all thank the Department of Energy for having this meeting today. I recognize this is kind of a replacement for the Advanced Notice of Proposed Rulemaking. I think having this preliminary review is helpful. I do want to mention, though, and I alreadymentioned this to Stephen, that AHAM is a consensusbased organization. In order for us to speak at these meetings, we need to obtain consensus from all of our members. Given the timeframe that we had on this particular rulemaking, where the presentation and the specific issues for comment were made available late last week, and the executive summary yesterday, we have not had time to obtain a full consensus. So I just want to make that clear that if, in the future, those documents could be provided a little bit earlier, I think we can certainly be happy to provide a lot moreExecutive Court Reporters (301) 565-0064 1 6

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 information than we will be able to do today. MR. BROOKMAN: Are there some issues you feel like you can characterize AHAM's response, or are you

now -- MS. BRUNK: We will have some questions. I think it depends where the discussion goes, but again, I will not be free to make a lot of comments, just because we have not received full member confirmation on our position. Thank you. MR. BROOKMAN: Other comments here at the outset in this opening round? Okay. Then, let's proceed with the engineering analysis. Judith Reich. ENGINEERING ANALYSIS MS. REICH: Well, good morning. I'm Judith Reich from Navigant Consulting, and I'm going to be starting out the discussion of the analyses that were conducted at the preliminary stages of this rulemaking. In the light of what Steve has expressed, the desire to expedite the meetings, and in light of the fact that so many of you are very familiar with the process, I'm going to move quickly over some of the more generalized discussions of the process, and focus on the results and the steps that we took in the analysis. So, the first three that I'll be discussing, portions of the analysis are the first the market andExecutive Court Reporters (301) 565-0064 1 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 technology assessment, and that is initially to first of all, define what exactly are the products that are under consideration in the rulemaking, how DOE intends to analyze them in terms of grouping them into product classes, and then to take a look at the regulatory landscape that they're currently facing. The second piece of the market and technology assessment is to get a snapshot of the industry in terms of who the key players are, the manufacturers, and what their market shares are, and also to look at historical trends in the industry. And then the final piece of that technology assessment that's very important is to define all of the technologies that are available to improve the efficiency of the products in question. The next step is to take that large set of technologies and screen them according to some very specific criteria to determine which subset of those technologies can be evaluated as part of the engineering analysis. Which then, of course, in the engineering analysis, the ultimate goal is to characterize how much it's going to cost at each incremental efficiency level, up to the maximum technologically feasible level. Let's talk about the market for residentialExecutive Court Reporters (301) 565-0064 1 8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 clothes dryers. Although there are about 14 manufacturers of clothes dryers that sell into the U.S., it's a quite concentrated market. As you can see, there are three key players, and of those, Whirlpool -- the combined Whirlpool-Maytag entity accounts for about three-quarters of both the electric clothes dryer and gas clothes dryer market. It's also interesting that those market shares for those three manufacturers have remained relatively constant, as long as you consider Whirlpool and Maytag together, since they did merge a few years ago. And clothes dryers are manufactured both in the U.S. and internationally, and there are some manufacturers that rebrand for others. Right now -- well, I should say according to data that was submitted in 2008 by AHAM, back in 2006, there were approximately eight million clothes dryers sold in the U.S., the vast majority are standard electric dryers, with about 1.6 million gas dryers, and a very small fraction, about 100,000 compact electric. For the purposes of the preliminary analysis, DOE proposes to categorize clothes dryers into six different product classes, which can be grouped as vented clothes dryers, and ventless or condensing clothes dryers. The product classes that are proposedExecutive Court Reporters (301) 565-0064 1 9

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 for the vented units are existing product classes which form the basis of the current federal energy conservation standards, and these are the electric standard, which is a capacity greater than 4.4 cubic feet, two compact electric classes which are differentiated by the voltage that they require, and gas clothes dryers. Newly proposed for this rulemaking are two ventless product classes, one being an electric compact at 240 volts, and again, using the same criteria of less than 4.4 cubic feet in capacity, and combination washer-dryers. And DOE -- yes -- MR. BROOKMAN: Let's let her finish with this slide, yes. MS. REICH: DOE recognizes that right now the current test procedure does not accommodate testing of ventless units, so DOE is considering at this time, amending the test procedure with provisions that would allow ventless units to be tested. MR. BROOKMAN: Debra Brunk. MS. BRUNK: Debra Brunk. I just want to note on the product classes, that in the framework document, AHAM had suggested also including a new product class for the electric standard ventless size. In this document DOE noted that those are notExecutive Court Reporters (301) 565-0064 2 0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 currently on the market, and we would agree with that. I think what we were looking at is if we were going to propose these new classes, we also know that clothes dryer capacities have been going up. It just would seem like it would be a good idea so it would decrease the waivers -- request for waivers that DOE would -- may expect to see in the future on these products. And based on how the electric compact was determined, obviously there's no data there, it was sort of extrapolated. We believe the same sort of approach could be done for an electric standard product class. MR. BROOKMAN: Thank you. Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock. For the ventless dryers, again, you're talking about amending the test procedure which obviously makes sense, but again, there is a timing issue. What is the timing of DOE's decision on modifying the test procedure, just because of the way the pace of the rulemakings has been, what is the timing of that decision? MR. WITKOWSKI: I'm looking at ... It looks like the final rule is near the end of this year. MR. ROSENSTOCK: Final rule for the clothes dryer efficiency standard, or final rule for the test procedure? MR. WITKOWSKI: For the test procedure.Executive Court Reporters (301) 565-0064 2 1

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. ROSENSTOCK: And how about -- Steve Rosenstock, yeah -- and how about for the efficiency? MR. WITKOWSKI: Excuse me for interrupting, but we have on our website a complete updated schedule. I'm sorry, I don't have it here, but you're certainly willing to check with that, because the schedule that I have is just a partial schedule, and we can get you more accurate information. MR. ROSENSTOCK: Thank you. MR. BROOKMAN: Thank you. Okay. Judith. MS. REICH: All right. Talk a little bit further about why ventless clothes dryers are being considered. It's believed that they have unique utility because it offers consumers the possibility of installing them in locations that don't have access to the outside, so no external vent is required. And the utility that's associated with combination washer and dryers are that first of all, they are a single unit that washes and dries the laundry in the same basket, in a combined cycle. And DOE's research has suggested that all such units are ventless so that they would be categorized strictly in the ventless class or category, and so therefore they too would be able to be installed in locations that would not have external ventingExecutive Court Reporters (301) 565-0064 2 2

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 available.

MR. BROOKMAN: Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock. Just out of curiosity, are they considered -- for the clothes washer category, are they considered separate products as well. MS. REICH: There is currently no separate product class for a combination washer-dryer. MR. ROSENSTOCK: Thank you. MS. REICH: For clothes washers. MR. BROOKMAN: Yes, Lane. MR. BURT: Lane Burt. General question on the test procedures for combination units. Are they going to be tested in drying mode only, or are they going to be tested as a unit with washing and drying capability? Because one of the conclusions of the previously mentioned report is that there is the potential for energy savings if manufacturers are allowed to test units together that work together, because it is more efficient to mechanically remove the water than to dry it. MS. REICH: Well, DOE right now is considering the clothes dryer test procedure. As it currently stands it is only addressing clothes dryers,Executive Court Reporters (301) 565-0064 2 3

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 and therefore would only address the drying portion of the cycle. But again, the rulemaking is -- those topics are under consideration. MR. BURT: Thank you. MR. WITKOWSKI: And if you have any suggestions or comments on the test procedure, we encourage you to, in the written comments if not here, to propose those. We're always happy to look at comments and suggestions. MR. BROOKMAN: Thank you, Stephen. MS. REICH: You know, well perfect lead-in to the test procedure. This is a separate rulemaking that is currently underway for both clothes dryers and the room air conditioner test procedure is being evaluated as part of that same rulemaking. For the clothes dryer test procedure, under consideration are both active mode issues, and stand-by and off mode energy use. And the latter is being addressed as part of a requirement by the Energy Independence and Security Act, EISA, which requires that if it is technically feasible to incorporate such energy use into the efficiency metric, then the test procedure, if it doesn't already include that, needs to measure such energy use. And as I mentioned before, the test procedureExecutive Court Reporters (301) 565-0064 2 4

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 does not currently have provisions in it that can accommodate ventless clothes dryers, and DOE believes that there are some simple clarifications that can be inserted into it that would allow the testing of the units, primarily the -- stating clearly that the use of the exhaust simulator would not be required. DOE would like to receive comment on product classes for ventless clothes dryers, specifically the current DOE clothes dryer test procedure does not contain provisions for testing the ventless clothes dryers. DOE invites interested parties to submit inputs on potential clothes dryer test procedure amendments for such testing, as well as data and information on the energy efficiency performance of those units. MR. BROOKMAN: Okay. So we've already heard one report, that's good. Debra. MS. BRUNK: This is Debra Brunk. This isn't specifically on the ventless clothes dryers, but it is on the test procedure. Back last year we had the Notice of Proposed Rulemaking on the standby portion of the test procedure for these products, and I guess I'm just curious what DOE's plans are in terms of making -- are there any plans to, as we review the overall test procedure changes for RMC and all of those kinds ofExecutive Court Reporters (301) 565-0064 2 5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 things, to also look at the proposed changes for the standby power and active modes. That certainly is addressed a lot here in the technical support document, but there's a lot going on with the standby, and I guess we're just curious if there'll be another opportunity to at least maybe review where DOE plans to head in that direction? MS. REICH: Yes. The test procedure rulemaking is addressing both active mode and standby mode issues, and it is expected that there will be a supplementary NOPR that's published for that rulemaking. MR. BROOKMAN: Yes, please. MR. POPE: Ted Pope, I just wanted to seek clarification -- too much? MR. BROOKMAN: Lift it up. MR. POPE: -- clarification on the type of comments you’re seeking on a test method. Lane mentioned earlier, and we have similar concerns about not more accurately assessing the end-of-cycle energy use, and the relevance of automatic shut-off. Can you confirm whether DOE's open to comments on those aspects that don't relate to the ventless clothes dryer question? Is it wide open on active mode? MS. REICH: Yes, it is. There are going toExecutive Court Reporters (301) 565-0064 2 6

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 be a couple of slides shortly that are going to discuss active mode, and DOE welcome any inputs on all active mode and standby mode issues. MR. POPE: Great. Thank you. MR. BROOKMAN: Okay. Other comments? MS. REICH: In terms of the active mode, specifically, that is a topic that DOE is considering, the automatic cycle termination, because it's recognized right now there is a single fixed credit that is available for clothes dryers that incorporate some type of termination sensory, either moisture or temperature sensing. And it's recognized that some approaches may be better than others, so there -- it's -- provisions are being looked at that would actually measure the effectiveness of a type of system that provides automatic cycle termination so that it recognizes that it's avoiding overdrying the clothing. Other issues that are being addressed are related, primarily, to the fact that consumer usage and capabilities of the machines have changed since the last test procedure rulemaking. Specifically, people are using potentially different number of cycles per year. Clothes washers are resulting in clothes loads that are being put in the dryer with a different remaining moisture content that would impact theExecutive Court Reporters (301) 565-0064 2 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 measurement of the energy efficiency in the dryer, and that consumer load sizes are likely to be different than they were over the years. So each of these issues are being looked at. Again, DOE welcomes all of the -- all of these inputs. However, because of the concurrent rulemaking schedules, the active mode issues have not been addressed in the preliminary analysis. So you'll see we're focusing primarily on standby power for this rulemaking at this time. MR. BROOKMAN: Elizabeth. MS. JOYCE: Hi, Elizabeth Joyce. I just wanted to reconfirm that we think it's very important that DOE does consider adjustments to the credit for automatic cycle termination, given some of the new findings that NRDC drafted for it, and also considering that DOE's analysis shows that -- assumes that even baseline units have -- for dryers -- have some kind of automatic termination feature, that it's very important that DOE consider that. MR. BROOKMAN: Yes. Alex. MR. LEKOV: Alex Lekov. Just one thing, very briefly, to mention that the proposed change for the test procedure in terms of usage patterns and capabilities are not considered in the test procedureExecutive Court Reporters (301) 565-0064 2 8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 considerations, however, they're implemented in the preliminary analysis as related to life cycle calculations. MR. BURT: Just to clarify, that was on the assumptions for the consumer use side and the initial moisture content and -- MR. BROOKMAN: Yes, Alex. Lane, thank you. Alex, please. MR. LEKOV: The assumptions applied in the life cycle cost analysis are changing the number of clothes dryer cycles per year, changing the RMC, and the dryer test load size. MR. BROOKMAN: Thanks for that specificity. Okay. Other clarifications before we move on? MS. REICH: Standby and off mode energy use. DOE is required to consider that in the test procedure by EISA, and so therefore DOE has already initiated a rulemaking that has looked at standby and off mode energy use and has published a test procedure Notice of Proposed Rulemaking back in December 2008. Now what happened was that EISA requires DOE to consider the most recent version of the International Standard for measuring standby power, which is IEC standard 62301. And it was recognized at the time of the NOPR for the test procedure, or for DOE's test procedure, that IECExecutive Court Reporters (301) 565-0064 2 9

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 was in the process of updating this 62301 standard, and DOE decided that it would be most beneficial to continue the rulemaking to allow it to consider any potential revisions to IEC 62301, because these would represent the industry's best inputs into how to measure standby power. At the time that that decision was made, it was expected that the second version of IEC's 62301 was going to be issued in July 2009, but that rulemaking has been delayed, at least until the end of this year, so DOE determined that it would be appropriate to move on with the rulemaking and consider the language that has been incorporated into the most recent draft version -- it's identified as Committee Draft for Vote 2, of IEC 62301. So those proposed amendments for standby power and off mode power are being incorporated into a single rulemaking that now is also addressing active mode issues. MR. BROOKMAN: Lane. MR. BURT: Lane Burt. One note on the standby power. I'm glad that the Department is looking at this. It can be significant for clothes dryers. Ecos found that dryers' electronic controls have standby between 1.4 and 3.1 watts, but only needed toExecutive Court Reporters (301) 565-0064 3 0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 have standby power in the range of 0.03 to 0.05 watts, representing over 400 kilowatt hours over the lifetime of the product. MR. BROOKMAN: Thank you. Debra Brunk. MS. BRUNK: Debra Brunk. I just wanted to note AHAM's support for DOE evaluating the most recent draft of the IEC 62301, second edition, CDV-2. We do believe that's the most appropriate draft, and I think moving forward, it does put DOE in harmonization with the -- certainly where Canada will be, but also Europe and most of the rest of the world. MS. REICH: Moving to room air conditioners. Again, this is a fairly concentrated market. DOE identified fewer than ten key manufacturers who are selling room air conditioners into the U.S. And as of 2007, 70 percent was attributed to just four manufacturers. At this time, DOE has not identified any manufacturers -- domestic manufacturers of room air conditioners, because all production has been moved outside of the U.S., and most of that has gone to Asia, although some amount may still be occurring in Mexico. Also, significantly different since 2007, is that two out of the four manufacturers have exited the market altogether, and according to Appliance Magazine , there 25Executive Court Reporters (301) 565-0064 3 1

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 are about nine and a half million units being shipped annually. MR. BROOKMAN: Yes. Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock, yeah, I -- a couple quick questions. It says production moved out of the U.S. When did that occur, just out of curiosity? Was it like last five years or ten years ago? And the reason I'm asking is how will that impact the manufacturing impact analysis? MR. BROOKMAN: Yes. Detlef. Say your name, Detlef. MR. WESTPHALEN: Detlef Westphalen. So the question is, what is the history of, I guess, the flight of manufacturing of room air conditioners out of the U.S.? MR. ROSENSTOCK: And particularly when? MR. WESTPHALEN: When? Well, my understanding is that this was happening all through the 90s, and, you know, certainly not within the last five years, probably more than ten years ago most of the trend. MR. BROOKMAN: Okay. Thank you. Does anyone else wish to comment on that? No. Okay. Steve, are you okay? MR. ROSENSTOCK: Well, again, there's aExecutive Court Reporters (301) 565-0064 3 2

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 section in the analysis that talks about manufacturer impact analysis, and since all the manufacturers are overseas, you know, it's kind of an interesting point in terms of are we trying to determine the impact on -- I could have said competitors, but now all the manufacturers that are overseas, and there's no domestic manufacturing impact, so I'm just kind of curious, you know, what exactly -- I know there should be -- there probably should be analysis, but there is no domestic impact. MR. BROOKMAN: Let's raise it then. Okay. MS. REICH: I'm going to let Detlef answer that question also. MR. WESTPHALEN: No comment. MS. REICH: No? MR. BROOKMAN: Mike Rivest. MR. RIVEST: Steve, in doing the manufacturing impact, part of our job is to make the conclusions that you just made, so I think we identify the manufacturing, the location of manufacturing facilities, if that's available, and the number of employees in the industry, both domestically and internationally. And in terms of our modeling of the industry, it's become impossible to segregate companies that are U.S. owned with manufacturing in the U.S. andExecutive Court Reporters (301) 565-0064 3 3

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Mexico, overseas, so we don't try to separate out the financial modeling. But all the impacts on manufacturing capacity and employment are treated separately, and that information is presented that way. MR. ROSENSTOCK: And you're going to determine the impact on overseas employment? MR. RIVEST: We've determined the -- yeah, the overall impact on employment of the industry, and then as a subgroup of that, local employment. MR. BROOKMAN: That's down the road. Go ahead. MR. BOWLEY: Yeah, this is Brice Bowley, General Electric. I'd like to at least state that even though most of the manufacturing or all of the manufacturing is now in Asia, that the revenue from that does help fund the research and manufacturing for domestic production of other appliances. So I wouldn't say -- the actual manufacturing jobs are in Asia, but it does help fund other research and work done in the U.S. MR. ROSENSTOCK: Thank you very much for that. I appreciate that. But the DOE's analyses tend to segregate out just solely the impact on that industry, so that's why I was asking. They don't do any cross-over, spill-over effects when they do thatExecutive Court Reporters (301) 565-0064 3 4

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 analysis. MR. BOWLEY: I guess my point is there is some spill-over effect there, so. MR. ROSENSTOCK: Okay. Thanks. MR. BROOKMAN: Thank you. Okay. Let's move

on. MS. REICH: DOE is proposing to use the existing 16 product classes for room air conditioners, 12 of these came about originally from NAECA, four more were added in '97 in the last rulemaking, and again these are categorized into groups based on whether it has reverse cycle or louvers, whether they're casement type products, and also by capacity. On the test procedure side for room air conditioner, similarly to clothes dryers, EISA has a requirement that DOE shall examine standby and off mode energy use and incorporate it into the energy descriptor in the test procedure if it's technically feasible. So, along with the clothes dryers, they were -- clothes dryers and room air conditioners are bundled together. The test procedure purposes into a single rulemaking for which a Notice of Proposed Rulemaking was published back in December 2008 as well. Again, similar to clothes dryers, DOE continued the room air conditioner test procedureExecutive Court Reporters (301) 565-0064 3 5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 rulemaking so that these revisions to IEC 62301 could be considered, and now the room air conditioner test procedure amendments will be addressing the standby use and active mode issues. On the active mode side, the issues DOE is considering are how many hours of use consumers are using the room air conditioners, and also the fact that the referenced external standards it uses for its methodology, an AHAM test standard and also one from ASHRAE, are both quite, I shall say, aged, and so DOE is considering the most recent versions of those, referencing the most recent versions, the AHAM RAC 1- 2003, and ASHRAE 16-1983, which was approved for update in 2009. MR. BROOKMAN: Debra Brunk. MS. BRUNK: This is Debra Brunk. I just want to note that the AHAM RAC-1 is now actually AHAM RAC-1- 2008. It's an ANSI AHAM standard. MS. REICH: Okay. The preliminary analysis for room air conditioners consistent with EISA's requirement that, because of the expected final rule date for these energy conservation standards, DOE must consider standby mode and off mode energy use. This analysis has been conducted on the basis of an assumption of the 750 annual active mode hours, andExecutive Court Reporters (301) 565-0064 3 6

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 5115 standby mode hours. During -- when DOE published the framework document, there was some discussion about whether 750 hours is still a representative number for the active mode, and in fact, well, the discussion had been whether that number should be reduced. But as part of this -- these analyses, particularly the life cycle cost analysis, research there indicates that, in fact, those numbers may be on average, higher than 750. Given this kind of uncertainty, DOE is proposing for the purpose of today's analysis, to base the integrated metric on still using the 750 active mode hours. MR. BROOKMAN: Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock. On your second bullet point, the active mode hours can be higher than 750, is that for both residential and commercial types of applications, or just one of them? And then I have a second question. MS. REICH: Alex can correct me if I'm wrong, but I think that's for both. MR. BROOKMAN: Alex Lekov. MR. LEKOV: For residential applications which the Department has determined in the range of 90 percent of the entire market, it is about very close to 750. For commercial, it is significantly higher.Executive Court Reporters (301) 565-0064 3 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. ROSENSTOCK: Thank you. Second question I had for the standby hours of 5115 hours, that's about equal to seven months of standby, and is that like a weighted average of those consumers or businesses that actually unplug the room air conditioners, that somehow you have a power strip to turn them off, versus some that leave them plugged in all year? Because if it was -- if they're plugged in all year, it would be 8010, basically, versus -- and if they were unplugged, it would be closer to like 2000. MS. REICH: It does consider the portion -- MR. ROSENSTOCK: Kind of a weighted average? Thank you. MS. REICH: In order to integrate standby power into the metric for room air conditioners, right now the efficiency metric is an energy efficiency ratio, defined as the cooling capacity divided by the input power. In order to roll in standby power, the integrated metric is defined on an annualized basis, where now the cooling capacity is multiplied by the number of active mode hours. The power consumption in an active mode is also multiplied by 750 hours, and then it's added to the standby energy use in this average 5115 hours. MR. BROOKMAN: Brice.Executive Court Reporters (301) 565-0064 3 8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BOWLEY: Brice Bowley. Just have a question. Looking at the calculation, what happens if you have an appliance that has both standby and off power. I understand that's not common in the market now, but going forward with standby becoming a more important, you know, factor to control, we see appliances potentially having an optional button to turn power off to the unit to reduce the power consumption in the non-active modes. So I guess my question is, is how do we address room air or other appliances that now actually have the possibility for both off and standby? MS. REICH: In the test procedure rulemaking that was only looking at standby power, it was proposed that, as you say, that a unit would be either in the off or inactive mode. It was also proposed that if it had the capability for both, that those would be roughly half of the hours annually would be attributed to each mode. Not really having any information to come up with any sort of different weighting, but that -- that has been available for comment, so any data that we have and can receive would be certainly appreciated. MR. BOWLEY: I guess the only concern I would have of weighting it fifty-fifty is that doesn't reallyExecutive Court Reporters (301) 565-0064 3 9

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 give manufacturers as much incentive to add an additional feature to have an off mode. Whereas if it was, if we have one or two watts in standby, and we have an off mode that's 0.05, attributing it all to the off mode actually makes it more likely to have that option to consumers. MR. BROOKMAN: Thank you. MR. WITKOWSKI: Stephen Witkowski, DOE, and again, if you have any data or specific examples, DOE welcomes that information, and we will certainly look at it. MS. REICH: All right. For the technology assessment, again, DOE tries to gather as much information as possible about all possible technologies that can improve efficiency. The starting point is often the technical support document from previous rulemakings, but then DOE supplements that with more recent information from as many sources as possible, which can be a literature review. DOE observes technologies that have been implemented when it conducts its reverse engineering, and also, really solicits information from as many interested parties as it can. Comments that are submitted during rulemakings, as well as manufacturer interviews. The technologies are narrowed down intoExecutive Court Reporters (301) 565-0064 4 0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 specific design options that are considered later, using screening criteria that are laid out by DOE. These consist of, first of all, technological feasibility, and this would be whether it has been demonstrated in a prototype or has already been commercialized and is available on the market. Second, is that the technology must be practicable to manufacture, install, and service, on a scale that's necessary for the industry at the time that any upgraded standards become effective. The third criterion is whether there are any impacts on utility or product availability. And finally, of course, needs to consider health and safety issues. When DOE applies these screening criteria, first of all for residential clothes dryers, out of the 18 technologies that were identified, three were screened out. Microwave drying was eliminated on the basis of potential safety concerns that were never really solved back a number of years ago when certain prototypes were being developed, and it's never progressed to DOE's knowledge past that point. Water cooling for ventless units and indirect heating, in which some of the heat for drying is derived from a home's hydronic heating system were eliminated due toExecutive Court Reporters (301) 565-0064 4 1

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the complexity of installation and servicing issues that would violate the criteria on whether this could be installed and serviced on a scale that's necessary. So that left 15 design options for clothes dryers. For room air conditioners, all of the technologies that were identified were found to have met the criteria, and therefore were carried through to the engineering analysis. Even though the technologies mentioned before had met the screening criteria, in fact, there are also some of those technologies that could not be evaluated in the engineering analysis for a couple of reasons. For dryers, reverse tumbling was found to have negligible energy benefits. The -- as it turned out, the primary purpose of that is to prevent wrinkling in clothing, and so it provides some utility, but it does not save any energy. Then as we've discussed before, the improved cycle termination can't be measured right now according to the test procedure. So those were eliminated from consideration for clothes dryers. For room air conditioners, there were some technologies, a number of them that the components were already believed to have been optimized for the application, and therefore there were no improved designs that aren't already being used, specifically,Executive Court Reporters (301) 565-0064 4 2

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the improved fin design, two design improvements to the indoor blower and the outdoor fan efficiency. Other technologies, again, are implemented. These are, again, just standard practice: the hydrophilic film coating on the fins, and the spray condensate -- those, again, based on DOE's research and observations, they appear to be industry standard, so these are not opportunities to improve efficiency above what's already being done. And finally, due to the conditions of the room AC test procedure, which tests the units at fixed environmental conditions, certain technologies which are appropriate under changing conditions aren't captured -- the improvement, although it may be seen in the real world isn't captured by the test procedure, namely the variable speed compressors, the thermostatic electronic expansion valves and thermostatic cyclic controls. So those, too, were eliminated prior to the start of the engineering analysis. MR. BROOKMAN: Lane Burt. MR. BURT: Yes, I just wanted to reiterate that we feel very strongly that improved termination should be scrutinized to the highest level. Secondly, I think the Department's assumption in the test procedure of all synthetic mixed fabrics may beExecutive Court Reporters (301) 565-0064 4 3

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 underselling the efficiency value of a reverse tumble. Cotton does tend to ball up when rotated in one continuous direction, as do other natural fabrics. So perhaps that test procedure assumption is causing you to underweigh those potential benefits. MS. REICH: Okay. And certainly if you have any information on appropriate changes to the test cloth, that would be welcome. MR. BURT: We would suggest a mix of 100 percent cotton and 50:50 as an alternative to what the Department does right now, which is all 50:50. MS. REICH: Okay. Just listing here, I won't go through these in detail, but these are the clothes dryer design options that are carried through. If anybody has questions on specific technologies, let me know. And similarly, the room air conditioner design options. DOE would welcome any comments and data regarding any additional design options or variants of the design options that are already being considered that can provide efficiency improvements for both clothes dryers and room air conditioners, including those that may not yet be on the market. MR. BROOKMAN: So you can see a complete listing on those two slides, 26 and 27, comments on those? Okay.Executive Court Reporters (301) 565-0064 4 4

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. REICH: Okay. As everybody is probably familiar -- MR. BROOKMAN: We have one. Lane, please. MR. BURT: I do have one quick question. I didn't have a chance to really scan it, but the impact of the intake air from the dryer and its impact on the air conditioning system, is that considered? So if the option is to draw outdoor air versus indoor air, depending on what is more ideal for actually drying the clothes. MS. REICH: Right. In terms of -- is it in terms of infiltration of ambient air or -- MR. BURT: No, the actual intake -- air intake into the dryer itself. Ecos suggested that there may be potential for savings by allowing that design option, just a duct on the dryer that could be activated or not activated, depending on when it's more useful. MS. REICH: Okay. MR. BROOKMAN: Ted. MR. POPE: Ted Pope. Along the same lines, I noticed that the TSD mentioned that DOE didn't think there was energy penalty for increased infiltration, and I could understand that during the heating season, but I wasn't clear how DOE came to that conclusion forExecutive Court Reporters (301) 565-0064 4 5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 cooling season. MS. REICH: Right, you know, I think it's an issue of a lack of data showing the effects, and that the issue is, on balance is there a net effect, and so it's not known what percentage of the time that's going to have a net positive impact versus a negative impact. So in the absence of that kind of information, DOE believes that on average the net effect is probably about even. MR. BROOKMAN: Ted. MR. POPE: Sorry, Ted Pope. Can you explain what the benefit is? I don't see that. I just see half -- half the air being a penalty as opposed to -- MR. BROOKMAN: Let me ask first. You have data as she might desire? MR. WITKOWSKI: Yeah, Steve Witkowski, DOE. I'd like to emphasize that, you know, what we're here for is to receive input data and information. Again, our analyses are based on the best data we have. There are a lot of theoretical discussions that go on as to possible benefits, but until DOE has something solid to base it on, we really aren't here to get into discussions over what may or may not be benefit. And again, we strongly urge any input data or peer reviewed articles or whatever may help us change our analyses.Executive Court Reporters (301) 565-0064 4 6

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: Lane. MR. BURT: We will submit that table that Ecos developed that has dryer energy consumption, kilowatt hours per load for various weather and locations. MR. BROOKMAN: We look forward to that. Thank you. MS. REICH: Okay. So, again, probably everybody has seen this slide quite a bit. This is to show fundamentally what the purpose of the engineering analysis is, which is to define what the relationship is between incremental improvements in efficiency of the product and what the impact on the manufacturing cost will be. The curves that are generated from this are used in the downstream analysis that look at the life cycle cost and pay back period, national impacts on the manufacturer impact analysis. DOE takes multiple approaches in developing the information for the engineering analysis. The primary source of information is initially data that is provided by AHAM, that is an aggregate of various manufacturers’ submissions, and in this particular case, AHAM was able to submit data for clothes dryers, but did not receive sufficient information from room air conditioner manufacturers that would allow it toExecutive Court Reporters (301) 565-0064 4 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 aggregate it and potentially not reveal any proprietary information. So, then DOE also reviews the analysis that was done previously, in former rulemakings, and then conducts a reverse engineering analysis in which samples of products are tested and torn down, and a manufacturing cost model is developed. DOE also conducts manufacturer interviews with as many participants as are willing to provide information, and also in this particular case, for room air conditioners, to supplement the fact that we didn't have the AHAM data as a starting point, DOE interviewed a number of component vendors and developed an energy model. For clothes dryers, DOE conducted the analysis on all the product classes. Due to the large number of room air conditioner classes, DOE selected some representative room air conditioner classes that had a high number of shipments in them, and then extrapolated the results to the other product classes. Just run through this very quickly, how the cost models are developed. They consist of a per-unit cost, the full production cost, plus conversion costs that are experienced by the manufacturer. These material and component costs are developed during theExecutive Court Reporters (301) 565-0064 4 8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 reverse engineering process, and the cost model that is built from that information includes not only the manufacturing costs, material costs, but labor and overhead as well. Once these manufacturer costs are determined -- manufacturer costs are developed, these are supplemented with interviews that allow DOE to further refine the results. In terms of the reverse engineering, this is where specific units are pulled apart and evaluated, and the key part of this process is in the selection of the units to tear down. DOE attempts to find representative models that span the range in efficiency from a baseline efficiency to max-tech, and tries to evaluate if there are different types of platforms available also. They're taken apart, a bill of materials is created, and also the different types of fabrication processes and assembly processes are estimated based on what's observed and the net result from a very large, complex Excel spreadsheet is the manufacturing cost. Okay. For this rulemaking, DOE is considering integrated efficiency metrics, and is proposing new metrics that are based on the existing ones that now incorporate standby mode and off modeExecutive Court Reporters (301) 565-0064 4 9

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 energy use. And for clothes dryers, rather than the energy factor, it's now an integrated energy factor, and similarly for room air conditioners, it's an integrated energy efficiency ratio. I've already mentioned the IEER, the rationale for that calculation. For IEF for clothes dryers, normally that's a -- it's a per cycle measurement. It's test load pounds per kilowatt hour of energy use. Now, in this metric, in order to obtain a per cycle standby power input or contribution, the standby power is taken -- is measured over the annual number of standby hours, and that then is segmented into -- by the number of cycles per year, segmented into the contribution of standby hours for that given cycle. MR. BROOKMAN: Yes, Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock. Yeah, looking at this IEF for clothes dryers, with 8620 hours in standby, and the -- which leaves 140 hours for active, if the assumption is 416 hour annual dryer cycles, that's 20 minutes per dryer cycle. I don't know if that's really accurate or not, so you might want to review those numbers. Thank you. MR. BROOKMAN: Lane. MR. BURT: On the IEF, is the Department ofExecutive Court Reporters (301) 565-0064 5 0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Energy considering larger changes to the efficiency metric. We would suggest that pounds of water removed per unit energy would be much more usable to the consumer in evaluating whether this dryer is more efficient than that, and also would be more reflective of the actual conditions where the dryer is put in, where you might need to take out a lot of water from a heavily saturated cotton load, versus a little bit of water from the same size load with a fabric that dries much quicker. MR. BROOKMAN: Thank you. MS. REICH: For clothes dryers, an efficiency level approach was taken in which a baseline unit is categorized, and then based then on efficiencies of products that are currently on the market, efficiency levels up until the maximum, the highest possible efficiency are defined. Then during the reverse engineering, the tear-down analysis looks at units in the test sample that were selected at each one of those efficiency levels, and determines what the typical manufacturing costs will be for that unit, and thus at that efficiency level. And from these, the cost efficiency curves are generated. For the baseline vented clothes dryers, because existing -- or because federal standardsExecutive Court Reporters (301) 565-0064 5 1

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 currently exist for these products, at least for the active mode, DOE used those standards as the baseline efficiency level. For ventless units, since these are not currently covered products in the standards, DOE estimated what the baseline efficiency in active mode would be based upon its own testing. Actually, I'm sorry, that was based on -- yeah, information from an independent lab that conducted the tests, and it's important to note that these were tested under conditions of the DOE test procedure, the only difference being the removal of that exhaust simulator. For standby and off put energy use, DOE did do its own testing, and determined what an average energy use in those modes would be among the sample units, and then the baseline integrated energy factor was created from the combination of those values. This chart shows the values that are used. The first column are for the vented dryers, those are the existing standards. The last two values in that column were the test values. And in DOE's tests it determined that an average of two watts of standby power were observed. So the net effect of that is to reduce the level of the integrated energy factor a little bit lower than the existing energy factor because of that extra energy use that had not beenExecutive Court Reporters (301) 565-0064 5 2

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 previously accounted for. Then to determine, for active mode efficiency levels above the baseline, a number of different sources are used to find efficiency data. There are a number of product databases that are available, various manufacturer information catalogs and journals, provide the information, and in some cases, particularly at the max-tech, if these are prototype technologies that discuss what a percentage efficiency improvement is available, that will be factored in. In addition, feedback is obtained from comments that were received at the framework stage and from interviews conducted with the manufacturers. The only clothes dryer class for which this type of information was not available, were the vented electric compact 120 volt units, because such information on products is just not available. DOE is not aware of information on these units, and therefore, had to scale the efficiency levels above the baseline from that of -- by the same ratio as the baseline values for electric standard dryers. For standby mode, DOE was able to identify possible reductions in standby power associated with some specific technologies, and the features that were observed for clothes dryers were improvements in theExecutive Court Reporters (301) 565-0064 5 3

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 power supply and the implementation of an automatic power shut down. For the units in DOE's test sample, no off mode capability was found -- was observed, and therefore in this analysis, only standby power is being addressed. In order to move from active mode efficiency levels to an integrated efficiency level, DOE needed to figure out where to -- how to apply improvements in standby power, how they would relate to improvements in active mode energy efficiency. And the assumption DOE made would be that a baseline unit would remain at the baseline two watts even as active mode energy efficiency is improved for any efficiency level that did not strictly require electronic controls because, of course, in order to achieve standby power reduction, you'd have to have standby power with the electronic controls. So at the efficiency level at which a clothes dryer must have electronic controls, at that point DOE determined where it would be most cost effective in terms of how much would IEF be impacted by unit cost for either an active mode improvement or a standby mode improvement, and put that in at the point where it was most cost effective. So it's a little confusing, but maybe I can explain it better by seeing where these -- how theExecutive Court Reporters (301) 565-0064 5 4

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 efficiency levels -- integrated efficiency levels wound up. So again, at the baseline level, DOE assumed that there would be two watts of standby power, and this is because DOE observed that baseline products could either have electromechanical controls or electronic controls, so it assumed that if there was standby power, that that would be two watts. At the higher level -- at higher levels it required efficiency level three before a clothes dryer must have electronic controls to achieve that active mode efficiency, and therefore, starting at -- starting above level four, it was cost-effective now to start improving standby power. There were two levels that were defined, going from a two watt standby power at the baseline, to a one and a half watt, which was associated with the improvement in the power supply, and then an additional step to implement an automatic power shutdown resulted in efficiency level five. Perhaps not unexpectedly, these were added inprior to the heat pump technology, which is the maxtech level, because the improvements in energy efficiency were more cost effective than the heat pump technology. MR. BROOKMAN: Ted. MR. POPE: Sorry, just a question. IExecutive Court Reporters (301) 565-0064 5 5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 apologize for not understanding this, but what is causing a two watt standby for mechanically controlled units? MS. REICH: It's not for electromechanical, but DOE recognizes that there are a fair number of units that have electronic controls even at the baseline efficiency, so it assumed that for those units there would be a two watt standby level. MR. POPE: I'll think more about that. Thank you. MR. BROOKMAN: Steve. MR. ROSENSTOCK: Steve Rosenstock. Yeah, what percent of the marketplace has the, I'll say mechanical for lack of a better word, mechanical versus all electronic type of features where, you know, the more mechanical or older style has zero watt standby and the electronic have two watts. Is there -- do you have some figures because, again, I'm saying like if the market's like 50:50 then you might be overstating the national energy savings. MS. REICH: Right. I don't have market information. I believe in our test sample, I believe it was weighted more to having the electronic controls at the lower efficiency. MR. BROOKMAN: We'll give that time to dwellExecutive Court Reporters (301) 565-0064 5 6

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 and we can return to it if we need to. MS. REICH: Okay. These are the integrated efficiency levels for the ventless electric compact units. Again, for the baseline, it's assumed for all clothes dryers that the same standby power levels are appropriate, so that at the baseline all ventless units are presumed to have electronic controls, so the standby power levels would be layered in right above the baseline. There are two additional gap-fill levels. These are based on -- let's see, there was a waiver that was granted to Miele for a condensing unit that said that Miele agreed that its condensing unit, when tested to the DOE test procedure without the simulator, would achieve 82.5 percent of the efficiency of an electric standard unit, so that was the source of one gap-fill active mode level. The second one was derived from NIST data, and finally the heat pump active load efficiency level was derived from test data that indicated what percentage improvement could be achieved by implementing that. For all levels above where automatic power shutdown is first implemented, it's assumed that that would be maintained at higher efficiencies. Similarly, there is a -- we have theExecutive Court Reporters (301) 565-0064 5 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 information for combination washers and dryers. At this point it did not become cost effective to layer in standby power until after the second efficiency level,and again, we have the heat pump technology as the maxtech. Okay. Now I'm going to have a number of charts with a lot of cost information. I won't go through each number individually, but as a function of IEF, this presents the results for the integrated incremental manufacturing costs. And what you'll see that, of course, we start at a zero incremental cost at the baseline, and these are the results of DOE's cost analysis up to the max-tech. I just want to note again that this cost includes the material, labor and direct overhead that's used to manufacture the product. These are the results for two of the vented product classes, the electric standard and the electric compact 120 volt. This chart shows the results for the remaining two vented product classes, the electric compact 240, and vented gas. The third slide shows the cost information for the ventless product classes, the electric compact 240 volt, and the combination washer and dryer. Any comments? MR. BROOKMAN: Hang on. A lot of data. Tim.Executive Court Reporters (301) 565-0064 5 8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BALLO: Tim Ballo, Earthjustice. If we could just back up for a second to the issue of the electromechanically controlled dryers, and the inclusion of a two watt standby for those models when calculating the IEF. I think, and this is just thinking out loud without -- I haven't really thought about it fully, but the Department might run into a problem with the anti-backsliding provision of EPCA if it does not adopt a standard, or if it adopts a standard that actually, because of the two watt standby into the IEF metric, would essentially lower the efficiency requirements for electromechanically controlled dryers. If the existing energy factor’s at some level, I think it's -- let's say it's at 3.01 for electric standard dryers, if DOE adopts a integrated energy factor that has the effect of allowing some additional cushioning for electromechanically controlled dryers, because of that two watt standby that they don't actually use, I think it might run afoul of the anti-backsliding provision. MS. REICH: That's a very good point. It's certainly something that should be taken into consideration. MR. BROOKMAN: Tom Eckman. MR. ECKMAN: Tom Eckman, Northwest PowerExecutive Court Reporters (301) 565-0064 5 9

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Council. It seems to me we've got a bit of a conundrum here with respect to the two watt standby, because I think it's almost tautological. Since we're not dealing with early termination controls, which require, probably, electric circuit board or something with the control to determine moisture content, and automatically shutting down the unit, you're giving the two watt standby all the burden of just -- the cost burden on only changing standby losses, when, in fact, that electronic control could be used for early termination, or termination when the moisture content is adequate. So you're not seeing the benefits because the test procedure doesn't recognize that. So you're putting all the burden of the cost, basically, on the one watt or point five watt reduction for standby, and none of the benefit that you get by going from mechanical to electronic controls for moisture termination reasons. So I think that's -- you can't get there that way, because the test procedure doesn't allow it, so I think you've got to go back and have a different decision tree here, because it doesn't -- if you follow the test procedure that would take advantage of termination when moisture is low enough to be acceptable, then the benefits of reducing -- the cost of moving to electric -- electronic controls are sharedExecutive Court Reporters (301) 565-0064 6 0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 over more benefits. So they're in the wrong place in the stack. MS. REICH: I don't disagree with your comments at all, and, you know, certainly the hope is that as the test procedure rulemaking proceeds, that the issues such as being able to more effectively measure the automatic cycle termination can be incorporated and evaluated in the efficiency levels. MR. ECKMAN: Given the credit that's provided automatically now for termination with moisture controls instead of time, you automatically are excluding that as a benefit because everybody gets it, simply, and there's no cost shown for it. If you put that -- so I think it needs to be in at least the baseline cost analysis that if a product is receiving the 18 percent credit for that type of device, then the cost of that type of device needs to be there. Well, that's electronic controls. MS. REICH: Right. And for those baseline units that have electronic controls that already is incorporated. MR. ECKMAN: Well then the two watt standby isn't necessary for those baseline units. Because they can do better with electronic controls. MR. BROOKMAN: Mr. -- say your name, please.Executive Court Reporters (301) 565-0064 6 1

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BATTAGLIA: James Battaglia. Well, for the automatic termination, electronic controls are not necessarily required, so the baseline assumption was that automatic termination was present, so that twelve percent credit is in the baseline. MR. BROOKMAN: Who do you represent? MR. BATTAGLIA: Navigant Consulting. MR. BROOKMAN: Thank you. MR. BATTAGLIA: Does that answer your question? MR. ECKMAN: So that electronic -- you can terminate on the basis of moisture with mechanical control? MR. BATTAGLIA: Well, you can terminate it on the basis of a temperature sensor, which also gets you that automatic termination credit, yeah, in the exhaust air. For moisture sensing, you can use a separate electronic control, but I don't believe we saw that that was consuming any standby power. MR. ECKMAN: But a portion of the cost, I think, has to -- it's connected with the test procedure because you're not recognizing the differential control capabilities of mechanical versus electronic controls. MR. BROOKMAN: Tom, maybe we could discuss this at the break.Executive Court Reporters (301) 565-0064 6 2

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. ECKMAN: I think that's -- until those are linked together, we're going to miss this. MR. BROOKMAN: Steve. MR. WITKOWSKI: Yes, Steve Witkowski, DOE, again, we welcome comments, and there is a comment procedure and if you take issue with this, or if you want to bring this up in the other test procedure, it really helps if there's written documentation or written arguments submitted, particularly with data. MR. ECKMAN: Yeah, I'm just -- MR. WITKOWSKI: We encourage you to -- MR. ECKMAN: -- falling to the -- with the perception that the two watts are being granted to a baseline unit that already has electronic controls in it, and then the cost is being added later for electronic controls somewhere down the stack, just doesn't seem logical. The baseline unit already has electronic controls. MR. BROOKMAN: Okay. Okay. MS. REICH: Okay. Just for comparison purposes, what's presented here is, on the left hand side are the cost increments that DOE determined on the basis of its reverse engineering, and on the right hand side are the values that were submitted by AHAM, that represent the aggregated industry numbers.Executive Court Reporters (301) 565-0064 6 3

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I just want to point out because the max-tech level is based on prototype technology, AHAM was unable to provide information there. Also, for gas clothes dryers -- I'm sorry, the last set was for electric clothes dryers, these are for vented gas clothes dryers. DOE's numbers again on the left, AHAM's numbers on the right. For room air conditioners, a different approach was taken. Rather than an efficiency level approach, a design option approach was used. MR. WESTPHALEN: Now, the agenda calls for a break right now, but if we want to keep moving along. MR. BROOKMAN: How long is your segment? MR. WESTPHALEN: Twenty slides, roughly. MR. WITKOWSKI: I would suggest a break. MR. BROOKMAN: Let's take a break. Okay. It's now 10:40 by my watch. We'll break for 15 minutes, which means we'll resume at 10:55 in this room. While you're in the Forrestal Building you must wear a badge visible, and if not, someone will escort you. (Whereupon, a 16 minute recess off the record was taken.) MR. BROOKMAN: Okay. Let's proceed. We're going to hear from Detlef.Executive Court Reporters (301) 565-0064 6 4

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ENGINEERING ANALYSIS FOR ROOM AIR CONDITIONERS MR. WESTPHALEN: Okay. I'll give everybody just one half a minute. Okay. I'm Detlef Westphalen. I'm going to be presenting the section of the presentation on engineering analysis for room air conditioners. Engineering analysis for room air conditioners was very similar to what is normally done, and very similar to what Judy described for the clothes dryers. Just top level, two key differences. In the data gathering effort that AHAM conducted, insufficient numbers of manufacturers provided data for AHAM to aggregate and provide that information to DOE. So that was a source of information typically provided that we did not have. And also, the transition in refrigerants from HCFC-22 to R-410A, I guess, prevented us from analyzing the products that will be regulated when the rule takes effect. And so some of the things that we did, were trying to deal with those differences. Top level results, I think there are some -- one of the comments addresses the question of size impacts on the room air conditioners and I think that's one of the key issues that, you know, from our analysis it looks like cost effective efficiency improvements can be made, however, to some extent, in some cases aExecutive Court Reporters (301) 565-0064 6 5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 greater extent than others, they're dependent on the ability to increase the size of the product. The steps in the development, as mentioned, are very similar. Select representative products -- this started out by looking at what are the representative product classes, then selecting representative products of those classes that span a range of efficiency levels. Then developing definitions for the baseline and again, as you saw for clothes dryers, this was a little bit more complicated than it has been in the past, due to the standby and the integrated efficiency metrics that we need to consider. Also involved in developing the baseline, we did energy modeling in order to define what is a baseline unit using R-410A refrigerant. Then we also looked at the impact of different design options for increasing efficiency, and also for increasing costs. Tear down analysis was done for the reverse engineering aspect, and also to develop our manufacturing cost models, which we used to develop cost estimates for the baseline models and also the models with design changes. And ultimately, cost efficiency curves were generated as is done with these rulemakings and engineering analyses.Executive Court Reporters (301) 565-0064 6 6

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Representative product classes. At the framework meeting, DOE proposed looking at three product classes, one, three, and five. These are the low capacity, mid-capacity, and high capacity for the window units, without reverse cycle. Window units are the ones with the louvered sides, and stakeholders suggested that DOE also look at product class eight, which is a product class covering the units that are built for through-the-wall installation. They don't have the louvered sides--because they're in the wall, air cannot be drawn into those units from the sides, it has to be drawn in from the back and then discharged to the back, so it's a very different product design. DOE conducted the analysis in detail on these four product classes, and then extended the analysis numerically to the remaining twelve. This chart shows some of the information associated with prevalence of the different product classes. This is based on three databases from CEC, AHAM, and Energy Star. Ideally, we would have received data on shipments by product class, but as I recall, that information was not available, so we used this as a proxy to get an understanding of the importance of the different product classes. And as indicated, we selected one, three, five, and eight, which represent a large number of products that wereExecutive Court Reporters (301) 565-0064 6 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 available in these databases. Those were selected for the analysis, the detailed analysis. I mentioned the refrigerant change, R-410A. DOE conducted the analysis using energy modeling andconstructed baseline designs with the models using R410A as the refrigerant. Now this work was based on tear-downs of units with HCFC-22 refrigerant. Energy modeling of the R-22 units and then with input we had received from vendors and discussions with manufacturers, modifications of those designs through the modeling to represent baseline R-410A models. And subsequently those models were further modified in order to look at different efficiency levels. This chart just shows an example of some of the information that was input to the model, essentially, performance data for -- MR. ROSENSTOCK: Steve Rosenstock, yeah, looking at this graph, it looks like there's a general lowering of efficiency using the R-410A compressors, kind of -- looks almost across the board. Is that what your testing found? It looks like it's in the five to ten percent range. Is that what the tests seem to indicate? MR. WESTPHALEN: This is data obtained from compressor vendors.Executive Court Reporters (301) 565-0064 6 8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. ROSENSTOCK: Okay. MR. WESTPHALEN: We did not do any calorimeter testing with compressors. And at the time we were doing this work, there really was only one product on the market that even had 410A refrigerant, that we were aware of. This chart also shows -- and maybe I'm getting too much into detail in response to one of the comments from the framework phase, suggesting that we look at scroll compressors, and you can see the efficiency improvement shown by switching to scroll isn't really borne out by the data. MR. GOUW: This is Sean Gouw from Southern California Edison. Just curious, what were the operating conditions for the test? MR. WESTPHALEN: For these data? MR. GOUW: Yes, for that data. MR. WESTPHALEN: Those probably would have been the 45 degree evaporating condition, 130 condensing condition, standard 20 degree superheat, leaving the evaporator, 15 degrees subcooling leaving the condenser. MR. GOUW: Okay. Just wanted to point out, there is an interesting study done by NIST, where they compared R-22 and R-410A in a split system. They usedExecutive Court Reporters (301) 565-0064 6 9

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the same split system, and they found that condensing temperatures above 95 degrees is where you saw the drop in efficiency due to R-410A having the lower critical temperature. Just wanted to note that. MR. WESTPHALEN: Okay. In response to that, I guess what you're suggesting is that this difference in efficiency may not be borne out at lower condensing temperatures, and in cases where use of a large condenser would have reduced condensing temperature, that effect would have been borne out in our energy analysis, because we used actual compressor performance data. MR. GOUW: Okay. MR. BROOKMAN: Thank you. MR. WESTPHALEN: As with clothes dryers, we also were looking at standby power levels and incorporating them into the analysis at both baseline efficiency levels and higher efficiency levels. DOE measured standby power consumption of representative room air conditioners. The majority of the room air conditioners that were obtained for tear-down were electronic controlled. There were a few that were not, but the baseline assumption, the representative baseline product is assumed to have electronic control. And two different standby power levels wereExecutive Court Reporters (301) 565-0064 7 0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 identified, based on different technologies used for the power supply for those units. So the baseline efficiency levels were developed, including active mode efficiency, and the standby power level. And one thing I should mention here, for two of these product classes here, we conducted analysis on two different capacities of product, product class three and eight. We conducted analysis on both 8,000 and 12,000 BTU an hour units. The baseline active mode efficiency level was selected based on the current standard, that's the EER, and then the baseline standby power energy use was selected as 1.4 watts, consistent with our measurements. And so the integrated energy efficiency ratios were calculated based on these numbers and the IEER equation that Judy showed previously. Incremental efficiency levels were selected based on a review of available products. I mentioned the database, triple database, CEC, AHAM, and Energy Star. DOE combined all of this data and spent considerable amount of time looking at retailer and manufacturer websites to deselect products that obviously are no longer for sale, and so the list was then narrowed to a database that we felt was a credible list of actually on sale products for the time that weExecutive Court Reporters (301) 565-0064 7 1

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 were doing this assessment. And so then DOE selected efficiency levels above the baseline, rounded to the nearest tenth, because we don't want to carry a standard to the hundredths, up to what was considered the suitable maximum levels. MR. BROOKMAN: Elizabeth. MS. JOYCE: Elizabeth Joyce, just a question. If I read the TSD right, you did determine the maximum levels, again based on the Energy Star products, or the products that were available in the Energy Star database as of 2008? MR. WESTPHALEN: That's correct. The maximum efficiency levels reported. MS. JOYCE: Okay. Is it possible to consider more recent products that could have entered into the database since that time? Will DOE be able to consider that? MR. WESTPHALEN: Yes, we have done some looking at available products recently, and for instance, the 12 at efficiency level five really hasn't been exceeded as far as we're aware. MS. JOYCE: Okay. MR. BROOKMAN: Brice. MR. BOWLEY: Brice Bowley. Are any of theExecutive Court Reporters (301) 565-0064 7 2

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 models that are up there, like the max efficiency, are any of them 410A products? I know -- because there are a few products that were 410A at the time, so I wondered if any of those include the 410A. MR. WESTPHALEN: Well, that's a good question. You look at, for instance, product class one, less than 6000 BTUs an hour. We stretched this product class to 12 because of the 6000 BTU an hour product, it's actually product class two, but there was no -- that was the 410A product. There was no reason to believe that -- MR. BOWLEY: So I know what product that is, I guess. MR. WESTPHALEN: Correct. Correct. MR. BOWLEY: My only concern was -- MR. WESTPHALEN: Well, if you do, yeah. MR. BOWLEY: So what? MR. WESTPHALEN: If you do know what product that is, yes. MR. BOWLEY: Well, I suspect I know what product it is. The only question, I guess the concern is, there was an article in Consumer Reports about the deficiencies of some of the products meeting the high efficiency, specifically one labeled at 12 that was a 410A product. 22 23 24 25Executive Court Reporters (301) 565-0064 7 3

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. WESTPHALEN: Okay. We'll have to review that. MR. BOWLEY: I can forward the article. MR. BROOKMAN: Thank you. MR. WESTPHALEN: We'd appreciate that. MR. BROOKMAN: The Department would appreciate that. MR. WESTPHALEN: So I think we've covered this slide. There's an additional slide showing the incremental efficiency levels for the other two product classes, and those efficiency levels were structured and developed in the same fashion as described for the previous two. As mentioned, DOE conducted energy modelingin order to determine efficiency levels for these R410A products. The models were initially based on products that were received and reverse engineered, and then those models were matched with their reportedperformance and then adjusted, first, to develop an R410A baseline, and then subsequently modified to increase the efficiency levels. The model that was used had been used in the previous room air conditioner rulemaking. As part of this rulemaking it was updated to include consideration of additional refrigerants, namely R-410A, and also itExecutive Court Reporters (301) 565-0064 7 4

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 was updated in the area of heat exchanger algorithms in order to allow assessment of microchannel heat exchangers and also incorporate more modern algorithms and correlations that have been developed for some of the other heat exchangers. It was also updated for Microsoft Windows operating system. The model -- the energy model itself does not address air flow and energy use for fans, so off line analyses were done so that if we said, okay, well let's increase the air flow 20 percent, that we also considered the blower power that would be required in order to do that. So here's a request for comment and it was initiated by the realization that at the framework phase DOE proposed the use of an efficiency level approach, however, because of the transition in refrigerant, there were no R-410A models to look at for reverse engineering and analyzing using the efficiency level approach, so the methodology was modified, so DOE requests comments initially on that. MR. BROOKMAN: You can see the comment box. DOE adopted an approach relying more on design option analysis using both energy modeling and manufacturing cost modeling to determine the impacts of efficiency improvements for the products. Any comments on that?Executive Court Reporters (301) 565-0064 7 5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 No? MR. WESTPHALEN: As mentioned at the start of my discussion, one of the issues that we came across was clearly if you let the size of the box grow, there's more room for larger heat exchangers, and it's much more cost effective to increase performance than if you restrict the growth of the box. And as part of the analysis, DOE considered growth in two steps for all of these product classes for which growth is possible, that is the window units. This step was not taken for through-the-wall units which are basically sold at a fixed size, and that has to do a lot with the fact that it's a heavily geared towards a replacement market, where you have existing sleeves, and if you made it larger, you couldn't sell that product any

more. But for the window air conditioners, DOE considered two steps in size growth for each of these product classes, and the details are shown a little bit better in the TSD. However, there's clearly a question, and this was brought up in framework meeting and comments, that there's a consumer utility impact of larger box size. And so at this point, during the preliminary analysis, DOE did not have good -- a good understanding of what is an acceptable growth in size.Executive Court Reporters (301) 565-0064 7 6

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For instance, what are the window sizes, what's the distribution of window sizes in the markets where these products are sold? How big can the product class five get? What is the dependence on sales rates, on, for instance, impulse buy on a hot July afternoon, of how big the unit is or how heavy it is? And absent that, DOE conducted the analyses, but there's still the question out there of what kind of size limitations might there be that would strictly set the consumer utility at a certain level. So DOE has a request for comment here. A methodology for determining appropriate maximum sizes has not been established, and DOE seeks input on this topic, including, if possible, consumer surveys or similar data. And I would expect this is something that perhaps there is not been time to look at what's available. MR. BROOKMAN: So written comments would be especially helpful. Ted. MR. POPE: Probably a dumb question, on the through-the-wall, is the further projection now possible, or is that already presumed to be constrained? MR. WESTPHALEN: That would be presumed to be constrained. You know, there are all different sizesExecutive Court Reporters (301) 565-0064 7 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of walls, but the sleeves are standard size. MR. POPE: But going outside, so, you know, projecting out to the outdoor space more wouldn't affect the sleeve size, or -- MR. WESTPHALEN: Well, the sleeves are -- and maybe some of the manufacturer representatives could speak to this more directly as to details. MR. BROOKMAN: Brice. MR. BOWLEY: Yeah, Brice Bowley. As far as extending the depth, I mean basically the building set up at a certain dimension width and height, so you're correct, you could extend it deeper, except the existing wall sleeves would not allow for deeper installation, so the through-the-wall units usually don't come with a wall sleeve, they're slid into an existing sleeve if it's a replacement. So the existing sleeves would have to be torn out and replaced with additional ones. MR. POPE: Thank you. MR. BROOKMAN: Thank you. No additional comments at this time? Okay. MR. WESTPHALEN: So the next few slides show the results of the analyses and in tabular form for the four product classes directly analyzed. One thing you see here is that we have reported incrementalExecutive Court Reporters (301) 565-0064 7 8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 manufacturing production costs in one column, and shipping costs in another column separately. And the shipping costs are reflective of the size of the product, and the reason that we've reported these separately is that the shipping cost is generally paid by the retailer in this market, and so in order to properly account for the price at retail, that needs to be considered in the equation as well. The manufacturer markup would apply to the incremental MPC, and then a shipping cost would be added, and depending on how the retailer markup works, the shipping costs would have to be considered in that equation. MR. BROOKMAN: Yes, Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock, yeah. For the shipping costs, are those basically, I'll say, based on international rates, since the product is being shipped from overseas? MR. WESTPHALEN: That's correct. A container from Asia. MR. ROSENSTOCK: Okay. Thank you. MR. WESTPHALEN: And I believe the assumption is getting to a U.S. port and that the distribution within the U.S. would be part of the retailer markup. Also you notice that the baseline incrementalExecutive Court Reporters (301) 565-0064 7 9

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 manufacturing production cost is non-zero, and this reflects the cost conversion to R-410A refrigerant, which clearly is not part of the assessment of TSLs directly, but factors into the manufacturer impact analysis. These are the results for product class three. As mentioned, DOE conducted analysis for 8000 and 12000 BTU an hour products for this product class, and then averaged those two values to obtain these numbers. Product class five, these are the window units, large size with no reverse cycle. And then product class eight. Again, these results are consolidated for two different capacities. And again, you can see the shipping costs here, while they reported they don't change because the size doesn't change. MR. BROOKMAN: Brice. MR. BOWLEY: Brice Bowley. A question on the shipping cost, that's not intended to be incremental shipping cost, then, is that correct? That's the total product shipping cost? MR. WESTPHALEN: Right, as you can see for the baseline it's non-zero. MR. BOWLEY: Okay. MR. WESTPHALEN: And if you have comments,Executive Court Reporters (301) 565-0064 8 0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 obviously, on those costs, we'll welcome that and we'll consider it. Just a few words on extrapolation of the results to other product classes. I don't want to get into this in too much depth. It's discussed in the TSD. For some of these product classes, we can interpolate between product classes with larger and smaller capacities. For many of them, extrapolation was required for a different product class, but this methodology discussed in the TSD was used for the rest of the louvered product classes, the through-the-wall product classes six, seven, nine, and ten; the reverse cycle product classes, which in many ways are similar to the window units and the through-the-wall units, except for inclusion of reverse cycle for heat pump heating; and then the casement and casement slider product classes, 15 and 16. And again, we have a request for comment on the extrapolation and I expect that maybe this is something where there would be more information available for the written comments, but if anybody has any comments at this point on that approach? MR. BROOKMAN: Tom Eckman. MR. ECKMAN: On the reversing units, do you take into account the impact on the heating sideExecutive Court Reporters (301) 565-0064 8 1

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 efficiency of an increase in heat exchanger area and things like that when you look at the performance, or just -- is that just looked at cooling only? MR. WESTPHALEN: It's looked at cooling only at this point. The standard applies to the cooling only side of the operation, and -- MR. ECKMAN: It has an impact, clearly, on the energy consumption on the heating side as well, if it affects that performance. MR. WESTPHALEN: Yeah, I expect, and Alex can probably answer whether it was even considered in the LCC. I expect not. MR. ECKMAN: Was it considered in the LCC, that the heating -- the impact on heating of any changes in the performance on the cooling side? MR. LEKOV: Alex Lekov -- MR. BROOKMAN: Alex, find a microphone. MR. LEKOV: The effect of heating on the cooling side -- MR. BROOKMAN: Find a microphone, Alex. MR. LEKOV: In terms of room air conditioners, not at this time, the LCC analyses do not include this. MR. ECKMAN: Okay. MR. BROOKMAN: Thank you. AdditionalExecutive Court Reporters (301) 565-0064 8 2

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 comments? You see the request for comment in the box there. We're going to keep moving on. MR. WESTPHALEN: Okay. The next section addresses manufacturer selling prices, and manufacturer markup. Manufacturer selling prices account for the non-production costs and profit. DOE determined the appropriate markup factors for review of U.S. Securities and Exchange Commission 10K reports, and the production costs are multiplied by this factor to determine the manufacturer's selling prices. And the manufacturer selling prices are then an input to the LCC analysis, along with the shipping costs that we talked about before. This manufacturer markup is 1.26. This number might be familiar to some of you. And at this point, I think we open the floor to comments and recommendations on any other aspects of market and technology assessment, screening analysis, and engineering analysis. MR. BROOKMAN: Any additional comments? Since we took a break that lasted until 11, I think we'll go at least until noon, maybe 12:15, before we break for lunch. Alex Lekov. ENERGY USE ANALYSIS, MARKUPS FOR EQUIPMENT PRICE DETERMINATION AND LIFE-CYCLE COST ANALYSISExecutive Court Reporters (301) 565-0064 8 3

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. LEKOV: I'll continue with the next group of analyses related to the determination of the markups to determine the product prices, energy use characterization, and life cycle cost analysis. Markup for product price determination, the purpose of this analysis is to characterize the channels for how products are distributed from the manufacturer to the consumer, and so as to determine the prices paid by the consumer based on manufacturer selling price, both for baseline and higher efficiency products. The purpose of energy use characterization is to develop the energy consumption savings estimate for selected product efficiency levels. And the overall life cycle costs and payback analysis develop the consumer life cycle cost savings and payback periods for the higher efficiency products considered in the rule. This is the overall flow chart of the LCC analysis. The upper part of the chart shows the parameters associated with the development of total installed costs. The bottom part represents the operating costs development, and on the right side are the final results. The yellow boxes are the inputs, the green boxes identify intermediate results, and theExecutive Court Reporters (301) 565-0064 8 4

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 blue boxes are the final outcome of the LCC analysis. During this presentation I'll be talking almost for every single box you see here and associated assumptions and results. Briefly, the overall method. Life cycle costs equals total installed costs, plus the sum of operating costs, discounted to a particular base here. The economic evaluation is performed from the consumer perspective. Analysis models the uncertainty and variability of the inputs and apply Monte Carlo simulation approach and many of the parameters are presented as probability distribution. The platform for the analysis is in Microsoft Excel spreadsheet, combined with Crystal Ball which allows to use input in the format of probability distributions. The flow chart at the bottom summarizes the above. As mentioned at the beginning, we'll be talking markups, energy characterization, and LCC. So the next several slides, the focus will be on the markups. So the purpose is to the consumer -- to determine the consumer product prices based on the manufacturer costs, as well as to characterize product distribution channels and market segments. The inputs are coming from engineeringExecutive Court Reporters (301) 565-0064 8 5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 analysis for the manufacturer markup and the retailer markups are determined by investigating data from U.S. Census Bureau financial data for household appliance. The output comes in the shape of markups which are defined as baseline and incremental. Before describing the details about these two types of markups, I will mention that this type of approach is not new to the Department. It has been applied to many rulemakings over the last eight, nine, years. With that overall the markup relates the consumer price to the cost of goods sold, which is essentially the cost that the distributor pays for the equipment and for handling the equipment. The baseline markup itself represents the price to cost prior to a change in efficiency. So it could include the consumer price that covers all of retailer or distributer expenses, plus profit, and in addition to this, includes the direct labor costs as listed here. Once you have a change in the efficiency of the product, there is an incremental markup, and this incremental markup relates to the incremental change in the cost of goods sold. The premise of the whole concept is that some costs remain constant, would suggest and some are changing. So the incremental markups cover only expenses that vary with the consumerExecutive Court Reporters (301) 565-0064 8 6

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 -- with the cost of goods sold, in this case, expenses that increase due to an increased product efficiency. However, this concept and based on the Census data, gives us the fact that the direct labor costs are not accounting -- are not much accounted in the incremental markup. The second component of the markup analysis is to define the distribution channels. At this time, this is pretty straightforward. Manufacturer has a consumer distribution channel, and the overall average markups by product costs, the outcome is shown here. MR. BROOKMAN: Yes, Debra. MS. BRUNK: Debra Brunk from AHAM. I just have a question, and it was not clear to me from reviewing the preliminary TSD. Was a separate analysis done on clothes dryers and room air conditioners, or were they analyzed together? MR. LEKOV: Separate analysis. MS. BRUNK: It was a separate analysis? MR. LEKOV: Yes. MS. BRUNK: Okay. Thank you. MR. LEKOV: So, once we have the markups, we are getting it to the derivation of the consumer price, which essentially has the inputs that are coming from the engineering analysis, the baseline manufacturer'sExecutive Court Reporters (301) 565-0064 8 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 selling price, and the markups as just explained. In addition, we're accounting for the sales tax. So this is how the consumer price is derived. Total installed cost of the equipment. Installation cost is an important component of it. So, basically it represents the labor and materials necessary to install the appliance. For this product here, the example on this screen, relates to the room air conditioner, DOE found no evidence that the installation costs would be impacted with the increased efficiency levels. The source for the data is RS Means. We used the 2008 version here. What you see is, on this screen is a typical approach how this type of costs are calculated within the RS Means method. So for the three room air conditioner product classes, you have the labor hours, and they include their cost and overhead and profit, pretty standard, and those are here, the outcome in terms of average price. Similarly, for clothes dryers method, everything is the same. Here, the table shows how the Department developed the installation costs. What's important is that for some of the product cost estimates were made basically separately for retrofit, while in the case of clothes dryers, new owner, newExecutive Court Reporters (301) 565-0064 8 8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 construction. So there are slight differences in terms of labor hours. In addition to this, new construction item includes material costs for the piping piece. MR. BROOKMAN: Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock, yeah. In terms of -- for the clothes dryers, in terms of the max-tech, if you're using, say, an electric heat pump clothes dryer, I am familiar with the heat pump water heaters on the market, they typically need clearance space for the heat pump aspect to operate properly, so it does surprise me that even in that case there doesn't -- I would guess there would be an increase in labor hours because there might be some retrofits needed, you know, if the clothes washer is located in a closet or a tight space. For proper operation of the - - I'll say the heat pump component, I would guess that there would be a significant increase in labor possible in those situations, and significant increase in labor hours. MR. LEKOV: The heat pump clothes dryers are not a common product for the United States markets. Basically, there is not much experience with it. The cost mentioned basically will depend on the location of the unit and particularly in the interior air conditioned space, the aspect of closeness and so on.Executive Court Reporters (301) 565-0064 8 9

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 At this time, the Department essentially based on the fact that this product probably does not exist in the United States with the exception of the prototypes. There is no experience. The Department would appreciate any data and we'll consider including those expenses in the NOPR phase of the rule. MR. ROSENSTOCK: Well okay, Steve Rosenstock, then again, the Department might want to look at some of the experiences with heat pump water heaters, because there might be very similar issues in terms of space issues and installation issues. Thank you. MR. BROOKMAN: Thank you. Yes, Jennifer. MS. AMANN: Hi, Jennifer Amann. I was just going to say I think you may be better off getting data from Europe where you have some countries exceeding ten percent saturation of heat pump clothes dryers at this time, so it might be better to look at the experience with actual heat pump dryer installations. MR. BROOKMAN: Thank you. MR. LEKOV: Thank you. The Department will consider this. MR. BROOKMAN: Debra Brunk. MS. BRUNK: Debra Brunk. I think just along the same lines here, I'm not that familiar with the RS Means. Does that provide labor information, just inExecutive Court Reporters (301) 565-0064 9 0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 terms of hours? Is there some sort of labor versus weight of product, or labor versus size, or that kind of information available? Again, we're talking about potentially looking at increased sizes or weights for room air conditioners, and also as you move to a heat pump dryer, there's a significant weight difference there. So I'm just -- if you could help me understand a little bit in terms of what RS Means provides in terms of that kind of information on labor. MR. LEKOV: This is exactly correct. Both the labor hours, as well as the cost is provided in some details. I will start first the costs, and this is what's included in the analysis. Essentially, we are accounting for variable labor rates, basically RS Means are a way of calculating rates for a range of states, so you could see a variability, let's say, from 60 percent to 150 percent, depending on where the labor force is located. In terms of the size of the product, yes, RS Means provides differences in the labor hours associated with the size of the equipment, however, for this product, I don't believe we had knowledge of different labor hours for different capacity units. However, if there is any data or reference to this, the Department will consider it.Executive Court Reporters (301) 565-0064 9 1

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 With that, the next slides we will focus on the energy use characterization, essentially I'm going into the determination of the operating costs associated with these equipment pieces. So, in the case of room air conditioners, the Department looked both in the installations in the residential market segment and in commercial. For the residential buildings, the basic tool is the availability of the EIA's RECS database. The Department applied a set of assumptions to determine what part of RECS is applicable for this product, and once this is determined, it looked at the cooling area associated to the room ACs for each household, in conjunction with the Energy Star sizing guidelines, to determine the capacity of the unit in each household. So that's shown on this slide, and there are details in Chapter 7 and Appendix 7A. In the case of the installation in commercial buildings, the Department started with the CBECS, which is the Commercial Buildings Energy Consumption Survey. And in this particular case, again, applied a set of assumptions, looked at the cooling -- or the cooled area for each specific building, and applied criteria to derive the ... so basically for, depending on the square footage, the Department used each sample toExecutive Court Reporters (301) 565-0064 9 2

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 derive the energy use for the three capacities, three capacity ranges. MR. ROSENSTOCK: Quick question? Steve Rosenstock, yeah, I -- in CBECS they actually ask for - - if the buildings have room air conditioners, they actually ask for the size of the offices that they're serving? MR. LEKOV: Exactly. CBECS provide information, whether there are room air conditioners, as well as provide the square footage of the building cooled by the room air conditioners. MR. BROOKMAN: Debra Brunk. MS. BRUNK: Debra Brunk. It asks for square footage of the building or square footage of the room? MR. LEKOV: Square footage of the cooled

area. MS. BRUNK: Okay. MR. LEKOV: For household -- for the clothes dryer, the Department also used the RECS example, applied criteria whether there is a clothes dryer in the household, and after that, separated it into two samples, depending on the fuel type. In addition, for electric clothes dryers, the Department applied different criteria for the compact unit, so it applied those to manufactured homes, multifamily homes, and forExecutive Court Reporters (301) 565-0064 9 3

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 single family with less than 1000 square foot. MR. BROOKMAN: Steve. MR. ROSENSTOCK: Steve Rosenstock. Actually going back to the room air conditioner, sorry. In your research what percentage of room air conditioners are being used in commercial buildings? Were you able to get any sort of rough estimate in terms of the percentage saturation? MR. LEKOV: In the NIA analysis, the Department arrived at the 12 percent value. MR. ROSENSTOCK: So 12 percent room air conditioners are being used in commercial buildings? Thank you. MS. BRUNK: Doug? MR. BROOKMAN: Yes, Debra. MS. BRUNK: Debra Brunk, I just have a question on the clothes dryer. Let me understand this. For the electric vented clothes dryer, are you saying that if in RECS they came up as a manufactured home, a multifamily home, or a single family home less than 1000 square feet, it was assumed to have an electric unit clothes dryer? Is that how I would read this? MR. LEKOV: That's the second step. First it's necessary to determine -- basically RECS report whether there is a clothes dryer or not, so that is theExecutive Court Reporters (301) 565-0064 9 4

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 basic thing. Once it is determined there is a clothes dryer, the next set of considerations is applied, and essentially, you first segregate the fuel types and for electric the purpose of what I'm saying is basically for the equipment, that if the area of the compact units, those are -- the example is -- those are applied to this type of houses only, because those are small units that are more appropriate -- the assumption that those are more appropriate for these housing types. MS. BRUNK: Okay. Thank you. MR. LEKOV: The next important and the base component of the analysis is to make an assignment of the products in the base case, in terms of efficiency. So this particular slide is focused on the room air conditioners, and the importance of this is to make sure that the considerations, such as not all consumers purchase products at the current minimum standard, as well as the fact that the consumers purchase products at efficiency greater than or equal to the prospective standard level. So not to have this double counting, that's the kind of common prospect. So, the DOE used the AHAM shipment databases by efficiency level as available, as well as the Energy Star fractions by state to identify the fraction of equipment in each product class that are above theExecutive Court Reporters (301) 565-0064 9 5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 baseline level. And here are the numbers for the room air conditioners, the next one are the numbers for clothes dryers. MR. BROOKMAN: Yes, Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock, yeah, this leads to the following slide about issues, base case efficiency distributions. In it you write here that the recent data -- the data on recent trends of products are inconclusive. But I'm just -- MR. LEKOV: Right. Yes. MR. ROSENSTOCK: But I'm just kind of curious. Are you talking about the recent years, 2008, 2009, recession years? And what about the trends through, I'll say, 2007, what were the -- for example, you know, some of the products -- I'll say Energy Star levels were 40 to 60 percent looking at the Energy Star level on room air conditioners from, say, 2000 to 2007, the increase from 10 to 44 percent, and the recession kind of killed that trend, or -- MR. LEKOV: Essentially, we looked even more than the last several years. So basically the trends are all over the place. I believe that the charts are in the technical support document. MR. ROSENSTOCK: Okay. MR. LEKOV: So, at this time, the DepartmentExecutive Court Reporters (301) 565-0064 9 6

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 basically assumed that the 2007 trend is applicable for the effective date of 2014, as well as after that. Again, the constant assumption was adopted. Of course, any data or references to anything that could help the Department to refine this is welcome. MR. BROOKMAN: Let's return to the comment box. You see a request for comment. If there's anything else to be said on this subject before we move on? Yes, Tim. MR. BALLO: Tim Ballo with Earthjustice. If we could just back up quickly to slide 81. I just have a question about that. I take it that the houses meeting the assumptions listed at the bottom of this slide are assumed, for purposes of the life cycle cost analysis, to install an electric vented dryer. And I'm just wondering, we have some data that was presented at the beginning of the analysis that showed those dryers were a very small percentage of the market, and I'm just wondering if -- if the assumptions used in the life cycle cost analysis reflect a similar distribution that was shown in the sales data? MR. LEKOV: I would try to disconnect this from the fraction of sales. This is more -- basically this set of criteria is more to identify more appropriate sample size associated to this specificExecutive Court Reporters (301) 565-0064 9 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 type of equipment. MR. BROOKMAN: Let's return to the comment box. So Alex stated this. DOE assumed that the market shares of efficiency levels in 2014 would be roughly the same as shares in 2007, and you can see the rest of the comment there. Any additional comments, questions, on that there? Debra Brunk. MS. BRUNK: Debra Brunk. Actually again going back to what Tim just noticed or mentioned on slide 81, I guess I still have a question, and again this deals with the whole analysis. Should that middle box be electric vented or electric ventless? MR. LEKOV: That's true. Yes, that should be ventless. MS. BRUNK: So that should be ventless? MR. LEKOV: Correct. MS. BRUNK: So then I guess I have another question which would be, why -- what assumptions or what goes into making the assumptions that any of those three particular homes would have a ventless versus a vented product? MR. LEKOV: First, the overall example for the standard includes every single household. This is just a subsample to identify this compact, vented compact, as well as ventless unit to associate themExecutive Court Reporters (301) 565-0064 9 8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 with more appropriate size housing that could be matched in terms of deriving the energy use. So that's just -- the only purpose of this is not to associate the compact unit, for example, with a huge house. MS. BRUNK: Debra Brunk. So -- still just so I'm clear. Should this read electric vented and ventless clothes dryer, that middle box? MR. LEKOV: This box -- vented compact -- MS. BRUNK: I'm sorry, it's compact vented. MR. LEKOV: -- 120 and 240 volts, as well as the vented. So those are all derived from this example. MS. BRUNK: It's all compact units, and that would also potentially include your washer-dryer combos? MR. LEKOV: Yes. MS. BRUNK: Okay. MR. LEKOV: Correct. MS. BRUNK: Okay. MR. BROOKMAN: Phil. MR. MANTHEI: I was just confused like everybody else. MR. BROOKMAN: Any additional questions or comments here? Okay. MR. LEKOV: So with that, this slide focusesExecutive Court Reporters (301) 565-0064 9 9

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 on the -- essentially the energy -- deriving the annual energy use for the room air conditioner, and the three -- make it a little bit clearer, these three boxes are the key for what has happened. So, basically, we have the operating hours for room air conditioners derived from the RECS energy use, EER annual distributions from AHAM, so those two values essentially are shown here, the two parameters for developing the unit consumption basically comes from the report of energy use and the number of RECS units which I explained under the example chart. The capacity was derived from the cooling area criteria, again, explained on the previous chart. This allows to derive the three basic parameters needed for the operating hours, which are the existing EER, the energy consumption, and the capacity. Once we have the operating hours, the number of units, and EER, now we are determining the annual energy use. Once this happens there is a next step. We're converting the annual energy use to monthly energy use, and the purpose of this approach is essentially to more accurately to reflect the energy use of the room air conditioners, which is seasonal, and the fact that the Department actually has monthly energy prices, which allow to do the calculations monthExecutive Court Reporters (301) 565-0064 1 00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 by month. So how this happens essentially for each household, the Department extracts the cooling degree days and scales this use in the 12 monthly energy use, using the cooling degree days for each month. This allows to arrive at the monthly energy use. MR. BROOKMAN: Debra Brunk. MS. BRUNK: Debra Brunk with AHAM. I just have a couple of questions here, and I noticed this from reviewing the preliminary technical support document. It looks like DOE is relying heavily on the RECS data for this analysis, and I guess I'm just curious why that is when there is data available from the technical analysis that was completed, in terms of using the test procedure. We have roughly the number of units that are on the market, the distribution of those units in terms of their capacity, and EER, or the proposed IEER with the energy efficiency change. And then we also do have an accepted number of operating hours, at least with the test procedure. So I guess I'd like to better understand the rationale for using RECS data to estimate the monthly energy use, as opposed to the test procedure. MR. LEKOV: The basic presumption is that the engineering analysis, the Department fully utilizes theExecutive Court Reporters (301) 565-0064 1 01

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 assumptions according to the existing test procedure, while in the life cycle cost analysis, and this is in the definition of this analysis, the Department always tried to adjust to any information available about the field operation and consumption of the equipment. So, the RECS, which is the periodical base by EIA, has good reputation as a source of this type of field data. So in this case the Department choose this approach. MR. BROOKMAN: Debra. MS. BRUNK: Debra Brunk. I guess I just -- certainly the RECS data is appropriate, I think, for a lot of analyses, and is well-recognized, as you mentioned. I guess what I'm trying to understand, first of all is, has DOE done any kind of validation in terms of what they are receiving in terms of the RECS data and those estimates versus what you would obtain on the test procedure? Has there been any validation that the RECS data is actually representative of what consumers are indeed using, as opposed to what they are saying they are using? And I guess that's just -- the other concern is my understanding of the RECS data is that in terms of overall energy consumption, it may pull out a certain product, but most products, and I believe room air conditioners and clothes dryers fall into thisExecutive Court Reporters (301) 565-0064 1 02

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 category -- these are lumped into sort of a general energy consumption number. And so I'm trying to understand the different assumptions that may be used and built upon to actually reach this monthly energy

use. MR. LEKOV: In terms of room air conditioners, RECS utilizes an approach called the conditional demand analysis to extract the room air conditioner-specific data for their reporting, in terms of energy use. The approach applied here also realize, in terms of determining the energy -- the operating hours themselves, also relies very heavily on the information of efficiency that's available, and in terms of annual service chart data. Essentially there is data for the room air conditioner as a whole for the period since 1972, as well as there is an AHAM data available, I believe, for the last three years. As for the specific product cost, it's by product cost, as well as the Department has a few other data points, like the EER's 1992 and 2000, where the standard changed. So this allowed a pretty good mapping of the efficiency data. In addition to this, the capacity, I explained the other parameter that's in the formula, the way it was determined, using the Energy StarExecutive Court Reporters (301) 565-0064 1 03

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 guideline in terms of area. So the -- to a certain extent it correlates overall -- balances the three parameters used in this calculation to get to the operating hours. MR. BROOKMAN: Do you have any -- MR. LEKOV: Having said this, I would like to emphasize that still this is one approach that the Department choose to use. However, the Department is open for proposals and data that could justify another calculation approach. MR. BROOKMAN: John Cymbalsky. MR. CYMBALSKY: John Cymbalsky, DOE. Having worked for EIA for 20 years, I'm familiar with the RECS survey, so RECS is a sample that is statistically valid, that's the first point. Second point is that the energy use is based on monthly billing data that they actually collect from the sample, so it is controlled for that, and like Alex said, the conditional demand analysis, what it will do, based on the monthly electricity use, it's fairly straightforward to tease out the cooling numbers. Dryers might be a little more problematic. MR. BROOKMAN: Thank you. Do you have any additional comments before we move on. We're going to move toward lunch as quickly as possible. I want toExecutive Court Reporters (301) 565-0064 1 04

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 see how much more content we can cover, say, in the next five or ten minutes. You okay? MR. LEKOV: Yes. MR. BROOKMAN: Let's move on. MR. LEKOV: The clothes dryers. This morning, Navigant Consulting presented well the background, the active mode and standby power. So the LCC analysis calculate those separately, and the main point which I'll emphasize here is that for certain parameters, like the load weight distribution, the remaining moisture content, and dryer cycles, the Department did evaluations and determined distributions of value, some of which are considered for adoption in the ongoing test procedure. Particularly in terms of these three parameters, I will try also to come with some numerical values. So based on the tub size as well as the associated pounds of clothing, the Department, for example, came with a different average value for the load weight, which is higher than seven. I believe from the distribution, which is like from three to ten, the average is about 8.1 pounds. So this is what's used in the calculation. The remaining moisture content is the most important parameter. Essentially, based on informationExecutive Court Reporters (301) 565-0064 1 05

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 in the CEC directory, basically the Department came with a much lower range of remaining moisture content, within the 30 to 61 percent range, compared to the test procedure of 72 percent, which is essentially a reduction by more than one-third. And in addition to this, based on information provided in RECS, the Department came with a similar lower -- oh, what I did? MR. BROOKMAN: Just hit F5. MR. LEKOV: F5 brought me to -- very -- okay, I apologize. So, basically, the number of annual cycles is 285, which is for the standard electric, and somewhat lower for gas than what's happened. This is - - as a result of this, field energy consumption for clothes dryers is much lower than the one you get -- somebody will get using the test procedure. MR. BROOKMAN: Let's pause there. I didn't get your name. MS. WALTNER: Meg Waltner. I can wait. MR. BROOKMAN: Okay. MR. LEKOV: Just to briefly mention here, the Department also calculated the standby power using the assumptions mentioned this morning, and it included the value -- the value is included in the overall electricity use.Executive Court Reporters (301) 565-0064 1 06

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: Meg. MS. WALTNER: Meg Waltner. The Ecos study mentioned earlier found that there's a 20 minute variation in cycle time, based on whether the sensors work accurately or not, did you take that into consideration as well? MR. BROOKMAN: Do you know when that Ecos study will be available? MS. WALTNER: I think we can provide you a draft copy after this hearing. MR. BROOKMAN: I think the Department always likes data to be early and complete, so the sooner the better from their perspective, I'm certain. MS. WALTNER: Okay. MR. BROOKMAN: Okay. Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock, yeah, in terms of cycle time, doesn't the -- isn't there information from the DOE test procedures or some sort of testing that -- MR. LEKOV: The length of a single cycle? MR. ROSENSTOCK: Yes. MR. LEKOV: Sixty minutes, this is the basic assumption. MR. ROSENSTOCK: But I'm saying, isn't there some data out there that describes, either forExecutive Court Reporters (301) 565-0064 1 07

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 manufacturers or consumer reports or other third parties, that kind of gives a better, you know, another idea of just typical cycle time, just because there's such a variation? He said it's an assumption, that's why I'm asking. MR. LEKOV: The clothes dryer team, NCI and us look at this issues, I believe at this time, this is the value we're using. If other data exists or references that could identify a range, it would be applied. MR. ROSENSTOCK: Thank you. MR. BROOKMAN: So then, yes. Yes, Debra. MS. BRUNK: Debra Brunk. I guess I would just be interested in understanding if DOE had any suggestions or ideas on why the number of cycles per year decreased from what it is currently, which is 416, to 329, which is what was proposed in the framework document, to now 285 cycles per year. Do you have any sense of what might be happening in the market to cause that decrease? MR. LEKOV: I believe a few things happened. One of them, basically, this derivation comes from the parameters reported in RECS. One item is the increase of -- the coupling of clothes washers with clothes dryers, the frequency before was 0.84, now it is 0.94.Executive Court Reporters (301) 565-0064 1 08

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 That -- so the coincidence of the two values, and this data actually coincides with another data point from Procter and Gamble. Other items that bring it in this direction is maybe some factors such as maybe people are doing larger loads less frequently. Maybe also was fewer considerations -- I'm also looking to the NCI folks, those who have considered also the test procedures, so if there is any good -- MR. BROOKMAN: Let me pause, Alex, do you have any comment on the shift from 329 to 295? Nothing additional? Steve? MR. ROSENSTOCK: Well, again, I was going to say, you know, wouldn't the combination of larger clothes washers and clothes dryers in terms of capacity, plus demographics, if families are getting smaller, wouldn't that also tend to make the number of cycles go down? MR. LEKOV: Yeah, the demographics is definitely another factor. MR. BROOKMAN: So once again, the Department loves to see data on these, rather than speculation. Phil, did you have a comment or question? MR. MANTHEI: Only that obviously as our moisture content goes down to the neighborhood thatExecutive Court Reporters (301) 565-0064 1 09

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you're talking about here, 46 percent, the clothes loads are going to dry in a lot less time than 60 minutes. MR. LEKOV: That's correct. The main thing is that this is what you see in the reported data, and these days the clothes washers are much more efficient in terms of providing clothing with less moisture content. MR. BROOKMAN: Does AHAM have that data, or do the individual manufacturers can they supply that data? Would it be for distribution of clothes washers, different age of clothes washers that would supply the moisture to the clothes to the dryer? MR. MANTHEI: You're asking about AHAM data? MR. BROOKMAN: Or data that perhaps you might have, Phil. MR. MANTHEI: Well, certainly we could provide data on what it takes to dry a seven pound load with the existing test procedure at a different moisture retention content -- MR. BROOKMAN: Okay. MR. MANTHEI: -- going into the dryer. MR. BROOKMAN: That would be very helpful. Debra, I don't know about you, can AHAM supply that data?Executive Court Reporters (301) 565-0064 1 10

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. BRUNK: We can -- Debra Brunk, we can try to collect it, we do not currently have that just in hand. MR. BROOKMAN: Okay. If you were to speculate, if it's not 60 minutes, what would it be, Phil? MR. MANTHEI: It's going to be a little bit less. Well, at least in the calculations of EF, and certainly IEF, the test procedure just terminates at five percent, but again, we're connecting the dots between the new test procedure and potentially a new test procedure that has moisture sensing determination, and in the life cycle cost analysis, I'm reading ahead a little bit, you're not looking at anything that started with a remaining moisture content below 70 percent. But clearly from the data that's presented in the TSD, you've got from AHAM's data, the average remaining moisture content, something like 47 percent across the stock, different between top loaders and front loaders. Seems to me in the life cycle cost analysis you need to reflect the fact that that 60 minute cycle isn't appropriate for, and is different from a top loader load delivered at 38 percent remaining moisture content, and a front loader that's delivered at a different remaining -- excuse me, 47Executive Court Reporters (301) 565-0064 1 11

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 percent and 50 percent. So the remaining moisture content ought to drive cycle time, particularly if, in the baseline, you're assuming you've got a sensor that turns off the unit when it's dry. If that's not the case, then let's not price that into the baseline, but I think that's what I just heard earlier today, that the baseline assumes it's got a sensor in it that takes advantage of termination on the basis of how dry the clothes are. Well, we can't have a 60 minute cycle time if that sensor is there, it ought to be determined based on remaining moisture content. MR. BROOKMAN: Okay. Thank you. MR. MANTHEI: It seems like that's inconsistent. MR. BROOKMAN: Thank you. Final comments on this subject. I'm going to -- if you look forward to the next page in your slides, we have four -- I think significant comment boxes. I'm thinking maybe we should go to lunch. These are important issues for the Department. They want you to comment on them to the best of your ability. So let's -- is that -- MR. LEKOV: Yes, they're essentially, all those four topics relate to what we have been discussing the last ten minutes.Executive Court Reporters (301) 565-0064 1 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: Well, let me ask, is there a lot to be said on load sizes, remaining moisture content, number of annual cycles, and annual operating hours? A lot additional or have we covered it pretty much? Steve Rosenstock. MR. ROSENSTOCK: I guess the only thing in terms of load size -- Steve Rosenstock -- in terms of load sizes for clothes dryers, if the trend has been again for larger clothes dryers, should the -- has the average load size increased? That'd be my only question. MR. BROOKMAN: So then let's just try -- additional thoughts on load sizes? You see the comment box there. I think everybody -- they just need lunch, I think. It's 12:20. Let's return to this when we resume in this room at 1:20. Please wear your badges in the building. (Whereupon, at 12:20 p.m., the hearing was recessed, to reconvene at 1:20 p.m., this same day, Tuesday, March 15, 2010.)Executive Court Reporters (301) 565-0064 1 13

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A F T E R N O O N S E S S I O N 1:20 p.m. MR. BROOKMAN: Okay. Let’s resume. Thanks to all of you for being back on time. We are going to pick up where we left off. I believe is not this slide. PARTICIPANT: The next slide. MR. BROOKMAN: The next slide, yes. Welcome back, by the way. I hope your lunch was nice. We had just progressed beyond that slide and now we’re on 87, load sizes for clothes dryers. And I know all these issues matter a lot to the Department. So, let’s hear from you about that one first and then we’ll move on to moisture content, number of annual cycles, and annual operating hours. MR. LEKOV: I wonder whether it will be helpful for each of them with one sentence to summarize what’s the source of the calculation so -- MR. BROOKMAN: If it’s brief. MR. LEKOV: Yeah, and really brief. So, for the load size, as mentioned here, it’s essentially the calculation -- basically the derivation of the distribution as it relates or comesExecutive Court Reporters (301) 565-0064 1 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 from the models clothes washers, models in the CEC directory with the correlation between tub size and average pounds from the clothes washer test procedure. So, the tub size and average pounds are from the clothes washer test procedure and the tub sizes are for clothes dryers from CEC directory. MR. BROOKMAN: That was good. That was brief. Now, so comments then on load sizes. Yes, Debra. MS. BRUNK: Debra Brunk. So you’re using the load table in the DOE test procedure? MR. LEKOV: For clothes washers. MS. BRUNK: For clothes washers. What happens if the drum volume on the CEC database is higher than the load table? Do you extrapolate? MR. LEKOV: My recollection is that there is sufficient range of large tub sizes. So, I think that basically covers, I believe, for a relatively large ten or 11, if I am not wrong. But definitely that was the approach. MR. BROOKMAN: Additional comments on load sizes? Debra, are you okay? Okay. And, of course, you don’t need to cover it all now. If you have additional thoughts that followExecutive Court Reporters (301) 565-0064 1 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 on from this, the Department wants them and soon, in your written comments. So, please, they would invite that, I’m certain. Do you want to provide an overview on clothes dryer remaining moisture content, how that’s derived? MR. LEKOV: Yeah. Basically the remaining moisture content comes from the clothes washers reported value in the CEC directory. MR. BROOKMAN: Comments on remaining moisture content? (No response.) MR. BROOKMAN: We covered some of these a little bit already. MR. LEKOV: So the range is 30 to 61 percent, you’re right. MR. BROOKMAN: Yes, please, Ted. MR. POPE: I may have misunderstood. I thought somebody said the LCC did presume the lower RMC, and so forth? MR. LEKOV: Correct. MR. POPE: That is correct. MR. LEKOV: That’s exactly what I said the test procedure is at 70 percent. DOE’s estimate is a range from 30 to 61 percent with a mean value of 46. MR. BROOKMAN: So then we’re going to move onExecutive Court Reporters (301) 565-0064 1 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to annual cycles for clothes dryers. MR. LEKOV: This one comes from RECS data which reports two things; reports for clothes washers by bins, the number of cycles and in addition to this the frequency of using a clothes dryers. So these two values came to derive the clothes dryer cycle. And after that it was multiplied by the availability of clothes dryer household. MR. BROOKMAN: So any additional comments on this? (No response.) MR. BROOKMAN: So from the silence I won’t over interpret. [Laughter.] MR. BROOKMAN: Nor will that Department. They will wait for your comments. MR. LEKOV: We can move on. MR. BROOKMAN: Yes. Annual operating hours for room air conditioners. MR. LEKOV: This one is pretty complex. I think quite a few details are available in the TSD.Just I know if needed, feel comfortable to call or email any time. We will provide the deep details of this derivation. MR. BROOKMAN: Additional comments on thatExecutive Court Reporters (301) 565-0064 1 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 one? Annual operating hours for room air conditioners. (No response.) MR. BROOKMAN: Okay. So then we’re going to proceed. MR. LEKOV: Okay. MR. BROOKMAN: Okay. MR. LEKOV: With this, those are the results for both products, the baseline average annual energy use for all product classes for both products. MR. BROOKMAN: Yes, Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock, EEI. So these are using -- um, these are including this standby energy values as well? MR. LEKOV: That’s correct. And the electricity includes the standby. MR. ROSENSTOCK: Okay. I had a quick question. Because when I looked at the formulas before for the room air conditioners, there was about 10 kilowatt hours and for the clothes dryers, again, about -- I just used it like 2 watts as a standby, about 16 kilowatt hours for clothes dryers, you’re showing a 71 kilowatt hours per year for the vented gas clothes dryer? MR. LEKOV: Uh-huh. MR. ROSENSTOCK: Is there -- is that for theExecutive Court Reporters (301) 565-0064 1 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 motor -- is that for the -- is there an electric motor? Again, electric motor -- MR. LEKOV: Yes. MR. ROSENSTOCK: -- that’s for the motor plus standby? MR. LEKOV: Selected -- plus MR. ROSENSTOCK: Thank you. MR. BROOKMAN: Debra. MS. BRUNK: Debra Brunk. I guess this just goes back to kind of the difference between the test procedure and the energy use. I mean, the baseline efficiency level is baseline energy efficiency used from the test procedure. I mean, if you were to actually calculate this out, the energy use, the two do not correlate. So I’m just curious how you plan to -- how the DOE plans to kind of to deal with that inconsistency? So, for example, if you were to take a baseline efficiency level of 2.96 on a vented electric standard clothes dryer, you would expect your energy use to be quite different from the 519 kilowatt hours per year that’s reported there. So I guess I’m just trying to understand how you would, you know, rationalize those differences? MR. LEKOV: Basically the number of cyclesExecutive Court Reporters (301) 565-0064 1 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 drives the calculation to a large extent. MS. BRUNK: Yes. MR. LEKOV: What else in looking at basically energy use, that those are the main barometers. And essentially the only way to change this will be to change the number of cycles if we have any data or inputs on this. The other item, of course, is the remaining moisture content. There was one comment when they took a look at -- and the load size. If anybody provides data in this area, the DOE will include it or consider it. MR. BROOKMAN: Additional comments? Tom Eckman. MR. ECKMAN: This is a question for the manufacturers. I’m aware of in some of the equipment you’ve -- for maintenance purposes you have little data loggers going on in there. Is there runtime meter data being collected? I know there sometimes are on dishwashers, but is that true with dryers? Do manufacturers keep that data for maintenance purposes? Because they’re pretty low maintenance items. So I suspect that investment is probably deminimus. MR. BROOKMAN: Debra Brunk. MS. BRUNK: This is Debra Brunk. I would have to get back to our members to determine if that’sExecutive Court Reporters (301) 565-0064 1 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the case. I know for some products those are available and they may not be available for all product classes as well. MR. ECKMAN: It may be -- the RECS datas user-reported numbers of cycles a year. It’s not metered. So if we went around the room and asked how many cycles of dryer use I have a year, I bet we would get a random variable with a high level of disconfidence. [Laughter.] MR. LEKOV: The data is provided, of course, for quote, “washers” and it’s in six bins. So from to from to. So the LCC calculations work with distributions. MR. ECKMAN: Right. Even with the distribution the mean value is, you know, pretty big. Yeah, standard deviation on that mean might be fairly high. MR. BROOKMAN: Big tails. MR. ECKMAN: Big tails. And so getting some meter data on cycles per year or run times per lifetime or something like that might be useful to calibrate on. MR. BROOKMAN: Okay. Thank you. Okay. Alex, let’s go.Executive Court Reporters (301) 565-0064 1 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. LEKOV: So now let’s go in the parameters that are used for the calculation of the paybacks and LCC cycle itself. Energy prices are a big driver. This one shows the sources. I’ll go directly to the actual derivation. So basically for the LCC electricity prices are defined for each household. Important to note is that you use this in average price to define the LCC baseline, however, it uses marginal prices to define the LCC cost savings. So, there is a slight difference between the residential approach and the commercial approach. It’s not slightly, there is a difference between the two approaches. In the case of a residential they input data comes from the LBNL’s sample of 90 utilities which recently has been updated in 2008 as well as the monthly consumption data from RECS 2005. The marginal prices are defined basically when you know the tariff you put a different energy use and calculate where the change occurred. For this particular analysis probably important to mention that a marginal price can be lower than the baseline. So that’s in terms of residential. For commercial the approach is complex, but the most important that in addition to the electricityExecutive Court Reporters (301) 565-0064 1 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 use it accounts also for demand charges so there is also it’s applied incremental in terms of demand charge. MR. BROOKMAN: Steve Rosenstock? MR. ROSENSTOCK: Steve Rosenstock, Edison Electric Institute. I think this approach is fine. I think my question was, as you’ll see in the next slide, that there was -- there has been a drop in the last couple of years in electric prices. And, again, it looks like you’re -- it says, prices are calculated based on previous analysis, CUAC is that a unitary -- a central unitary air conditioners? MR. LEKOV: That’s for the commercial one. That is in this approach, the details of how arrived essentially comes from the commercial AC. MR. ROSENSTOCK: And DT is distribution transformer? MR. LEKOV: Correct. MR. ROSENSTOCK: Okay. Again, those -- I know for transformers that analysis was completed in 2007. Things have changed since then. The other question I had was, are you taking a similar approach with gas prices for the gas dryer analysis? MR. LEKOV: Yeah, I -- okay, the gas isExecutive Court Reporters (301) 565-0064 1 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 essentially comes from the so-called EAI natural navigator and there the Department is using average prices. However, they are percents as regions, so they are different for the household depending on the region. MR. ROSENSTOCK: So you are not using the actual utility tariffs for the gas prices? MR. LEKOV: Yeah, I don’t -- yes, no. The answer is no, we are not using the actual utilities for gas. MR. ROSENSTOCK: Again, it just seems that you’re taking a more detailed approach on the electric side than on the gas side. I don’t understand why. MR. LEKOV: Because the DOE had this tariff database which is a unique tool available for electricity. At this point no equivalent. MR. ROSENSTOCK: But the tariffs for on the gas side are publicly available as well. MR. LEKOV: That is true. Maybe Greg can tell you. MR. ROSENQUIST: Greg Rosenquist, LBNL. We use the prices in the tariffs because AC is more of a peaky end use. While, you know, clothes dryers are more flat. So that was the reason why. MR. ROSENSTOCK: Okay. I understand.Executive Court Reporters (301) 565-0064 1 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: Thanks, Greg. Okay. So additional comments on this slide before I move on? (No response.) MR. LEKOV: And this is just to show that for the forecast, DOE uses the official AEO reference case in lower and higher case of energy prices forecast to use the prices that we have for the basic to expand them for the future. So, the next item associated to the determination of operating costs is the repair and maintenance. And basically DOE directly goes here to ask for a comment since no evidence was found that there is change in the repair and maintenance as product efficiency increases. So any data that could help to refine this assumption would be appreciated. MR. BROOKMAN: Yes, Debra Brunk. MS. BRUNK: This is Debra Brunk. We can certainly look for data, but I would suggest that DOE actually has these data in the form of the design option analysis that they conducted on these products. Typically if you have higher component costs that are incorporated into a product, you will also have higher repair maintenance costs if those components need to be replaced.Executive Court Reporters (301) 565-0064 1 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 So just in terms of that approach, I would suggest that DOE does have those data. MR. BROOKMAN: That wouldn’t be validated by some field experience? MS. BRUNK: Perhaps. MR. BROOKMAN: That would be an extrapolation what you just described; wouldn’t it? MS. BRUNK: Yes. MR. BROOKMAN: Okay. So data, once again. Okay. Alex. MR. LEKOV: Going to other inputs, discount rates and a lifetime, so, the primary source for discount rates is a major source from Federal Reserve Board survey of consumer finances. And in order -- and actually it’s a pretty good source because it gives us data point from ’89 to 2007. It accounts for almost 200,000 data points which allow to create distributions both for new construction and for replacements. So, the new constructions are primary-based when applicable on a mortgage associated with the household and the replacement account basically for both the cost of any debt SOL as for cost of any equity or potential cost of any equity. To calculate the discount rate is very different and also need to know that this is a realExecutive Court Reporters (301) 565-0064 1 26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 discount rate. It does not account for the inflation. A lifetime. DOE took an approach to derive lifetime based on REC’s available equipment age data information of the stock from American housing survey and matched this with the shipping data to derive lifetime distribution using Weibull functions. Weibull functions arae considered as a very good way of expressing the lifetime of distribution of different equipment. So the main answers are here for room air conditioner, the lifetime is 10 and a half years and the clothes dryers is 16 years on average. MR. BROOKMAN: Debra Brunk. MS. BRUNK: This is Debra Brunk. Just a question on how you might -- I know you have your minimum and your maximum in terms of your -- your average lifetime, but I mean, typically I think what we’ve seen is there could be a pretty tremendous lifetime difference on room air conditioners with the product class. And does the analysis get into that level of detail or, um, based on the data from the AHS? MR. LEKOV: No, we’re are no distinguished by product costs. Essentially there is no such details for example in American Housing Survey or in RECs for that matter.Executive Court Reporters (301) 565-0064 1 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 But those -- this type of data corresponds to quite a few literature studies, the data points that you could find in the literature. On the lifetime the Department basically asks for a comment basically both on the approach and actual values. MR. BROOKMAN: Additional comments on lifetime? (No response.) MR. LEKOV: The next two slides are essentially examples of the LCC savings and results that details for all product classes are in the TSD. Here the room air conditioners I believe most of the participants today are familiar with this expression of life cycle costs which includes the savings, includes the impacted households, and provides the payback as calculated at the lifecycle costs. And I will toggle between this here and the clothes dryers for electric standards. MR. BROOKMAN: Yes, Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock. Again, I really like the way the data is presented and appreciate, especially for payback showing median and average. Especially on the room air conditioners there seems to be quite a scatter between median and average.Executive Court Reporters (301) 565-0064 1 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Any thoughts as to why that was in the analysis? Why there’s such a huge difference? MR. LEKOV: Basically it’s obvious that what this means we have a huge tail. Which means that a relatively small number of households will have very high expenses. MR. BROOKMAN: Please, Brice, use the microphone. MR. BOWLEY: The average payback is high like at 10.4. Doesn’t that imply I have very low usage of the product? MR. LEKOV: The combination that’s exactly true. MR. BOWLEY: Okay. MR. LEKOV: Low usage and high costs or one of the two -- MR. BOWLEY: Okay. Wouldn’t that be low usage and low cost? MR. LEKOV: But one of -- MR. BOWLEY: Okay. MR. LEKOV: -- or both. MR. BROOKMAN: Ted. MR. POPE: Ted Pope. Quick question. The large market share for the higher tiers of the clothes dryer analysis, you know, I realize there are a numberExecutive Court Reporters (301) 565-0064 1 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of factors that are of value to consumers that don’t show up as an energy consideration. But I would imagine that one of the convincing sales points about the dryers are more expensive because they have moisture sensing and so forth would be the argument that there’s less wear and tear on clothing. Is itconceivable that DOE would consider including some nonenergy benefit value in terms of, you know, clothing life increases if data were available? Or would that just be outside the scope of the analysis? MR. LEKOV: If this could be quantified, if somebody provides data, it definitely would be considered. MR. POPE: Thank you. MR. LEKOV: Okay. With that, that’s the general requests for any comments here or further written comments on any aspects -- MR. BROOKMAN: Elizabeth? MS. JOYCE: Elizabeth Joyce. Two comments, kind of general in terms of lifecycle savings for both AC and dryers. For room AC, we notice looking at the TSD that in many cases for some of the standards levels, these levels with the highest life cycle savings kind of look to be at least the max technology levels for a number of the product classes. And soExecutive Court Reporters (301) 565-0064 1 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 based on that, we would like to know if DOE would consider -- or is willing to consider kind of even more aggressive standard levels of kind of really pushing the envelope in that case if it seems that -- even at the max-tech level there can be effective savings. MR. LEKOV: I think the policy people should answer that. MS. JOYCE: Or I guess I would just at least like to -- MR. WITKOWSKI: Well, I think we’re looking at that. And until we are provided with information or specifics, you know, it becomes just speculative. MS. JOYCE: Certainly. MR. WITKOWSKI: But we would certainly look at any examples if they’re available. MS. JOYCE: Okay. MR. LEKOV: And I just will mention that there are many criteria -- additional criteria in addition to the lifecycle cost. MS. JOYCE: Sure. Sure. MR. BROOKMAN: And you had a second one? MS. JOYCE: Sure. The second issue was for dryers. Actually more of a question. Looking at, again, kind of lifecycle analysis -- lifecycle cost analysis from any of the dryer levels, it seems thatExecutive Court Reporters (301) 565-0064 1 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 kind of the opposite was true. That in many cases the levels with the lowest costs for savings were kind of the baseline or maybe standard level one. And this was especially confusing to me looking at the market shares for some of the dryers, I think particularly for, I think, product class two and four. It seemed like the market was almost evenly split 50/50 between baseline and standard level two products. Yet, for those analyses it seemed like the highest life cycle savings or the lowest costs were for the baseline level. And I guess I don’t really understand how the market could be -- could have so many products that are at a higher level yet they don’t seem to be cost effective according to this analysis. I don't know if these products might have extra features, et cetera, that might make them -- MR. LEKOV: Just if I may on certain general terms, those are analysis results. They could be checked and so on. But assuming that they are correct generally what’s happened for clothes dryers you have very small efficiency improvement, if you look from efficiency level to efficiency level, and the cost is not negligible. Also, yah, those are the main factors that drive the results. MS. JOYCE: Okay. I guess I was justExecutive Court Reporters (301) 565-0064 1 32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 confused how it could be -- MR. LEKOV: Correct. You will see more in the NIA analysis where basically the roll-up scenario is applied in terms of shipments. So this high efficiency levels may help to explain when we get there in two or three slides I will return to your question to see whether we could get it a little bit clearer. MS. JOYCE: Okay. Thank you. MR. BROOKMAN: Yes, Brice. MR. BOWLEY: Brice Bowley. I had a question on the payback analysis again. Looking at the -- like if I take, for example, the efficiency level one -- MR. BROOKMAN: Are you on clothes dryers or -

- MR. BOWLEY: I’m looking at the air conditioner -- room air conditioners. I guess I’m a little confused on how the median is calculated. If I look at that, 14 percent of the households have an increase in costs and 49 percent have no impact. So, how is it that since only 37 percent of the population has a benefit, how is the median, 50th percentile at 1.6 years? MR. LEKOV: Okay. So first let me step back. So you realize that what’s happening, we have example of 10,000 households. Okay. So each provides -- thisExecutive Court Reporters (301) 565-0064 1 33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 is a statistical significance in order to address the variability. Now, essentially if you eliminate the impact of this so-called no-impact, you have 51 percent that are impacted. So just looking at this, you have more households that have net benefit compared to net costs, 14 versus 37. So you would expect to get a certain not very high payback. It’s case-by-case, but those are the basics and the details are, of course, in the actual simulation. MR. BROOKMAN: John, did you -- MR. CYMBALSKY: John Cymbalsky. Were you asking why people are buying things that are not economic? Was that essentially your question? MS. JOYCE: Yeah. Sorry. MR. CYMBALSKY: I don’t think I can answer that. But -- [Laughter.] MR. CYMBALSKY: -- what people think about it. MR. BROOKMAN: Elizabeth, go ahead. MS. JOYCE: I’m Elizabeth Joyce. Yeah, just kind of confusion over how it could be -- for example, I think for the gas dryers 60 percent the market today was shown to be at a standard level two and yet the most -- or the level with the lowest costs and the mostExecutive Court Reporters (301) 565-0064 1 34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 cost effective savings was the baseline level. And, yeah, I was just a little confused about how that works. I’m no economist. MR. LEKOV: Nor do you want to be. [Laughter.] MR. BROOKMAN: I see Constantin. MR. von Wentzel: Constantin von Wentzel, Navigant Consulting. I would always be very careful about confusing costs and the price that a consumer would actually pay in an establishment to buy something. So it could be the relative position of a manufacturer producing more premium appliances that has a high market share that would enter and skew the results in one direction or the other in terms of the market share of certain appliances and their efficiencies. MR. BROOKMAN: Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock, EEI. To get back to the no impact to follow on. As I recall, for the no impact, what that really meant was the lifecycle costs were plus or minus 2 percent of the baseline average LCC; is that -- is that still -- MR. LEKOV: No, Steve, it’s not correct. This is -- you are referring to something that the Department attempted about eight years ago.Executive Court Reporters (301) 565-0064 1 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. ROSENSTOCK: Okay. MR. LEKOV: -- with the central AC. MR. ROSENSTOCK: Yeah. MR. LEKOV: That has not been the case since then. Exactly the calculation, whatever it is. MR. ROSENSTOCK: So when you -- for these numbers that are showing no impact on the lifecycle, there’s no impact in terms of lifecycle costs, is that saying that -- you know, because isn’t there a sensitivity range in there somewhere? MR. LEKOV: It means that it’s already -- the household owns something at this level or above. So it’s not impacted by the standard. The equipment is already at a sufficiently high level. Above you can see the level. So, for example, I would say for level one, where 49 percent of the -- this 49 percent all of them have EER above 10.3 already in their household -- at 10.3 -- Okay. With that this concludes the LCC section. And if -- unless Doug has other -- MR. BROOKMAN: Nope. MR. LEKOV: Okay. MR. BROOKMAN: I think we got final comments on life-cycle cost analysis. If there are any others,Executive Court Reporters (301) 565-0064 1 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 let’s have them now because we are going to keep moving

on. SHIPMENTS ANALYSIS AND NATIONAL IMPACT ANALYSIS MR. LEKOV: So I will be presenting also the shipment analysis and national impact analysis for both products. There is no need to read here, basically shipment analysis are needed for the national Impact analysis. And here is the process chart basically shows you that we have some inputs that are coming from LCC. We have model shipments coming from the shipments model and we are calculating savings and after that the assigning quantitative value to the savings. This one here gets into the detail and this example of room air conditions. So looking at two market segments, replacement, and essentially households that had no air conditioner or are adding a new room air conditioner. This analysis does not consider room AC in new construction. So, once they are determined the total shipments are derived. So many of the data sources used in the shipments model are, again, by market segment for both new construction and replacement. Lifetime comes from LCC. In terms of just for new construction as relates to clothes dryers, two sources forecasts for new housing from EIA as well as newExecutive Court Reporters (301) 565-0064 1 37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 housing saturation from RECS. Historical shipments for both products AHAM submitted data. The existing AHAM fact books -- the distributions by product costs for both products we have AHAM data submittal for certain years. And with that, here is the result for room air conditioners as applied in the analysis and this is just to remind everybody, this is the base case forecast in case of no new standards. So the three segments are clearly defined here, room AC replacement, the large portion at the bottom, commercial at the top and the middle are essentially the new purchases for, as I mentioned, household that are ailing, replacement, and so on. Those are essentially used to calibrate the missing data compared to the actual historical data, the line here. As you see here the Department does not forecast increase of the shipments in the future. (Pause.) MR. LEKOV: Clothes dryers, again, we have three markets, replacement, new homes, and first-time owners. The historical data is shown there. The trend is pretty clear from the historical data. And this is where the department ends up in terms of forecast. MR. BROOKMAN: Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock, EEI. ForExecutive Court Reporters (301) 565-0064 1 38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 this modeled shipment for new homes, it appears that like after 2012 you’re basically saying -- again, I can’t -- I don’t have that segment, it’s about over a million to a million and a half new homes every year in the forecast? MR. LEKOV: That’s basically what AEO is reporting. MR. ROSENSTOCK: Because that seems kind of high based on what’s been happening the last few years. Anything over -- well, this year they’re projecting 300,000 based on NHB numbers. So it just seems a little on the -- it might be on the high side. MR. BROOKMAN: The 300 is just single family you’re talking about? MR. ROSENSTOCK: Single family homes, yes. I know this is probably new family and multi and -- MR. BROOKMAN: Yeah, the housing recession you can see pretty clearly right in that midway. MR. ROSENSTOCK: But it looks like, again, like in 2005 there were about 1.7 million single family homes built in the U.S. and last year it was down to 600,000. So, again, it looks like it’s bouncing back to at about a million and a half new homes. Again, that seems a little high to me. Just a personal -- MR. CYMBALSKY: So you don’t think theExecutive Court Reporters (301) 565-0064 1 39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 housing market will ever recover, that’s your statement? MR. ROSENSTOCK: I don’t think it’s going to go back to the boom years of 2003, 2005, at least -- again, just a personal thought, personal observation. I don't know how -- MR. LEKOV: So, just the response is it’s just AEO data. It’s not DOE’s data. MR. BROOKMAN: Additional -- MR. CYMBALSKY: Which is based on the global insight macro economic model. MR. BROOKMAN: Where did you get that? MR. WITKOWSKI: I would like to point out though that if you look at the 2005 data you will see that the slope is very high. The slope from going forward after that is much less. So you really have to look at the slope among other things. MR. BROOKMAN: Thanks Steven and also John. Okay. So let’s proceed. MR. LEKOV: So at this point we have the shipments handled and here are all the inputs involved in the calculation of the national impact analysis. So I will just mostly it’s a list of those and the source and the matter so we are looking total installed costs from LCC, repair and maintenance from LCC, annualExecutive Court Reporters (301) 565-0064 1 40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 energy is from LCC, base case efficiency at the LCC standard case forecast. It’s a roll-up scenario. I believe I will be illustrating it on the next slide. Energy prices are the average prices and forecasting trends from EIA. Electricity site to source conversion comes from national energy modeling system, NEMS, and we derive, we do the runs. Discount rates are constant at 7 and 3 percent, they are coming from OMB. They are fixed by OMB. We have a present year which is the year where DOE projects to issue the final rule. And for room air conditioners, DOE plans to apply the same approach. Here is an illustration of the forecasted efficiency in the future basically using a roll-up scenario. Most of you should be familiar with what DOE -- how DOE is doing essentially. The base case it comes from the AHAM submittal and incorporates original efficiency distribution based on the state by state Energy Star market share. And after that is the standard case efficiency essentially efficiency below the standard level roll-up to the considered standard level. Just an illustration of results for one of the room AC product classes. So, this is how the energy savings are coming in quads which is ten on theExecutive Court Reporters (301) 565-0064 1 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 power of 15. This is more interesting chart. Basically this is the calculation of the net present value. So in terms of operating costs you have here below zero the expenses which are essentially the equipment cost and the repair and maintenance, here are the operating costs and it’s given for both commercial and residential and this is in billions of dollars the savings, the annual savings. That’s pretty much what the Department is reporting at this phase of the rulemaking for this rule. There is one additional slide for the purposes of which kind of to give you a heads up of that with the so-called trial standard level DOE will calculate the impact of the energy savings on the natural gas and electricity prices. So, for this phase, since we don’t have trial standard levels, just pick up the lowest savings for each product class of room AC totalsavings. And after that did the same thing for maxtech, did NEMS runs and came with this is the type of impact on the natural gas prices, 0.2 cents for efficiency level one, 1.3 for the max-tech which result in national benefits of 0.22 billion or 3.25 billion. So those are again preliminary results before getting to the trial standard levels which will beExecutive Court Reporters (301) 565-0064 1 42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 presented for the next phase. And this is wrapping up this part. Oh, and there is comments on any aspect. MR. BROOKMAN: For this discussion box, any part of national impact analysis? Ted. MR. POPE: I apologize, Alex, I think you said this. What was the reason for doing just the roll-up and not a shift? Did you say that? MR. LEKOV: Okay. In the past the Department presented both scenarios. It seemed to me over the last several years the more conservative approach was the roll-up so the interested parties basically set up with the roll-up. So the calculations are done based on the roll-up scenario only. MR. BROOKMAN: Okay. Steve Rosenstock. MR. ROSENSTOCK: Thank you. Steve Rosenstock, EEI. With the calculation of the natural gas and electric price impacts and you’re showing the benefits, are those benefits separate from future projections in gas and electric prices based on AEO? For example, if you said, you know, the electric pricing would be 11 cents, but because of the reduction in demand it 10.9 cents. Is that shown in your LCC analysis or is this a separate calculation that you’re saying, okay, we’ve done the analysis based on what AEOExecutive Court Reporters (301) 565-0064 1 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 is projecting, but because of the standard in reduction and demand, the actual prices are going to be lower and this is a separate savings? MR. LEKOV: Okay. First, this is -- you’re right. This is a separate analysis which represent the annual service for the forecasted period until 2044. I believe that what you are saying, Steve, is whether there is a closed loop through the LCC and NIA. If this is what you mean, basically to come back with the calculated lower costs, if this is the direction of your question, no, it has not been implemented such approach. Just also want to point that this particular item, although DOE is calculated, how to characterize, probably the weight at this point is not very high on this item. My understanding is there are some issues which are still under development related to the transfer portion of it. So, the numbers are presented and I would end with this. MR. BROOKMAN: Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock, EEI. I appreciate that, but, again, this is probably maybe a 20,000 foot level. If you say that these standards are going to have an impact on the -- I’ll say the wholesale or retail prices, then shouldn’t that beExecutive Court Reporters (301) 565-0064 1 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 included in the LCC analysis? You know, if you’re -- again, wouldn’t you have to assume that those benefits would show up in the consumer bills if the prices are going to go -- if it’s going to reduce the cost of natural gas or electricity, wouldn’t that show up in the future lower -- in terms of lower energy costs? MR. BROOKMAN: Okay. Thank you. Debra is next in the queue, Debra Brunk. MS. BRUNK: Debra Brunk. And I guess forgive me for my ignorance or confusion here, but I am struggling a little bit with this natural gas price impacts. Are we talking about generation here? What are we -- because I’m looking at room air conditioners and clothes dryers. I can understand how clothes dryers would affect, but I’m not clear how, you know, room air conditioners would affect natural gas prices except at a generation level. MR. LEKOV: Let me try in a simplistic way. So basically we have a set of energy savings. We pass them to the NEM system which essentially represent the entire U.S. energy in common. So what’s happened is the output represents certain impacts on the energy prices for about six or seven sectors, like power sector, transportation, residential, it’s essentially distributed. Those are appropriately weighted andExecutive Court Reporters (301) 565-0064 1 45 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 we’re using an approach called “inversed elasticity” essentially as documented in some external literature on this topic. DOE is not the first to do this. And certainly there is a sample and the reason why it came into the analysis four years ago. So at that point it’s possible to get the actual type of reduction. So those are about the entire U.S. economy as a result of whatever impact comes from these two products. And after that we simply do the calculations to get the associated NPV value. MS. BRUNK: So you’re going back to distribution. MR. BROOKMAN: Okay. Tim. MR. BALLO: Tim Ballo, Earthjustice. Just a quick question. I’m sorry if this is in the TSD. The 15 percent rebound effect for room air conditioners, is that based on a study that looked at room air conditioners specifically or what’s the source for that? MR. LEKOV: It’s central air conditioning, I believe. Maybe John could comment on this because he wrote the algorithms for this. MR. CYMBALSKY: Well, I don’t do that job anymore, but -- [Laughter.]Executive Court Reporters (301) 565-0064 1 4 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: John Cymbalsky. MR. CYMBALSKY: Yes, so where they come from are meta studies of general rebound effects for service end use demand and residential and commercial buildings. So, generally it’s things like heating, cooling, and lighting. Things you have direct control over. So as the cost -- the marginal cost of you using that end use falls, you’ll use it more intensively. So that’s what that represents. MR. BROOKMAN: Yes, please, Meg. No, pardon me. Joanna Mahr. MS. MAHR: Joanna Mahr. Just a question on the rebound effect. In reading the TSD it sounded to me like the assumption was that any decrease in savings due to the rebound effect was kind of offset by increase in consumer utility. And it sounded to me like it almost -- the rebound effect didn't come into the analysis; is that -- MR. LEKOV: Essentially what John said is correct for the life cycle cost analysis where you analyze household-by-household. However, for the national economy it’s -- the energy savings are fully reduced by 15 percent as this -- MR. BROOKMAN: Okay. Addition comments on this set of issues?Executive Court Reporters (301) 565-0064 1 47 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (No response.) MR. BROOKMAN: And final comments on national impact analysis before we move on? (No response.) MR. BROOKMAN: Okay. Thank you, Constantin. I mean, Alex. MR. LEKOV: Thank you. MR. BROOKMAN: And now we are going to hear from Constantin. TRIAL STANDARD LEVELS AND PRELIMINARY MANUFACTURER IMPACT ANALYSIS MR. von Wentzel: Okay. Ladies and gentlemen, my name is Constantin von Wentzel, I work for Navigant Consulting and I’m here to tell you about the preliminary impact analysis. Specifically we conducted interviews with manufacturers of room air conditioners and dryers either on site or telephone interviews on several topics. One was a rather comprehensive engineering analysis of options that manufacturers had to improve energy efficiencies and the costs thereof and the impacts on the manufacturers thereof. And in addition to that we discussed key issues as defined by the manufacturer, current market conditions, manufacturer and consumer subgroup analysis, product utilityExecutive Court Reporters (301) 565-0064 1 48 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 innovation, potential impacts of amended conservation standards and the cumulative regulatory burdens. And for the residential clothes dryers we were able to get interviews with approximately 90 percent of manufacturers in terms of market share. In terms of the residential clothes dryer key issues, cumulative regulatory burden, number one on the agenda was the UL safety requirement in terms of clothes dryers being able to contain fires inside the drums. Manufacturers were quite cognizant of the cost increases that could result in the products and the difficulty of implementing that. Current and new energy conservation standards for other, but related products, such as clothes dryers -- clothes washers was another key concern because it basically means that a manufacturer has to update multiple platforms at the same time as opposed to being able to time out or space out plant conversions. Last, but not least, in terms of cumulative regulatory burden was the potential reduction of hazardous substances requirements. This is not something that’s a key concern or a key issue yet in the United States in terms of it having been implemented already, but there appear to be enough signs on the horizon that manufacturers have started toExecutive Court Reporters (301) 565-0064 1 49 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 worry about it since some markets like California may in fact adopt those requirements. Impact on product mix, according to manufacturers amended energy conservation standards could result in longer drying times. This is because there is some benefit to simply blowing air through the clothes as opposed to heating that air. And the question is, is whether consumers would accept longer drying times in return for lower energy bills. And multiple manufacturers stated that their feeling was that if a clothes load took more than one hour to dry that most U.S. consumers at this point would reject such an appliance. In terms of the Energy Star program, multiple manufacturers mentioned that the existence of an Energy Star standard for clothes dryers could very well push forward innovation and higher efficiency in clothes dryers because it would justify the research. They also mentioned that consumers are becoming more educated on clothes dryers and would like to see a similar increase in energy efficiency for clothes dryers as they’ve observed for clothes washers. And the Energy Star label could hence be a very gooddifferentiator between baseline equipment and higherefficiency company in the marketplace.Executive Court Reporters (301) 565-0064 1 50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Manufacturers were quite concerned about current manufacturing conditions which is to say that their plants are running at very low capacities due to the current economic conditions. They mentioned that consumers are basically not consuming nearly as many clothes washers and clothes dryers as they have in the past. So, for example, instead of buying pairs of clothes washers and dryers consumers may elect to just replace one failed appliance as opposed to both. They’ve also seen impacts in terms of what kinds of clothes dryers and clothes washers manufacturers -- excuse me -- that consumers purchase. Which is to say that they will go for a lower-end clothes dryer instead of the high-end because they simply don’t have the disposable income anymore to afford the higher-cost appliance. In addition, in response to the current economic conditions, many manufacturers have significantly pared back their engineering resources which puts an even greater strain on them in terms of being able to comply with amended energy efficiency standards across all the product platforms that these engineering staff are assigned to. And because the demand currently is so low,Executive Court Reporters (301) 565-0064 1 51 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 it’s also extremely difficult to justify any kind of capital expenditure to change plants around or change product platforms at all. One of the other key concerns is that if you have a higher-volume production it’s easier to justify the capital expenditures to, for instance, come up with a solution in-house that’s cost effective. However, if there is very little capital available you may have to resort to buying a third party solution to increase your energy efficiency in your appliances. That in turn has a significant impact on the profitability of a manufacturer. So for some manufacturer, especially those with low market share, stringent standards could reduce their profit margin to a point where the U.S. market is no longer attractive. Several manufacturers also mentioned that if they were forced to redesign products due to amended standards costs would increase and they would reduce the scope of their products or even cut entire product platforms to remain profitable. And this is, again, the whole question of capital expenditure. If you’ve got multiple product platforms that you have to update, you may not have the capital available at all to make those changes. So as a result, you might decide to cutExecutive Court Reporters (301) 565-0064 1 52 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the low-volume platforms that don’t, you know, represent the bread and butter of your production lines. And these product conversion costs have a significant impact, especially on lower-volume manufacturers because they have fewer units across which they can depreciate these capital expenditures. So, as I mentioned earlier, they may have to resort to buying higher-efficiency add-ons or add-ons that lead to higher efficiency from third parties which would, on the one hand, reduce the capital expenditures, but on the other hand result in a higher product cost which in turn could make their product completely uncompetitive relative to the other products in the market. And this is a very competitive market segment. So, multiple lower-volume manufacturers stated that amended energy standards at efficiency level 2 and up would most likely force them to exit the residential market due to investment requirements and the resultant market outlook. And multiple manufacturers also expressed concern over how the implementation of new design changes for clothes dryers would affect their standardization of common parts. So what this is referring to is, forExecutive Court Reporters (301) 565-0064 1 53 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 instance, your ability as a manufacturer to only stock, let’s say, to pull a number out of the thin air, five motors instead of 15 motors. Because you might be able to use five motors across all of your product platforms if they don’t have to be absolutely optimized for each platform. Whereas, if you had to optimize each platform individually, you might end up with 15 different motors. That in turn leads to lower buying power with motor manufacturers and higher per-motor costs. And, of course, also higher storage costs and higher inventory costs and so on and so forth. Another dryer key issue is product innovation. This is a common theme that we’ve heard from manufacturers in the past which is to say there is a finite amount of resources that each manufacturer has that can be dedicated to product development and energy efficiency standards basically force manufacturers to allocate or prioritize allocations first and foremost to reach energy efficiency standards. And secondarily to product innovation which may in fact be more profitable, but unattainable unless you actually achieve that baseline energy efficiency standard set by an amended energy standard. All manufacturers are concerned that new or amended standards would take away from investments andExecutive Court Reporters (301) 565-0064 1 54 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 possible innovations that would take place without standards. So, just to finish that. So requests for comment in terms of residential clothes dryer manufacturer subgroups DOE research suggested there are no residential clothes dryer manufacturers in the United States that are designated as small businesses by the U.S. Small Business Administration. DOE invites comment from whether a manufacturer subgroup analysis is appropriate for the NOPR stage. MR. BROOKMAN: No comments. Okay. MR. von Wentzel: Shall we move on, Doug? MR. BROOKMAN: Okay. MR. von Wentzel: The next question is, residential clothes dryer manufacturers must also comply with the underwriter laboratory UL fire containment regulation for clothes dryers. DOE seeks information from interested parties to further evaluate that is issue in the NOPR analysis. MR. BROOKMAN: Debra, does AHAM do this kind of analysis or do you leave it up to your member companies to do it for themselves? MS. BRUNK: I’m sorry. Debra Brunk. What kind of analysis? MR. BROOKMAN: Do you see the box there?Executive Court Reporters (301) 565-0064 1 55 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. BRUNK: Right. MR. BROOKMAN: Information from interested parties to further evaluate the issue outlined of the cost of fire containment regulations? MS. BRUNK: I think what we would need to look into and understand is how this UL standard wouldaffect the cost similar to the change from R-22 to R410A for room air conditioners. And I’m not clear that in the initial cost evaluation that we do that this was included. So we would need to go back to our manufacturers talk about this and try to decide if it would be prudent for us to try to provide that information as an aggregate. MR. BROOKMAN: Are there any manufacturers in the room? Do you have any comment at this point? Phil? MR. MANTHEI: I think every manufacturer is going to have different things to look at. You know, we’re all concerned about, you know, if there’s plastic, you know, in the clothes dryers in the cylinder area and what that implies and, you know, meaning passing the test. Will the door pop open, you know, can’t pop open; what’s going to happen. MR. BROOKMAN: Okay. MR. MANTHEI: What are we going to have toExecutive Court Reporters (301) 565-0064 1 56 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 do, you know, to make sure that the cheese cloth that’s draped over the product, you know, certainly, you know, doesn’t catch fire during the tests. So we’ve all -- almost all the manufacturers have run their own tests. I think we all have our own issues depending on our own design. And each manufacturer is probably going to have to make their own comments. MR. BROOKMAN: That would be great if you could supply that data. MR. von Wentzel: Moving then on to the room air conditioner preliminary MIA. In this case we are able to secure interviews with manufacturers representing approximately 30 percent of the market share. In terms of cumulative regulatory burdens, all manufacturers reported challenges regarding the 2010 EPA phaseout of the use of HCFC-22 refrigerants. Issues included reliability and performance of R-410A based compressors and size constraints of room air conditioners while maintaining the current efficiency levels. So, for instance, manufacturers reported that compressor manufacturers had not yet introduced complete lines of compressors at various voltages and capacities. So this was a big concern. And then thereExecutive Court Reporters (301) 565-0064 1 57 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 was also the reliability question because these compressors are fairly recent on the market in these sizes. Potential changes to the electrical codes for fire safety could add further costs and manufacturing complexity. I believe this refers to the need for AFCI plugs on room air conditioners. Multiple manufacturers also mentioned possible carbon penalties associated with future greenhouse gas regulations, RoHS requirements and Canadian product safety registration payments. That basically refers to a CSA pool. Environment Protection Agency banned production import of HCFC-22 for newly manufactured equipment in the U.S. starting on January 1st, 2010. This includes also equipment filled with HCFC-22. So it’s not just the gas itself or the refrigerant, it’s also equipment containing that. Manufacturers reported many challenges with addressing this regulation such as higher manufacturing costs, the reliability of R-410A based compressors and maintaining size constraint while meeting existing efficiency levels. And that refers back to the chart that we showed earlier which is to say that on average there appears to be a 10 percent penalty in terms ofExecutive Court Reporters (301) 565-0064 1 58 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the EER of R-410A compressors versus R-22 compressors. Whether you can make that up in the heat exchanger design and so on is a question we can leave aside for

now. R-410A compressors do not extend over the full range of capacity in EERs of HCFC-22 compressors, especially for high capacity room air conditioner compressors, i.e., above one and a half tons. R-410A operates at higher system pressures and thus requires thicker tubing, heat exchangers and so on and so forth and better sealing of the sealed system. In terms of the product mix impacts in the Energy Star program manufacturers reported lower efficiencies with R-410A based refrigerant units versus HCFC-22 units for a given cabinet size. Required changes may result in a decrease in total shipments due to constraints in the efficiency levels that can be reached within the current chassis sizes. Which is to say, some capacities may even disappear from the market because manufacturers will simply not be able to squeeze that much capacity or an adequate amount of capacity out of that unit while attaining current energy efficiency standards. Size limitations are especially relevant inExecutive Court Reporters (301) 565-0064 1 59 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 and through the wall market. This is what Detlef addressed earlier which is to say that your wall cutouts are set, your sleeve sizes may be set, and the addition cost of implementing units that are deeper or whatnot may be in fact very, very significant and may make the consumer make different choices. Increases in product size could have a significant impact in consumer utility which is to say people would perhaps not be able to lift these units into their windows anymore and so on and so forth. Industry consolidation. Multiple manufacturers stated that the number of factories currently supplying the U.S. market has shrunk from 20 to 30 factories to less than 10 even as production volumes have increased. Amended standards could accelerate this consolidation and no major manufacturing facilities remained in the U.S. The bulk of manufacturing is now done in Asia with a tiny proportion or comparatively tiny proportion being produced in Mexico. The impact on profitability has been severe because the ability of manufacturers to charge a slight -- a slightly higher amount for Energy Star compliant room air conditioners might be wiped out if they can’t in fact produce room air conditioners anymore thatExecutive Court Reporters (301) 565-0064 1 60 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 reach Energy Star levels because the cabinet may be too constrained or what have you. And manufacturers also noted that the types of consumers that buy room air conditioners tend to be very, very price sensitive and/or room air conditioners might be discretionary purchases that people make on a whim rather than, you know, with long-term planning. Industry profit margins have continually decreased and could continue to decrease with amended energy conservation standards. And what I was just speaking about in terms of Energy Star differentiation no longer being available is part of that. Product conversion costs. Manufacturers commented that the availability of technology options for energy efficiency improvement and the cost of bringing them to market is a key concern. Which is to say, if compressor manufacturers, for instance, don’t manage to increase the efficiency of R-410A compressors as they have, for instance, for HCFC-22 compressors in the past, then, you know, that path towards higher energy efficiency is blocked. Low margins of the room air conditioner business make it difficult to recoup any product development costs and obviously also capital conversion costs and what have you. Amended energy conservationExecutive Court Reporters (301) 565-0064 1 61 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 standards could exacerbate some manufacturers’ disadvantages of not controlling component development. What that’s referring to is, for instance, some manufacturers manufacturing their own compressors and other key components that go into air conditioners. That kind of vertical integration due to scale and what have you then leads to an economic advantage over those manufacturers that have to source their compressors from somebody else. Some manufacturers believe that product innovation would be stymied which is to say, you know, the primary focus would be on meeting energy efficiency standards -- amended energy efficiency standards. A secondary focus would be on product innovation. Resources would be focused on redesigning for energy efficiency improvement rather than on development of new products. However, some manufacturers believe that product innovation would benefit from amended energy standards as a potential for compressor and motor technology evaluation would increase. So, it’s not universal. In terms of consumer subgroups affected by room air conditioner amended energy efficiency standards, multiple manufacturers expressed concernExecutive Court Reporters (301) 565-0064 1 62 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 regarding the impacts on low-income and elderly subgroups, i.e., those who have lived -- who have to live off of fixed incomes. Higher cost necessitated from amended energy conservation standards may cause these individuals to choose not to buy such units or repair, if they can. This would put these consumers at risk of heat stroke and other heat-related medical issues. Which manufacturers brought up the example of, I think it was Chicago in 2003 where unfortunately a whole lot of people died due to heat-related issues. So, here is another comment regarding manufacturer subgroups. DOE research suggests that there is at least one room air conditioner manufacturer that is a small business. DOE invites comments on whether a manufacturer subgroup analysis is appropriate for the NOPR stage. MR. BROOKMAN: Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock, EEI. For this comment, where is this small business located? MR. von Wentzel: I’m not sure I can disclose that. All I can say is that they have less than 500 employees. MR. ROSENSTOCK: Is it domestic or overseas? MR. von Wentzel: It’s a domestically headquartered company.Executive Court Reporters (301) 565-0064 1 63 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. ROSENSTOCK: Is the manufacturer located domestically or overseas? MR. von Wentzel: I’m not sure I can answer that. I will have to get back to you. I’m sorry. MR. ROSENSTOCK: That will have an impact on my answer then because I would say if it was over -- the actual manufacturer was overseas, then I would -- my recommendation would be no. MR. BROOKMAN: Okay. Thank you. Additional thoughts on this before we move on? Ted? MR. POPE: Ted Pope. Can you clarify -- I think most of the data slides you just showed were manufacturers’ response to the survey. MR. von Wentzel: Uh-huh. MR. POPE: You mentioned the R-410A of 10 percent reduction in efficiency is what’s being said. But I feel like at the beginning of the morning session it was acknowledged that those efficiency decrements were measured on the very first units available with 410A. I wanted to clarify whether you think that’s thecase. Is that 10 percent reflective of state-of-theart 410A compressors, or was that from the very first, you know, products coming into the market say, two,Executive Court Reporters (301) 565-0064 1 64 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 three years ago? MR. von Wentzel: I’m going to have to defer to Detlef because he’s our resident HVAC guru. MR. WESTPHALEN: Well, I think -- Detlef Westphalen. I think what Constantin mentioned in regard to the component vendors not being quite up to speed when the manufacturers were in the process of redesigning their products really comes into play here. You know, we contacted all of the compressor vendors to attempt to obtain data to get an understanding of what the offerings were. And what we found was that there was limited -- you know, there were limited options available. We will certainly make another attempt and we are already in the process of doing that to find out, you know, have they extended their offerings? Are there better efficiencies available now? So that’s a developing situation and we’ll have to see where it goes. MR. POPE: Thank you. MR. BROOKMAN: Thank you. Let’s got to the next comment box. MR. von Wentzel: Yep. Other issues. DOE welcomes comments and recommendations from interested parties on any aspect related to the preliminary manufacturer impact analysis.Executive Court Reporters (301) 565-0064 1 65 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: Yes, please. MR. GOUW: Hi, this is Sean Gouw, Southern California Edison. I was just curious, I know 410 is the generally accepted replacement for R-22, but have any other refrigerants been explored at all? I know there are a bunch of papers that explore all of the different replacement -- I think there are some blends that offer similar thermodynamic properties. Although you do get the downside of when you develop leaks you have to evacuate and recharge the whole system since the ratios become kind of screwed up. But I was just wondering if DOE had acknowledged any other refrigerants besides R-410A? MR. von Wentzel: I’ll take the first stab at it and then Detlef can add on. We can simply report what manufacturers told us. And every unit that we’ve observed in the marketplace, to my knowledge, has been R-410A based. Whether you could implement different blends that offer properties closer to R-22, there is certainly a market for that. I mean, you go to any major show and you’ll see people offering these kinds of blends. But as far as I know, no OEM has adopted such blends. And what the exact reasons are, I’m afraid manufacturers would be the only ones to know. Or perhaps Detlef, if you have additionalExecutive Court Reporters (301) 565-0064 1 66 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 comments. MR. WESTPHALEN: Well, I’m sure the manufacturers could comment as well. But standardization is a very important thing in this market. Not just from the manufacturing perspective, but also for the service and, you know, to be dealing with multiple types of refrigerants out in the market, you know, it’s already been kind of a mess. And you talk to some of the service personnel out there that, you know, well, I don't know -- you know, clearly there’s an importance for labeling. But there’s also, you know, the importance to, limit the number of options. And this also goes to the compressor manufacturers. They don’t want to be dealing with multiple refrigerants either. And so, you know, they kind of moved towards 410A and everybody got on board because of standardization. And there are a lot of benefits to that. MR. GOUW: I guess I was just curious if anyone knew of any studies, if anyone looked into any other refrigerants. I know the EPA website lists -- I want to say upwards of 20 different acceptable refrigerant replacements for R-22. MR. WESTPHALEN: It may be that, you know,Executive Court Reporters (301) 565-0064 1 67 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 theoretically they could be developed. But if the compressor vendors aren’t going to stand behind the compressor using those substances, then the manufacturer can’t really consider using them. MR. BROOKMAN: Brice. MR. BOWLEY: Brice Bowley. I have to agree with Detlef. It’s certainly basically standardizing to one refrigerant is important because right now from a service standpoint we’re working with refrigerators which are 134A, old air conditioners which are R-22, and then R-410A and basically the compressors are -- you know, most of the compressor suppliers went to 410A and they qualified reliability which the reliability of the compressors long-term is a very costly process to actually qualify on multiple products. So that tends to be very costly. So service and qualification both are big cost drivers and standardizing to one, you know, refrigerant was really important for us. MR. BROOKMAN: Thank you. Let’s keep -- Steve, go ahead. MR. ROSENSTOCK: Just a final thought on the manufacturer impact analysis is for this -- for the NOPR stage is DOE going to be able to break out impact in terms of domestic versus international in terms ofExecutive Court Reporters (301) 565-0064 1 68 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 all the manufacturing impact whether it’s production, economic, job losses or job gains? MR. von Wentzel: I think that’s a very tough nut to crack and we are going to have to think very hard about how to do exactly that. MR. ROSENSTOCK: Thank you. MR. von Wentzel: So we invite any suggestions from you regarding how you would best consider doing that. MR. BROOKMAN: Okay. MR. von Wentzel: Or any other interested party for that matter. MR. BROOKMAN: So let’s move on to the first aspect of the NOPR, the Trial Standard Levels. And then maybe after this we’ll take a short break. Yes. Back to Alex Lekov. Trial Standard Levels and Preliminary Manufacturer Impact Analysis MR. LEKOV: So from that point on there will be one or two slides type of presentations to outline the activity that are going to happen during the next phase. So just to remind everybody that the next phase of the rulemaking when the group meets in six or eight months, instead of efficiency levels you will seeExecutive Court Reporters (301) 565-0064 1 69 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 trial standard levels. So here is to give heads up to everybody and to know that the trial standard levels are developed at the least of potential standard -- which impacts are weighted and the proposed standard level is selected. There are criteria on how to organize those. Here is the list of the criteria and essentially today the Department would like to invite you potentially to comment on what’s the best way of putting together those trial standard levels. And there are some examples that show how the Department dealt with this in the past. For example, the one criteria was the most efficient level, essentially the max-tech, the levels with lower lifecycle costs, levels with payback within three years or less. Efficiency levels with a specific technology and also some efficiency level that may come under other criteria or just as characterized here filled in large gaps. So, that’s about it. MR. BROOKMAN: Do you want to move ahead to the next slide? MR. LEKOV: I don’t think there is another slide for this topic. MR. BROOKMAN: Okay.Executive Court Reporters (301) 565-0064 1 70 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. LEKOV: Basically this is the comment. Here is the request for the comment. It’s a consideration of the criteria for the selection of trial standard level. So, any feedback. MR. BROOKMAN: Fortunately it’s on the same page on your slides on your -- on the copy that you have. So any comments on trial standard levels? And you can refer back? Yes? (No response.) MR. BROOKMAN: No. Okay. No comments. Yes, please, Joanna. MS. MAHR: Joanna Mahr. We would just like to encourage DOE in addition to evaluating the level that represents the lowest life-cycle cost also evaluate a level that represents the maximum savings while still being cost effective for the consumer. MR. BROOKMAN: Okay. Thank you. We’ve been going over an hour and a half since lunch. So let’s take a short break. Can we do this in ten minutes? Ten minutes which means just about 3:00. (Brief recess taken at 2:50 p.m.) MR. BROOKMAN: We’ll start back up. Jeff Kingman, manufacturer impact analysis. MANUFACTURE IMPACT ANALYSISExecutive Court Reporters (301) 565-0064 1 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. KINGMAN: I’m Jeff Kingman from Navigant Consulting. I’m working with the Department of Energy for the NOPR phase of the rulemaking. I’m particularly working on the manufacturer impact analysis. The important part about this slide is the manufacturer impact analysis is one of the downstream analyses. But the main purpose is to assess the impact of amended energy conservation standards on the manufacturers. The main output is the result of a cash flow model called a “government regulatory impact model.” And that is the measure of the industry -- the net present value of the industry after standards. Another important part of the manufacturer impact analysis is to look at the impact of subgroups of manufacturers that could be differentially harmed by standards. This slide just shows that the MIA is conducted in three phases and the next few slides just kind of go through those in a little bit more detail. Like I said before, this slide just again highlights that all the other of the analyses that were gone over in more detail today are inputs to the manufacturer impact analysis, in particular the shipments from the national impact analysis and the product costs from the engineering analysis.Executive Court Reporters (301) 565-0064 1 72 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The first phase is the industry profile. A lot of this stuff is presented in the TSD, but it is the public -- the information about the industry that’s available publicly. Some of the inputs or some of the things that DOE looks at are listed on this slide too. The second phase, DOE uses this publicly available information to do a preliminary run of the government regulatory impact model. And, again, the key output for that is the industry net present value. Another key part of phase two is the development of the interview guides. Similar to how the engineering analysis was conducted for the preliminary phase and the NOPR phase for the manufacturer impact analysis we go back to manufacturers with a new set of questions. Those interviews will take place following the comment period -- the close of the comment period, rather. And it’s just important to note that we do or Navigant Consulting does have confidentiality agreements in place with the manufacturers. And so information that is disclosed is kept private. At a minimum, it’s aggregated. This slide just some of the typical topics that the interviews include. In the third phase the actual analysisExecutive Court Reporters (301) 565-0064 1 73 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 conducted including the interviews and the inputs for the financial model are finalized. And, again, as I mentioned and as Constantin mentioned earlier too, the subgroup analyses are just a more focused version of the industry wide highlighting any groups that can be differentially impacted. One of the obligations or statutory obligations is to look at the impact on small businesses and that’s why we included those comments before or the request for comments before. Additionally we went over some of this before, but if anyone has any additional comments on the cumulative regulatory burden, those would also be appreciated. And this slide just highlights that, that this is in particular some of the regulations that are highlighted for dryer manufacturers, in particular, and if anyone has anything to add to that. And this is something that we’ll also be going over in interviews more in depth too. MR. BROOKMAN: Just pause there just very briefly. This comment box, additional things you don’t see here that the Department should consider with respect to cumulative regulatory burden. (No response.)Executive Court Reporters (301) 565-0064 1 74 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: Okay. MR. KINGMAN: And this is a similar slide for the room AC. Okay. And finally, as we -- we did go over this earlier today too, but we or DOE is interested in identifying any potential small business manufacturer for the NOPR phase. So if there are indications that there are others that we were missing, we would appreciate that. And finally, I’ll be around after the meeting too. I know we went through these kind of quickly, but if anyone has any specific question about how we conduct the NOPR analysis, definitely feel free to come over and talk to me. MR. BROOKMAN: Okay. Final comments on this stream before we go on to Utility Impact Analysis and the others? (No response.) MR. BROOKMAN: Okay. Alex Lekov. UTILITY IMPACT ANALYSIS, EMPLOYMENT IMPACT ANALYSIS, ENVIRONMENTAL ASSESSMENT, REGULATORY IMPACT ANALYSIS MR. LEKOV: So now I will address four analysis flows, utility impacts, indirect employment impacts, environmental assessment, and regulatoryExecutive Court Reporters (301) 565-0064 1 75 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 impact analysis. Details on those -- those are pretty detailed analyses with relatively significant background that are going to be presented to you during the NOPR phase of the rulemaking. Starting the utility impact analysis, the purpose is to investigate the impact on utilities from reduced energy use and peak load demand due to potential standards. So, DOE uses the national energy savings results from NIA. And as a tool, DOE uses the NEMS program. The output of this are several variables. But the one that is emphasized and reported in the Federal Register documents is the change in new capacity construction. So, the reductions of power plant that may result from the standard. So, this is the introduction to the utility impact analysis. Any comments? (No response.) MR. LEKOV: The Department also addresses the indirect impact -- the indirect employment impact and just to highlight that this differs from what Jeff explained, the direct employment impacts which are associated to a specific industry. This is here we are talking about a national employment impact over multiple sectors of the economy. So, again, there is a standard tool calledExecutive Court Reporters (301) 565-0064 1 76 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 IMSET which is a model of the U.S. economy. It looks at a number of sectors that may be impacted by the prediction in the energy use by those two products. The changes in products as well as other related energy expenditures are coming from the national impact analysis. And the outcome is essentially here is stated as change in employment sectors as a consequence of new standards essentially produces by itself a change of employment and change in the national employment, everything outside of the manufacturers. MR. BROOKMAN: So we will just take comments on that should there be any at this time. Employment impact analysis. Yes, your name, please. MR. LISS: Dave Liss, NEEP. I just wanted to actually jump back to the utility impact analysis. Sorry. MR. BROOKMAN: Okay. MR. LISS: I didn't get this in. On the change in the new capacity construction there are ways to quantify the economic benefits of reduction in capacity construction, at least in the northeast. And I know there are in other regions. Do you -- do you plan to include those quantifications in any kind of way in the NOPR?Executive Court Reporters (301) 565-0064 1 77 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. LEKOV: DOE’s standard approach is to report just the change in capacity generation. MR. LISS: Okay. MR. LEKOV: The economic benefits of this are not included at this point. MR. LISS: Okay. We’ll be -- I’m happy to submit some information from studies from the northeast. Thanks. MR. BROOKMAN: Thank you. That would be helpful. Okay. MR. LEKOV: So on environmental assessment, so the -- it’s a mandatory government requirement in a pretty significant way. Essentially the purpose is to report environmental impacts as a consequence of new energy conservation standards including changes in power plant emissions, and emissions at the household level. So, again, the analysis starts with energy savings from NIA. The main tools is NEMS which provides the component related to power plant emissions. In the case of fossil fuel fired plants is there are so-called “in building conditions”. Those are determined separately. Basically the Department develops a spreadsheet using emission factors based on specific guidelines from EPA.Executive Court Reporters (301) 565-0064 1 78 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: Yes, Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock, EEI. Are you going to estimate the CO 2 emissions from the fossil fueled appliance along with the SO 2 , NO x ? MR. LEKOV: DOE plans to do this. MR. ROSENSTOCK: Steve Rosenstock, EEI. It wasn’t shown on your slide, so that’s why I was asking. Thank you. MR. LEKOV: Okay. MR. BROOKMAN: Thank you. MR. LEKOV: Okay. The other important component here is which basically started to be standard in the recent rulemakings is the calculation of the economic benefits resulting from emission reductions based on a range of monetary values. Therefore, DOE before reported the emission savings in terms of carbon and in million tons -- now DOE also applies this interagency approach to provide also dollar values associated with those emission savings. And basically the output is the different emission reductions. Some of them are kept through regulations or they may not show up in the outcome. And this is about it for this particular analysis. MR. BROOKMAN: Comments on the environment assessment?Executive Court Reporters (301) 565-0064 1 79 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (No response.) MR. BROOKMAN: Okay. MR. LEKOV: The Department is also obliged to provide regulatory impact analysis and does basically, although those are called regulatory impact analyses,they investigate the national impact due to nonregulatory alternative actions. So, there is a pretty detailed analysis which assess the impacts of early replacement, prescriptive standards, voluntary efficiency targets such as Energy Star, et cetera. So, the tool is a modified NES spreadsheet which has certain assumptions that are well documented in the Federal Register document or in the TSD. And essentially those scenarios increase the overall appliance efficiency and are modeling to represent the impact of these programs. Usually the outcome is certain impacts similar to the impacts from the standards. However, the changes are always different from the standard. And the end totals presented exactly the same way as the NIA in terms of national energy savings and net present values. MR. BROOKMAN: So comments on the regulatory impact analysis. (No response.)Executive Court Reporters (301) 565-0064 1 80 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: That’s it. MR. LEKOV: Okay. MR. BROOKMAN: Thank you, Alex. So as we said this morning, now is an opportunity for anybody to make additional comments, issues you wish to raise, think that have not been covered sufficiently, et cetera. (Pause.) MR. BROOKMAN: Joanna, go ahead. MS. MAHR: Joanna Mahr. Just that we would request, I think there’s a small error in the national impact analysis spreadsheet for the group four of room air conditioners. It shows the operating cost savings to be negative. So I think it’s just a spreadsheet error. I would just request that change. MR. BROOKMAN: Okay. Thank you for noting that. Other comments before we turn it back to the DOE folks for closing remarks? (No response.) MR. BROOKMAN: Okay. That’s it for my part. Thank you. Back to Stephen Witkowski. And I’m going to hand out this evaluation sheet. Please take the minute that it takes to fill it out. The Department reads them. They are alwaysExecutive Court Reporters (301) 565-0064 1 81 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 looking for ways to improve these meetings. NEXT STEPS AND CLOSING REMARKS MR. WITKOWSKI: Well, first of all I would like to thank all of you for attending and participating. And I would strongly urge you to submit comments -- written comments by the comment period closing date which is April 26. And all of that information is on the last sheet here. It’s also in the Federal Register notice. In the past a number of you have also cc’d me requesting receipt of comments. I have no problem with that. My e-mail address is in the Federal Register Notice. But please make sure that the primary recipient is the e-mail address given here and in the Federal Register. We look forward to your comments. Also, once the transcripts are available and reviewed, we will try to get them posted. But, unfortunately, I can’t make any promises on the time frame. But we will do our best to get that up there. And, again, thank you very much for coming. We really appreciate your participation and we look forward to your input. MR. BROOKMAN: Safe travels.

(Whereupon, at 3:20 p.m., the meeting wasExecutive Court Reporters (301) 565-0064 1 82 1 2 3 4 5 6

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 adjourned.)Executive Court Reporters (301) 565-0064 1 83 REPORTER'S CERTIFICATE

This is to certify that the attached proceedings before: U.S. DEPARTMENT OF ENERGY In the Matter of: **ENERGY CONSERVATION STANDARDS FOR RESIDENTIAL CLOTHES DRYER AND ROOM AIR CONDITIONERS** 

Were held as herein appears and that this is the original transcript thereof for the file of the Department, Commission, Board, Administrative Law Judge or the Agency. Further, I am neither counsel for or related to any party to the above proceedings.



### Wendy Greene Official Reporter Dated: March 17, 2010